As freight rates and raw material prices have fallen sharply recently, U.S. furniture makers are slashing prices to stimulate the market, hoping to reverse the impact of slowing orders this year on their business.
According to US media reports, many furniture companies hope to reduce the price of products and offer discounts in order to move goods out of fully loaded warehouses to reserve space for new products to be launched in October. There are also businesses choosing to reduce or eliminate shipping surcharges for dealers because freight costs have fallen.
In either case, suppliers want to see the savings reflected in prices, easing the inflation problem that has affected the industry over the past 18 months.
Judging from the information obtained by the US media, many furniture companies have announced discounts and price cuts.
Upholstered furniture maker Hughes Furniture has given dealers a new price list, effective August 8. The company said some costs were being reduced after two years of price increases, so prices were adjusted accordingly.
Furniture maker Enza Home also recently announced a 25% discount on summer bedding, noting that there will be no surcharges going forward.
Wooden furniture importer Coast To Coast has cut prices on half of its products by as much as 40 percent. "We've probably received a year and a half of inventory in the last six months," CEO Andy Stein said. "Demand has softened over the past two months, so that's a serious problem. To clear inventory, it may take a significant price cut to sell."
Recliner maker HomeStretch sent a letter to dealers on Aug. 8 detailing some areas of cost reductions, including a $3,000 reduction in container freight costs, which alone reduces shipping costs per item of raw material by $2.30. The company also saw lower costs for plywood and foam.
"Because we have invested heavily in raw material and finished goods inventory over the past six months, it will take some time for these initial cost reductions to start to have an impact on our manufacturing costs," company president Skipper Holliman told dealers. In this inflationary period of 2019, we had previously only been able to raise prices to offset some of the additional costs we incurred. Once we saw lower manufacturing costs, we would also start lowering prices. We know we need to give you the best possible price on HomeStretch products , to make us as competitive as possible in your retail store."
On the retail side, dealers no longer accept price increases.
The founder of Houston-based Gallery Furniture shares: "I made a new rule: We're no longer accepting price increases from these manufacturers, they're going to have to cut prices because I'm sick of inflation," he said, adding that he Already seeing some price cuts," but not an avalanche. Thank God, because of the recent promotions and other things we're doing, we've got our business going. But there's still a lot of places where it's tough. It has fallen as fast as it has risen before.”
The company also buys more U.S.-made products and less imports, he added.
"And trying to please more customers," he said, adding, "At the end of the day, everything we do is talk to customers. So we'd better have a good talk with them. I'm calling about 150 a day. customers - that's the highlight of my day, talking to the people who are actually spending money for us - and making sure they're happy with the product. To me, that's what the furniture business is all about - not looking at charts and numbers, but dealing with customers.”