There’s no need to discuss the obvious: inevitably, commercial furniture sales were down during the COVID-19 pandemic. Thankfully, the shutdown is now behind us. However, as with most things in life, there are silver linings—and one of them seems to be the furniture market. The segment is not only recovering but has been booming for many independent dealers—in part thanks to employers’ efforts to lure workers back to the office post-pandemic. Yet some dealers wonder if this growth is sustainable in the long term…
So far, so good
Kendall Smith, vice president of office products at Workplace Solutions-Barefield, Jackson, Mississippi, estimates $17 million of the company’s $22 million in annual sales is contract furniture, with most projects being in the $200,000-plus range. “There was a little slowdown in 2020–21; we did some home office sales, but not enough to get excited about,” he says. “But furniture sales have grown since COVID-19. We’ve recovered well.”
Furniture sales have likewise been rising for Ball Office Products in Richmond, Virginia—so much so that they now account for more than 50 percent of Ball’s total sales, according to owner Melissa Ball.
According to Alan Bird, president of Complete Office Supply, Indianapolis, Indiana: “Business is strong in both types of furniture we sell—the contracted furniture for large projects, which take six to eight weeks from assessment and review to install to complete; and the transactional, where a customer calls looking for desks for two offices. Transactional sales are usually rather quick. These clients want convenience, and the item is usually not for them, so they don’t care so much about the features, like if a chair is ergonomic. They go on the website and see if it is a good price. Or they say, ‘I have $200 to spend.’ Our transactional sales are typically $20,000 or less. The transactional sales have been quite good and are often more profitable, since large projects include more players and require more aggressive pricing.”
Brad Armacost—principal and president of Contract Furniture Professionals, an independent contract interior rep firm in Louisville, Kentucky—also confirms the furniture market is strong. Yet not everyone is entirely confident this strength will endure into the future.
Vertical growth and slowdowns
While Smith says Workplace Solutions-Barefield tries not to focus on specific verticals, the most significant growth in the last two to three years has been in the banking industry. He attributes this in part to the strong relationship that one of the seven companies Workplace Solutions acquired in the last seven years has with a major bank. However, he admits to a slight cooldown in the past six months. “Due to the bank failures in New York and California, a lot of projects have been put on hold,” he explains. Another vertical that has been spending money on furniture is education, specifically colleges and universities. “Many schools received COVID-19 relief money and grants directed to upgrade their facilities,” says Smith. “There is a lot of competition for students, especially at the state university and college level, so most of these are really big projects.”
The company’s third-largest vertical is healthcare, where it has enjoyed growth until recently: “We aren’t the primary vendor, but we have received a lot of business from one very large Louisiana hospital chain that has made a lot of acquisitions. However, some healthcare facilities are putting capital expenditure projects on hold due to concerns over higher interest rates and the country’s rising debt.”
But other verticals are bucking this trend. “We’ve seen an uptick in the legal segment, with several large law firm furniture projects,” Smith continues. “That growth is primarily through acquisition.”
Bird has found furniture sales to be most robust in the healthcare arena outside of hospitals, such as mental health and addiction facilities; followed by professional services and manufacturing. Other dealers cited similar segments, with many sales driven by a common theme: the effort to entice workers back to the office.
A feeling of home
J.D. Ewing—CEO and chairman of COE Distributing, a 100 percent manufacturer/wholesaler headquartered in Smock, Pennsylvania—has noticed several trends in the office furniture space: “There’s a significant increase in collaborative soft seating. Businesses want to create a homey feel to get people back in the office, even part time. Workers may only go into the office for four hours, but they want to see more than a reception desk. They want it to be more inviting. Another trend is mobility: companies are buying foldable, storable furniture to create flexible spaces.”
Armacost similarly sees a move toward comfort: “Companies are trying to make the corporate environment more like home by creating the feeling of a café, with upholstered, collaborative areas to sit around rather than just desks and chairs. They want a more comfortable living room atmosphere. Corporate uses a metal or wood base; in K-12 and higher education, it is predominately metal.”
According to Smith: “Post-COVID-19, there is much more concentration on interior design and many companies are sparing no expense on breakroom lounge areas, buying new furniture and things like flat-screen televisions. Even firms that are not expanding are renovating their breakrooms to create spaces so employees will want to return to the office. The spaces are also more collaborative. After all the Zooming during COVID-19, people missed interacting with their peers. For example, there’s been a move toward open, collaborative spaces in the legal sector, especially with paralegals. Attorneys primarily had hard walls and so did paralegals; now, we are beginning to see them in more open spaces. And the education sector wants touchdown spots where people can plop down, pull out their laptops and plug in instead of having a student union. Hipper furniture and a coffeeshop atmosphere are driving factors in student recruitment, which is incredibly competitive now.”
Interestingly, Smith also sees a trend that links to the past: “We are one of the original 50 Steelcase dealers,” he explains. “In the late 1940s or early 1950s, Steelcase did a rendition of a Frank Lloyd Wright desk. Everything comes full circle. Now people like it.”
Bird likewise sees a growing willingness to spend more for an employee-centric focus. “In the early 2000s, price was the issue,” he recalls. “It wasn’t about an ergonomic, properly fitted chair or nice textiles. If customers needed chairs, they’d ask how much and buy about a $200 chair. They aren’t going crazy or throwing their budgets out the window, but now they will spend $350 to $400 a chair. It’s all about employee happiness. They want to keep their best employees and attract the best. So employers are creating cool designs and spending money on nicer-looking, better-made furniture. One client of ours owns a donut chain. Getting workers to come in at midnight to make the donuts was hard; but if they didn’t come, the shops couldn’t open. The owner spent 35 percent of his budget on opening a single, more conveniently located manufacturing facility for all the shops and created a really cool breakroom space to ensure the employees understood their importance.”
Ball agrees that a more comfortable workplace is increasingly a priority, especially for specific age groups. “Before COVID-19, workers showed up; now businesses are paying more attention on getting them to show up,” she says. “There’s more focus on making workers happy. Employees work at home next to their dog and five feet from the refrigerator. Employers are paying a little more attention to the physical environment if they want their employees to come in.”
And sometimes, this increased focus includes adding some fun and games. “We have had a few more requests for corporate games to entice people back,” says Ball. “One mortgage bank wanted to add a shuffleboard to make the workplace fun. Coincidently, we own a gaming company, so we could get it easily.”
But the most significant trend Ball reports is the lack of one: “Everyone wants something different. Last week, I had one client that wanted taller panels and another that wanted us to come in and lower the panels. Also, since COVID-19, some employees are more sensitive to being in close proximity. Some need open spaces and meeting rooms. Others need private areas, almost like phone booths or pods. Some clients want collaborative spaces and ones that are private and independent. It depends on who the clients are and what they do.”
For Ball, this is unsurprising given the times we are living in and companies’ efforts to stand out from the competition. “For decades, schools looked for ways students could work together,” she says. “Then came COVID-19 and they spent a year figuring out how to separate people. And it’s rare for people to walk in and say, ‘My company is just like all the others.’ They are more likely to say, ‘We are really different.’ It’s our job to see what makes them different and speak to that.’
When it comes to color trends, opinions run the spectrum.
“They are definitely bringing more life to the office using bold, bright colors and getting the designer involved,” says Armacost.
Bird agrees: “Our customers are moving away from black, blue and gray, and it’s incredibly refreshing. We are seeing them choose different colors. They are not just supporting their culture, but trying to create it. I am excited to see what the next few years bring.”
Smith says he leaves most furniture trend-watching to others in his company, but ventures: “It seems companies are moving away from gray, black and tan in favor of more pastel colors that make people feel better.”
Meanwhile, Ball reports: “We are still seeing neutrals with accent colors. Customers are looking longer term, especially smaller and mid-sized entities. They are not looking to redesign their interiors in five years, so they are not looking to be trendy. They want design sustainability.”
According to Ball, environmental sustainability is not a priority for most customers: “Only one of our customers wants sustainable products, even though they cost more. There are beautiful, sustainable bamboo and other products, but they tend to be expensive. Most clients are not willing to spend more for them. They say they want them, but often what they say and what they do are two different things.”
Smith, however, suggests the opposite is true: “Clients are making their breakrooms more attractive with bright colors and an emphasis on fabrics, especially eco-friendly ones. Traditional office product customers still want transactional furniture imported from China bought from wholesalers. But the larger, more progressive customers and designers are using materials that help the environment. They are choosing panels and fabrics made of recycled material from floating pumps and other repurposed plastics.”
Smith believes the outlook for the furniture sector will hinge on many variables. “The younger generation might never be 100 percent back in offices,” he predicts. “In San Francisco, whole office buildings are empty. I also see people leaving larger cities because of taxes, potential reparations and crime, and moving to less populated states. The healthcare sector will continue growing due to an aging population. Down the road, I also see the big furniture manufacturers selling direct. They do some now, but I think it will increase. They will do it out of necessity, a desire for greater revenue to please their stockholders and because mergers and acquisitions will leave fewer local dealers.”
Ball fears that continued fallout from the COVID-19 pandemic, combined with inflation, could make the furniture market skittish in the near future. “I am concerned people are becoming more cautious and will be holding on to their money now that grant, PPE and COVID-19 relief money is no longer flowing,” she says. “Many companies used the money to keep afloat and now it is time to fly on their own, but banks aren’t looking to lend money.”
Armacost forecasts the pace of mergers and acquisitions will continue to rise. “Smaller independent dealers are already few and far between,” he says. “The big boys are buying a lot of them out. It’s all the more reason for independent dealers to stick together and share ideas and best practices.”
According to Bird, the best way for small to mid-sized independent dealers to do this is to take advantage of all that the Workplace Solutions Association can offer (see below).
The WSA adds value
As many of you know, the Independent Office Products and Furniture Dealers Association (IOPFDA) recently changed its name to the Workplace Solutions Association (WSA). The dealers we spoke with who serve on the WSA council were enthusiastic about the name change. “It better portrays what our industry does,” said Kendall Smith. “We are not just sellers of office supplies and furniture. We are solution providers. Also, it’s less confusing than IOPFDA and easier to remember!”
As important as the name change is, members are more impressed with all WSA offers and urge other independent dealers to take advantage of its benefits. Of particular interest is the recently appointed WSA Furniture Committee.
According to Alan Bird, the WSA Furniture Committee is a diverse group of nine members organized by Mike Tucker, who saw a need for the WSA to provide more assistance, particularly to mid-market independent dealers.
“There’s a focus on small and big distributors, but the mid-size ones often get lost, so we put this committee together to see how we can help this group flourish,” Bird says.
According to Smith: “The association conducts surveys that allow us to benchmark our commissions, sales and employee salaries with other dealers. There are many other tools, too, that the majority of dealers aren’t taking advantage of.”
Bird lists a few: “WSA has tools to help dealers adopt technology, business management tools, government advocacy, tools to help them expand into different verticals. The surveys they provide can help dealers with market forecasting.”
Melissa Ball especially likes the advocacy the WSA drives: “As business owners, advocacy is important, and that’s what caught my eye about the association. There can be a piece of legislation where you think, ‘That can’t happen.’ Then it does. It’s great to have this organization to watch and keep us up to date and tell us what we need to do; when to take action.”
What resonates with Brad Armacost and the other dealers is the need for independent dealers to share and learn from one another, and the opportunity the WSA affords them to do just this: “WSA provides resources like benchmarking and information that they would not otherwise have. It allows dealers to learn from one another, to see what has been successful.”
“I can pick up the phone and talk to a dealer in Denver, Colorado,” enthuses Bird. “I can network, and I can get advice. We all need to learn from each other.”
“Take advantage of the WSA tools,” advises Bird; while Smith summarizes: “A dealer that is going to stay in business and not be acquired needs to belong to WSA.”
For more information on the WSA, visit wsa.issa.com.