Choice provides edge in leather arena
By Joan Gunin -- Furniture Today, February 27, 2006
High Point — Customization, cut-and-sew options and Asian capabilities will continue to be key in the coming months, as more retailers choose choice over commodity, according to leather upholstery manufacturers and importers.
Leather resources, mindful of 2005's flat sales climate, hope to see improvements this year. Furniture/Today estimates U.S. leather upholstery sales in 2005 were $3.5 billion, or 26% of all upholstery sales, essentially unchanged from 2004.
Domestic manufacturers such as Bradington-Young and Century still run cut-and-sew programs. Others, however, including Distinction Leather, Flexsteel, Hickory Hill and Jaymar — as well as Bradington-Young — are employing a piggyback approach, supplementing better domestic collections with less costly, and less choice rich, import programs from China.
Norwalk's Hickory Hill division is among the latest to blend its leather program.
"We are adding an import line to augment price points and as a step-in up to our custom line," said Alex Reeves, vice president of sales.
The Valdese, N.C.-based producer will launch this spring in High Point its own fully upholstered Chinese stationary leather program, under a brand name yet to be determined.
"We're offering better values with nice leathers and frames, not just trying to hit price points," Reeves said.
Four married groups featuring top-grain leathers and no-sag seating will be unveiled at retails from $1,099 up. The imports will overlap with Hickory Hill's existing better brand, Bancroft & Bliss, featuring 10 sofa groups at up to $1,999 retail.
The B&B eight-way hand-tied frames offer special order on 50 leathers with delivery in four to six weeks.
"There is no bottom (in terms of price in the marketplace)," Reeves said. "You have to figure out what to do in terms of the market, and focus on it and specialize in it and stay on it."
Similarly, Canadian-based Jaymar is straddling the domestic/import fence as it competes with a worldwide supply of product.
Having introduced the Etc. line in April 2005, Jaymar then dropped one price level with the addition of Encore, a "better" line. With the top and middle tiers in place, the company is gearing up to add a "good" level in April, said Gary Zuckerman, vice president of sales and marketing for the United States.
Under the new three-tiered strategy, Jaymar will stock one configuration of each made-in-China style, but offer quick-ship special-order flexibility on the same frame made in Canada, all at one blended price.
"The same leather is stocked in both locations, so it is totally seamless," Zuckerman said. "If someone were to buy a sofa from our Chinese partner and later wanted to add a chair and ottoman, you would not be able to tell which piece was made in which country."
Etc. began shipping in August. A year later, the original four-frame assortment has swelled to 18, with seven models added in October and two more in Toronto.
Room for improvement
Broyhill's Michael Delgatti, executive vice president for upholstery and occasional merchandising, intends to "re-energize the (stationary) leather category through innovation. There is always room for improvement."
With a slowdown in furniture-price deflation, "The worst is over and we can now focus and put more emphasis on creativity and design," he said. "We can afford to add more detail to upgrade the quality of the leather in terms of its look and feel. The whole China phenomenon is allowing us to do this."
As its current cut-and-sew program in South America winds down, Broyhill's primary focus now shifts to finished goods from China, Delgatti said.
But at Bradington-Young, Curtis Bolick, sales and merchandising manager, said, "We are seeing values come back to South American sources, especially on the cut-and-sew side, as well as from Italy. The euro is down a bit, so it's balancing out things."
Buoyed by values seen at the Showtime fabric fair in December, Bolick said he continues to shop Italy and South America for quality leathers for the Hooker-owned company's domestic line, rather than treated goods out of China.
"Consumers want more natural leathers," he said. "China simply does not have the capability or the desire to produce fine anilines."
Rather, Bolick said, the Chinese are utilizing low-grade raw materials on different types of products. "They are trying to present products as antique reproductions with the effects of natural markings," he said.
The time involved in treating these lower-end raw materials only brings up the price points, he said. With its domestic program, Bradington-Young is able to offer more than 300 leathers, in contrast to its more restrictive Seven Seas imports program, with two choices per SKU.
Domestically, Bradington-Young is working to reduce delivery times. "We are pushing for 30 days out the door," Bolick said. "This is important to our domestic viability."
In lieu of Chinese involvement, Canadian-based Palliser has capitalized on Mexico as a less costly production hub.
"We keep an eye on our options, but our commitment is to be a competitive domestic manufacturer with a unique position of strength by producing in Mexico," said Pablo Reich, vice president of sales and marketing for Palliser upholstery.
"That is our strategy to compete with China."
With leather becoming increasingly affordable and more accessible, "we foresee strong growth," he said. "As people seek more customization, we can provide a very competitive price without an ocean in between."
Reich pointed to Palliser's adeptness in special order and expedited delivery. He also noted that as leather upholstery becomes more fashion-forward, with resources mixing leather with fabrics and using embossed leathers, the leathers themselves are evolving into new applications.
In addition to production in China, Italian-based Chateau d'Ax and Natuzzi also have factories elsewhere — in Romania and South America, respectively.
Domestic specialties
Closer to home, Phil Brown, Century's merchandise manager for leather and chairs, said, "Our game plan is to continue to give the customer choice, so they can create (the look they want)."
Century relies on cut-and-sew programs from Mexico and Asia, offering 50 leathers and 70 frames, with shipments delivered in six to eight weeks.
In what Brown describes as a backlash against generic looks, Century emphasizes customization. "As in the automotive industry, customers want choice and options, whether it's in the leather or the finish," he said.
West Coast-based resource Zocalo offers its own form of customization, matching contemporary shades of leather accent upholstery pieces to its casual dining and case goods.
"It helps us to create a major collection," said Marketing Director Danny Olivas.
At American Leather, Cary Benson, co-president and chief marketing officer, reported, "Fourth-quarter sales have been phenomenal and January was good."
