Tired of hearing about Covid? So are we, but since we are stuck with it for a while longer, we must continue to seize upon opportunities to position ourselves to be stronger once we get back to a new “normal.” Interestingly, economists have characterized our current economic crises as a “service sector recession.” Manufacturing continues to chug along, but service areas (especially travel, hospitality, and retail) are feeling significant pain. There is one exception– that is anything to do with home improvement. With parents and kids alike operating from home for work and school, coupled with historically low interest rates, families are investing in their homes like never before, creating strong demand for design and construction services nationwide.
This heightened demand has certainly kept us busy over the past few months; however, the increase for interior design has not affected everyone equally. Because they are nimble with the ability to pivot quickly, independent design firms have far outpaced the larger national chains since the pandemic began.
The reasons are numerous, but primarily, smaller independent businesses are typically more entrepreneurial, whereas larger chains have more bureaucracy and often large showrooms which have come under more scrutiny for Covid protocols. The end result has been that many of our independent customers tell us they have had more leads than they could handle over the last 6 months, while national accounts are contending with shutdowns, employee turnover, and reduced store traffic.
Additionally, small firms often have more personal relationships with their clients since they are typically generated from word-of-mouth referrals. As such, trust levels are often higher, which is an important consideration when inviting someone into your home during a pandemic.
To complicate things further, global supply chains for nearly all products have been thrown into disarray. In March, manufacturers reduced production quickly in the anticipation of greatly reduced revenues. When demand sprung back in May & June, many businesses were left without product to sell and uncertain timelines of when product would be available.
This downward spiral has been magnified by the increasing Covid cases around the world where many components are produced. Hence, large orders are often delayed for long periods because some small but critical component is delayed from a foreign location….often for months at the time.
It is not my intent to be the “half empty glass” guy, but rather to point out how we respond and adapt is what will separate the winners from everyone else. Here are some suggestions that will help you manage in the current environment and still take advantage of the huge demand in the home improvement services:
Don’t overpromise on delivery times with hopes that your vendors can magically find a way to make it work. Right now, they are struggling to acquire the demanded product themselves, and finding solutions is largely out of their control. If you set proper expectations with your clients, you will not be burdened with unexpected surprises down the road.
When a client selects a fabric or product, have them make alternate choices in case the primary selection is not available. You certainly don’t want them to think they are settling for second best, but if timing is important to your customer, this will save you time and effort later.
Make sure you understand the timelines suppliers are currently quoting. Look for the shortest period possible from the time you have to commit cash to your vendor delivering finished product. During that window, you are financing the transaction. For example, if you purchase fabric but then have to wait 8-10 weeks to have it fabricated, you are out of pocket for the cash during that time. Remember, time adds cost to a project, so faster the better.
Covid will probably be with us until at least next spring, and the supply chain issues will likely not improve until end of the first quarter. However, economists are forecasting that U.S. growth should reach pre-Covid levels by the end of 2021. In the interim, we have an opportunity for substantial growth if we face the current challenges and find ways to work within them. Wishing you all much success in the coming year!
President, Carole Fabrics