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Conversations in Las Vegas PDF Print E-mail
Written by Joe Carroll   

ImageI have just returned from the summer market in Las Vegas. As expected, the weather outdoors was extremely hot while exhibitors adopted a cool attitude to cope with current business conditions. Expectations were not high - the industry has long been accustomed to the slower pace of the summer markets.

Therefore, it always amuses me when I ask how their market traffic has been that manufacturers almost universally reply with a tone of disappointment that attendance appeared to be down slightly. How quickly our optimistic industry forgets that summer traffic is almost always down compared with winter traffic and, for several years, one result of the economic turndown has been fewer stores sending fewer buyers to market.

But, on the bright side, the consolidation at retail means those fewer buyers attending market have more individual buying power.

I read sometime ago that there is a psychological explanation for why we tend to think the other guy's business is hurting more than ours. I don't recall the rationale precisely but when I asked manufacturers how they felt the market was going the answer was almost always something along the lines of: "Slow. Attendance is definitely off."

When I asked the obvious follow-up question - "How are you doing?" - one of the following was almost always given in response: "Not bad, we saw all of our Top 100 dealers"; "Didn't sell a lot to our regular customers but had serious interest from several new dealers. We'll follow up on them right away"; or, "We didn't expect to write a lot of business, we were here to show new product, get reactions and cement existing relationships."

When I asked how their business was year-to-date the answers ranged from a low of about 2% over last year to as high as 33% (this latter figure came from a $200 million-plus company, by the way).

One must conclude that we are all pretty much in the same boat. Our businesses are slightly ahead of last year and we think the other guy is doing worse than we are.

The major topic of discussion was doing business with China. The law of supply and demand has resulted in container shortages. Some manufacturers have experienced over a 100% cost increase in recent years. One manufacturer told me that he had formed personal relationships with each of the presidents of the major shipping lines just to make sure his goods got priority in their containers.

A current, and hopefully temporary problem, is that of mould. New U.S. government regulations limiting the amount of formaldehyde that can be used in plywood, particle board and paint finishes has contributed to the growth of mold on furniture that sits out on a humid dock for a week or more under a tarp before it is loaded into a container. I am told finishers are working quickly to develop new finishes that will inhibit mould.

Another emerging concern is the rising labour rates in China are always a concern. Just like forgetting that summer markets are traditionally slow, the industry seems to forget that the situation China is now facing also occurred in Taiwan in the 1990s. In less than 20 years, Taiwan's rising standard of living priced its labour costs out of competition with emerging countries such as Indonesia, Thailand and Malaysia. Although the situation in China is not quite the same there are parallels.

As the lawyers like to say, it's always about money. Those companies who have the capital, or access to capital, will emerge as leaders once we pull out of this recession.

We've been hearing for almost 15 years now that there will be a shakeout of both retailers and manufacturers across the industry. So why hasn't it already taken place? It seems that everyone has hunkered down to weather this recession, meaning relatively few businesses have had to shut their doors. Ironically, when business gets good again it seems very likely that only those with the financial wherewithal to invest in marketing, inventory and delivery will emerge victorious.

We don't know what is going to happen, but when it does, it's going to be very interesting.

Joe Carroll, formerly publisher of Furniture/Today, is now president of McNeill Communications, a High Point-based agency specializing in marketing, advertising and public relations. He can be reached at

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