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The cost of living crisis is expected to hurt demand for home furnishings throughout 2023, but better supply chain data can help furniture brands stay in control.


The cost of living crisis is already putting considerable pressure on consumer spending, and with mortgage costs rising and fresh uncertainty about energy bills after the government announced the price cap will end in April, things are not expected to get easier any time soon.


Advanced Supply Chain Group (ASCG) surveyed 100 UK retailers in September, and 65% of respondents said the soaring cost of living is already having a negative impact on their sales. Looking at home furnishings specifically, retailers identified furniture as one of the top three purchases consumers are likely to cut back on, behind jewellery and fashion accessories.

This is backed up by the findings of ASCG’s accompanying survey of more than 1,000 UK shoppers, which showed 75% of consumers plan to spend less than usual on home furnishings in 2023.

However, we believe the reality could prove to be more nuanced. There is no doubt that interiors and home furnishings are more important to UK consumers than in the past, with the market forecast to be worth £14.2bn in 2022, compared with £11bn in 2015, according to GlobalData. In addition, only 12% of consumers in our research identified furnishings as one of the top three areas where they would seek to make savings next year. Instead, most people said they plan to focus on cutting the amount they spend on eating out and takeaways, grocery shopping and holidays.

Identifying inefficiencies fast
Furnishings retailers are therefore heading into the peak Christmas season surrounded by uncertainty about consumer demand. Yet our retailer research showed brands are planning to get on the front foot in the areas they can control, first and foremost in their supply chains. To reduce operating costs and improve cash flow in the year ahead, 40% plan to review their supply chain to find efficiencies, 37% will renegotiate terms with suppliers, and 29% will replace existing suppliers with new ones.

Interestingly, retailers put these actions ahead of reducing sales and marketing budgets (24%) and cutting staff (20%). Only 13% said they are planning to close bricks and mortar stores.

The furnishings industry knows only too well the problems caused by failures in the supply chain, after three years in which retailers have dealt with store closures during lockdown and the accompanying surge in online sales, followed by the jump in shipping costs, a backlog of deliveries and and a global shortage of finished goods and raw materials.

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To make their supply chains more agile and resilient, retailers need access to the most accurate, timely data. Vector, our bespoke supply chain software, draws together data from sales channels, warehouses, order fulfilment sites and freight tracking, to provide an integrated overview of how supply chains are performing. Companies can quickly identify where bottlenecks are occurring or where costs are building up, and make changes.

Data delivers better decisions
As the peak festive trading season starts, and deadlines approach for delivery before Christmas, many furnishings retailers will be looking at discounts and promotions to drive sales. This is in line with the broader retail sector, with 46% of our survey respondents planning to add new, lower-priced products and 31% to invest more in promotions and discounts.

However, promotions lead to volatile demand patterns, and retailers will need accurate, up-to-date supply chain data in order to move stock to the areas where demand is highest and protect their margins.

Furnishings retailers expect leaner times when incomes are squeezed and the housing market looks uncertain after such extreme peaks in activity. But by staying informed with the most accurate supply chain data, and software tools that help them to draw insights from it, they can stay responsive and make the right decisions quickly.


By Caroline Ellis, commercial director at Advanced Supply Chain Group.
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