Youth producers adjust to downturn
By Lisa Casinger -- Furniture Today, March 23, 2009
HIGH POINT — “Flat” seems to be the new “good” as far as sales are concerned in youth furniture. Vendors are looking closely at the bottom line, editing their number of SKUs and looking for ways to help their customers drive traffic.
Earl Wang, vice president of product development for Lea Inds., said that though the company's sales have gotten “a little bit better” in the last month and a half, it is “concerning if you do a straight comparison to this time last year.”
Dutailier's David Fontaine, marketing manager for furniture, said his adult bedroom business is soft but youth is doing well and “about the same as last year.” Fontaine said the company's distribution has shifted some from independent retailers to big boxes.
Keith Covey, vice president of sales and marketing for Furniture Basics, said his company was seeing “triple-digit growth before the economic crisis. We're technically up a bit, (but) not by what I would call a significant amount. 'Flat' is the new 'good.' If we can have the same year as last year, we'll be up.”
Stefan Brugger, CEO of Gautier USA, said it didn't lose money in 2008, thanks to the company's new Gautier store, which opened in Paramus, N.J., in November. Thirty percent of Gautier's business is derived from youth furniture sales.
Driving traffic
All of the vendors interviewed for this story said the top concern on retailers' minds is driving traffic.
“Consumers are sitting back on any significant purchases,” Wang said. “There are some great buys out there for consumers who have cash.”
And, while youth and infant furniture, like cribs, are not as postponable as other furniture purchases, Wang says there are multiple retail channels in which to buy them. At the same time, consumers are buying fewer add-on pieces like desks and media centers.
“If Mom and Dad can't pay the electric bill or the mortgage, they aren't going to be buying more than the core needs for their children's rooms,” he said.
Covey agreed that store traffic is a major concern, but he said the economy isn't the only factor.
“It's not that people don't have money or that they aren't spending it — they're just spending it cautiously,” he said. “We're seeing a generation that doesn't have a problem buying everything on the Web — I think that has the potential to hurt the brick-and-mortar retailers more than anything else. People aren't out there shopping the same way they used to.”
Finding the right mix
Brugger said that in addition to concerns about the drop in traffic, retailers are worried about a movement toward lower-priced items.
“None of the experts or pundits can really foresee when (credit) is going to loosen up,” said Wang. “I think until we see improvement there, it's hard to gauge what we're looking at for the rest of the year.”
Lea is taking a hard look at its existing inventories and piece mix going forward.
“We're pairing back on the number of SKUs we're introducing,” Wang said. “Of course, we'll have the core SKUs of twin and full beds, underbed storage and dressers, but maybe you don't need two styles of nightstands or mirrors. We're trying to get more creative with our offerings while still addressing the basic consumer needs.”
Fontaine sees the level of business remaining the same this year.
“It is slow, but babies are still being born and people still need furniture,” he said. “Dutailier is a high-end manufacturer and people who have money will still buy.”
Fontaine said the company is weeding out its “duds” or slow movers, but that is a normal process, not something that's changed because of the economy. Dutailier is investing more in product development, however, gearing up for when consumers get back to spending.
“We invested a lot and focused heavily on the glider side of our business for the last 18 months,” Fontaine said. “Now that we are satisfied with that, we are working on our case goods.”
This year, Furniture Basics plans to add about a dozen new SKUs to its line, according to Covey, including sleigh beds and lofts, storage and maybe even cribs.
Service a key
Covey says one of the steps that has helped sustain Furniture Basics' business is making sure products are in stock “100% of the time.” In addition, the company has worked hard to reduce overhead costs.
Gautier plans to open two or three more U.S. stores this year and Brugger expects total sales to increase by about 20%. The company hasn't changed its volume of introductions or SKUs and, in fact, debuted two juvenile collections in January at the Maison&Objet show in Paris.
When times are tough, buyers — both retailers and consumers — become skittish about going out on a style limb. Contemporary made a big splash in youth a few years ago, but now things are swinging back to safe, more traditional looks.
Wang says Lea is going with darker finishes and trying a girl's youth group in chocolates and merlots, a finish that's somewhat gender neutral and has a metropolitan look. And one of the boy groups the company is working on has an American country feel.
Back to basics
“When times are tough, people look for safe, more generic looks and they rely on the bedding and accessories to be the style,” Wang said. “From a fashion standpoint, I don't see a lot of chances being taken right now.”
Dutailier's Fontaine agreed. “Three years ago, style was easy — contemporary was standing out,” he said. “But now, with the recession, we aren't sure where to go style-wise. We have to try to not be too outside-the-box because consumers are shy.
“Colors are kind of boring right now, (with) lots of neutrals. We show fun and funky colors and patterns in the showroom, but we end up selling the neutrals. Earth tones are everywhere.”
Dutailier has revamped its Great Value collection, a line designed at a lower price point than much of its line. The company also is reworking its case goods to produce them more efficiently and adding and changing features to add value but keep prices competitive.
When it comes to style, Brugger says Gautier sets its own trend.
“One collection is more romantic, for young ladies, and the other is very flashy metallic, for boys,” he said. “Our trends include functionality with features to implement iPods, game consoles, etc.”
New rules on lead
All of the vendors say they are compliant with the latest U.S. Consumer Product Safety Commission legislation, the Consumer Product Safety Commission Improvement Act of 2008.
The act regulates the lead and phthalate content in products intended for use by children 12 and younger.
On Jan. 30, two weeks before the act was to have become effective, the CPSC voted to issue a one-year stay of enforcement for lead and phthalate testing and certification. The delay is aimed at providing time for testing protocols and procedures to be developed and test labs to be accredited.
The new date for regulations to be phased in is Feb. 10, 2010.
“We're committed to providing a safe product,” Wang said. “However, the interpretation and implementation, testing and record keeping are a challenge. All of this has affected the flow of our introductions. It's slowed them down, so we can make sure we are compliant.”
Brugger says Gautier products meet the “severe European standards” and the company actually is developing a furniture board which will “set new standards” in safety.
 Dutailier has spent the last 18 months focused on its glider business. The Canadian manufacturer is now turning its attention to boosting its case goods program, an executive says. |
Correction
12/23/2007FR regs set for July '07
02/19/2006
