Upholstery makers see room for growth in '05
By Gary Evans -- Furniture Today, December 26, 2004
High Point — Closing the year on an upbeat note, seating manufacturers hope the tune they hear next year is the sound of a cash register ringing up more upholstery sales.
There's reason to be optimistic. For the past couple of years, some 4.5% to 5% of 31,505 respondents to an exclusive Furniture/Today survey either bought or expected to buy a stationary sofa, and 1.3% to 2.2% bought or were thinking about buying a sofa-sleeper. With the economy improving and consumer confidence growing, 2005 sales should be on par or better.
"We're very optimistic that things are turning," said Lee Fautsch, national sales manager for Flexsteel. "What I'm hearing from our retailers is that business has improved at least marginally and in some cases, markedly. It would appear that people have settled down after the election and we're thinking we could be in for some very good business."
So where's all that new furniture going?
About half — 52% — of those surveyed said new upholstery will go in the family or great room. A little less than half — 46% — wanted a new piece for their formal living room. That may explain two major directions in style over the past year — either casual contemporary in many variations (including lifestyle, urban and retro) or a cleaner version of the over-decorated traditional of a few markets ago.
In fact, the mantra for today's upholstery industry might be "cleaner." Producers have taken a lot of the frou-frou out of introductions in favor of simpler, straightforward looks with smaller-scaled elements and toned-down (but still vibrant) color.
"We've gone very much brighter for the past two markets," said Del Starnes, president of upper-end producer Taylor King. "This last market we kept some of that but returned to the more mainstream with richer, and a little deeper tones."
Starnes said he also sees an opportunity for growth in transitional/contemporary styling. "We're going to address that in a more important way next market," he added.
In addition, the scaling issue is becoming more and more important, said Flexsteel's Fautsch. "People are looking for finer lines in their furniture, not so big and bulky. We've been talking about great rooms (requiring bigger furniture) since the cows came home. But not everybody has a great room. There's big business in small scaling."
Other factors driving business in 2005:
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Delivery: Producers are working to shorten delivery schedules, partly for competitive reasons but more as a hedge in holding off imports. According to the Furniture/Today survey, 75% of consumer respondents said the maximum they were willing to wait for furniture was four weeks; 46% expected delivery in two weeks.
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Imports: There's hardly anyone in the upholstery business that isn't using cut-and-sew or imported fabrics. In turn, manufacturers say that domestic mills have responded with strong values and, more importantly, a surge of innovative products. While manufacturers are looking abroad for labor-saving production and inexpensive fabrics, there's been no rush to source fully assembled upholstery, with the exception of leather. And while there are no signs yet, some executives feel that, as the economies of China and India grow, producers may find some room there for U.S. exports. The declining value of the dollar also may help.
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Value: Strong values in imported case goods are having a ripple effect on fabric upholstery. After all, who wants to buy a sofa that costs more than an entire bedroom or dining room? As a result, domestic upholstery makers are looking for new ways to enhance value, including added styling, fabric and construction touches.
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Leather: Imported leather goods cut into fabric sales enough that several manufacturers have begun their own import leather programs. On the other hand, micro suedes have cut into leather sales, so it may be a wash.
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Raw materials: Steel for springs, foam for cushions, wood for frames and just about everything else that goes into a sofa or chair has gone up in price. Manufacturers say they have been squeezed in every way imaginable until they finally have had to pass some of the costs on.
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Government regulations: Flammability regulations are a run-hot, run-cold situation. The possibility of replacing voluntary UFAC standards with a federal standard — something the industry now supports — waxes and wanes and is still somewhere in the governmental hopper. A new issue is polybrominated diphenyl ethers, or PBDEs, a fire retardant found in foam. A government study in Dallas found PBDE levels in supermarket foods like salmon, meat and dairy products were much higher than expected, warranting further study given possible ties to cancer.
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Floor space: The retail space pie isn't getting larger, and manufacturers have to offer sure-fire winners to get a bigger piece of it — especially with so many manufacturers' stores opening. And then there's the battle to get a bigger piece of the consumer's dollar. That's not getting easier, either. To survive, let alone grow, manufacturers must offer fresh styling, quick delivery, consistent quality and strong values.
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Fashion focus: "We, as an industry, have been giving lip service to this adage that we're in a fashion business," said Flexsteel's Fautsch. "The colors of the last five to seven years certainly would not indicate that we're in a fashion business.
"But I think we're on the threshold of really meaning what we say, not just in color but also in the selection of fabrics — not just chenilles but all kinds of textures, silks and satins. We're doing a better job of offering the public some real fashion for the first time in a long time."
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