3 min read February 2024 — In an interview with Invest:, Andrew Koenig, CEO of CITY Furniture, talked about the boom in demand for home furnishing during COVID-19 as a result of the work-from-home modality. That demand has since slowed because of reduced housing sales. He also discussed the importance of the Lean Thinking philosophy for CITY Furniture’s operations and the importance of Florida for the company’s operations.
What is the role of Florida in the operations of CITY Furniture?
We are excited about the continued growth of Florida, especially in Central Florida. We recently opened a new headquarters and our second warehouse operation in that area. The home furnishings industry in Florida is promising. With the current population growth in this state, it is exciting to serve so many people. With more stable supply chains, our customers are satisfied and we are bullish about the future as Florida continues to grow. We are working toward making big investments and doubling down on our growth.
What factors differentiate CITY Furniture when it comes to being effective in the retail furniture market?
It is a combination of our product, the service that we provide, our execution speed, and our people. It all starts with offering a beautiful product with great value, great style, and great quality. We then focus on satisfying demand quickly. We have four warehouses in Florida, over 450 drivers, and 250 trucks, so we are fast to serve and good at logistics. Additionally, we have great people from beginning to end helping customers shop for furniture online or in-store, executing deliveries, or taking care of customer service.
How important is the Lean business philosophy and continuous improvement to the success of CITY Furniture?
Lean Thinking is all about continuous improvement. We have put it at the heart of our business. Every person, department and position of our business aims to get better whether it is about safety, quality, customer satisfaction, financial performance, or our corporate culture. At CITY Furniture we provide our associates with autonomy, and the ability to be involved, give ideas, participate in kaizen events, and give feedback so that we get better. We have systems and strategies in place to execute those ideas and make sure that we improve. Any organization has processes and problems, so they need to continuously improve, which means all organizations can learn from Lean Thinking. For us, it is the right way to run an organization that constantly gets better every single day.
How does the Lean Thinking strategy mesh with the increasing presence of e-commerce in retail?
Lean Thinking is a philosophy of continuous improvements that applies to every aspect of business, including e-commerce. When it comes to our customers shopping online, we aim to ensure that they understand the dimensions and images of our products. We have a large technology department that has been supporting a digital transformation in our company and innovating with new ways of shopping. We have adopted augmented reality so that customers can see the products in their rooms and size them properly. Our customers can also communicate with us over chat or over the phone to receive help. Once those products are chosen, we have a great process that ensures our products are inspected and shipped correctly and that our customers are satisfied.
Lean Thinking is all about never passing on a defect to internal or external customers, which is why our drivers inspect everything before the product goes on the truck so that there is little to no chance of it being rejected due to damage. We also focus on delivering a great sales experience that guides customers to the right products that meet their budget and quality needs and solve the problems they have at their house. Our customer satisfaction is at 95%, which is a good batting average for the Florida market.
How has demand for home furnishings been influenced by the popularization of work-from-home models?
There was a boom in demand for everything home-related in the first 18 months of the COVID-19 pandemic. The importance of the home office has not changed and we do not see that trend going backward. Demand for those furniture products is much more heightened than it was pre-pandemic, which is a good thing for everyone in the home furnishings industry. Additionally, people are multipurposing their homes, renovating and building extensions to bring more activity to their houses. These trends are positive for our industry and providing those furnishings is important to us.
That boom in demand lasted until the end of 2021 when mortgage rates started to rise and housing sales started slowing down. In such a situation, people do not move as much, so they do not need as much furniture. Between 2022 and 3Q23 we have not seen the dynamism that we saw in 2H20 and 2021. Nevertheless, the market for furniture is still big and we are trying to capitalize on it.
On the other hand, as more people move to Florida and especially to South Florida, new opportunities for our industry appear because people need furniture when they move. When interest rates level off and decline and mortgage rates become more affordable, we will see a housing sales increase, which will help grow our business.
What is the strategy of CITY Furniture to plan for long-term growth?
We have been planning for years for long-term growth in South and Central Florida. We are always looking for better real estate to upgrade or renovate our facilities in the markets where we are present. This ensures that we have the best store presence in each CITY. We are quite bullish on growth in Florida and excited for the future because homes are at our core.
What initiatives is CITY Furniture implementing to reach its goal of becoming carbon neutral by 2040?
We are very proud that up to one-third of our energy consumption is powered by the sun. We are part of the Solar Together program of FPL and aim to grow our partnership with that company to ensure that more of our energy is powered by the sun or another renewable source. Additionally, our entire fleet is powered by compressed natural gas (CNG) and we have been ranked on the Greenest Fleet list of the National Association of Fleet Administrators for eight consecutive years. Moreover, we have various recycling initiatives that are key to our operations and we recently hosted our second annual Green Summit.
What are the biggest challenges that CITY Furniture faces in the retail industry?
The biggest challenge is forecasting where our business needs to be in the future, including the customer experience in the store and the online services, our products and quality. We need to be prepared for the things that people will be buying for home furnishings in the next 10 to 15 years. We need to make sure that we offer an awesome shopping experience whether it is online or at the store. On the other hand, there are always some economic worries. Most people in the industry would say inflation has been tough to manage and the economic slowdown has caused ripples in the furnishings industry. Some businesses have not been very good at adjusting to that slowdown and we have seen some companies go down in the past few months.
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