High Point — For the furniture industry, the Iraqi war began almost a month ago.
Retailers and manufacturers say consumers began anticipating the conflict in mid- to late February, pinching retail sales already encumbered by a slow economy and severe winter weather.
The prospective war's impact on the April market here, other than providing a distraction similar to the football playoffs that often punctuate the winter San Francisco market, is expected to be minimal. International traffic to the market, however, may be noticeably lighter.
The economy, a wild winter and now a widely anticipated war have combined to confront the furniture sector with a triple-whammy. Winter is finally giving way to spring, but war is proving equally chilling to sales. And don't even mention North Korea.
"January was the second-biggest shipping month our company has ever had," said David Pinamonti, senior vice president at A*America, an importer based in Seattle. "But in late February, we really saw business slow down. And we expect everyone to be home watching CNN for a few days once this thing starts."
Pinamonti said he has heard of no buyers canceling or even altering plans for High Point market, but points out that all of A*America's retailers are in the United States and Canada. To prepare for delays in shipping related to heightened security at seaports and airports, the company has beefed up its warehoused stock by 15%–20%, similar to actions taken in response to the dockworkers' lockout six months ago.
"We don't see shipping getting disrupted, but security will probably be heightened and that means it might take a little longer," Pinamonti said.
Standard Furniture is bracing for "a tough High Point market and a tough spring," said Don Mecke, vice president of sales and marketing. Business at the company, which combines domestic production with imports, is ahead 14% year-over-year, but the retail climate is not great and getting worse, Mecke said.
"I am sure the fact that we are in the preamble to war is (affecting) business, as is skyrocketing gas prices," he said, explaining Standard's response as "taking the bull by the horns and charting our own course."
The company introduced its first leather line under the Kathy Ireland Worldwide brand at Tupelo, a launch that exceeded Standard's "wildest expectations," so Mecke said High Point could yet be a good market.
Attendance hard to predict
Bruce Miller, chief executive officer of the International Home Furnishings Center in High Point, said advance registration by international buyers is running at normal levels.
But he said he's concerned that world events could cause some to cancel plans to attend the April market.
"With all the uncertainty out there ... it's just difficult to predict," he said of international attendance. "I'm just hoping that the world scene will straighten itself out in the next couple of weeks, but in reality, that's probably not going to happen."
Drexel Heritage is taking a similarly proactive approach in anticipation of a High Point market that forces manufacturers to earn each and every sale. The company is making elaborate plans to video all showroom displays of new product before market. If there is a significant dip in attendance because of the war, Drexel Heritage can take market to the dealers.
"This will not replace the market experience, but at least it will serve to begin a dialog on our new product introductions until our accounts can visit our showroom perhaps later in the month," said Jeff Young, president.
Since taking the helm at Drexel Heritage a year ago, Young has had the company use its U.S. plants to make initial samples, first cuttings and even second cuttings in some instances before moving production offshore. The company could ramp up domestic production quickly if the need arises, he said.
Anticipation of war has put retail sales in a "holding pattern," said Young, so Drexel Heritage developed a monthly event calendar designed to spur business.
North Korea also looms
A company completely dependent on the Pacific Ocean's shipping lanes is Lacquer Craft, a southern China-based manufacturer that markets through Universal Furniture and ships direct containers. Mohamad Amini, an executive with the manufacturing giant, said he expects little impact from an Iraq war on the flow of goods other than security-related delays.
North Korea, however, could present a far more complicated scenario if it affects shipping from Asia, he said.
Gary Bryant, vice president at Canadian case goods producer AP Inds., said that situations like the ones in the Middle East and North Korea are among the reasons his company uses a blended program of imports and domestic production. The company imports only a few beds and, if shipment delays are imminent, can readily switch over and make them in Canada, he said.
"AP Inds. built our business on shipments in four weeks or less," Bryant said. "These three disciplines prohibit dependence on imports."
Jabs doubts war will happen
One who does not believe there will even be a war is Jake Jabs, chief executive at Denver-based retailer American Furniture Warehouse. Jabs said that although Saddam Hussein is a maniac, "he's not an idiot. He will disarm."
Jabs said he does expect traffic to take a hit at High Point, however. One of the industry's most active travelers, Jabs says his buying team will be at market in full force, open to buy and looking for deals. "But many people are scared to travel, and I understand that," he said. "I'm suspicious that traffic will be down."
Jabs recently returned from the Far East series of furniture shows, and said traffic was significantly off in Singapore and Kuala Lumpur — in part, he suspects, because of anti-American sentiments and fears of international travel.
North Korea also will not be a factor, Jabs said, because China will take care of North Korea.
If there is a bright lining to the clouds of conflict and plunging consumer confidence, executives agree it is pent-up demand. Home sales have remained strong throughout, and people are still having babies.
As long as consumer confidence can rebound following the war, pent-up demand should be "great for home furnishings," said Geoff Beaston, president at Shanghai-based Fine Furniture Design and Manufacturing. "If the confidence level of the consumer does not move up, we are in for a soft market."
Jeff Seaman, chief executive officer at Seffner, Fla.-based retailer Rooms To Go, said another positive is that the war's resolution would end the holding pattern in which retail is stuck.
"If the war is quick and successful, I think it will affect business positively," he said. "There's some fear related to uncertainty."
Moving production to U.S.
Century Furniture told the (Raleigh, N.C.) News & Observer that it, too, is ready to move offshore production back to North Carolina, if necessary.
Eric Schenk, the company's chief operating officer, said less than 15% of Century's furniture is made abroad. Transitioning that business back to western North Carolina would require 10 to 12 weeks, he said.
On the retail side, Schenk said the manufacturer's contacts with dealers in the Middle East, which normally occur face-to-face, have switched e-mail and phone calls. Business trips to other parts of the world remain on schedule.
| Acknowledgements | ||
| Senior Retail Editor Clint Engel and Business Editor Larry Thomas contributed to this story. | ||
