Entertainment continues to thrive
New electronics driving demand for fresh furniture
By Marc Barnes -- Furniture Today, December 25, 2005
High Point — As the last quarter of 2005 drew to a close, those in the home entertainment segment took a deep breath and pored over circulars and brochures.
Not their own. And not their competitors. Most were looking at the offerings at Sam's Club, Best Buy and Circuit City, as big-box retailers and discounters alike offered price cut after price cut on the newest that the television industry has to offer for the holiday season.
Strong sales of televisions, spurred by recent price cuts, comes as good news to those who make and market the furniture that goes along with it. All who were contacted in a spot survey by Furniture/Today reported a strong year in 2005 and predicted that the trend will continue through the first quarter of 2006.
To keep business rolling, many sources are promising new offerings at the Las Vegas market in January.
"Entertainment centers are really going through a metamorphosis, because for the past 10 years, we've been selling a rear-projection configuration and that became a commodity," said Karl Eulberg, vice president of sales with Kathy Ireland Home by Martin. "Now, everything is changing, with the new technology and the wide aspect and shallow format. Our business has been strong and will get stronger."
New shapes, sizes
Eulberg said that his company took the most popular looks in home office and created similar designs to accommodate the new technology. Kathy Ireland Home will soon offer accent tables in the same styles, so that an entertainment area can be furnished in a complementary way. Especially popular have been pieces in traditional styles with cherry finishes.
"It is a mixed blessing," he said. "We used to sell two big tiers and an armoire in the middle. And now, we are selling 50- to 60-inch carts with shallow hutches that surround the TV. With less square footage on a lower price point, they are going to spend more on the TV and less on the furniture."
West Allen, merchandising manager at Parker House Furniture, said that demand for home entertainment pieces was almost too good during 2005.
"It really exceeded our ability to ship that fast and to anticipate it," he said. "We ended up with some stock shortages and we are making every effort this coming year to make sure that does not recur."
Allen explained that, in the past, Parker House catered more to midsized furniture dealers. Demand outstripped supply, and so this year, the company has added 85,000 square feet of warehouse space, which is approximately double what it had in the past. The increased capacity means that Parker House will now be targeting larger accounts.
"The (entertainment) category is the strength of our business right now," Allen said. "We are pleased because we offer wall units that are expandable to fit any size TV. We are telling people that if they buy one of our units now and in two to four years replace the TV with something else, the wall unit will expand or contract with whatever you buy."
At Hooker Furniture, Hank Long, senior vice president of merchandising, said that he recently reviewed the numbers for the October High Point Furniture Market — and he liked what he saw.
"I feel like our new formats are finally taking hold and with what's going on with plasma TVs selling, I feel like next year is going to be a good year for entertainment," he said. "We've been handling our new formats for the year-and-a-half and they are finally taking hold. We're getting some great placements on new product.
"TVs, too, are coming down in price and that is going to spur the sale of electronics and leave a little more on the table to buy furniture. We want to be able to help (consumers) do that."
Long said that traditional styles remain Hooker's strength, although some contemporary pieces are gaining ground. He said that more items will be introduced in upcoming markets and should sell well, as long as the economy remains strong.
"Business has been pretty good out there (during) the last month," he said. "Gas prices have started to subside, the weather has changed. This is a seasonable business. When it gets cold, people stay in their homes."
Price cuts pay off
Tobe Kramer, vice president of Michels, said that his company's entertainment line fared well in 2005, but would have done better had the offerings from the TV industry been more standardized. Kramer said that by midyear, consumers were confused by the wide variety of sizes and formats. More recent price cuts helped them make up their minds.
"We are getting more entertainment business as a result of that," Kramer said.
Kramer said that a popular seller for Michels this year was a brushed chrome unit with a frosted glass door panel. The credenza can accommodate televisions from 38 to 50 inches — and the piece can be adapted to accommodate a floor model.
In 2006, Michels plans to introduce entertainment products with a totally different look, while still tying the designs in with the new sizes of TVs. Given recent market developments, Kramer said the furniture industry will have to brace itself for more changes to come.
"When was the last time you had the ultimate laptop or computer?" he said. "Maybe it was cutting edge for about a year and that was about it. TV is headed in that direction and it is a real scramble for furniture manufacturers."
Kelly Cain, vice president and product manager for Stanley Furniture, likens the changes to what happened when televisions went from black and white to color.
"Once you have seen high definition, you don't want to see a regular TV," Cain said. "A much greater percentage of people are aware of the benefits of HD and that is what is leading to sales."
Cain said that entertainment is one of Stanley's fastest-growing categories, primarily because of increased electronics sales spurred by price cuts. Popular offerings by Stanley include a console and deck that hide up to a 60-inch television behind doors, which appeals to those who the ability to keep their television out of sight when not in use.
Offerings in both traditional and contemporary are doing well — and Stanley is planning to introduce two new collections at High Point in April that will include both entertainment and occasional tables.
Cain said that the business outlook in the category is bright, but challenges remain.
"The big challenge that we have is to get more and more of the retailers to carry a nice selection of home entertainment centers," Cain said. "A few of them have a home entertainment department, but they have little to offer in the category. We have to figure out how to get regular stores to carry home entertainment centers."
In addition, Cain said that high-end consumers — those who could buy the televisions before they went on sale — were more likely to purchase new furniture.
"As prices come down and it becomes more of a mainstream product, people will be spending less and less on the furniture to go with it," he said. "The good thing is that there is huge demand. As people continue to change over, it will still be a growing category at all price points."
