Independents overcoming obstacles
By Marc Barnes -- Furniture Today, July 10, 2008
High Point — High Point— If anything, the challenges for the nation's medium-sized furniture retailers are greater than they are for the 100 biggest stores, given that the smaller you are, the less room there is for error.
The good news for these retailers is that they are finding a way to succeed, despite daily challenges.
The numbers tell part of the story: In 2005, the Top 100 saw an 8.3% sales gain, more than twice the 4.1% gain in furniture, bedding and accessories sales at all U.S. furniture stores in 2005, which came to $52.4 billion.
Jerry Epperson, an industry analyst and managing director of Mann, Armistead & Epperson, said these figures show that the smaller independents continue to face numerous challenges in the current business climate. The factors include continuing increases in the cost of real estate and gas, as well as a drop in the size of average sales tickets due to imports and price deflation.
"It's getting more and more expensive to be truly competitive," Epperson said.
Richard Ennis, president of Ennis Fine Furniture in Boise, Idaho, which has eight locations, is experiencing the real estate crunch first hand. He opened a new Thomasville store in February 2005 and is looking to expand in the Spokane, Wash., and Reno, Nev., markets — if the right deal comes along.
"It really depends on availability and the right locations," he said. "I am not sure if we can get anything physically open this year or not. In those markets, it looks like we are going to have to build buildings, because we can't find any in the right place or the right size."
His challenges boil down to a double whammy: a decrease in customer traffic along with an increase in the cost of doing business — some of which is being passed on to customers.
"We just started charging for delivery at the first of this year," Ennis said. "Most of the country charges for delivery — we hadn't up to this point. But it was a smooth transition, because people respect the price of gas and they don't expect things to be delivered free anymore."
Creating a niche
Abide Furniture, based in Bentonville, Ark., is a relative newcomer to furniture, having shifted over to the category from flooring three years ago, in part because of a shortage of qualified flooring installers.
"There are a lot more people around who can move furniture than there are who can install carpet," said buyer Matt Abide, who runs the business with his two brothers and father.
Abide added 12,000 square feet in warehouse space last year. This year, the retailer is adding an additional 25,000 square feet in showroom space and 24,000 square feet to the warehouse, while shoring up sales efforts at its stores in Bentonville and Springdale, Ark., and Greenville, Miss.
Abide Furniture focuses on offering unusual pieces and color combinations that no one else in its markets has, pieces that make customers want to come in and buy. In addition, said Abide, the retailer's relative lack of experience in the industry can be a strength, since it's very open to new ideas.
"If you stop learning, you will get passed by," he said. "That's why, at market, we try to visit more new companies than older, existing companies, because we want to know what is going on out there and what changes have occurred."
Feast to famine
Bridgman's Furniture in Lebanon, N.H., provides a good example of how challenging this business can be. Last year was Bridgman's worst in seven years, and it came on the heels of a record 2004.
Dan Rutledge, who with his brother and their wives, owns the 115-year-old store, pointed out that Lebanon is a ski resort area with a lot of second homes. Last year, it rained a lot on the weekends, which kept travelers from New York and Boston away from the slopes — and out of the store.
"What we did was we scrimped and saved and cut back on expenses that we could cut back on," he said. "We are doing better this year, not as good as two years ago, but a heckuva lot better. We are staying ahead of last year's numbers."
Rutledge said that to grow the business, he actively pursues customers who are not second-home visitors to the area. He said it is a continuing challenge to overcome customers' experiences with shoddy merchandise that they have found elsewhere.
"Companies like that have given the industry a black eye and people don't have as much faith as they used to," he said. "We only do business with people who take care of us, and that means something to the customer."
At Pilgrim Furniture City in Southington, Conn., President Mike Albert said that he recently added 30,000 square feet of display space as part of an aggressive effort to grow the business.
"We are currently looking at other locations because we have had a good year," he said. "We've done a lot of advertising, we've gotten the building into really good shape, we went to same-day delivery — we've done a lot of cool things."
Recent steps, said Albert, include putting in a café that will serve lattes and desserts. In addition, there's a full-sized carousel inside the store, to give children something to do. The retailer also gives freely to charity, through golf tournaments and raffles of Christmas trees.
Pilgrim has been noticed for its efforts: The National Home Furnishings Assn. honored it as its Retailer of the Year this year.
Albert said the challenges his company faces — flowing the goods, keeping costs in line, attracting and keeping good employees — are little different than any other retail business. The secret is to find creative ways to meet the challenges each day.
"We keep trying," Albert said.
Studying the market
At Inter!ors in Lancaster, Pa., Todd Lehman, president and CEO, said that growing his business last year meant more clearly defining the store's marketing message.
"We are continuing to do a better job at truly understanding what our market is and what they want and how we can meet those needs," he said. "We have always been a high-end store, and we are moving down into the middle-end price points. Our objective in our marketing campaign is to point out that we have price points that all consumers can use."
Part of the strategy has been to look outside of the immediate area, to see what can be done to get customers to drive 25 minutes to shop at Inter!ors — along with a possible store-within-a-store in the future, which would offer floor coverings, kitchen and bath items and lighting.
"The biggest challenge for us is (competing with) the regional type of stores — the fact that they have such a high advertising and marketing budget," Lehman said. "It is a challenge to us to keep our name out there and before the consumer."
Not just hot air
Karen Dreiling has found an unusual way to get attention in her market: Give the furniture away if the wind blows at a certain velocity. Since her store, The Furniture Look, is in the windy spot of Hays, Kan., (remember Dorothy and Toto?) it would seem that her sales might suffer from this type of offer. But with the help of an insurance company, which agrees to cover a payout if the wind hits the magic number (similar to the more well-known "hole in one" giveaways), The Furniture Look has built this promotion into a highly successful event.
"Any purchases are free in June if the wind blows 25 miles an hour or more on July 4," she said. "It did in 2000, 2001 and 2003. In 2004, the insurance company looked at me and said 'no' (to covering the promotion). This year, we were able to get another wind sale. After it blew the first year, sales doubled. After the second one blew, we tripled our sales."
