During a 15-month period with an unusual level of disruption, the West Michigan commercial furniture and design industry rebounded faster than expected, but according to three local CEOs, challenges remain.
The Economic Club of Grand Rapids on May 17 hosted a panel discussion, “Shaping the Workplace,” featuring Andi Owen, Franco Bianchi and Jim Keane, presidents and CEOs of Herman Miller, Haworth and Steelcase, respectively.
The trio shared insights on workplace trends prior, during and post-pandemic; sales channels; and corporate responsibility, including environmental and social health and wellness.
Deirdre Jimenez, president and CEO of Grand Rapids-based Business and Institutional Furniture Manufacturers Association (BIFMA), moderated the discussion.
Jimenez noted in her opening remarks that “the pandemic paused projects, stalled commercial real estate transactions and slowed new product orders,” leading to softening revenue in the U.S. commercial furniture industry. However, while the financial impact of the pandemic for 2020 was originally forecast to be a 20% decline, the year finished with a 13% decline.
“IHS (Markit) forecast that the furniture industry will slowly continue to rebound in 2021 and 2022, and signs are already pointing in the right direction,” she said. “According to a recent Bloomberg report, office searches that had been postponed are reactivating, fueled by a pursuit for less expensive rates and more concessions from landlords who are eager to bring people back to their buildings. According to property data from (Design Trade Service), which tracks office tours, national demand for office space jumped 28% in March from the prior month and is now just 9% below pre-pandemic levels.”
Additionally, February architectural billing index data showed upticks in design contracts and billing for the first time since the pandemic, Jimenez said.
“These signals would indicate that companies are planning a return to the office, and with the CDC lifting guidelines, that shift will be happening sooner rather than later,” she said. “The amount of office space companies need may change, but with change often comes remodels, and with remodels often comes new furniture.”
For years before the pandemic, Jimenez said strategies gaining momentum included the open office and remote work, which evolved from being mobile within one’s office through the creation of “neighborhoods” to being able to shift from working from home to working in the office through the use of “hoteling” stations in the workplace and performance seating at home.
When the pandemic hit, shelter-in-place restrictions forced the accelerated adoption of remote work, and people quickly discovered their non-ergonomic home furniture — sitting at the kitchen table or working in bed all day — wasn’t cutting it.
Owen said Herman Miller adapted to the increased demand for home office solutions by continuing its residential office catalog, upgrading its e-commerce delivery platforms, tailoring its logistics to deliver to individuals as well as businesses, and adding five U.S. retail stores and one in Tokyo. She said it might sound counterintuitive to expand brick-and-mortar during a pandemic but sinking real estate prices made it a risk worth taking.
“Our strategy at Herman Miller is really the idea of meeting our customers wherever and everywhere that they are,” she said. “… Our customers are very intentional, and they want and need advice from product specialists, especially in the home office category.”
She said the retail stores surpassed all sales expectations and led to a remarkably strong quarter in the company’s retail segment.
As the COVID-19 vaccines started to become available, Eden Workplace conducted a survey in March that found 85% of workers want to return to the workplace, and Jimenez said furniture industry CEOs proved eager to respond to that trend.
Keane said the keyword moving forward will be “hybrid” — that is, avoiding the extremes of bringing everyone back in person or closing down offices and going 100% remote. Instead, many of Steelcase’s clients are aiming for a middle ground that allows employees to work from home one or two days per week and in person the other days for the sake of improving workplace culture, collaboration and innovation.
“Some of the skills and the relationships we built up over all those years of working together, we’ve benefited from over the last year, but they’re beginning to atrophy as people only see each other on Zoom meetings,” Keane said. “As every meeting starts at a certain time and ends at a certain time, there’s less chit-chat. There’s less connections happening between people. And even from a perspective of learning, learning begins to slow down, and you can feel this most intensely with new employees who have joined companies in the last year. It’s harder for them to get beyond the mechanics of what their job entails to understand, what do other people do and how do we do things around here? … If learning is slowing down, it’s likely slowing down across the board.”
He added the work-from-home experience is uneven, with some employees experiencing home environment challenges, burnout, mental illness and loneliness, and differences showing up across age, gender and socioeconomic lines.
Steelcase is eager to help its clients meet the moment by offering design and furnishings solutions as well as strategic thinking, Keane said.
Bianchi said it’s important to make sure not only that conference rooms are redesigned to include remote workers and there’s enough furniture for everyone no matter where they are, but that a hybrid environment is 100% inclusive in terms of decision-making, technology access, visibility and opportunities for advancement. He said behavioral changes are needed to ensure remote workers’ voices are heard, both in conference calls and in other ways.
Owen added now that collaboration has been shown to be possible outside the office, it will be important for employers who want their employees back in person to make offices “desirable destinations for employees, not just places that you have to go, but places that create a sense of shared purpose, a sense of belonging, a sense of community, where people want to go and where they’re enticed to go.”
Post-pandemic, Bianchi said he believes changes to the workplace that aren’t going anywhere include safety features and heightened cleaning procedures for physical and psychological safety, activity-based workstations, environments of choice, technology integration into every space, an increased emphasis on comfort, a heightened connection to nature and the proliferation of outdoor workspaces.
As far as sales channels go, Bianchi echoed Owen’s thoughts that the future of sales will happen through a combination of e-commerce and in-person contact, with customers looking to have face-to-face collaboration with architects, designers and dealers to decide what route to go, and then perhaps completing the transaction digitally.
Keane said in an age when manufacturers all over the world are entering the e-commerce space, it will be increasingly important for commercial furniture manufacturers to differentiate themselves by leveraging their BIFMA-compliant status to communicate that they are selling safe products.
In addition to navigating all of the changes brought on by the pandemic in 2020 and 2021, the climate crisis and the role of corporations in solving it was next on tap in the discussion.
West Michigan furniture manufacturers have long been working toward more sustainable practices in terms of carbon outputs, water, waste, recycling and the whole circular economy with a team of full-time sustainability experts in place to help. Herman Miller, Haworth and Steelcase worked together with BIFMA to create the BIFMA Level standard for sustainable products. Steelcase recently was recognized by the Wall Street Journal as one of the 100 most sustainably managed companies in the world for having achieved carbon neutrality in 2020 and for setting goals to become carbon negative by 2030. Keane said Steelcase’s goal is to move sustainability forward for the entire industry — suppliers, peers, small businesses, etc. — by blazing a trail that others can follow.
Other concerns addressed by the panel included how to meet employees’ health and wellness needs through thoughtful design and ergonomics, as well as ways to increase racial and social justice through supplier diversity, community outreach, cross-sector partnerships and internal initiatives.