Leather players thinking globally, acting locally
By Joan Gunin -- Furniture Today, October 10, 2004
High Point — This market, leather upholstery manufacturers are faced with a variety of big issues, including rising Asian competition, currency imbalances and economic uncertainty caused by the election and the war.
But while they're thinking globally, they're acting locally, doing what they can to enhance product lines, improve service and beef up merchandising support and custom capabilities.
At Omnia, Murray Eastern, director of sales and marketing, expressed optimism about this market. "We're on a very strong growth curve due to our growing national presence."
California-based Omnia, which has a strong presence on the West Coast, is now encountering tremendous growth in the East.
"We'll have very strong attendance from independents — which is bucking the trend," said Eastern.
To continue this sales momentum, Eastern said his priority remains offering "timely delivery, quality product and the best selection available in the domestic market."
Harry Cierler, director of North American operations for Chateau d'Ax, also said he was optimistic about market, while admitting that "business has been a little strange."
"Dealers will ask 'what's new' and 'how to promote' and we are trying to be very innovative with some of the things we're doing construction-wise and product-wise," Cierler said.
Retailers need to find creative ways to get consumers into their stores, Cierler added. "The furniture industry needs to give consumers a reason to shop."
At Leathercraft, President Jack Donahoe predicted this will be "an average fall market without overwhelming attendance. Naturally, the more people that come, the better we do, but we may not have that card to play this time."
Therefore, he said, his job is to "convince" the retail store buyer not to focus solely on price points.
Rather than capitalizing on commodity goods and volume tonnage, Leathercraft stresses "the opportunity to sell better, unique stuff," he said. "But it's not midpriced, so we must be flexible and accommodate our better consumers to make it worth the price."
As long as it product remains fresh, Leathercraft will continue to be rewarded by consumers willing to pay higher prices for non-commodity products, said Donahoe. "Our product will hold its value to the consumer," he said.
Scott Glenn, vice president of product development and marketing for Interline Italia, said business has been "tough for the last number of years. We're seeing a gradual and healthy uptick if we look at the economic indicators. Business may see a modest increase but, honestly, who knows?"
Those manufacturers and retailers who work hard to maintain their competitiveness in leather will see growth, he said.
"There is business to be had, but fewer are having it," Glenn said. "Even if we have a flat year and lose 5% to 10% of the manufacturers and dealers out there, that in itself will give a sales increase to those who are still there."
Competition from the Chinese has forced Italian producers to rework their business strategies, Glenn added.
"It's all about market share right now," he said. "Leather should still outpace most categories. The leather business is maturing in the United States but still has a way to go to be maximized."
Regardless of its origin, leather offers "a higher average ticket and a higher margin opportunity," Glenn said. "Such opportunities are critical to dealers."
Larry Crink, executive vice president of sales and marketing for DeCoro, agreed that retail is tough. But he said that "strong values are continuing to sell on all retail floors."
The Chinese-based producer will unveil 50 styles and frames this market, Crink said. "We are prepared to further prove our value and fashion leadership against new leather manufacturers coming on board."
Fred Starr, president of Natuzzi Americas, said while the upper-end Pasquale Natuzzi Collection is "doing particularly well, competition remains especially keen at the promotional end. We are seeing more pressure there and to that end, we're being more aggressive" with new models and additional cover options.
Starr predicts better- and medium-end customers will return to the shopping mode following the elections.
"There is huge pent-up demand for furniture," Starr said, pointing out that the strong housing activity over the last few years means that there are a lot of under-furnished homes.
While Natuzzi is looking to stir up business at both the high and low ends, Thomasville's market focus is geared to its midprice entries.
Designed to "bring balance" to its leather lineup, Thomasville is "building a bridge" between its promotional import program and its domestic custom program with the addition of midpriced cut-and-sew offerings from China and South America.
"We are bringing in cut-and-sew to ease the jump," said Michelle Rosson, director of marketing and merchandising for Thomasville upholstery.
"We have done well and seen growth at both the promotional and higher ends," she said. "Now we are concentrating on a larger segment of the middle part of business. The Thomasville consumer still expects higher-end elements from all the products we give them."
With the rollout of its own store-within-a-store gallery concept this week, American Leather is seeking to define its dealer base.
"We don't sell product, we sell a package: branding, advertising, delivery, everything," said Cary Benson, vice president of sales and marketing. "We're trying to find retailers who embrace that total program that we offer."
American Leather is aiming "to identify those retail partners who truly want to partner with us and with what we are doing and want to make it work within their own market," Benson added.
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Leather players thinking globally, acting locally
Oct 13, 2004
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