Moving quickly to meet demand
The frustration going forward may be how to capitalise on a surge in demand if the supply side can’t keep up this Summer.
Re-opening optimism, threats and opportunities
SHOP-TALK • Expert Insights • February 24, 2021
“For the majority of retailers who have moved quickly to adapt to the new ways of working, there has been an unexpected sales bonanza over the last year,” one retail specialist told The Stocklists. Much of the floor retailing sector is believed to be trading 10–15% up on pre-pandemic levels. But there are challenges ahead.
Major supply issues, escalating raw material price increases and double-digit cost inflation on imported finished goods are going to dominate the agenda in the coming months.
Some key manufactures got off to a shaky start after the first lockdown as their just-in-time models were disrupted. Performance has improved, though there are still some critical gaps with imports due to the well-publicised logistics issues.
As demand peaks, the problem is likely to re-emerge during the Summer and even some UK manufacturers will feel the pressure as fibre takes longer to arrive through the ports.
“Get your orders in as early as you can,” says Mike Reed of buying group SMG. “Many retailers are building up their roll stock in readiness for the anticipated post-lockdown surge. The strategy has cashflow implications but may avoid losing sales and potential repeat customers in a tight supply situation this Summer.”
Early orders may also help lock-in prices as manufacturers face growing pressure to pass on their increasing costs to retailers.
“Retailers need to be ready to switch sales between ranges and manage expectations carefully, particularly about booking fittings – allow some leeway in case it’s held up so that you don’t have to disappoint your customers,” suggests Linda Thomas of SMG.
“The challenge after lockdown will be for main industry suppliers to ensure their businesses can take full advantage of the inevitable upturn in demand,” says Richard Moore of buying group ACG. “Likewise retailers will need to do the same, particularly with the shortage of installers. There is also the problem that more self employed carpet fitters will further develop their own customer base. Logistics is also very challenging particularly after the recent events concerning the demise of Rhys Davies.
“There is no doubt it will be a challenging time, and excellent service levels will play a key part, which will determine who takes market share,”
says Richard.
Consumers are braced for price inflation
“Pricing is likely to be one of the hot topics this Summer and retailers should be ready to take advantage of the opportunity it offers,” says David Spragg of The Stocklists. “Manufacturers and importers are likely to have to pass on increased costs and retailers must not be coy about doing
the same.”
Linda agrees: “Consumers are already braced for inflation across all sectors so flooring retailers should be confident about increasing prices and improve their margins while this climate exists and while consumers have disposable income to spend.”
“I believe the independent retailer has every chance of coming out of this stronger,” says Richard. “I do see the opportunity to sell better quality flooring with the extra money that has been saved by consumers,” he says.
Retailers need to focus on online strategy
Lockdown has engendered better ways of working for many. “Appointment setting has been hugely successful for many retailers, both in-store visits between lockdowns as well as zoom sessions and video showroom visits,” says David Spragg. “Sales people say how much easier it has been to close sales and stop the shopping around on price. There is a strong appetite to continue this trend – working smarter, not harder.”
“Retailers will need to look closely at their online strategy,” agrees Richard. “See how you can make your websites and social media more interactive with your target audience to attract increased footfall.
“Lockdown has taught us how important the digital world is and how it has affected the way we do day to day business. I am seeing more businesses investing in the internet with online sales and Facebook influencing where consumers go to buy flooring,” he added.
Buying groups have enjoyed optimistic levels of interest from retailers. “We have seen a significant increase in membership enquiries. I think this is in part retailers’ instinct that there is more safety in numbers but also the stores are looking for a more professional approach, better point of sales and stronger buying power,” says Mike. “Happily there also seem to be a lot of new start-ups and expansions going on which is really encouraging in the unprecedented market conditions we have at the moment,” he said.
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