Buyers seek values, service
By Clint Engel -- Furniture Today, April 10, 2005
High Point — Sales have been on the upswing for many retailers this year, but they're coming to the April furniture market with sharply contrasting views on where business is heading and what they need from suppliers.
While some expect their business to hold up nicely, other retailers say they're seeing signs that shoppers are pulling back.
Consumer confidence could be crumbling under the weight of high gas prices and a lackluster stock market, they say. What's more, rising prices on the materials used to make furniture — from petrochemicals to steel — are driving up furniture prices in a challenging time at retail.
With this, buyers here are likely to have their eye out for clear values. For many, that means more imports from Asia. But there also will be renewed pressure on suppliers to deliver on promises and ship on time, which could be a plus for domestic manufacturers.
Hot product categories include leather upholstery, motion and contemporary and urban styles.
"I think the consumer is feeling very strapped at the moment," said Eric Blackledge, president of Corvallis, Ore.-based Blackledge Furniture. His midpriced store's business is up slightly for the year, but March sales slowed as gas prices rose and consumers grew more cautious.
"Even long-term credit offers aren't pulling as well as they used to," Blackledge said. "Most people, in general, are feeling very insecure about the future."
He said his emphasis at market will be on "obvious values" in core items the store can promote this summer and fall.
In dining room, for instance, the retailer will be concentrating on casual-leaning styles and the best values in the middle price range — including tables with four chairs for $799.
Coming up with upholstery values could prove more difficult because raw materials prices are rising. Blackledge said his store may have to move out of its starting $499 and $599 price points for stationary upholstery and opt for a $699 start in order to meet its own quality standards.
He joked that between the new antidumping duties on Chinese bedroom furniture and rising steel and petrochemical prices, he has seen enough price increases in the past 30 days to state confidently that the industry's struggle with deflation is over.
Consumer confidence also is on the mind of Jeff Seaman, president and CEO of the 99-store, Seffner, Fla.-based Rooms To Go. He said a sluggish stock market and higher oil prices aren't helping. With cost pressure caused by more expensive raw materials and the new duties, he said, the mid-market consumer with less disposable income is facing higher prices for furniture.
"Having said that, though, the first quarter has been very strong and business is strong now," he added. "I just don't think it will last."
Hungry for ideas
Still, this doesn't affect Seaman's shopping plans at market.
"Like everyone else, we're looking for the next big thing," he said.
Seaman added that contemporary styles are gaining in popularity and will get a good deal of the retailer's attention, but added that High Point is all about finding niche product that fits into RTG's assortment.
"We're just hoping that there are a lot of good ideas this market," he said.
In the Jackson, Miss., area, where Miskelly Furniture recently expanded and remodeled its main store, business in the first quarter was up more than 25% from a year ago. Miskelly brothers and business partners Oscar, Chip and Tommy are looking for similar results for the rest of the year.
Miskelly is bringing seven buyers to High Point and spending eight days — adding nearly a full day to "Lewis and Clark a little bit" to explore new sources, Tommy Miskelly said.
High on the brothers' shopping list is step-up leather upholstery. The retailer would like to find a good source for eight-way hand-tied product it can retail for $1,899 or $1,999.
Miskelly also is looking for more retro, urban styles for its new Directions department, which took the store beyond its core traditional offering, and some upscale accents to dress its Grand Interiors area of step-up imported case goods.
"We need to go after some rich accent pieces that really wow," Miskelly said. "We've covered our bases real well, but we need some lipstick in there."
Liverpool, N.Y.-based Raymour & Flanigan, which is adding stores in metro New York City, will continue to look for "better upholstery values," said Neil Goldberg, president and CEO.
The retailer wants broaden its offering at step-up $899 and $999 sofa price points, where it now has a limited number of SKUs.
Goldberg also said he will continue to search for sources capable of servicing the fast-growing 56-store retailer properly.
"As our volume grows, each placement represents a significant number of turns, and we need to have vendors who can meet that change on a daily basis," he said.
Keith Koenig, president of Fort Lauderdale, Fla.-based City Furniture, said that supply chain management and service from manufacturers will be among the biggest issues he tackles at market.
"Unfortunately, a lot of the factories we've done business with in the past have not been as reliable with their on-time delivery as they should be," Koenig said. "Were getting very tough with those vendors."
That means City will wean itself from a number of suites and factories (including overseas factories) — not because the product isn't selling, but because the vendors aren't living up to their end of the deal.
"We are working our way to those suppliers that can give us great styles at great values with consistent delivery," he said. "And if they can be in the United States, all the better."
Lifestyle themes
At four-store Gorman's in greater Detroit, the focus will be on specific fill-ins to complement the dramatic showroom conversion Gorman's is near to completing. The store is moving away from dedicated manufacturer presentations to lifestyle displays.
Chairman Bernie Moray said the store is looking for what he called European fashion sofas, with carved wood trim for its European Classics area, for instance. Moray and Gorman's President Tom Lias will hunt for new contemporary offerings, particularly from overseas, in exotic woods with metal trim and other touches.
Among other things, Gorman's needs to fill a void left by the now-defunct DIA, a major supplier to its one contemporary specialty store.
This market will be the first in some time in which Indianapolis-based Kittle's doesn't make major vendor changes, said CEO John Durkott.
The 16-store retailer spent most of last year changing its supply structure — in part preparing for new competition coming into its markets, including Havertys and Ashley Furniture HomeStores. The result has been a more global sourcing strategy for Kittles across its promotional to high-end stores.
Durkott said Kittle's grew its business with core lines Broyhill, Henredon and Lane, but also brought in imports from Universal and Legacy Classic that are doing very well. This market will be devoted largely to seeing what's new and what's selling well from these kinds of companies.
Business for Kittle's this year got off to tough start, but picked up dramatically in March as same-stores sales for the month rose nearly 12%, Durkott said. Like others, he's concerned about the impact of gas prices and other pressures on consumers spending.
He believes that is one reason why special event sales — such as Labor Day and Memorial Day promotions — are going to become more important tools to get people out to shop this year.
"It's going to be a year where nothing comes easy," he said.
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