How Nash’s Economic Game Theory Can Help Save the Contract Furniture Industry

By Shea Uebelhor

Have you ever seen the 2001 film “A Beautiful Mind?” Russell Crowe plays the lead role of John Nash — an economic theorist struggling to find his groundbreaking theory to prove his place as the world’s greatest economist. If you are familiar with the plot, you’ll know that after many failed attempts, Nash finds his ah-ha moment while at a local college pub; understanding that each person vying for their own best interest will ultimately not promote the greater good of the collective. Rather, one player will win, while the others will lose.

This is a perfect illustration of the haves and have-nots of our industry. The industry turf war — whether it be at the major manufacturer level, the distribution channel, the war between reps — is escalating every week.

There are known major disruptors — like Vari (formerly Varidesk). They intend to start at the CRE building-owner level — taking hundreds of millions of dollars of projects out of our industry. These projects rarely, if ever, touch a design firm, dealer, and certainly not the manufacturer or rep. What started as a simple Skymall product turned into a behemoth of a disruptor.

There are plenty of other lesser-known disruptors looming in the not-so-distant future as well; taking aim at any inefficiencies or redundancies that exist  — and capitalizing on a better user experience for the modern buyer. 

And by the way, who can blame them? We all feel the pains of our industry. Our client experience has more friction than a runaway train trying to slam on the brakes. It’s no fault of any one entity, these facts are a result of decades of building on the old way of doing things. The challenge isn’t “how to make the old way better,” but rather “what if we started from scratch?”

So here’s the secret: the reason tech companies and others are ready to disrupt our industry is that many of them realized how slowly we, as an industry, have evolved our consumer experience. We grind out big projects with massive competition — hoping to land the new standards account whale. We ignore the onesie-twosie orders due to the high cost of sale and low margins. We simply accept that the industry is going to contract due to work-from-home and hybrid models that we simply don’t know how to service effectively. Want to see a fun graph? Check this out:

So what is the answer? 

Manufacturers — it’s time to start getting your digital assets ready for the modern age. For those that don’t know what this means, nor how to start the process, Cayke is here to help guide you through that process. Once your assets are ready, you’re ready to unlock an entirely new sales channel. And please, kill your Shopify accounts. This toe-in-the-water approach might get a few bucks here and there, but those dollars immediately leave our industry as you do it. Make an inclusive strategy that will benefit your reps and dealers. Those are the entities that you demand more of anyway.

Dealerships — it’s time to evolve into capturing the small orders for solid margins while making your cost of sale pennies on the dollar. Work from home programs — such as Sit-On-It’s well-advertised program — are an entirely new channel of opportunity for your dealership. Encourage your manufacturer partners and reps to get their digital assets ready and allow you to create a program that will excite your smallest and largest clients! You owe them a solution, and Cayke has one ready. It can include any of your favorite manufacturers that have appropriate WFH solutions. Talk about inclusive!

Reps — tired of the milk runs? If not, it might be time to consider retirement. Is promoting the new color palette on your manufacturer’s training tables not moving the sales needle closer to your quota? We get it. It’s time to demand better from your manufacturers to enable more sales and a better experience for your dealers, your design firms, and everyone’s end users. 

For those of us that are too set in our ways to consider a new path forward, I certainly wish you luck. The path that we’ve been on for too long has profited too few and left the rest behind. Every good idea seems to get bought up before it has the opportunity to do the most good (cough: Design Public). That’s the advantage of being at the top.

For the rest of us, we are better when we work together and promote innovation. That’s the one disadvantage that a major has — they are simply too big to change. But don’t be fooled, the majors are buying up the B2C channel as quickly as possible ($1B in acquisitions in 5 years, but MillerKnoll mergers grab the headlines). This allows the majors to understand the online buying experience, digest the data, and promote a seamless buying process that their distribution channel simply can’t handle. But they’ll throw their dealers a few shekels to keep them happy. 

So let’s move forward in the face of disruption. We need digital assets to enable small orders, WFH programs, and day-2 standard sites to start a new path of profitability and frictionless experiences. Cayke can show you a platform and how this works, while keeping your cost-of-entry minimal. 

There is still a place for the contract sales that we know today to exist. Bespoke projects driven by talented design firms will still require the skills and processes that we all are comfortable in executing. However, if today’s industry processes are leading you to complain about depleted margins, the abundant competition, and how difficult it is to keep great project managers and designers on staff — maybe it’s time to consider a new strategy?

Are we ready to think about making this step into a new era? It starts with the manufacturers (or “brands” as they preferred to be called). But they won’t take this leap without encouragement from their reps and dealerships. Educate yourself on the process and what it takes to make this change happen and become digital-asset-ready and data-rich. If our industry can begrudgingly adopt something like CET Designer (high cost of entry, minimal data to speak of) to make the process better, just wait until you see the marginal GP increase across the board with digital asset readiness and the doors this can open. 

Creating a better B2B experience while enabling a better B2C experience isn’t hard — it’s just uncomfortable and unknown. But it just takes a few to start this fire and start getting profits back into our industry. Profit that one day might allow us to stand in the face of imminent disruptors, leaving a better industry to those behind us. Something any economist would be proud of.