With the pandemic on the wane, employees are heading back to the workplace—if they haven’t already. However, given the emphasis on social distancing, health and hygiene, along with the advent of hybrid working, today’s office is likely to be a very different working environment. What opportunities does the “new normal” hold for furniture dealers? Michelle Sturman finds out…
The office furniture category is possibly the most design and trend-led of all the offerings available within the business supplies industry. Granted, the trends tend to evolve at a snail’s pace, like the gradual transition from the gray cubicle of the 1950s to the open-plan configuration of the 1990s. This, of course, led to the current penchant for hotdesking, collaborative styles and a return to cubicles for those that require privacy—albeit in funky private booth and pod-style variations.
Then, every once in a while, something traumatic happens that rewrites the rulebook, chucks out the trends and requires everyone to undergo a radical rethink of what they thought they knew. Enter SARS-CoV-2. In a matter of just over a year, the global pandemic has upended working life as we understand it.
Starting in March 2020, stay-at-home mandates lasted anywhere from a matter of weeks to months. Some states—like North Dakota, Nebraska and Iowa—never issued one, while others still have instructions in place. No matter the length of time, the net effect of the pandemic saw millions of office employees move to home-working and home-schooling, and an unprecedented shift to virtual work and education.
The COVID-19 effect
There will be many changes in the office furniture industry as the country heads back to the workplace. To truly understand the impact of COVID-19 on the sector, a look back at the past 15 months is required.
For Fireside Office Solutions, Bismarck, North Dakota, office furniture represents around 75 percent of sales, with the rest made up of stationery, IT services, managed print services and a record-scanning service bureau. “When you’re in a state of fewer than 800,000 inhabitants and geographically challenged, you can’t have all your eggs in one basket and just be in one vertical,” says president Chris Whalen.
“COVID-19 dried things up. Our fiscal year begins April 1, so the problem is we came off the back of a really good year and then started to tank the first three months. Unfortunately, we did get to a point where we had to lay off some staff members. The good news is we qualified for the Paycheck Protection Program, so we were able to bring them back about a week later. We’ve also controlled our costs and cut back,” he adds.
For Business Office Outfitters in San Diego, California, owner Jerry Sinclair says the company remained open six days a week and finished 2020 with no decrease in sales over 2019. “Our entire staff, except for one person with underlying health issues, have come to work every day,” he reports. “We have gone out on appointments and our trucks have delivered five days a week since last March. We underwent two bad months in 2020 (April and May), but the rest of the year was very good.”
However, he continues: “Obviously, our industry has been hit hard and it will take years to recover. But we had a record 2020 in terms of chair sales and had some sizable used furniture projects, and budget office furniture was a notable winner. [Chair manufacturer] Boss Office Products had a record year and so did we. We have been very proactive the past 12 months and kept all 25 of our people employed.”
The mass migration to a home office—whatever that may have entailed—did provide opportunities to garner some furniture sales. This was predominantly on the back of traditional office supplies relationships and the scramble by companies to ensure that employees could work from home (WFH) safely and efficiently. As Tom Triplett, vice president of the interiors division at Triplett Office Essentials, Des Moines, Iowa, explains: “Like many, there was a 90-day period [at the start of the pandemic] while we tried to figure out what was next and for how long. A lot of time was invested in connecting with customers and trying new things, sourcing different and related products.
“We had lots of customers WFH, so sent out digital messages with options for home-working and consulted with them to provide furniture or discounts on home office packages. As the year went on, some businesses chose not to put company assets in people’s homes unless there was an ergonomic or health need.
“Many mid-sized customers asked for our help in remodeling their current space since it was empty and a good time to update and replace furniture. This has provided some confidence that the office would return.”
Others, such as Office Outfitters in Waupaca, Wisconsin, saw sales rise from 10 percent pre-COVID-19 to 40 percent during 2020. Says president Bill Zimmerman: “We have been transitioning from transactional to projects over the past five years, but last year saw transactional sales increase by around 20 percent. I expect to see 75 percent of furniture sales go back to the office, based on informal feedback from customers.”
Not all independent dealers opted to offer home-working options for customers. “We tried to stay out of the WFH space,” says Brett Baltz, director of interiors, Egyptian Workspace Partners, Belleville, Illinois. “It can rapidly become a nightmare, as the distribution chain can’t really accommodate it. When you think about a traditional furniture dealer, they’re project driven. We’re not selling onesie-twosie and the e-commerce experience isn’t really set up for customers to log in and simply buy one desk and one chair.”
Back to “normal”
The good news is that green shoots are emerging, with the vaccination program going full steam ahead and schools and offices reopening, affording plenty of possibilities as head-scratching over an approach to the “new normal” makes way for “real-world” solutions. While Mesa, Arizona-based OPACS saw a marked drop from Q3 2020 until the end of Q1 2021, there has since been a sharp increase in activity and people heading back to the office. Owner Travis Kimmel adds: “From here, it looks like things are trying to revert to normal and demand is returning. We have used these last few months to strengthen relationships with architect and design firms and they are very busy, which is a good sign for dealers.”
Whelan is likewise witnessing a return to the workplace: “We have two large energy companies in town. One had employees return to the office on May 10, while the other is still determining who is going to WFH. They do plan on going back, although the date seems to now be pushed back to July.”
Whelan says a hybrid workforce doesn’t really come into play for the smaller firms that Fireside OS deals with, such as banks and mortgage companies: “A majority of the businesses stayed in the office. Essentially, it was merely some of the lobbies that closed and moved to ‘appointment only.’”
In markets like Whelan’s, where stay-at-home orders weren’t issued, it seems hybrid working and the subsequent reimagining of the workplace are practically non-existent. He says: “We were anticipating a lot of workplace reconfiguration. Originally, as cubicles became the norm, dividers for the office were tall; then they were lowered or removed to accommodate the open-plan office. Following COVID-19, we thought the panels would rise once more. Up to now, we’ve only had one customer with an order for 500 sneeze guards and just haven’t seen the taller panels and spacing of desks in the office in our market.” Zimmerman agrees with Whelan, noting that the only change he has seen is the decision to move to cleanable fabrics within the public sector.
Conversely, for Sinclair, although he expects people to remain working from home, with a resulting negative effect on the furniture sector, for companies planning a return to the workplace, new office furniture is on the cards.
Baltz says that in terms of heading back to the office, it’s all over the board. However, Egyptian’s client base has not been affected to the same extent as those in other markets, like Chicago, as it targets medium to large nonenterprise accounts. “It really comes down to the type of business,” he says. “There’s lots of confusion in the market concerning what the office of the future looks like, with arguments about how many people will go back. I’ve talked to partners at large law firms from the baby boomer generation who think everything will return to normal. However, millennial-aged partners at that same law firm don’t believe it will ever go back to the way it was. I think the data is pretty clear that it’s not going back to normal.”
The “new normal”
So just what is the “new normal?” Clearly, it depends on what the local real estate market and individual companies have endured throughout the pandemic, but early indicators show a “one-size-fits-all” approach is no longer appropriate as businesses seek to manage their office footprint. In many ways, we were already en route to the post-pandemic workplace with an increased awareness of health and wellbeing, including cleanliness and hygiene, along with a slow march toward hybrid working. COVID-19 has merely accelerated these trends.
Ergonomic furniture, for example, continues to be a money-spinner. “We saw the rise in ergonomic furniture pre-pandemic and still are—whether it’s converting an existing office cube to sit-stand desks or incorporating different pallets for posture,” observes Whelan. “This is especially true for state government contracts which call for height-adjustable furniture.”
Office Outfitters is also selling many sit-stand products; as is Great River Office Products, St. Paul, Minnesota, where furniture sales make up 30 to 40 percent of the overall business. Daniel Schmidt, vice president and director of sales, says that seating must be ergonomic, and adjustable and sit-stand units are selling in all applications. He additionally notes that while panels are going back up, they are glass, not fabric.
The post-pandemic workplace offers dealers prospects in office reconfigurations and fit-outs, along with a host of areas such as audiovisual (AV) technology, virtual environments, signage, furniture upgrades and touchless solutions.
Says Baltz: “One key trend is a high-functioning collaborative space, full of very high-end technology that’s not confusing to operate. We call it a ‘huddle room,’ which is basically a conference room that supports one to four people. I don’t think the open office concept is going away, and safety and hygiene options in the workplace now include sanitizer stations and digital signage.
“I’m really seeing attention paid to making the workspace much more comfortable, with lots of soft seating and so on, as customers are enquiring about casual areas designed for collaboration,” he continues. “Offices are starting to resemble a high-end living room, but very functional, with furniture that supports laptops with built-in power. Retaining company culture is driving a lot of these changes, as collaboration, mentoring and maintaining soft skills are more effective in the workplace. I’m hearing stories where employers want everyone in the office, but they haven’t adjusted their space and employees are refusing to return. Simultaneously, some progressive leaders are acknowledging they need to transform their space to make it much more inviting, knowing they’re competing with someone working from home.”
Triplett agrees: “Customers are seeking products that are flexible, mobile friendly and adaptable to serve more than a single purpose. Wireless charging and power options are vital, and clients are looking for space designs and functions that encourage people to want to be in the office and interact with others.”
He adds: “We have a nice blend of project and transactional business. The transactional orders have been good, as the smaller mid-sized employers are back in the office or very far along in the process. The large project business is coming back online and we expect more normalcy next year as customers settle into the ‘new normal’ for the office.”
According to Baltz, technology-centric workspaces will represent a leading driver in the future new workplace due to the hybrid workforce, the growing use of videoconferencing in education and work, and a requirement for sophisticated sensor, occupancy and traffic-flow technology ecosystems. “Many customers are looking at wireless experiences where there’s a very high-performing setup,” he explains. “The tech going into these spaces is costing as much, if not more, than the furniture. There is a sticker shock on it, because the mentality of many organizations in the past was to stick an Apple TV in the conference room and say they had an integrated AV solution.
“We’re placing microphones in ceilings, several monitors, auto-adjusting cameras—there’s a lot of planning going into these spaces now. Having to call the IT guy to make the AV tech work just doesn’t cut it anymore. It has to be easy and offer a great experience for the person using the technology.”
Plenty of options
Over the past year, the pandemic has thrown many curveballs at the IDC, but has equally presented a wealth of opportunities. One vertical many dealers are diving into is the education sector due to the CARES Act, which has provided billions of dollars in relief funding for educational facilities. Schmidt, Whalen, Zimmerman and Baltz all report a similar story on the potential in this sector, with the reinvention of schools due to hybrid learning, social distancing protocols and spending on new furniture and technology.
As Triplett points out, more avenues also exist in the new workplace, including expanding outdoor offerings, services for repairs, wellbeing and WELL design and integration. In addition, “we’ve added sprayers and disinfectants, and many smaller customers are looking for a DIY self-maintenance program to reduce
the transmission of germs in the office,” he says.
Meanwhile, both Business Office Outfitters and OPACS refer to prospects in providing moving services for customers. “We have expanded our furniture installation offering by partnering with an IT company to provide a complete office moving service,” says OPAC’s Kimmel. “We have only targeted our existing customer base and limited it to businesses with fewer than 20 office workers.” Business Office Outfitters’ Sinclair remarks that doing more labor jobs and moves for clients has helped the company’s bottom line.
As the return to work ramps up and companies start figuring out how they want the post-COVID-19 office to operate, this is good news for the IDC. But there is one elephant in the room: manufacturing lead times and the supply chain. Continued global supply chain issues are exacerbating problems experienced during 2020, with little sign of abating—ports are backed up, containers are unavailable and costs are rising rapidly. Dealers agree that much of the problems with supply have originated with vendors that ship products from China. Both Sinclair and Triplett report that products made in America, on the other hand, have provided acceptable lead times. Says Sinclair: “We have been blessed with good manufacturers and inventories, with many parts and materials produced in North America. I think the writing is on the wall for various manageable challenges ahead—some will relate to parts; others will involve labor production. We are proactive with suppliers on our needs and forecasts. It is equally critical to continually communicate with the customer.”
With an eye on customer-first and winning in a competitive landscape, Zimmerman has some sage advice to offer: “We always find a way to provide what our customers need, constantly sourcing new manufacturers. For example, a large customer wanted a contract line we didn’t have access to, so we partnered with the manufacturer to work through one of its dealers and received favorable terms to make the project work for all parties involved. We won the business, and although we made a bit less margin on the bigger dollar sale, the customer got what they required and the contract dealer made a little money.”
At-a-glance: post-pandemic office trends
As the return to the office ramps up, what are the major workplace trends that will dictate the design of offices and the furniture contained within them?
- Furniture designed and aimed at the WFH team will continue as hybrid working becomes the norm and companies look to upgrade home-working environments. According to Quintana Research and Consulting, the global home office furniture market is expected to grow at a compound annual growth rate of around 7.5 percent from 2020 to 2026.
- While the purchase of office furniture was believed to be relatively outside the realms of e-commerce, three factors are increasingly shifting this perspective:
- the massive increase in buying online;
- the rise of younger generations making purchasing decisions on behalf of companies; and
- the increasing use of augmented reality and personalization tools to assist in decision making through “realistic” furniture placement in real-world settings.
- The pandemic has accelerated the present trend of health, hygiene and wellbeing in the workplace, with businesses looking to refit offices to ensure employees feel safe and protected in the work environment. This includes installing air filtration systems, desk spacing, sneeze guards, sanitizing stations, touchless products and digital signage.
- Accommodating collaborative and community-spirited areas, as well as smaller workspaces for individuals, will be crucial. Including mobile and modular furniture that can easily be moved around for collaboration and socializing will be key in designing the post-pandemic office. On the flipside, huddle rooms, pods and similar will become more popular for private meetings—either face to face, virtually or both; as will a quiet space for working and privacy.
- There will be an increased focus on “resimercial” design for comfort and relaxed settings with soft furnishings (boosted recently by the CDC reporting that surfaces were not leading carriers of COVID-19) to foster collaboration and social cohesion.
- Expect an increase in outdoor furniture sales as companies look to maximize the use of existing space to provide a pleasant outside setting while helping address health and safety concerns related to COVID-19 and promoting employee wellbeing.
- Already an embedded trend before the pandemic, the rise in ergonomic furniture options such as sit-stand desks will continue.
- Sustainability is back on the agenda for office buildings, furniture manufacturing and materials, the supply chain, delivery, closed loop and recyclability, and more environmentally friendly products in general.
- Whether it’s using highly sophisticated audiovisual systems for conferences and remote workers or ensuring pods, desks and furniture cater for all types of power outlets and access to AV systems, the integration of technology into office and furniture design is imperative.
- The upswing in hybrid/blended/flexible working will exert perhaps the most significant influence on the office in 2021. Not only will all of the above be impacted by this transition, but it will likely mean companies will re-evaluate their real estate, potentially downsizing and optimizing whatever space is left. The office will remain the primary workspace and refurbishments will witness an increase in demand.