CATEGORY UPDATE
On the MOVE
With the prospect of a return to the workplace, what’s in store for the office furniture sector? OPI’s Michelle Sturman finds out...
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t’s an intriguing undertaking to look back on what was written in OPI a year ago. Reading the Category Update for furniture in 2020 (see OPI July/August 2020, page 40) reveals that much of what was predicted then is now coming to bear. For example, hygiene protocols and social distancing prompting a change in office design, an increased focus on ergonomics and the rise of the home office. However, many aspects were unforeseen. How could any of us have known back then – a mere few months into the COVID-19 pandemic – that we would still be battling the virus despite vaccination programmes? Additionally, in many areas of the world, the majority of office employees are continuing to work from home (WFH). Interestingly, the term ‘hybrid working’ didn’t appear once in last year’s feature, whereas now it’s virtually the default phrase embedded in our office-related lexicon. It’s currently a defining factor in shaping the office furniture sector for the foreseeable future, but it’s not the only one. A more (hopefully) short-lived determinant likely guiding the industry for the rest of the year is the ongoing supply chain disruption. It is causing issues from shipping product across the globe to transporting goods countrywide, even down to the last mile. In the US, VP of Furniture Sales for S.P. Richards (SPR), Eddie Baird, sums up the problem: “It is a perfect storm of shortage of raw materials, containers and domestic truck drivers, railcar congestion and increasing fuel prices. “For our private brand Lorell, we started moving pieces of production back to the US years ago
as we felt a strong mix of domestic and import suppliers was needed. For the items that are still sourced from overseas, it has been challenging and is very fluid today.” Baird notes that an aggressive inventory move a few months ago based on the expected return in demand is paying off, and customers will continue to see the benefit in the short term. “However, we do have challenges with high-velocity items as customers are coming to us because their traditional sources do not have product. This places an additional strain on our inventory because it is unforeseen demand. It is a good problem to have – sometimes!” BREXIT BREAKDOWN It is the same in the UK, according to VOW Wholesale Furniture Category Director Vanessa Warne. “At the start of the pandemic, demand forecasting was difficult as there was no real precedent for it. Fortunately, wherever there were stock shortages, we’ve been able to offer alternative items. More recently, the challenges have been centred around the lack of container space, rising shipping costs and port closures.” The UK has suffered extra headaches from the invasion of red tape due to Brexit coupled with the rise in coronavirus infections at the start of 2021. Richard Costin, CEO of UK-based office furniture manufacturer Bisley, explains: “In January, at the start of Brexit and the height of COVID, we initially had 50% of drivers not wishing to take our shipments into Europe because of the new paperwork and testing at the French border. This was a challenge, but it is fortunately now back to normal, albeit with an increase in cost due to the required paperwork.” Brexit-related expenditure has also risen for UK manufacturer Sit-Stand.Com as stock required for the German market, for example, must now be stored locally. It also has to supply Ireland from its warehouse located in Germany if necessary. “We cannot drop-ship from the UK anymore, so that’s an expense; it’s also reduced customer choice,” says Managing Director Gavin Bradley. UK-based firms are not the only ones affected. Dutch ergonomic accessories manufacturer and designer Bakker Elkhuizen has experienced some difficulties transporting products to its UK customers, predominantly in Q1 of 2021. The issue has not come from the manufacturing and supply of items, but dealing with UK customs and capacity in the UK palletised delivery network, says UK Country Manager Steven Howe, adding: “Getting stock the last mile has probably been the most difficult part.” RETURN TO GROWTH Supply chain woes aside, growth is returning to the sector. Says Baird: “In Q3 2020, we saw growth in the furniture category through our e-commerce customers due to the WFH segment. At the same time, companies were pushing out their return to work plans as COVID continued to spike. “Q4 was the typical seasonal decline and although e-commerce once more was strong,
