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Home office segment holds opportunity

Aggressive introductions planned for early '06 markets

By Thomas Russell -- Furniture Today, December 25, 2005

Writing desks do well
Working at home

High Point — Increasingly flexible work habits and innovative products continue to reinvigorate the home office category.

This year, small office/home office sales were projected to rise 7% to 8% to about $5.7 billion. That would bring the category to about 8% of total furniture sales, up from an estimated 6.9% in 2004.

Some vendors easily exceeded that growth rate. Others didn't. Regardless, most see momentum building for a strong 2006, with plans for aggressive introductions in High Point and Las Vegas in 2006.

Legends Furniture Marketing Director Tim Donk said his company is working on five new home office suites for the first half of 2006. If all of these groups are introduced, it would more than double the home office collections that Legends brought out in all of 2005.

While those two collections, Napa and Seaport, are doing well at retail, their sales haven't been enough to boost Legends' home office total this year.

"It has not been a growth category," Donk said. "We did not put a lot of emphasis on home office this year and missed some momentum. Because we did not have as much focus on it as we should, we felt it could have done better."

That largely explains the five new groups in development. "We want to show we are committed to the category," he said. "If it is holding its own and we are not really doing anything, that gives us hope."

Contrast that with Kathy Ireland Home by Martin, which had 30% growth in home office through early November. It might be difficult to match that in 2006, but the company sees enough momentum in its product line to keep sales strong for the foreseeable future.

"I think we have developed a reputation for home office in a step-up category that is pretty strong," said Karl Eulberg, Martin's vice president of sales.

He attributed some of the gain to higher price points made possible by more sophisticated finishes coming out of China. "We have addressed function, but now we have some pretty sophisticated styles," Eulberg said

Writing desks do well

Those range from the more traditional Brookfield collection to Tribeca Loft, a collection that appeals to a younger urban set with its clean lines and black finish. In 2006, the company will continue to offer a broad range of styles appealing to diverse consumer groups. It also will continue to develop product suited for today's technologies.

With the increasing popularity of laptops and other wireless computers, Martin will push writing desks and partial pedestal desks, whose design and size make them suitable for nearly any area.

"Writing desks are really strong," Eulberg said, noting the pieces are extremely stylish, thanks in part to the elimination of a tower with a "bunch of wires hanging down. They are going into the bedroom and great rooms."

Sligh Furniture President Rob Sligh noted that technology is driving product design in the category. Flat-screen monitors and TVs in particular are creating a push toward smaller desk surfaces and transitional or contemporary footprints.

"We like that because it allows us to make sleek and beautiful furniture," Sligh said.

Thin-screen TVs and computers also are feeding a drive to merge home office and home entertainment product. At the October market, for example, Sligh introduced the Tufano Home Living collection, a wall concept geared to both home entertainment and home office uses.

The Jesper 1000 group and Sauder's Convergence center are similar ready-to-assemble furniture concepts.

"We are seeing the reality of that in our homes," Sligh said of digital convergence. Combining the two also could help home office feed off the success of home entertainment.

Overall, home office sales at Sligh were up around 20% through October, compared to about 30% in home entertainment. Given the drags on the economy in 2005, Sligh was pleased with those figures, particularly in home office.

"It's definitely a growing part of our business," he said. "I think 2006 will be a good year."

Working at home

High gas prices combined with the increasing use of wireless technologies also could help boost sales in 2006, Sligh said. People will be more inclined to work at home, which the portability of laptops makes easier.

Home office also has been a hit at Coaster and Collezione Europa. Coaster has had success with large executive desks that retail between $699 and $749. But smaller desks geared toward laptop use also have done well, said Coaster Merchandise Manager Toby Konetzny.

"The trend is toward laptops or flat screens," he said, noting this is driving the development of smaller work surfaces. "So there is a whole lot less going on with the desk. Before, you had a printer, a fax, a scanner and a big monitor. Now everything is smaller or all in one."

Coaster is doing well with contemporary desks and carts with frosted glass tops. Geared to students and younger consumers, these retail as low as $49 a desk. Overall, its year-to-date sales in home office at the end of November were up 15%, Konetzny said.

Collezione Europa introduced 12 six-piece home office collections in April, its first major foray in the category. With executive desks retailing from $799 to $1,199, the company plans to expand on the collections rather than bring out new ones at next April's market.

"It's off to a good start, and we're very pleased," said Dennis Hoy, Collezione's vice president of merchandising.

Susan Dountas, vice president of merchandising at RTA specialist Sauder, said she expects 2005 sales to increase in the single digits in the home office segment. That comes on top of steady sales increases in recent years at both home office superstores and traditional furniture stores.

She expects a good year in 2006, thanks in part to an increasingly diverse product line that ranges from $99 work centers to $399 executive desks in the Christopher Lowell collection sold at Office Depot.

Function, Dountas said, remains an important part of the equation. "That does not vary by price point," she said.

"We're optimistic about next year," Dountas said of home office, with single-digit sales gains expected. "This year is ending on a good note. We look for increases in home office and home entertainment next year across channels."

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