Rebirth energizes Universal
By Gary Evans -- Furniture Today, September 9, 2001
HIGH POINT — Although it has been selling in this country for some 20 years, President Harvey Dondero sees Universal Furniture International as a company reborn.
"I just got through telling someone that we're three weeks old," Dondero said from his office here.
"We have new terms and conditions and sales policies, things like that … all housekeeping things. But this also gives us an opportunity to do things for dealers that we've never done for them."
Those things include putting more value into the product, offering a factory-direct mixed product container program, and stepping up efforts to make consumers aware of the Universal name.
All this comes as the result of the company having a new owner, China-based Lacquer Craft, owned by Samuel Kuo. Kuo is a key player in Chinese manufacturing and, through Universal, has become an important U.S. player as well.
Lacquer Craft closed the deal in July to buy Universal's product line, name and customer lists from LifeStyle Furnishings International for an undisclosed price. The sale gives Lacquer Craft what Dondero describes as a crack U.S. sales and marketing organization — as if a young Toyota, for instance, had had the Ford sales team behind it when it entered the United States.
In return, Universal gains some 1.6 million square feet of dedicated production capacity in south China for its line of case goods and occasional furniture, and will be able to consolidate production it now has in China, Taiwan, Malaysia and Indonesia.
"Lacquer Craft will be able to manufacture everything and anything that Universal was able to make in its own factories," Dondero said. "The exception will be some species and techniques that Lacquer Craft does not want to get involved in, and will outsource."
Dondero said a major component of the marriage is Lacquer Craft's low-cost manufacturing and the ability to warehouse and distribute mixed container loads directly to dealers. A warehouse and distribution center is under construction and should be ready by the first of the year.
Direct containers save on labor, reduce damage and help solve quality issues related to handling and transportation, and should cut total wholesale costs to dealers by an average of 20%, Dondero said. Since the containers bypass traditional warehousing in the States, duplicated inland freight charges and inventory costs will be eliminated — as will seven to 10 days of transit time. After a canvass of Universal customers, he believes 60% of sales would be through direct containers, up from the current 10%.
"That number may end up being 70% or 58%, but it will be in that neighborhood," he said.
Container shipments at first will go mostly to Top 100 companies, but Dondero thinks there are opportunities to sell to smaller retailers as well. The trick, he said, will be to identify those dealers likely to survive the next decade and foster relationships with them. In addition, Universal expects to grow its business with customers it already has but couldn't service until now with direct containers.
As an import pioneer two decades ago, Universal delivered a stylish product that undersold domestic resources. Now, with so many imports on the market, the object is to deliver a more stylish product than the other importers while underpricing domestic competitors. Non-container pricing for Universal bedrooms, for example, range from $1,999 retail to its top-of-the-line Alexander Julian collection at $3,995.
Lacquer Craft's factory has the capacity to produce $350 million in wholesale sales for Universal and the Lacquer Craft customer base. Since the factory is set up on a modular basis, the company can shift technology in one module while leaving the others unchanged, and not lock Universal into a particular product.
Unlimited horizons
"We have more resources for product development and product innovation, so we are expanding our horizon on the top end," Dondero said. "There's no limit on who we can compete against.
"That doesn't mean we are going to go out and target some of the high-end guys. What we can do is bring exceptional value to the consumer that was previously thought to be contained only in domestic production. Our challenge is to keep figuring out how to make more exciting and more complex product in the price segment we're in now."
Like the Japanese car companies that came here 30 years ago, Universal must convince consumers it's OK to buy imports at lower prices, Dondero said.
"Our biggest challenge right now is to introduce ourselves to the higher-end consumer and get them to realize that they're paying three or four times as much for a dining room suite as they should and to give them the same looks (for a cheaper price). That will be the challenge of imported goods, the same challenge that imports have always had in other industries," he said.
Universal has the well-known Alexander Julian brand at its upper end, and Dondero said the company's name is known in the marketplace. But in the next year, Universal expects to launch a public awareness campaign focused on the company's value and quality.
He's been toying with this campaign slogan: "We've been in your home for years. Now let us introduce ourselves."
| Dondero |
| Universal's Grand Inheritance dining room is one of four Chinese-made collections the company will show at premarket. |
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