Buyers likely to be cautious
By Clint Engel -- Furniture Today, April 18, 2004
HIGH POINT — HIGH POINT — While business is on the upswing for many retailers, a mediocre case goods preview, the looming threat of antidumping duties and other issues may put a damper on April market buying plans.
In some cases, retailers will shift their emphasis from case goods to the upholstery category, and from import to domestic sources.
One dealer said American factories are bound to benefit from the effort by a group of U.S. manufacturers seeking duties on wood bedroom furniture from China.
Some retailers say they'll seek price guarantees on Chinese-made bedroom at market to ensure that possible duties don't come back to bite them.
But there are different approaches to the antidumping threat. Two big retailers, for instance, say they plan to carry on with Chinese suppliers because they still represent the best value despite the possible duties.
"Right now it's the unknown that's scary," said Jeff Child, president of Salt Lake City-based R.C. Willey Home Furnishings. "The problem (with Chinese bedroom furniture) is you're buying without really knowing what the landed cost is going to be."
R.C. Willey is among retailers looking for a price guarantee from key vendors, at least until it's clear what duties, if any, the U.S. government will impose. The deadline for a decision on preliminary duties was recently extended by 50 days to June 17.
"We probably won't be buying a lot of Chinese bedroom until we know how this thing is going to shake out," said Child.
Tim Harris of two-store Knoxville Wholesale Furniture said he'll spend a lot of time in High Point on the store's upholstery lineup — aiming to freshen its looks at $599 to $999 in fabric sofas and $799 to $2,599 in leather.
With Chinese wood bedroom furniture, he'll seek assurances before he commits to anything long-term.
"We want to know where it's made. We want to know what the price is going to be through the end of the year, and we want to know when we're going to get it," Harris said. "Those are the three questions, and if they can't tell us, that will affect our decisions."
He said the threat of duties has put the American manufacturers in a better position this market, and said he plans to visit more domestic companies himself.
Others are not deterred by the antidumping threat.
Keith Koenig, president of Tamarac, Fla.-based City Furniture is a leader in a retail effort to fight the antidumping petition. He plans to continue buying aggressively from China in all categories, including bedroom, "because the best values and the best quality are coming from these factories and from the trading partners we have great relationships with."
Koenig said he plans to reinforce this commitment with a trip to China in early June. He intends to place more orders at that time, when he believes business for Chinese factories will slow down with the decision on duties nearing.
"We will not abandon those suppliers," he said, adding that City is not seeking price guarantees from them.
"A lot of other folks are fleeing or postponing orders or taking a wait-and-see attitude," he said. "I'm more fearful the disruption to the supply chain (by holding off on orders) could hurt us even more."
Koenig said flowing goods smoothly, even during uncertain times, is vital to both retailers and manufacturers. He's hoping City will be remembered as an important partner when the dust settles.
Likewise, Jake Jabs, CEO of Englewood, Colo.-based American Furniture Warehouse, is not shying away from Chinese imports. Both he and Koenig say they believe any duties imposed won't be near the triple-digit percentages the petitioners are seeking. Jabs said a 5% to 10% duty probably can be absorbed by retailers like American Furniture, Chinese factories and third-party agents — possibly without passing on price increases to consumers.
"I've instructed my buyers to act like this thing isn't gong to happen," Jabs said. "Because what's the alternative?"
Alternative source countries — Vietnam, Malaysia and others — already are at full capacity or do not have the infrastructures to handle all the bedroom furniture business coming out of China, he said.
Jabs, who has vowed not to buy from any of the antidumping petitioners, said 20 of his stores' 65 bedroom groups come from China. He's not seeking price guarantees from those Chinese sources, and doesn't believe factories would give them.
But what he has seen in recent weeks is a number of suppliers who source through China calling and telling him to come by for big discounts — as much at 30% off.
"With this dumping thing going on, a lot of factories filled up their warehouses," he said. "Anticipating the duties, these people loaded up, and now they're probably wondering if that was a good idea."
For some, the antidumping issue has little effect on shopping plans. Ken Loring of five-store Boston Interiors in Brookline, Mass., said he is looking to U.S. vendors for product that's currently coming from offshore, but it has to do with quality and flow issues, not antidumping.
"Sometimes the pain of defects outweighs the lower prices," said Loring, who has tried Chinese goods but has seen inconsistent quality at best.
Boston Interiors also is hoping to overcome some service issues by shifting to more U.S. companies that will ship reliably to the retailer every three to four weeks. Among other things, Loring will be shopping domestic leather producers "so we don't have to wait for months and buy containers," he said.
Seattle-based Masins plans to play this market a lot less conservatively. The high-end retailer will check out more new sources to spice up its assortment with more contemporary looks, integrating more color and "out-of-the-box" fabrics," said President Bob Masin.
"We'll not only seek out new lines, but go back to manufacturers we haven't visited in years," he said. Century fits that bill, as does DIA, a contemporary line that Masin said his store has probably neglected for too long.
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