How COVID-19 is affecting the furniture business?
Jacob George, founder of Wood Culture DXB, on how COVID-19 is impacting the retail furniture business
COVID-19 has definitely been a generational event which has had a profound impact in almost every aspect of life. There has been a tremendous strain on resources be it from a macro as well as micro perspective. It is something which will forever change the way we conduct ourselves socially and in business environments too.
We opened our retail store (brick and mortar) in October 2019, and have witnessed a healthy uptick in revenue in the months that followed. Although the effects of COVID-19 in the last couple of months have shown a decline in sales, it wasn’t as much as we expected compared to other industries. Having an exclusive product range for our store has helped in keeping demand consistent.
Keeping the above in mind, I truly believe that the retail market will pick up in the coming months to an extent greater than pre-COVOD-19 days as there is a backlog of demand to fulfil which was left uncatered to due to lockdowns imposed across different regions. E-commerce will definitely play an increasing role in the future and will move from being an ‘added feature’ to an ‘existential feature’ offered by all retailers. We have seen this first-hand after recently launching our online store this spring.
It is almost guaranteed that we will see many retailers close shop in the coming months unless the rentals are revised. We have seen various media articles on plans to accommodate the tenants with rent benefits but we are yet to see any rent reductions. We understand landlords too have financial obligations like home finance etc, hence the trend must start from the top which are the banks and related financial institutions. This was a market where real estate valuations were overly exaggerated and unless the rentals come back to a more realistic level, future retail trends look bleak.
However, from the demand perspective, the trend is positive and considering the Expo has been delayed by a year, this is an added bonus in reassessing initial design plans and perhaps adding more elements to the project. Participating Country’s expo support staff are yet to arrive and based themselves locally for the grand event. This means additional retail revenue to support their stay in the UAE during the event both before and during the event. This includes furnishing residential units and home decor etc. The various expo related projects, especially in regards to hotels and F&B, are still in finishing stages which will once again pose positively towards the local furniture retail sector.
Having launched our online store about a month ago, we have had access to simplified numbers in terms of customer behaviour and revenue streams. All these numbers portray a positive sentiment and we are confident there is room for growth despite the limitations on physical movement and other preventive measures. As always, those that do no adapt to the challenges ahead will wither away and this is not exclusive to being amidst a pandemic. Events like these tend to fast track innovation for the sake of survival. In the end, good innovation equals good future.