Forecasting New Products in the Furniture Industry: Getting Out of the Box and then Getting Back Into

Australian furniture industry is cut throat. The rapid expansion of industry during Covid tempted many new players to enter the field and currently, industry is poised to grow at the stable rate of 3 to 4 % per year.

Staying on top of the game has never been so important as it is now. Therefore, companies consistently launch new products to follow trends and engage customers. Our client, an upscaling medium sized business, based in Melbourne, launched 70 products on different seasons in an year with a hope that even if 5% of products are successful, the business might turn around and achieve sustainable source of profit over the next few years. However, not all products are successful and many tank at delivering sales regardless of how many hours of research and surveys went into studying the potential probability of success. It puts the role of demand planning on the line considering higher lead time coupled with container load requirements for optimal freight cost leaves no option but to order in bulk. When we were approached to crack the code, we did our analysis of business model, the suppliers' base, lead time and seasonality constraints and suggested two pronged strategy that was aim at minimizing the risk while capitalizing . We deployed two pronged strategy that we we believe can be applied on any industry with shorter lifecycle products.

1- Similar Market Analysis Model

A new product may likely be launched on the basis of some success factors properly gauged by the product development team. While industry trends, consumer preferences, and aesthetics appeal form the cornerstones of the new product launches in the furniture or fashion industry, many times , PD teams derive their conclusion through the success launch of the similar styled product in a market similar to ones they aim to launch the products. Having an inhouse data is great source to begin with only if the company is launching new products inspired by the existing folio of products. However, if the product to be launched is from an entirely new line, suppliers can be a great source to provide first hand knowledge on many variables.

A Belgium based company regularly arranged an Annual Suppliers Workshop to discuss new ideas and took feedback on possible likelihood of the products. The insights they gained from the suppliers led to further engagements at deeper level to create forecast planning. If a product has been launched in a similar market, the data accumulated can be the most successful tool to plan initial orders at the launch

2- Pre Ordering

Probably the most effective tool with the least risk is to launch product through pre ordering. Though mostly confined to the online sales, this tool gives first hand insight into high likely the product is going to be successful. However, the catch here is to be careful in ordering discounts at pre-order stages since this may lead to skewed data results when a product comes to in stock stage without any discounts. Initial Pre-order results may prompt demand planners to plan future consignments way before the first batch is arrived reducing the impact of stock outs due to higher lead time typically associated with the furniture industry in Australia.

Launching new products in the furniture industry requires a blend of innovation, market research, and a deep understanding of consumer needs. Companies must stay ahead of design trends, incorporating features like sustainability, multifunctionality, and smart technology to appeal to evolving customer preferences. Successful product launches often involve a combination of high-quality craftsmanship, strategic marketing, and effective distribution channels—whether through physical retail spaces, e-commerce platforms, or a mix of both. By responding to shifts in consumer behavior, such as a growing demand for eco-friendly materials or space-saving solutions, furniture brands can capture attention and build strong customer loyalty in a competitive market. Planning new products inventory cannot be fool proof but it should also not thwart companies to resist diving into new forays of investments.