Fabric protectors offer retailers major profit center

In-store service gives consumers extra protection for new furniture

By Gary Evans -- Furniture Today, March 7, 2004

HIGH POINT — HIGH POINT — One of the furniture industry's best profit centers is located behind closed doors.

That's where aftermarket fabric protectors typically are applied, either back in the warehouse or out on the loading dock. And as technicians perform their job, it's almost like they're spraying gold for retail cash registers.

Fabric protectors are chemicals available from five major suppliers and a host of smaller ones. Sprayed on, a molecular barrier surrounds the fabric fibers, repelling everything from coffee spills to dog urine. Similar protectors are available for leather, mattress pads and wood products.

In most cases, protectors shield against rips, tears and burns — but not against damage caused by acts like cats' scratching.

In all, protective coatings are estimated to be a $2.3 billion to $2.5 billion business at wholesale, with home furnishings accounting for much of that total (other major markets include the automotive and boating industries).

The profit model

Here's how a typical sale works: A retailer buys a drum of chemicals, which he uses to spray on newly purchased sofas and chairs. He then sells the consumer a warranty at a price of about $75 for a sofa. Depending on cost, warranties can run for different periods, but most are for five to seven years.

Chemicals used to treat the sofa cost about $2, and a warranty from the supplier backing the process costs the retailer $3, for a total cost of $5. The salesman gets $15 at the usual 20% commission. The store gets the rest in profit.

"I wish we could do it on everything," said Bob Bower, general manager of Russell's Furniture in Santa Clara, Calif.

Russell's, a well-known retailer in California's Silicon Valley, has been selling aftermarket fabric protectors for more than a decade. Bower said that his supplier, Guardsman, a unit of Valspar, provides chemical stain retardants in a 55-gallon drum.

A lifetime warranty protects against damage from food and pet stains — almost everything but normal soiling.

"The key is, the consumer needs to respond in five days if something happens so the warranty company will have time to do something about it," said Bower.

He noted that his company has drawn few claims and those that did take place were handled quickly and efficiently. Five days is an average response time for the top five suppliers, although they stress that the sooner a problem is reported, the better.

"We sell a lot of high-end upholstery," Bower said. "If you pay $399 or $499 for a sofa, then maybe who cares because it has a five-year life. But when you're talking seven to 15 years on a lifespan, I think you're foolish not to have it."

Bower said it takes a trained technician about five minutes to apply the chemicals, and 90 minutes to two hours for the upholstery to dry.

Andreas, a full-service store in Sugarcreek, Ohio, sells both fabric and leather protection with a close rate of 80%, according to Bonnie Dombeck, sales manager.

"We are a very low-pressure environment and are customer service-oriented," Dombeck said. "There is a level of trust we build with our customers. When we ask them that question (about buying fabric protectors), we're trying to help. You can make a lot of money on it. But the other avenue on this whole thing is that they're buying an insurance policy."

Enhancing the purchase

The average close rate on aftermarket fabric protectant is in the 60% to 70% range, according to top suppliers.

"We have some retailers that are well over 90%," said Tony Milano, vice president of operations for Stainsafe, one of the industry's leaders. But certain retail segments — like department stores — don't perform as well with the aftermarket products," he said, which lowers the overall average.

Milano said that fabric protectors "are one of the easiest things to sell. The biggest appeal to the retailer is that they provide a good value and it is something that enhances the customer's buying experience at their store. And they're obviously making a good profit on it.

"For the consumer, it's protecting an investment that she just made in upholstery — and takes the fears away regarding 'what's going to happen to my sofa in a year with my dog and kids?' " Milano said.

He added, "Think about it: If you get a spill on a sofa that isn't protected, you have to call a professional to clean it, and it's going to cost you more than that warranty — and that's just for that one time. And there's no guarantee that you're going to get it out."

Randy Wahlman, president of Ultra Shield, another major supplier, said his company has a database of 6,000 cleaning and repair companies to call when a customer develops a problem. The cleaning specialist has five days to report the results, Wahlman said. If the problem can't be solved, Ultra Shield will pay to replace the soiled part or, if that's not possible, the whole piece.

Suppliers seemed reluctant to specify how often they honor warranties, but apparently that hasn't been a problem for retailers.

"We had to fulfill a warranty and there was no problem on that," said Dombeck of Andreas, which uses Guardian.

"The fabric was discontinued so they (customer) had to select another product."

Wahlman and executives say that most Top 100 retailers sell fabric protectors.

Most use suppliers like Ultra Shield that provide both chemicals and warranties, although some carry their own warranties.

"They've found that when a recession is on, the extra sale of a warranty puts more money in their pocket," said Wahlman. "That extra is what pulled many of them through the recession."

'Easy to sell'

Jackie Groban, national sales manager for Guardian, which markets Guardian and Master Seal, which is licensed to use DuPont Teflon, said fabric protectant is a "very easy sell. At least half the people who walk into a store have a pet.

"The warranty protects their furniture from anything a person eats or drinks — anything that comes out of a human body. All pet stains are covered."

Groban said the average retail close rate is 70%.

But Guardian has two trainers that work with stores, and they often are able to increase that rate to 85% or higher.

"Do you how much that is in money?" said Groban. "Going up 15% is big time."

Suppliers said that those retailers who don't sell protectants simply "don't want to mess with them."

"Some stores are very small," said Ultra Shield's Wahlman. "People are a little shy of treatments because they don't understand chemicals."

None of the executives interviewed seemed concerned about the growth of microfibers, often touted as carefree and soil-resistant, and performance fabrics from companies such as Sunbrella and Crypton.

The typical comment was that most don't offer warranties that provide written piece of mind for the customer.