Buckle up: Wanek, Blumkin say 2023 could be a rocky ride

HIGH POINT — After more than a decade of relative prosperity, a pair of furniture industry executives say they wouldn’t be surprised if 2023 proves to be some of the toughest sledding we’ve seen in recent years.

But that’s not to say there isn’t going to be opportunity for those who know where to look.

mark schumacher, hfa
Mark Schumacher

During a Home Furnishings Assn. webinar, CEO Mark Schumacher asked Ashley CEO Todd Wanek and Nebraska Furniture Mart Chairman Irv Blumkin to offer their predictions on the next six months.

“I think it’s going to be a rocky road. It’s going to be up and down. Everybody’s got to get ready for a different retail and manufacturing environment than we’ve seen in the past,” Wanek said. “I don’t think it’s going to be a banner year in 2023 but it won’t be terrible. I get more excited in down cycles than up cycles because I think there are more opportunities in down cycles. I think 2023 is going to be a fight.”

Added Blumkin, “I don’t think anybody knows. We should have a margin of safety in your organization saying here’s the downside and the potential upside. I think there are opportunities for those in position to take advantage of opportunities to grow. In the macroeconomic, it’s going to be uneven, not predictable. You hear about inflation every two seconds. You have to have the ability to pivot but look for opportunities where you can shine and grow. Overall, I would prepare for a downturn rather than an upturn.”

Todd Wanek
Todd Wanek

Wanek said even if 2023 turns rough, it’s important for companies to look inward and turn to what they do well. After all, he said, the market ebbs and flows naturally.

“Focus. Don’t be scared or confused. It’s a market cycle. We’ve gone through these market cycles,” Wanek said. “We’ve had an unbelievable run since 2009-2010. We’re going through a market cycle; don’t be scared of that. Focus on your values and execution. If you do those things, you’re going to be fine. Who knows how long the cycle is going to last, but we’ll come out of it.”

Wanek said in August, Ashley gathered around 500 of its leaders and among other topics, they looked at how the company has weathered storms since 1970. He said throughout its history, Ashley has encountered several recessions, and he likened the company’s approach to driving a racecar.

“When you get to the corner you slow down a little, but when you hit that straight stretch, you accelerate,” Wanek said. “That’s where I think the big opportunity is; stay focused. Just do your business and execute.”

Irv Blumkin - cropped
Irv Blumkin

Blumkin agreed, noting that we should all be used to handling unexpected disruptions given the COVID pandemic is just barely in the rearview mirror.

“There will be constant disruptions, that’s the way the world works now. You have to know how to pivot and handle the disruptions,” he said. “The pandemic, nobody wished it, but it was an opportunity to learn about your business and become more customer focused and employee focused. They’re disruptive but they’re opportunities if you know how to deal with them.”

So how about some good news? Wanek said prices look like they’ll continue to come down. Maybe not to pre-pandemic levels, but down from the heights of the choked supply chain.

“Container freight is coming down so that’s a tailwind. Some raw materials are coming down; that’s a tailwind. Wages have gone up and other costs have gone up. We’re not going back to where we were pre-pandemic but there are going to be reductions,” he said. “The capitalistic market will force that to some degree. Everybody’s going to be competing for a smaller pie, and that competition will be healthy. Prices aren’t going to be where they are today. At retail, I think Black Friday is going to be incredibly competitive.”

So how can retailers prepare for falling prices, given the glut of inventory? Blumkin said they should be smart about how and what they mark down.

“If we have extra inventory, sometimes your first markdown is your best markdown. Get rid of the inventory that’s not the best inventory and then take advantage with inventory you can replace it with to enhance your margins,” he said. “If it’s good inventory and you’re over, that’s one thing. If it’s something you have too much of and it’s not great sellers, how do you compensate so it doesn’t affect your margins on the good inventory? What is the best way to maximize your inventory, inventory turn and margins. There’s no one perfect answer. It’s a blend.”

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