Ethan Allen picks up its pace
By Brian Carroll -- Furniture Today, September 27, 2004
Danbury, Conn. — Forgive Ethan Allen retailers for feeling a little like Alice breathlessly sprinting through Wonderland.
In Lewis Carroll's much-loved fairy tale, the Queen tells Alice she'll have to run merely to "keep in the same place." To get somewhere else, the Queen says, Alice would have to run twice as fast.
At the 2004 Ethan Allen International Retail Convention here, attending retailers were encouraged to pick up the pace.
Just seven years since embarking on a chain-wide overhaul of its stores, both inside and out, Ethan Allen is once again remaking itself. Chairman Farooq Kathwari issued the challenge to the approximately 600 Ethan Allen dealers who converged on Danbury this month from cities around the world.
"We cannot go backward," Kathwari said. "We are embarking on a reinvention of Ethan Allen again.... The cycle for reinvention is becoming shorter and shorter."
The latest reinvention is changing Ethan Allen's stores, product mix, sales event policies and, Kathwari hopes, the attitudes of many of its people.
He wants more leaders.
With the addition of Tango, a casual collection unveiled at the convention, and changes to three existing collections, about 70% of the merchant's product lineup is less than three years old. Most of the new product is casual.
Ethan Allen's stores also are undergoing another overhaul. A new flagship store opened in June 2003 in Alpharetta, Ga., in metro Atlanta. At 35,000 square feet and with a warmer, richer façade, it's meant to serve as a beacon and billboard to passing motorists. Since then, seven new-look stores have opened and 15 or 16 more should open in the next 12 months.
"We are busy finding the right locations" for new stores, Kathwari said. Ethan Allen employs sophisticated demographic and psychographic research to determine where new stores should go. In the past five years, more than 70 of the chain's stores have been moved to better locations.
The latest reinvention also calls for a renewed focus on people, specifically on developing talent within the stores' staffs. Kathwari said that, in order to grow, the company needs to develop leadership "at every level."
To open the conference, more than 300 Ethan Allen store owners participated in two days of management and leadership training and development. Compared with past conferences, far less time was spent with new product and far more was devoted to management and leadership.
"We need good people," Kathwari said. "In most companies, it is the stragglers who dictate what will happen and the pace of change. That is not the case here. When I have determined that we are at 70% readiness, then, like the Marines, we move. You can never be 100% ready."
Sales events at Ethan Allen will be quite different as the retailer migrates away from discounting to everyday low pricing and events centered on non-price incentives.
Reinvention continues in sourcing as well. Once entirely U.S.-made, Ethan Allen increasingly looks offshore for its product. The company has had to absorb 7% to 12% duty rates on bedroom furniture made in China, a range Kathwari calls manageable.
Anticipation of higher duties, however, did change Ethan Allen's sourcing equation. Some production was moved out of China and into, for example, Vietnam. Kathwari said the shift "has not been a major thing for us and certainly no disruption."
Ethan Allen still claims vertical integration as one of its chief strengths, however. The term historically has referred to stores supplied with company-made product, although Kathwari says that definition is antiquated.
"Vertical integration is coming up with the concept or idea, then delivering it to the consumer with control of it all of the way through," he said. "Where you make (product) is not as important, provided you have control of that sourcing and the logistics of that sourcing."
Kathwari said Ethan Allen indeed has such control, primarily through alliances with companies such as China's Markor, among others.
Closing U.S. plants — which Ethan Allen has done twice this year — and depending more on imports "obviously raised a lot of concerns," he said. The company operates a dozen factories in the United States, including six case goods plants, five upholstery plants and one accessory assembling plant, with about 4 million square feet and 4,000 employees.
Ethan Allen has about 310 stores, including 119 that are company-operated. In fiscal 2004, ended June 30, the company opened 14 stores and acquired 16 from retailers.
