SAVE THE DATES: Dream Camp April 30-May 3 & Sleep Summit Oct. 8-11, 2024

Retailers Aren’t the Boss Anymore and a Recession is Looming

When you walk into a store to buy a mattress or a piece of furniture, who is ultimately the one in charge? 

Is it the store owner? The consumer? Would it shock you to know it could be the manufacturer? 

As the supply chain issues continue to cause disruption in the pipeline, and as we see spending start to slow down as the world shifts from a pandemic to an endemic state, the roles of consumerism may shift as well. In this episode, we strategize how this affects you and your business, and how can you be sure you are getting quality service from your suppliers that you can pass on to your customer. Also, we touch on how the ecosystem varies between furniture and mattress industries, and we consider what role does a brand play in price negotiations when it comes to suppliers and in developing a customer base. 

FULL TRANSCRIPT

Mark Kinsley 

Retailers you’re not as in charge as you once were, so who is in charge? The Dos Marco show begins in 60 seconds.

Mark Quinn 

it is good to see your face.

Mark Kinsley 

Good to see your face. How do you look more tan than I do? I just got back from Northern California.

Mark Quinn 

It’s like all of this just red face from blood pressure excessive drinking. I don’t know which one. Yeah, outside a little bit. I’ve also been in New York. Kinsley and I got to tell anyone who is listening to this. You’re going to New York. We’re heading there anytime soon. You know, Nick and I did. We went to the Harry Potter show on Broadway. And I’m going to tell you like I like Harry Potter. But I’m not like a you know, I don’t totally geek out but I love the movies. I think they’ve done a great job with this series. And it was freaking incredible. The stagecraft the script, the theatre was beautiful. The cast everything was fantastic. The story it was just unbelievable. So if you’re going to New York plan time to go see that but sit in the middle of the orchestra pit because they do some really cool stuff that it would be neat to be there. But I mean, if you think about it, it’s magic and the way they perform the magic It’s incredible how they do it. So it was so freakin cool. I loved it, but and also great time to be with my son and

Mark Kinsley 

Broadway is back. That’s pretty exciting. Oh, yeah.

Mark Quinn 

Oh, they had some facemask Nazis walking around like with signs and I felt like a guy was following me, you know, put your mask on. So that part but it was okay, we got to go and easy Dumbledore. But anyway, so

Mark Kinsley 

easy done with that.

Mark Quinn 

I will make you disappear. I’ll turn you into a frog Get away from me.

Mark Kinsley 

That’s awesome, man. Well, I know Nick anyway, running track. And he’s getting ready to wrap up his junior year. And he’s doing so well. So proud of that kid. I mean, what a wonderful young man outside of his athletic prowess. And I mean, he’s Gosh, he’s got to be looking at going to college for some of the times he’s putting up so I’m super proud of him. And

Mark Quinn 

he is he got first in the state in the 400 for six A and so that qualified him for the New Balance Invitational in New York. And we got there. And I’m gonna tell you mark, like the best athletes in the country, you know, in high school. It’s a different game there, brother. You see those kids on the track? And you’re like, oh, my gosh. And so Nick didn’t win. But, you know, just just to get to go, it was a great thing for him. And, you know, it puts you on a big stage. And you know, you, you it’s a great experience for kids sports as a metaphor for life are great experiences for kids. But anyway, enough of that, hey, you and I have had some phone calls recently. And I want to really talk about that and dive into it because we’ve talked to rally Grayza and we had at retailers on the phone. We’ve had manufacturers on the phone, all in the furniture space now that we’re covering furniture with the fam. And I was absolutely fascinated, weren’t you in some of the places this conversations went in? So just so everyone listening to this knows, we are about to embark on a another deck of quantitative research with consumers. So we were learning our way in with furniture retailers and manufacturers and say, Hey, what are the blind spots out there? So Mr. Kinsley, based on those conversations, what was what were some of your takeaways? In terms of how manufacturers and retailers are looking at the industry,

Mark Kinsley 

I think one of the biggest takeaways was a comment I heard. That said retailers aren’t as in charge as they thought. And so we’re trying to gather up some good inputs here. So we can put together a nice deck of consumer and industry research, that’s going to be valuable to your business. Definitely one of the most important things we did last year was we put out consumer research that we did in partnership with nationwide marketing group. And that deck got all kinds of attention and all kinds of downloads from fam dot news. So we were getting these inputs. And so you know, there’s kind of that gathering phase, when you’re going to do some qualitative research that then informs more of a quantitative survey. And so I heard this comment retailers are not as in charge as they once thought. And so I asked, you know, some of our participants to expound upon that, and it was fascinating to think, okay, and in the past, retailers were able to, you know, pit vendors against each other, or put a little pressure on so they could get the right price, they had lots of different options when it came to merchandising their floor, but in the furniture space, you know, so many of these manufacturers, or these distributors are now bringing in the containers, and having to play a little bit of Russian roulette from time to time with these containers. They’re paying these exorbitant costs. And on the furniture side, it’s a little bit different than the matricide because years and years ago, they didn’t have the anti dumping duties put in place, and a lot of the manufacturing was taken offshore. So now you know, you have infrastructure in place and capital in place that’s deployed really strategically, to bring in these containers, to distribute them throughout the country to these different retailers, and retailers. And you’re going, I have consumers walking in saying, I want what you have. And so the retailer hasn’t been as much in a place to dictate the terms as they used to be. And then Meanwhile, back at the ranch on the manufacturer or supplier side of things, you’re going to continue to see massive consolidation, which could further put the reins in the hands of the manufacturers and not the retailers. Was that your take on it? Or did you have a different read?

Mark Quinn 

No, I think that’s a great take on I think that consolidation does shift, leverage and control. No question. I think the the consumer, oddly enough mark, like, you know, the consumer isn’t necessarily as in control, either, in a way, because they’re going into furniture stores or appliance stores, and they’re saying, Hey, this is what I want. And the guys like, don’t have it. And then, you know, they’re almost approaching it from the standpoint of, okay, what do you have, right, I ordered a whiskey last night with my dinner, and I had to go through like four different choices of whiskey before they found one that they had. And so you’re not in control, necessarily the way you were as a consumer. So I think that’s an interesting part. And I think that the the leverage, you know, in terms of all of that goes, I think maybe one of the takeaways to mark is, from a retailer perspective, like, think about who you’re buying from. Because if you’re buying, I’m making this up, if you’re buying a mattress programme, and you have eight suppliers, so you’re spreading your buying dollars out over eight manufacturers, you know, maybe you go down to three or four, so that you’re giving them more business, therefore, they’re making you more important, when it comes to shipments and getting things to, I think in the mattress space. The the shortages, you know, it’s much different than where they are in the furniture space. But that logic applies also to the furniture, guys, right? So maybe you’re consolidating your spend differently, so that you become more important to the coasters, to the elements to the Ashley’s, to whoever those guys are. And then you figure that out.

Mark Kinsley 

Right, I think there’s definitely been a push to be more important to the people that matter to you. And and this goes back to just good business, because there are lots of retailers out there that over the years have tried to make themselves very important to the vendors that matter to them. So instead of having to play catch up now, the people that did that in advance that had those great supplier relationships are benefiting from that, because, you know, they get priority on product, they get better service, they’ve got deeper relationships. And that just matters. It just matters. You know, one of the other things that popped up that I thought was interesting, we were talking about retailers not being in a chart as in charge anymore and you got into the consumer side of things. That’s the big question mark hanging over everybody’s head is are we in a recession already? Or is it looming? And is the consumer going to spend I heard a stat I thought was really interesting. This is a loose stat but capture the generalisation. Hear 2022 is going to be the biggest travel year in history in history. So if those consumer dollars are shifting back over to experiences to travel, and we’re in a recession, and there’s the uncertainty about the war in Ukraine, what’s going to happen to the consumer mindset? And are they going to invest in furniture mattresses? And I think there’s a lot of scepticism about whether or not that’s going to happen. Are we in a recession already? That’s the thing about a recession, you don’t know when you’re when you’re in it, until you’re able to look back on some of the data?

Mark Quinn 

Well, yeah, that is a good take there. Because I think everyone’s trying to figure that out right there. The whole Ukraine Russia thing, and what our oil prices going to do what what kind of pressure is that going to put on everything? Because it’s not about where we are, it’s about where we’re headed. You know, the President came on this weekend said food shortages are likely, that’s gonna freak some people out. So hopefully, the Consumer Index or the buying index stays strong. And the politicians and the media, don’t screw it up for everybody. Mark, you know, one of the things I took away, and I was wrong on this, and in and I was, I was in one of those soapbox moments where I’m like, This is what the furniture guy is, should do. And I’m like, pounding on the table. And I’m like, you know, the mattress guys do a great job of branding themselves, right? And so when a consumer comes in, you got TempurPedic with the best preference, you’ve got sort of Simmons with great awareness, CLE Stearns, and foster great awareness in so what is the value of preference over awareness, and then apply the logic into the furniture space, right, you have less of that you have less guys spending money, right? You’ve got Ethan Allen, Ashley, Lazy Boy, some of the brands from the past and all that, but you know, they’re spending money, at least I don’t think they are the way they used to. And so does the power of the brand matter as much on the furniture side as it does on the mattress side? And if you were a furniture company, why wouldn’t you invest a bunch of money into your brand? And that was, that’s where I was I’m like, Oh, my gosh, I mean, look at the wide open space. If a furniture company wants to really stand for something, create purpose around their their model, and create affection for their brand with a consumer, then would that give them leverage in their distribution with retailers? Right, like, it doesn’t matter a space? And you said to me, Well, you tell me what you said, I won’t put the words in your mouth, but you kind of you kind of had me look at that differently. And I’m like, wow, I never even thought of it like that.

Mark Kinsley 

Yeah, I was thinking about it in terms of, okay, what’s my current buying model? Like when I first started buying furniture? For me it was I found the mannequin that had the suit. Like, I looked it up and I was like, okay, that shirt that tie that suit those shoes, just give me what the mannequin has, like, clearly somebody put it together.

Mark Quinn 

This was clearly before you marry Tara, because there’s no freakin way she’s buying anything close.

Mark Kinsley 

And so and so the same thing applied. Whenever I was looking for where do I go to buy furniture, that’s gonna be a reflection of my style, my identity. And you know, early on, it was Pottery Barn for me. I’m like, they’ve got a great collection. They’ve got a great selection. And so we started running that to ground and thinking, okay, in the age of Instagram, and design driven environments, and people watching HGTV and saying, Yes, I want that. How do people make these buying decisions? Well, many times, it’s just not one thing. It’s just not a dining room table. They want the dining room table and the sideboard and the decorations. And so they’re looking for somebody that’s curated those types of collections with all those different elements. And they don’t give a rip about who made it. They just want it to look good, and they want it to work. And so from a filtering standpoint, I think a lot of people are like, Where can I go to find these these looks while they’re going to the retailer that’s really good at curating things like here in Bentonville. It’s house ha WRC and Laura Williams and the team do a great job of merchandising things, but in reality, you know, the stools the barstools that I bought from Laura and Jay are available, the exact same ones at Pottery Barn, but I was just looking for somebody Great. By the way. Great people, they’ve got a Englander mattress showroom there. It’s doing great. So I was looking at it like, okay, so if you go out and you do something like parachute is doing or castlerea, there’s some of these brands that are doing this. You curate a big selection of stuff, because when people are buying, they’re buying, they’re not just usually just getting one thing like an end table. So then you build up this brand, you’ve got consumer preference, let’s say for parachute, and then you’re able to take your brand to the retailer and say I have consumer preference for my brand of products within this retail environment the retailer is going to say, so I’m going to be able to get the exact same thing. And I have to pay a brand markup to you. And I think the the retailers you can be like I can go curate this selection on my own the retailer is the brand and the mind of the consumers. And I can do exactly what you’re doing at a significantly reduced rate. So I don’t have to pay that tax of brand. It’s just so different what’s happened in the mattress side of things because it’s a single object most of the time and yeah, there’s a little bit of asleep ecosystem that goes with that. But it’s such a different, less robust in terms of number of items purchase on the mattress side as compared to furniture. That was my thinking on it.

Mark Quinn 

Yeah, I think that’s exactly right. I don’t know why my phone was off. It’s ringing and that’s so weird. My silent mode is on the phones ringing just fine. I’m just Yeah,

Mark Kinsley 

I think that’s Lammott like It’s the finals like it.

Mark Quinn 

Spike it? Yeah, no, I still stand by like I’m holding on I can’t I can’t let go of it. Okay, I’m still holding on to the idea that if Lazy Boy or in a building it from the beginning up might be more difficult but like if furniture guys let’s say an upholstery line went where there may be direct to consumer at first rate, but they they invest, they invest, they invest like nectar like Casper like temper did back in the day. And then you’re selling direct, but you’ve built some affection with the consumer, then you release it into the brick and motar space, does that give that upholstery line leverage, potentially now

Mark Kinsley 

I look at Lazy Boy is such a harder to do a unique animal because it was a unique, demonstrable product that had a clear functionality to it. And so I think you would almost have to have a product. I think the people that have done this the best and the furniture space is Lovesac. It was a unique right product where they carved out a niche. And obviously, once you have a certain bank of customers, you can expand and have lifetime value out of those customers sell them more of what they want. But they had something that was very differentiated and they can show how it worked. So I think if you have that type of product, you can then leverage that into a into a direct to consumer brand that can sell more things to the people you have. And you can leverage that product into a retail ready product that doesn’t cannibalise any of their existing floorspace with existing suppliers. And I think that’s what Lazy Boy did early on. They’re like, look at these recliners man like this is live in life. Like they owned comfort in the home for a long time, even more so than the match totally hands which is amazing. So I think you got to have that right product and be able to check some of those boxes that allow it to transfer over I just haven’t seen

Mark Quinn 

so what just happened was you just told me that I was right that you could do the 100 for validating me.

Mark Kinsley 

Yes. And guy by the

Mark Quinn 

way, I went in saying I went in saying I was wrong and you like kind of helped me validate that yeah, you can

Mark Kinsley 

you get you get that product, right. Like you can tell Hey, what do you think you need to weigh in hop over to the comments section or go over and follow us on LinkedIn. So when you type in you know the fam on LinkedIn we get our blue logo and tell us tell us what you think. I think we got some things right we probably miss some things but that’s what I love about this show is people have lots of inputs for us.

Mark Quinn 

We miss a lot of things in by the way that’s why it’s important for the audience to chime in man have a conversation don’t be afraid to leave a comment right so people go they tell us all the time in person well, I just want to make a comment you know put yourself out there it’s okay you don’t have to be right just put yourself out there share a thought let’s you know have a conversation that’s how we learn from each other this is a camp fire in Mr. Kinsey before we go we need to do predictions here so this will probably post Monday is that yeah,

Mark Kinsley 

yeah, so this is live we are recording we let’s just say we’re recording live right now on the 28th of March.

Mark Quinn 

Okay in so so March Madness, so the hogs University of Arkansas, unseated Gonzaga number one picked by many of the experts to go all the way in Arkansas took them down last night in a heroic effort I thought they were fantastic they were they played my

Mark Kinsley 

entire thing I was just on the edge of my seat What a fantastic basketball game Go Hawks

Mark Quinn 

Yeah, I was sitting on a plane and we were in the air so we had internet connection but we couldn’t watch it. So like five of us guys right there. We’re getting the game cast you know, so it’s just like a free throw made free throw it you know, and so it was really exciting. But alright, so pick who do you think is gogs

Mark Kinsley 

all the way baby? Absolutely. Arkansas Razorback. No,

Mark Quinn 

I’m, I’m kind of with you. Like my heart is in that comment, although I’m a big KU fan. And so I think it could be either KU or the hogs. You know, don’t don’t count out Duke either, because you’ve got them playing for their coach, which is his last season. And so that purpose driven like X Factor can also play a big role. So yeah, who knows and whoever do it Duke plays today and I think that’s anyway I don’t know that The progression I think we play Duke if we lose or whatever but anyway so there you got March Madness right here on the desk

Mark Kinsley 

love it love it love it well hey, maybe you can tell us what who’s in your bracket as well. Thanks for everybody that’s subscribing. And hey thanks to Ray Allah Grayza who’s handling the fans furniture newsletter if you are not signed up at fam dot news you’re missing out it is straight fire from one of the top thinkers in the industry one of the most well respected men in the entire furniture industry who’s now back on the scene in a big way and he’s a member of the fam and he’s the he’s the godfather of the fam in my opinion man he’s wonderful guy and doing some amazing things and really bringing to surface some topics that possibly get ignored other places so sign up right now at fam dot news you

Mark Quinn 

fam dot news. Sorry, I didn’t mean to stuff in here there, Mark. I forgotten how much I like to read what re writes because he writes so well. And he’s so funny. In the way he talks about stuff, guys. If you’re not dialled into that, please do. Also subscribe. Tell your friends, this is a campfire. We want to share it and take anything you’ve listened to share the podcast or family news with people we want to grow the audience and grow our friendships and in connections to all of you so thanks for listening, and Kinsley anything else to add, or should we just skate off?

Mark Kinsley 

I’ll just sit over here being alabaster porcelain and you just look like tan man from Tahiti. I think we’re good.

Mark Quinn

It’s blood pressure.

Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.

Top