Retail Observer

April 2021

The Retail Observer is an industry leading magazine for INDEPENDENT RETAILERS in Major Appliances, Consumer Electronics and Home Furnishings

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RETAILOBSERVER.COM APRIL 2021 50 J ust when the home furnishings supply chain was finding its footing, Mother Nature interceded once again. As the COVID-19 freeze on raw materials and finished products finally began to thaw, February's spate of severe winter weather in the South and Northeast disrupted transportation and halted production of foam, a core component of mattress and upholstery products. As a result, manufacturers and their retail partners are now facing additional supply disruptions and shipping delays. And the cumulative effect of COVID, container constraints, rising transportation costs, and now a foam shortage stoked a second round of vendor price hikes. The industries' latest setback stems from February's deep freeze, which shut down the Gulf Coast refineries that produce the petrochemical constituents of foam. "This is going to create massive problems," said Seth Weisblatt, AVB/BrandSource's home furnishings merchandising director, of the cascading supply constraints. Indeed, the raw materials cut-off compelled chemical producers and foam suppliers to invoke force majeure, which allows companies to temporarily suspend contractual obligations due to unforeseeable circumstances, in this case the weather. In turn, even major furniture and bedding manufacturers have been put on foam allocation, which will add to shipping delays and an existing backlog of orders. "We are working closely with our vendor partners to minimize the impact on supply," wrote Ashley Furniture Industries' strategic sales chief John Mask in a letter to retailers. "However, we do anticipate some disruptions … that could limit our U.S. upholstery and bedding production." Smaller, more nimble manufacturers, like bedding producer Therapedic International, are scrambling for alternate sources and materials. "We're talking to cotton and fiber people," CEO Gerry Borreginne told industry news site Home News Now. "We're even talking to overseas foam makers to get us through this. We're doing a little bit of everything to try to fulfill all the orders in-house and not disrupt that supply chain to the dealer." But Mississippi-based upholstery producer HomeStretch, itself hobbled by the winter storm, is quoting July and August deliveries on new retail orders, the news site reported. "(This) was exactly what we do not need," president Skipper Holliman told the news site. Similarly, bad weather forced store closures for fellow Mississippian and BrandSource member Miskelly Furniture, which cancelled its Presidents' Day promotion. Fortunately, the company has been aggressively laying in inventory and is coming off a strong start to the year, executive Alan Vonder Haar told the news site, so the impact of shortages and shutdowns has been minimal. But what long-term effect storm-related water outages in Miskelly's hometown of Jackson will have on the business remains to be seen. Meanwhile, manufacturers passed through a winter round of price increases – the second since last fall – citing costly disruptions from the pandemic and now the foam fiasco. And BrandSource's Weisblatt believes there's still more to come. "Retailers have to start taking price increases," he said, pointing to "an unprecedented level" of wholesale pricing volatility that's expected throughout the year. "Don't be shy," he implored dealers in a recent BrandSource Furniture Update. "There should be little push-back from a consumer" when inventory is scarce. "Take the margin and the price increase when and where you can." Alan Wolf is Senior Communications Specialist for AVB/ BrandSource, the nation's leading merchandising and marketing co-op for independent appliance, consumer tech and home furnishings dealers. Alan Wolf Furniture Trends RO FOAM SHORTAGES, PRICE HIKES HIT FURNITURE AND BEDDING BIZ February's deep freeze in the deep South froze the facilities that make foam precursors

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