Leather sources ready to fire global shots
By Joan Gunin -- Furniture Today, April 25, 2005
High Point — Leather upholstery sources from all across the globe are coming to market this week with both barrels loaded, armed with everything from expanded import programs and more aggressive pricing to leather upgrades and greater choice — anything to trigger a longed-for buying frenzy.
Import sources hope to free up high inventories in Asia and kick start more shipments to U.S. customers by offering more competitive prices.
Most domestic manufacturers also have a presence in Asia to supplement their own product lines.
Admitting the retail market is "tough," Larry Crink, executive vice president of DeCoro, said, "Business has picked up significantly through March and we are staying very aggressive across the board to meet that demand."
At Natuzzi Americas, President Fred Starr agreed that the business climate "is tough," but he added that his company expects "an excellent market" based on strong efforts at premarket.
However, Starr cautioned, surging gasoline prices are a real concern.
"On an annual basis, every one-cent increase in gas prices takes $1 billion out of retail sales, so the impact of gas hikes could be significant."
This market, Natuzzi is putting heavy emphasis on its Natuzzi-branded products — all made in Italy — as well as its Italsofa promotional line out of China.
Natuzzi recently opened its second plant in China to meet growing demand for the promotional line. The 440,000-square-foot facility primarily serves the U.S. market, Starr said.
According to Scott Glenn, vice president of product development and marketing for Interline Italia, "Business out there for February and March has been better than January for comp numbers. It's loosening up. It seems to be on the plus side. I hope it bodes well."
Steve Barr, president of HTL USA, also sees advancement.
"Business is building back up," he said. "Better-to-mid-end retailers are now building value through innovation, design, style and leather quality, not just price."
Kevin Gallagher, president of Chicago importer Prime Resources International/Pacifica Leather, said, "It's nice to hear business is starting to pick up. That's the biggest positive. As business improves, we're finding our niche as a supplier of leathers with matching wall units and case pieces. We're offering a value story from China with some frames from $799 to $899 (retail)."
Like Gallagher, many manufacturers and importers — both domestic and international — are turning to China for product.
Calia Italia, Chateau d'Ax, Nicoletti and Schillig are among those European producers that now source promotional products from China. In each case, design remains in Europe, as does the production of the companies' higher-end lines.
Italy's Nicoletti has created a Chinese program to reach out to smaller dealers, similar to what domestic producers Bradington-Young has done with its Seven Seas Seating and Flexsteel with its Latitudes line.
"Those customers not able to buy at Nicoletti's starting prices now have an option to buy more fashion-detailed looks (from China) at a competitive price," said Tiziana Catalano, a U.S. sales manager for Nicoletti.
"We've reached a competitive price point without sacrificing quality," Catalano added.
Nicoletti's "good" and "better" merchandise is being produced at its new factory in China, while its "best" product entries still are built in Italy, she said.
More traditional looks will be added gradually to the now largely contemporary assortment from China. Individual sofas are priced from $799 retail, while three-piece packages will retail from $1,199 to $1,999.
Meanwhile, business continues to be tough, Catalano said, because of the strength of the euro against the dollar.
"Hopefully, this will be the right market to bring in new options (from China). We are optimistic," she said.
Natuzzi and Nicoletti are far from alone in their China strategies. This market, Calia Italia USA is debuting Divextra, a line of Chinese-built Italian designs. Sofa retails range from $799 to $1,199, and from $1,499 to $1,999 for seating groups.
Italian-owned Chateau d'Ax also is offering "exceptional values from both China and Italy," said Harry Cierler, director of North American operations.
At Schillig USA, the Premium Sofa collection hails from China, while sectionals are built in Germany. The German program features Fillmore Harty's designs, while the Chinese entries are from designer Wolfgang Setz.
"China doesn't mean 'cheap'," said Steve Bailey, vice president of marketing and sales for Schillig. "It's another (manufacturing) platform, a format change, for us. We offer the same style and quality plus the benefit of cost savings on labor."
Universal Furniture, which also has dedicated facilities in China, has doubled its six-month-old, top-grain leather program to 16 frames keyed to urban casual, European romance and 21st century modern style themes.
Response to the program, which began shipping in January, has been "phenomenal," said Roy Calcagne, senior vice president of upholstery.
This market, Flexsteel is introducing a three-level pricing strategy for its domestic leather seating program. Step-up charges in increments of $100 each will be attached for special-order, "good-better-best" leather enhancements beyond the basic cut-and-sew entries.
"Our (domestic) leather price points have never been lower," said Lee Fautsch, national sales manager at Flexsteel. "We have even graded some leathers down."
DeCoro also is adding five leathers across various pricing grades to broaden its range.
And Canada's Palliser is revising its leather grading to a more orderly system, divided between protected leathers (splits) and top grains (no splits).
"We have improved our program by assigning better leathers based on the specific frames," said Roger Friesen, senior vice president of sales, merchandising and customer relations for Palliser. "This brings focus and rationale."
For its tag-order (custom) business, Palliser can offer 80 colors with delivery in four weeks.
"That's not an import strategy," Friesen stressed, citing importers' lack of flexibility and timeliness. "We're all about choice — cover, color, grade — with four-week delivery."
At market, Palliser also is introducing Fusion, a new coil cushioning system using memory foam. Fusion offers a softer top layer, similar to that of bedding, Friesen said.
Broyhill, which employs a cut-and-sew cover program based in Argentina, is introducing five stationary frames in all-leather and five motion seating groups in leather/leather-match, said Tom Lenz, vice president of advertising and marketing services.
