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How will supply chain reshape summer market discussions?

2020.08.24


    Welcome to 2020’s highly compressed summer market season. After a spring that saw major markets canceled across the globe, the industry is trying to make up as much ground as it can this month with markets in Dallas, Atlanta and Las Vegas, each looking to provide retailers with access to much-needed inventory and manufacturers with some chance to get directly in front of their customers.

 

    And while markets are most often about showcasing the newest and most noteworthy product offerings, this time there is likely to be as much discussion about sourcing and supply chain as about style. The silver lining of consumers being confined to their homes this spring was the creation of pent-up demand that’s resulted in explosive sales growth since the reopening. That growth has been further fueled by decreases in experiential spending — theaters, sports events, travel and restaurants. The result has been dramatic near-term demand for home furnishings, which is a good thing.

 

 

    Welcome to 2020’s highly compressed summer market season. After a spring that saw major markets canceled across the globe, the industry is trying to make up as much ground as it can this month with markets in Dallas, Atlanta and Las Vegas, each looking to provide retailers with access to much-needed inventory and manufacturers with some chance to get directly in front of their customers.

 

    And while markets are most often about showcasing the newest and most noteworthy product offerings, this time there is likely to be as much discussion about sourcing and supply chain as about style. The silver lining of consumers being confined to their homes this spring was the creation of pent-up demand that’s resulted in explosive sales growth since the reopening. That growth has been further fueled by decreases in experiential spending — theaters, sports events, travel and restaurants. The result has been dramatic near-term demand for home furnishings, which is a good thing.

 

Except . . .

 

    Even in the best of times, short-term demand spikes can cause shortages and supply chain challenges. That’s exacerbated when that supply chain stretches across the globe and encompasses myriad countries wrestling with their own pandemic issues. Factor in a near-complete shutdown of manufacturing and distribution, the spring cancellation and/or delay of a massive number of orders and the attendant layoff or furlough of hundreds of thousands, if not millions, of workers across the globe and the result is challenging, to say the least.

 

 

    If that’s not enough, freight rates have risen to the point that many manufacturers are now wrestling with the notion of pass-along increases or alternatively, absorbing yet another round of costs already inflated by last year’s tariffs.  In this context, the question of whether mid-century modern gets another season or which shade of blue is going to be hottest might seem less critical than whether an order placed this month can get here before Black Friday.

 

    Certainly considerations of style are always important, but having the best product on your floor, catalog or website is only of value if you can keep it in stock, or alternatively, get it delivered in a timeframe that does not frustrate or alienate your customer. Those manufacturers who can help their retail partners achieve that in the coming months will be at a significant competitive advantage.

 

    For manufacturing leaders, this season’s biggest management challenges are likely to center on the supply chain and customer expectations. Helping retailers maximize the opportunity presented by consumers’ home-centric spending, while at the same time providing maximum transparency around order status and the flow of goods, will go a long way in maintaining critical relationships.

 

    Conversely, those who don’t have control of their supply chain and who find themselves unable to provide timely and accurate updates on the availability of critical goods, may soon find their customers shopping in greener, or at least better managed, pastures.

 

    For retailers, the process of forecasting has rarely been more challenging. The recent spike in home furnishings caught many by surprise, at least in its magnitude. And with some calling it a “sugar rush,” with all that implies, it’s difficult to determine when consumers’ shopping fervor will crash.

 

    The pandemic is also sparking interest in new categories, with consumers reorienting their lifestyles to accommodate staycations, working from home and turning the family abode into an indoor-outdoor entertainment hub. Predicting which of those segments will pay off biggest and re-merchandising to capitalize is only slightly easier than hitting the jackpot at a Vegas casino.

 

    However, figuring out how to accommodate rapid growth and determining which segment of your business is going to blow up most is a nice problem to have, albeit no easier to solve. For all the challenges of dealing with the pandemic, and they are unpredictable and significant, the next 12-18 months offer a significant opportunity for those who can get the right goods on the floor.

 

That all starts this month.

 


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