We aren't overstored, we're under-marketed
Jerry Epperson -- Furniture Today, April 3, 2005
In case you haven't noticed, there's a new investor focus on furniture retailing. My partners and I are seeing an interest in the retail side of our industry not evident since the early 1980s. Already, two high-profile, exceptionally well-run furniture chains, Harlem and Bob's Discount, have been recapitalized in partnership with sophisticated, respected private equity firms.
Please note that these stores were not "sold" or "acquired." These chains have new investors that, along with existing talented managements, have a new capital base and access to additional funds to allow them to grow and take advantage of opportunities in their current markets and beyond. And more of these types of transactions are coming.
Why? My urge is to kick into my usual rant about a glowing future, but you've probably heard that too often. Instead, find a copy of a November report from The Brookings Institute entitled, "An Opportunity to Rebuild America," and review their forecast for housing. And study the latest census data on migration within the United States, our population and how the age segments are growing, and the trends in immigration, education, wealth and income.
Our industry is so busy fussing about prices, imports, new competition, exclusives, terms and other drivel that we ignore the fact that others want to be in our industry for reasons we too often fail to appreciate.
Speaking of new investors, did you notice the Chinese government decided last October to release capital to flow out of China in order to make acquisitions? Only weeks later, a Chinese computer giant announced it was acquiring controlling interest in IBM's PC business. This could be huge news in our industry.
Already, over a dozen Chinese furniture manufacturers have established U.S. sales organizations to sell directly to U.S. retailers, instead of being merely OEM suppliers to U.S. companies. With the new Chinese government policy, they now are able to acquire U.S. manufacturers, importers or (dare we say it?) U.S. retailers. And, yes, already we have Asian ownership of at least two U.S. furniture retailers.
Old-timers may remember that we had BIF Furniture on the West Coast in the 1980s, and that Taiwan's Master Design owned Wickes in the early 1990s, but we believe these new chains are different and may bring a whole new perception to furniture retailing in America.
Combined with rapid growth in single-brand stores, store expansions and moves to improved locations for many of our existing chains, and new retail concepts, there is new vigor in furniture retailing.
Pessimists among us say we are over-stored, but I believe we are under-marketed.
