100 independent stores: Worth watching
Beyond the Top 100 retailers remain optimistic despite host of challenges
By Tom Edmonds -- Furniture Today, June 27, 2007
High Point — High Point— Rising operating costs and lower gross profits, caused by reduced wholesale prices, are just a few of the major challenges facing the independent furniture retailers who make up the Beyond the Top 100 list.
Business conditions also remain spotty, with some retailers saying that their most reliable advertising hooks are not working as well as they once did.
The biggest challenge, though, is less easily defined, although it's present every day. As owner-managers, retailers know they must not only lead by example, setting the tone for both employees and customers, but also be the lead firefighters, responsible for containing all the brushfires that pop up before they grow into something worse.
"The biggest business issue for any furniture retailer is the deflation we've experienced in the last two years," said Tim Harris, owner of Knoxville Wholesale Furniture in Tennessee. "Of course, backroom costs continue to creep upward. Our job is to do our homework better as far as our buying and not follow the pack that seems to be running off the edge of the cliff."
Harris' comments were echoed by several other retailers, who said they are looking for products they can sell at better margins or just working harder to sell up to a better group or add another piece to each sale.
Import complications
Some retailers added that the many issues related to case goods imports, the primary culprit in today's price deflation, continue to complicate their decision-making. Currently, the big questions relate to pending tariffs on Chinese-made bedrooms, and, for those who want to buy domestically produced bedrooms, where to get them.
"We're actually having as much trouble getting domestic product today as we were getting imported product," said Stuart Shevin, president of Standard Furniture in Birmingham, Ala. "So many people like us are entirely frustrated by the import issue."
For Shevin's promotional, credit-oriented business, deflation is not as big a problem as it is for those retailers who work higher price points.
"Where it's been a problem for the high-end guys, it's kind of helped us where we're offering more value than ever," he said, explaining that he's now selling bedroom suites for $2,000 that used to carry $4,000 price tags.
"The days of selling furniture that won't last are over," Shevin said. "We're selling some product with impressive quality."
Price deflation or not, Gary O'Reilly, owner of O'Reilly's Fine Furniture in Libertyville, Ill., said consumers expect and intend to pay less.
"I've never had a run where no matter what price you tell someone, they want it for less," he said. "In the first five months of this year, I've had more returns than I had all of last year. I can't make any sense of it. People are crabbier."
The normal arsenal of advertising hooks, a fundamental tool for building store traffic, are not as powerful as they once were for some retailers.
"One of the biggest struggles we have nowadays is how to get the customer in the door," said Harry Samuels, president of Samuels Furniture & Interiors in Memphis, Tenn. "All the promotions of 'no-no-no' and including the sales tax have been used so much that they are no longer as effective."
But this is the kind of issue that seems to spark some retailers' best thinking.
"You can't afford to run out of bullets on your advertising and marketing," Samuels said. "We've been developing other events, like having receptions at night or weekend seminars. Anything to get them in the store and to engage them."
Targeting the young
Samuels and O'Reilly each said they believe that a style shift is taking place in the marketplace.
For Samuels, a big transition is underway in his strongly traditional market. Perhaps because of television, he said, "The younger people aren't going for the same old traditional looks that their parents liked. Now, transitional looks are getting stronger with the younger crowd."
O'Reilly said he's asked his son, Gary Jr., to take charge of a new contemporary gallery to enhance the store's appeal with younger adults. "I'm not stupid enough after this many years (he opened the store in 1977) to think my way is the only way," O'Reilly Sr. said.
Beyond profits, furniture retailing is an exercise in creativity. And from talking with quite a few of these retailers over the years, one gets the sense that they get a thrill from being problem solvers, from changing direction just a little early rather than a tad late. But the job is a high-wire act, with employees and customers always watching. And it's impossible to anticipate what's going to happen from day to day.
"Every day you go in and see the hands of cards you've been dealt and you start playing them," said Harris from Knoxville Wholesale.
"There's a few thousand issues all the time," agreed Jim Bright, president of Dunk & Bright in Syracuse, N.Y. "The only time you can relax is when the store is closed."
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