Bedroom a bargain thanks to imports
Savvy retailers strive to sell more pieces to compensate for effects of price deflation
By Powell Slaughter -- Furniture Today, March 9, 2003
High Point — While master bedroom is one of the likeliest purchases for furniture shoppers this year, most retailers will have to sell more pieces than in years past to maintain revenue in the category due to downward price pressure from imports.
According to Furniture/Today's latest Survey of Consumer Buying Trends, 5.2% of U.S. households will buy bedroom furniture in 2003, ranking the category second only to mattresses in planned purchases this year.
The survey indicates consumers will be hunting for bargains, too — 40% of the surveyed households that say they'll buy bedroom have annual combined incomes under $40,000; and fully one-third of bedroom shoppers are less than 35 years of age, many making their first major purchase beyond what they used in college. Pricing trends are right for these young consumers.
Retailers recognize the benefits to consumers of price deflation, but offering more bedroom for less money is forcing merchants to work a lot harder in the category. And consumer wariness in today's geopolitical environment makes it tougher to sell the extra units necessary to make the same money retailers did a couple of years ago, especially for independents.
Atlanta-based Havertys has improved its margins in bedroom, according to Tony Wilkerson, senior vice president of marketing. Havertys concentrates on middle to lower upper price points for bedroom, which is one of the chain's two largest product categories.
More value equals more sales in the Havertys equation.
"Imports have added value to each price point range, so that a customer can get more for their money today in each category," Wilkerson said. Major suppliers include Broyhill at middle price points and Thomasville at lower-upper retails. Havertys-branded bedrooms are top performers as well.
Pam Leonard, merchandise manager for The Old Cannery Furniture Warehouse, a midprice retailer in Sumner, Wa., agreed that consumers are benefiting from today's price pressure.
"They're getting a lot more for a lower price, but we're still getting our margin," she said. "And while it seems that the price of furniture at retail is still going down, we've actually been able to improve the margin."
Leonard credits that improvement to Old Cannery's shift to more direct-container sourcing in the past couple of years. A single-store independent, Old Cannery buys containers through several distributors, including Emerald Home Furnishings, A-America and Klaussner.
She advises retailers new to containers to work through a distributor, and realize that containers aren't as daunting as they might appear.
"You don't deal with all the hassle like letters of credit — it just shows up at your warehouse," Leonard said. "When people think about containers, they usually worry, 'Oh, I can't handle all that product at once.' When you think about it though, compare a high-cube, 40-foot container to getting a 53-foot truck delivery. We do those all day long."
The flip side
Even if retailers maintain or improve margins on lower-priced bedroom product, they're still ringing up less in sales.
"I think the offshore pricing is the yardstick for everyone, wherever the product is made, and no matter where it's made, value still comes into play," said Larry Wells, owner of Lexington Furniture Co., a middle to upper-end retailer in Lexington, Ky. "Our problem is it's causing a deflation in the price of goods.
"Say our average bedroom delivery in 2001 was $5,000. For the same number of pieces in 2002, it was $4,000. That means Lexington's costs — delivery, handling, detailing, overhead — are 20% greater."
Lexington gets some relief by "stretching its legs a little" on import margins.
"We aren't looking to make a killing, but if we can get two or three points here and there it helps. Retailers could find themselves in financial trouble if they aren't careful. If it's not already here, it's right around the corner."
Lexington Furniture's bedroom lineup starts with Stanley, Lexington and Fine Furniture, moves to Durham, and tops out with Henredon, Century and Henkel-Harris.
Not only imports, but economic conditions and a slow retail environment are pushing prices southward, said Allan Morris, president and CEO of middle to upper-middle priced retailer Burdorf Interiors in Louisville, Ky. His bedroom suppliers include Fine Furniture, Royal Patina, Durham, Master Design and Hickory White.
"Pricing pressures are coming in all forms, and consumer expectations on downwards pricing is a standard, not an exception," he said. "You see this in other (industries), and it has caused havoc in retail and automotive for pricing and margins."
Consumer preferences
Wilkerson at Havertys said there aren't any specific style trends driving the bedroom market right now. As a broad-based retailer, Havertys experiences a range of consumer preferences.
"Customers purchase to their needs — one piece or a matched suite, or several coordinated pieces for an unmatched suite," Wilkerson said. "Certainly, popular styles and designs change over time."
Others, however, saw some changes in how consumers shop for bedroom. A piece vs. suite approach is apparent at Lexington Furniture Co.
"We find people are upgrading from a king to a queen bed, or buying a gold mirror to go over the dresser or an armoire," Wells said.
Burdorf Interiors' strongest price point is in the $1,699 to $1,999 range for a bedroom set. Both the price point and Burdorf's mid-America location are tailor-made for what imports have to offer.
"We're advertising the look, quality and particularly the price points in our TV and newspaper ads," Morris said. "Just remember Louisville, Ky., is in the traditional style market and that is right on target with design from Asia."
Burforf's consumers love sleigh beds, he said, and they still want the suite of product — all at a price. The store is ordering more containers and more imports to meet demand.
In the Pacific Northwest, consumers go for casual feels, said Old Cannery's Leonard.
"Mission still sells very well," she said. "We manufacture solid-wood bedrooms ourselves that do very well. People here tend to love the outdoors and nature, and that shows in their casual tastes in furniture."
Source: Furniture/Today Consumer Buying Trends Survey, February 2003
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