Have we reached the bottom of the economic cycle for the residential cabinet, building and furnishings industry? Our readers are already making appropriate adjustments to expense budgets and cash flow. But, perhaps this is also a time of great opportunity.
Reducing expenses and overhead is an unavoidable first step. No manager wants to cut his departmental budget, and no one wants to cut his own salary, therefore few will be candid about sales forecasts or staff requirements. For this reason, it may be helpful to retain an outside consultant for some objective evaluations. The tactic is to cut costs but the strategy in a declining market is to win business away from competitors and prepare for a new growth cycle.
This might not be a good time to stop imagining new marketing ideas, new designs, and new manufacturing efficiencies.
New leaders emerge
Many successful companies have made their greatest strides during economic downturns. It is a time when the relative void of positive messages within our industry makes creative ideas and messages more easily noticed and more appreciated. Like a bird song in winter, it is a time when furniture dealers, real estate agents, builders and consumers are looking for hopeful and brighter ideas to strive for in months and years ahead.
Smart companies invest in marketing and design in the worst of times. Advertising is one obvious and easily measured sign of marketing activity. Successful companies have been appearing regularly for many years, through growth markets and retrenchments.
Baker Furniture and Henredon have both appeared consistently in the pages of House and Garden, Architectural Digest and Interior Design every year, through periods of boom and bust, for at least 50 years.
Market leaders such as Robb & Stucky at the high end of the market and Ashley Furniture in the mid-market have announced that they plan to continue their strategies of opening new stores. They will use this retrenchment as an opportunity to solidify and protect the dramatic market gains they have made in the past ten years. When consumers are ready to start buying again, they will be ready.
A different approach
During the recession of 1979-1983 existing homes sales dropped 53 percent. The furniture industry declined sharply, and many companies retreated into a defensive posture. It was a time when our industry naturally tried to defend itself and preserve capital. Many companies erased marketing programs from their plans and cut back on product development.
Some companies took a different approach. Baker Furniture was especially farsighted. The company's executives became more aggressive and creative. They developed astonishing design and marketing programs in both traditional and modern design. And, for the next two decades, they grew much faster than the overall residential furniture industry. The company grew from being a small niche player into a very important competitor among all of the better brands in fine furniture stores across America and in several foreign capitals.
Steelcase, the office furniture giant, has built their brand continuously with memorable regularity and repetition, especially during recessions. In the past they have advertised in business and design magazines throughout many adverse business cycles.
There are also many cabinet and home building companies across America, whose long range vision and determination have brought them through past recessions, emerging as market leaders.
Importance of continuity
It is helpful to reduce expenses thoughtfully, not just alphabetically.
Advertising, design development, marketing and technology are all long-term investments. They have a cumulative effect that supports both top-line growth and bottom line margins. The process can't be "put on the shelf." When marketing stops, it rolls backward.
The key marketing term is "continuity."
When advertising and sales calls stop, and when everyone in the chain between the company chairman and the buyer stop talking about innovation and excellence, customers quickly forget everything they knew or sensed about the supplier.
Decades of building a reputation can be lost in a year of silence.
Industry leadership is centered among companies whose design, technology and marketing programs are maintained consistently throughout the rising and falling tides of our economic seasons. This is a time when those who react responsibly and act creatively during an ebb tide will benefit most on the returning tide.
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