“Our industry continues to struggle on many fronts. Downsizing and shortened workweeks have become the accepted norm. The number of inquiries made by wholesale customers to verify availability and current pricing has added another layer to the daily burden handled by a reduced staff within most organizations.

Whereas the industry once had a six to eight week order backlog, this is no longer so. The trade did not realize what a luxury having such a backlog was. It enabled smoothing out everything including production scheduling (larger runs per item), ordering raw materials (especially fabrics), improved efficiencies, and so on. Today there is much more scrambling to get it made and out the door than ever. Given fewer retail sales, the customers want their orders “now”, to maintain cash flows.

A European supplier informed me late last year that they lost a very large portion of their receivables due to their customers’ inability to pay. Their receivables insurer is reluctant to open credit for new customers, even when the customers are financially stable or even strong. Their sales are down as a result.

China’s minimum order quantities have always been an issue for importers, so with the general overall decrease in business, those minimum quantities have become an even greater hurdle. Many importers are delaying reordering until some or most of their next reorder has been presold. Delivery delays are very common.

I have heard that Chinese suppliers are now facing the economic result of their world conquest. Their worldwide export customer base has been eroded across most industries. Recent radically increased pricing has narrowed the gap between sourcing in China versus sourcing elsewhere, especially when the not-so-apparent “other” factors are considered.

Many manufacturers are trying to “go back” to local suppliers where possible, but the now-established low pricing everywhere precludes doing this easily. Stores say they prefer and want to buy locally. What they do not say is…“at the China price.”

Many Chinese factories have been affected – either downsized or closed. There will be more. Importers must scramble to find substitute suppliers, and doing so takes time, which adds more delays and variance in product.

As an industry we cut our own throats by jumping from the stable local supply chain everyone supported and was happy with. In our collective greed (a word rarely used or printed) to buy low and sell high we sold our souls and abandoned known and reputable quality, reliability, consistency, availability, predictability, uniqueness, and more.

Many goods have now become commodities, such that there is little or no profit to be made. Profit, not sales volume, is what drives business. We are now paying the high cost for low price (a phrase coined by one of our local manufacturer customers).

A very common comment heard following our recent Furniture Show here was that “everything looks the same”, referring to the imported goods. I thought so myself, year after year. Several consumers have recently complained they do not know where to see better and/or different merchandise. Whereas our industry once showed different looking goods manufactured locally or imported from who-knows-where, at price points all over the map, today almost everything looks “the same” and is offered “at the lowest price”. We no longer promote quality or choice, preferring as an industry to sell price.

We as an industry did this to ourselves. If we were smart (which is doubtful given what we have witnessed) and looked at the long term, we could perhaps to an extent reverse the above over a decade or more.”

What’s your take on Ray’s comments? Please write to Eric Schneider:  eric@sipco.net

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