by Market conversations offer insights into strategies to help spur business heading into the second half and beyond
HIGH POINT — With the close of the April market nearly a full month in the rearview mirror, product development and marketing initiatives advance toward the summer Atlanta and Las Vegas markets, not to mention the next October market. Thus another market cycle begins.
But before we get too far ahead of ourselves on new product, conversations we had with executives at the spring market bear repeating as they offer a glimpse of where the industry is headed in the weeks and months ahead as we approach the second half.
For case goods and upholstery resources alike, while the business is not great or even good, there are plenty of opportunities for growth, particularly as retail rebounds and consumers once again start returning their attentions to home décor.
Bassett Furniture, for example, unveiled some new initiatives at market that aim to help drive retail traffic and reduce lead times and shipping costs.
For example, it opened a new Custom Studio concept earlier this year that allows dealers to create a custom upholstery gallery in 950 square feet, about a third or less of the size of its 3,000-5,000-square-foot Design Centers. The company said this offers its customers “a proven retail footprint that generates high sales per square foot” with a compelling display of made-in-America product.
It also has developed a mixed container program that lets customers mix most of its imported wood products along with its imported Club Level motion seating line. The company said these items will be stocked at its Vietnam distribution center for immediate shipment.
In addition, the company has debuted Club Level frames in stocked fabrics aimed at hitting more competitive price points, while continuing to offer the line in top-grain leathers, and featuring zero-gravity mechanisms and high-density foam.
At market, the company also took a second space in Interhall to further attract attention and interest among designers who are known to shop the space for emerging trends and industry resources. The Interhall space aimed to educate interior designers — a growing part of its retail business — not only about its custom capabilities, but also its speed to market in domestic upholstery and case goods manufacturing.
“We’re doing a lot of things, none of which is in the context of a silver bullet,” company CEO and Chairman Rob Spilman told Home News Now. “But they are all things that we believe are worth the investment that we’re making to grow the business.”
Resources such as Hooker and Universal also are catering to designers, with a mix of product, events and locations that attract a buyer looking for style leadership across multiple categories, from indoor case goods and upholstery to outdoor furnishings and accessories.
Universal said both its educational events and product mix continue to be a draw for designers. But it also reported strong traffic from brick-and-mortar stores throughout the event, including the final days of market, which ended on April 17.
“We’ve seen a good mix of the designers that we typically see, but we have also got a great brick-and-mortar contingent that has found some things they liked this market,” Sean O’Connor, president, told Home News Now. “The buzz has gotten out there and we have seen a nice uptick in traffic.
“We also had a good response from people who are wanting some fresh new things to keep their floors refreshed. And I think that they understand that while business might be slow now … they want to be inspired. They want to find something that is fresh and new, and they find inspiration in the way we have designed and laid out the showroom, the collections and the layering of textures and materials. It is just about finding something that is new and different but doesn’t feel like ‘me too.’”
Hooker Furnishings said that product development remains its core focus, particularly as it tries to find synergies between the case goods and upholstery side of the business moving forward. That means creating environments where both categories available through multiple brands in the line can show together in the same space as part of a cohesive display and merchandising opportunity.
“We are just going to consistently try to control our controllables,” said Jeremy Hoff, chief executive officer. “We’re a product- and customer-centric company. And for me, those are the most important things you should focus on and that is how do you make your product what it needs to be for your customers. Because at the end of the day, if you don’t have product, you don’t have anything.
“You can focus on all the other things to make sure your company is better on the back end operationally, but if the product is not right, it is all for naught in this industry.”
David Koehler, president of AICO, echoed those thoughts as many of its collections are developed with both case goods and upholstery, thus aligning the core elements of its business from a design and merchandising standpoint. To that end, it showed several successful collections this past market that paired both segments, including occasional that continues to be developed and designed to complement its upholstery mix.
“Many customers are guardedly optimistic as we know the ‘home’ space continues to face headwinds,” Koehler told Home News Now. “That said, as the old adage suggests, ‘great sailors are not made on calm seas.’ To that end, we believe product leadership is especially important in the current environment, and we’ll continue to be very active in bringing new, fresh, innovative merchandise to the market … and this is what our customers want to see when they attend the show. As a result, we had some strong order intake and were able to acquire meaningful market share in High Point.”
For these and other resources, developing the right product also means coming up with designs that appeal to new, in many cases a younger demographic.
“One of the things that we are seeing with our lines, particularly in the U.S., is that as consumers start to age out and a younger generation comes in, what they are looking for in design and style is different,” said Michael Hsieh, chief executive officer of Lifestyle Enterprise. “They are looking for something more European in design and that’s already happening with our global partners. And what we show in the international markets, we are bringing some of those ideas to the U.S. and vice versa.”
He noted that while the company continues to offer more traditional looks across its line, the need to serve new demographics has created opportunities for more cleaner-lined, contemporary-style offerings in case goods and upholstery. He added that some of the product is also scaled to smaller-sized apartments and homes, particularly on the upholstery side of the business.
“We have different styles and we have refreshed looks, but the one thing that stays the same is the value proposition for every group that we have,” he said. “If we can’t hit that price point to provide that value, we don’t even consider bringing it in.”
For Lifestyle and others, this also means offering a good-better-best story within their lines to boost the appeal for retailers seeking to broaden their own mix.
Homelegance, for example, has moved to a new 100,000-square-foot showroom that will ultimately allow it to showcase its entire case goods and upholstery line, thus presenting a vast mix of styles and price points. It had a soft opening during the April market, showing in roughly half the space, with plans to occupy the remaining space for the fall market cycle.
Another goal? To offer retailers a mix across its good-better-best lineup representing a value across price points.
“Traffic in retail stores is off, so retailers are looking for ways to drive traffic,” said Jamie Collins, executive vice president. “They still have to make margin, but they’re going to want to have items on their floor that are meant to drive people through the door, whether it’s a $199 dinette, or a $99 recliner. But the majority of the business is still looking for great value. So whether it’s at the high end of our product line — where we know we’re going to be less money than our competitors for the same quality — or if it’s a doorbuster — it’s really two different animals, but you have to have it all. You have to have a blended margin.”
He said this market, the company gave dealers a sense of the depth and breadth of its line and sourcing capabilities across styles and price points.
“We are giving them a taste of who we are now and who we’re going to be as we gear up to a big introduction in October,” Collins added. “It’s about showing where our strengths are, and one strength is our ability to source. … It’s every category and it’s every style.”
Bernards said it had success with its 80-piece Trilogy collection, part of its new Apex brand targeted to designers. Designed by Stephanie Lena, the mix of case goods and upholstery offers a new look that combines modern forms in three distinct finishes with mixed media elements such as travertine stone, metal and woven natural materials.
Order writing at market was the strongest the company has seen in the past couple of years, noted Micah Swick, president.
“The response was fantastic,” Swick said, estimating that about 90% of the collection is going into production. “We really went outside our comfort zone and we are very pleased with the response.”
Swick added that the timing of the collection is right as the company has seen consistent business of late, particularly with a steady stream of orders from smaller customers that come in each day. In addition, he noted, “Inventory levels are to a point where retailers feel like they can refresh their floors. Now that they have their business rightsized again, they want to be able to excite people.”
At the upper end of the market, sources note they also have a story that continues to draw interest, whether its among designers and their clients or those shopping upper-end retail floors.
“At our level, we’re selling consumers that still have money,” said Jay Carlson, president of upholstery resource Nice Link Home Furnishings. “The stock market’s up and people that have money will invest in a $3,000 to $6,000 sectional or a $1,999 to $2,999 sofa.”
But he added that new technology and innovation also will continue to drive traffic and sales, whether it’s a sectional with a 360-degree work surface, or built-in speakers along with charging capability.
That said, he noted that some retailers also see this as an opportunity to work harder to find product that will excite the consumer once it hits the floors later this year or early to mid-next year.
“When business is good, and when you can sell anything, it’s not as challenging,” Carlson said, relaying how some retailers enjoy the competitive nature of ‘fighting for the business.’ We do this not only to make a living, but also to challenge ourselves, too. And with a lot of retailers now, as the business is slower, they are looking out six to nine months from now as far as when this product is going to hit the floor. And as that starts to come up we’ll have new looks and fresh items on the floor.”
For Cozzia USA, the strategy is to continue offering specials and promotions that help drive business at retail even if the bestselling chair in the line continues to sell for about $8,500.
“For us, it tells us a couple of things,” said Bob Bruns, president, of the success of its bestseller. “One, I believe that we’ve got the right product. And two, that customer that buys in that price point probably isn’t as affected as that wider customer base.”
That said, special promotions remain important, including the $9,999 promotion on its $10,999 Quantum chair along with an $8,000 promotion on the $8,500 chair, both at full margin. Other promotions and special offers such as extended warranties also are available throughout the calendar year as a way to help drive business for the retailer.
“What we are saying to our sales consultants is ‘guys, we don’t want you to think about it. Here are the tools — just execute it.’
“You show all this to a dealer and their eyes light up,” Bruns said of the promotional calendar.
Others at the upper end also hold promotional events to drive traffic, including Stickley and Baker, both of which sell products through their own stores or galleries. Baker’s events include spring and fall sales that help clear out heavy inventories on some goods.
Baker President Mike Jolly said that the company began feeling business slow down some late last year as some people held off on certain projects. While he said the company had more quotes for orders on hand by mid-April than it did last year at this time, he said, the challenge is closing the deal.
“Normally, if you look at those, about 30% come to fruition,” he said. “ A lot of things just get pushed out. And we’ve got a deluge of quotes. It’s just a matter of turning them into (written) orders. I don’t know whether it’s just the election year, but furniture in general is in a downturn. The lower end’s been experiencing it for about a year and it’s finally made its way to the upper end.”
A recent office furniture project it launched at market in partnership with architectural firm Gensler could help boost business significantly with anticipated demand for commercial grade residential — or resimercial furniture.
“We are doing that and are doing some hospitality-driven business in Asia, also,” Jolly said. “And that’s keeping us smothered at the moment.”
During the High Point Market, Vanguard Furniture CEO Andy Bray described business at the high end as very healthy — at the moment.
“We are seeing our upholstery business is still stronger than our case goods business,” he added. “I think that’s just a reflection of the fact that upholstery has to be replaced. Bedrooms don’t. And when the housing market turns you’ll see bedroom and dining room sales pick up for the high end. But right now, upholstery is leading the charge.”
He also noted that as a luxury furniture producer its focus moving forward is to continue offering a value in its price point without sacrificing quality.
“We’re not promotionally driven,” he told Home News Now at market. “For us, it’s about providing the best product we can provide and really enticing that customer — the luxury customer that has money — to spend it on a product that they really desire. So that’s what our strategy is. We have to have beautiful products and be innovative in our assortment and really create better product continually.”
