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rdmBlueBackgroundBY RICHARD DE MELIM


The situation at Ultra Furniture underscores the fragility at the heart of the business of furniture making.

Tesco is the manufacturer's biggest customer, accounting for more than 70 percent of its business.


Ultra must now decide what steps to take after the announcement that Tesco Direct will close, shutting off a key sales channel for the Kingswinford company.


Not only an important sales channel, but a fast growing and successful one, according to chairman Joel Rosenblatt. He said Tesco had been growing at "a phenomenal rate" and that the sofa maker was coming off a record week when it heard the news.


It employs 160 people, up from the 115 who were transferred out of the previous operating company when Helium Sofa Group acquired the business late 2016. Several other major accounts have been brought on board in recent months.


"Replacing 70 percent of your business overnight is not straightforward," Mr Rosenblatt said.


In many respects, this is a problem of scale.


Tesco doubling sofa sales is a big deal for an SME that supplies it, but small beer to a £50 billion turnover retailer operating in multiple product categories.


For retailers of a certain size, a seven or even eight-figure number in a spreadsheet might still not be significant enough to prevent a big red line being drawn through it during a management strategy meeting.


There are many furniture manufacturers and wholesalers — and we could all probably reel a dozen of them off the top of our heads — that rely on one or two customers for the bulk of their business.


It's easy to say they should all heed the warning, have a disaster plan in place, or take steps to avoid finding themselves in the same situation. But in the real world, customer-dependancy for many suppliers is a fact of life in a tough and competitive industry.

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