Furniture fortunes

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Furniture fortunes

Can furniture sales maintain their post-pandemic pace?

 

No one needs to tell independent dealers that, on average, office product sales are dwindling. This means diversification isn’t just an option—it’s a necessity to make a profit. One of the major sectors savvy dealers have been exploring for this reason is furniture. But since COVID-19, many employees have been working remotely on hybrid schedules in home offices that have already been kitted out with everything they need. In this scenario, can furniture remain the sales driver it has been over the past few years? While no one can predict the future, the dealers we interviewed provide insight into current market conditions and trends and ponder on what might lie ahead.

 

Meet the dealers

San Diego, California-based Business Office Outfitters and Office Furniture Outlet combined do about $8.2 million in annual sales, most of which come from furniture. While the companies sell some high and low-end lines, most of their sales are in the mid-market range. They also sell refurbished furniture.

Emerald Business Supply and Emerald Business Interiors are headquartered in Philadelphia, Pennsylvania. Of their $17 million in annual sales, furniture accounts for just under $6 million. This figure is expected to grow—in part due to the addition of seasoned talent such as Nick Faragasso, who joined three years ago as director of workplace interiors after 14 years with W.B. Mason.

Spry, Anderson, Indiana, enjoys annual sales of $27 million, with up to 6% generated by furniture. About two years ago, Spry acquired Lee Graphics, a company with a stronger furniture focus, which Spry continues to build upon. Most of its sales are budget and lower-end furniture is supplied largely by S.P. Richards.

GBP Direct, Kenner, Louisiana, entered the furniture business in 2008, when it brought three employees on board from a competitor with more than 75 years of combined furniture experience. Today, furniture accounts for 50% of the company’s $20 million in annual sales. Like other dealers, GBP Direct sells all furniture grades, including purely transactional sales, through the company website. However, most of the family-owned furniture business is in the mid-market sector.

 

Who’s buying what—and who’s not

“In California, rents are so expensive that a lot of companies are struggling with their leases—something I’m sure is happening elsewhere, if to a lesser degree,” says Jerry Sinclair, co-owner and vice president of Business Office Outfitters and Office Furniture Outlet. “If they can’t negotiate a reasonable lease, many are downsizing or letting their staff work remotely. When their leases are up and they can’t negotiate a reasonable price, others say, ‘We’re out.’ The real estate companies have been hit especially hard. Home sales are down and rent prices are up, so a lot are closing their offices. We buy back a lot of that furniture.”

According to Sinclair, residential sales aren’t helping much: “Most remote employees have already purchased things like their high-end ergonomic chair, and they don’t need more than one desk and chair. I think many companies are still trying to get employees back in the office, but most people are working hybrid two or three days a week and I don’t see this trend stopping.”

So, who is buying furniture? “Our sales in healthcare and education are strong,” reports Sinclair. “Some administrative employees in these sectors can work remotely, but the frontline workers can’t; they must be in those facilities.”

According to Mike O’Connell, Emerald’s managing partner and president, and Faragasso, director of workplace interiors, their most significant furniture accounts are in healthcare, education and corporate. But there has been a decline in office sales. “In the city, the employees are not coming back to the offices as quickly as the mayor or the companies would like,” admits Faragasso.

“What we sell depends on the industry,” says David Sager II, Spry’s national director of office supplies and furniture. “Most of our sales are to healthcare and financial institutions. In healthcare, we sell a lot of tables and chairs for training facilities and other areas of substance abuse clinics where furniture can get beat up, so they aren’t looking for top end. Many are federally funded, so they are careful with their spending. Their grants usually end in June and September, so they will buy more then if they have money left. Financial institutions have been very cautious this year; they are more conservative in what they purchase. Last year, eight to 10 financial entities spent $20,000-plus in furniture. This year, I think only one has spent that amount.”

GBP Direct’s largest furniture customers are in government, education and one other rather specific sector. “Some of our largest furniture customers are oil, gas and chemical companies, like Shell, Exxon and BP,” explains president and owner Randy Durbin. “We are very fortunate—they all have processing centers here. We did a project for one and others heard we did a great job, so they called us. We currently have three projects for $400,000 each
on oil rigs.”

Sales and business development manager Cody Durbin enthuses: “We’ve seen amazing growth in the furniture market, with projects that range anywhere from $20,000 to $600,000.”

 

Changing times, changing trends

“Laminate is the most popular material right now, versus wood or veneer,” reports Business Office’s Sinclair. “But now, people are using many beautiful color combinations. The move is away from dark laminate, like mahogany and cherry, in favor of lighter colors, like birch or driftwood. Black is still popular for chairs, but there is more color overall. Companies want things that look better and more modern. Going back to old styles is not going to happen because employees like and want to work for more modern companies, so keeping up with these trends is critical.”

Another ongoing trend is the type of furniture being bought, which continues to be aimed at enticing employees back into the office. “We are selling more lounge and collaboration furniture,” confirms Sinclair. “Companies are buying more large high-top tables and sit-to-stand desks are still popular. Employers are trying to make the office more like home, to make employees feel like they are returning to a house.”

In the south, GBP Direct finds laminate and more color also reign supreme. “People are starting to get away from the wipe-down vinyl that was popular during COVID-19,” says Cody. “They want more color, including fabrics and patterns. They are moving away from gray, black and white. Instead of neutrals, they want to introduce color into everything. “

Randy gives an example: “We recently did a project for the local zoo and they used lime green, mustard yellow, orange and a beautiful blue. More people want vibrant, refreshing colors instead of depressing black and gray.”

Cody reports that height-adjustable furniture is also selling: “Sit-to-stand desks are still popular, although I am not sure how much they are actually used after installation. Taller collaborative tables are also being purchased. We installed one big, long, tall table with plastic chairs for the zoo. We are seeing that a lot because people want something more collaborative and less formal. I think this trend is here to stay.”

Emerald is also selling more collaborative pieces. “We are not seeing individual areas being outfitted with furniture,” explains Faragasso. “It’s more spaces for people who come into the office for a few hours to touch down. We are seeing more lounge spaces, with laptop tables versus cubicles. We are also seeing panels coming down. During COVID-19, panels were 65 inches; now, people are asking for 30 or 42 inches.

“Regarding material, we are seeing a move away from wood or wood-framed chairs in favor of laminates and fabrics like lighter gray. In the education sector, we are seeing more lightweight furniture that can be moved about and tables and chairs that can be reconfigured for communal or individual work. In classrooms, there’s a move away from desks toward chairs that allow kids to wiggle and jiggle, and bookshelves on castors that can be moved.” He agrees with the other dealers that height-adjustable desks, especially sit-to-stand models, remain popular.

 

Sizing up the competition

According to Sinclair, the main competition in the furniture arena is different from that in the office product category: “Our biggest competitors are the local competition and Wayfair. Amazon still plays a role, but with online retailers, customers can’t sit in the chair. They can’t test and kick the tires. This is why we have a retail store with a big showroom. Customers can take their time and sit in a chair for two hours if they want.”

So how do Business Outfitters and Office Furniture Outlet deal with the local competition? “We stock a lot of product, which many dealers don’t,” says Sinclair. “So if a company needs the order quick, we often have 100% of it in stock and can have everything ready to deliver a whole office in as little as a week.”

At GBP Direct, Cody suggests the reason why Amazon has made less of an impact in the furniture marketplace comes down to trust: “Amazon is very much a competitor for a single transactional sale chair; but at least right now, it is not in the position to supply services like installation. The company doesn’t offer installation, but people also do not trust Amazon to be able to install it. I know I am not going to trust a third party—you’d get someone you don’t know who might say, ‘I think I can build that.’ We have a credible history and are a trusted company in the area.”

Spry’s Sager agrees that service is the key to competing against Amazon and making money in the furniture market. “Most manufacturers offer the same discounts on product, but doing a job in three hours versus two days means labor savings,” he elaborates. “That’s where your profit margins are.” Yet he acknowledges that supplying services such as installation can be challenging, especially in rural areas: “We have installers on our payroll, but finding workers for larger projects can be difficult.”

 

Looking to the future

Sinclair believes that expansion may still be on the cards for Business Office Outfitters and Office Furniture Outlet in the next two to five years. “It’s a tough industry and always changing, so it’s a gamble to say what we will do too far ahead,” he admits. “I don’t see us opening 10 more furniture stores with people continuing to work from home and companies closing their doors. However, we will continue to look at different revenue streams and market sectors. Being in business for 66 years doesn’t mean staying the same. You have to pivot and try different things.”

O’Connell suggests the best thing dealers looking to get into the furniture sector can do is recruit top talent and Emerald plans to continue down this path: “Emerald has sold furniture since 1988, but we were selling, not competing. Hiring sales reps with expertise in the furniture industry was a gamechanger for us. So was hiring a talented in-house designer. Before, sales reps had to get renderings from an outside firm or be restricted to what the manufacturer offered. Now, we can provide 2D and 3D plans. Previously, the lead times were much longer and we had to pay piecemeal. The turnaround time was two or three weeks, and the design firm was in a different time zone, which made it hard to coordinate. With an in-house designer, our turnaround time is usually under a week.”

GBP Direct is also clear on its plans for the future, according to Cody: “We will still seek out experienced people and we’ve invested in our website, marketing and space planning and logistic programs. We want to make it as easy as possible for people to understand what we do and how we do it.”