Home furnishing demand planning: Trends and changes that impact your business

Converging economic and public health crises greatly accelerated business transformation across the globe in 2020 and 2021. Factor in societal strife and changing consumer behaviors, and it’s clear businesses face a new competitive landscape.

Trends in the home furnishing industry exemplify the level and severity of these changes, which we discuss in this post.

More changes, less time: Can your business keep up?

Efficient and effective demand planning is vital for home furnishings companies to maintain positive relationships with customers. Demand planning ensures the right products can make it to the right people in a reasonable timeframe — an expectation nearly all customers now have in the age of e-commerce.

The COVID-19 pandemic has, of course, underscored the importance of understanding the drivers of consumer demand , and not all businesses have reacted as effectively as they could have.

Let’s look at some key trends in the world of home furnishings, from before the pandemic and during it, and how your organization can adapt to them.

Pre-COVID industry trends that continue to make an impact

Even before COVID hit, two prominent trends were impacting home furnishings.

1. Disruption in delivery channels

The ways in which your company makes its products available to customers have likely changed significantly in the past several years. Innovations in mobile and desktop platforms have expanded opportunities for making sales, but also knocked time-tested delivery strategies and channels out of balance.

Consumers no longer need to make a purchase inside a brick-and-mortar location, and many prefer home delivery.

2. Changes in consumer behavior

The nature of home furnishings means that some customers will still want to look at an item in the real world and, especially in the case of furniture, try it out before buying. But many are perfectly happy shopping online.

Customers want convenience, and what could be easier than shopping at home through a computer or mobile device? The National Retail Federation reported slightly more than half of consumers cite convenience as an influencing factor in purchases.

The pandemic accelerated existing trends AND introduced new ones

The COVID-19 pandemic introduced a number of sudden and jarring changes to society. People across the country and the world had to adapt to strict rules related to essential and non-essential businesses, social distancing and more. This public health emergency forced alterations in consumer behavior, including:

Accelerating the shift to online shopping

The pandemic created conditions that seemed almost perfect to spur faster adoption of online shopping. It was difficult or impossible to visit many brick-and-mortar locations, which made digital purchasing that much more convenient.

While public health restrictions will eventually be loosened and phased out entirely, it’s likely that increased use of online shopping is here to stay. The opportunity to interact in person can’t be completely ignored, but it doesn’t appear to be a serious obstacle for many consumers.

Restacking consumer spending habits

Consumers have limited opportunities to spend money on forms of entertainment offered outside of the home during a pandemic. And costs related to commuting and working in an office dropped for those who could work remotely.

The Federal Reserve Bank of St. Louis pointed to severe decreases in travel and hotel use as well as spending at restaurants and bars. Many consumers who had stable finances and employment during the pandemic still had some level of disposable income, but far fewer places to spend it.

Fewer options for recreation outside the home have also led some consumers to focus more on their living space, driving demand for furnishings.

Key issues for your business to address going forward

We have identified three important concerns that companies in the home furnishing industry will need to address moving forward.

In all cases, connected planning solutions, like Anaplan, can offer additional context, information and analysis that spur positive outcomes. A connected enterprise is in the best position possible to accurately forecast demand and make related operational changes in a holistic and effective way, ensuring all perspectives and areas of operation are included.

1. Chasing demand or throttling production?

Disruptions in international vendor operations and domestic production significantly complicated supply chain efforts in the first half of 2020. The Wall Street Journal noted many businesses are now rebuilding their inventories.

However, the “bullwhip effect” can lead to inefficiencies, as shifts in consumer demand make it more difficult to accurately forecast optimal inventory. This problem grows in severity at each higher step of the supply chain, as demand becomes less and less predictable based on historical performance.

2. Possibility for continued disruption through 2022

While the development and distribution of vaccines have followed fast schedules, it will take time for them to be distributed, domestically and internationally. Additionally, factors like the length of time the vaccine provides protection must be addressed.

There is potential for continued disruption in the short term. Successful demand planning needs to take future supply chain disruptions into account.

3. Continued changes to your market

Just as the shift to spending more time at home led to an increase in interest for home furnishings, there are many possibilities that could affect future demand.

The reopening of the economy could lead to consumers spending money in other areas. Your business may bring product to market that perfectly taps into rising trends. Consumer sentiment may also alter affecting purchase decisions for the foreseeable future.

A partner in connected demand planning

Allitix is an Anaplan Gold Partner, a clear indication of our ability to implement the technology, processes and culture needed to draw the most value from a connected planning system.

Our teams are ready to help your company establish a comprehensive approach to demand planning that leads to smarter decisions, reduced disruption and better business outcomes.

To learn more, get in touch with our expert consultants today.