Retailers plan aggressive buying at High Point Market
Clint Engel -- Furniture Today, October 18, 2013
HIGH POINT - A drawn-out government shutdown and other negative news is on the minds of retailers shopping the High Point Market, but they say it won't affect their buying plans.
And for the most part, those plans are pretty aggressive, as stores in most areas of the country continue to benefit from the slowly improving economy and a nice uptick in the all-important housing market.
Better business has buyers seeking better goods - step-up upholstery and case goods as well as accents and more unusual items. Some will be looking for a quality and construction story to justify higher-price points while some are looking for more bells and whistles and other wow factors to persuade consumers to open their wallets and spend a little more.
Exhibitors also are likely to see more retailers rebalancing their floors by beefing up their hottest categories, including sectionals and power motion upholstery.
And more than a few are likely to benefit from the trials of Furniture Brands International, as some dealers shop for alternatives to such lines as Thomasville, Broyhill, Lane until the smoke clears on the corporation's future.
"We're going to be looking at a little higher price points this market," said Sam Zavary, president of co-owner of four-store Exclusive Furniture in Houston.
"We've been noticing customers are willing to spend a little more vs. post-2007."
The Exclusive buying team, here for five days, is looking for opportunities to step up in several categories. In upholstery, Zavary said he'll have his eyes peeled for better quality goods, including higher density foams and cushions with two-sided seating.
The promotional to midpriced retailer sells bonded leather upholstery and will continue to do so for the price points, but Zavary wants to offer more top-grain leathers, too. He's also looking for a quality story in case goods, including pieces with nice finishes, he said, and full-extension drawers.
Zavary said that during the first half of this year, Exclusive's top price points in bedroom furniture - groups retailing from $1,799 and up - enjoyed a 21% increase in sales, so it's that end of the business that will get the most attention here.
While July and September were difficult months for the retailer, Zavary said the year has been strong overall and better business is fueling its two-store expansion plan for next year.
"You and I know, the middle class person gets scared," Zavary said, adding that the consumer starts worrying about spending, wondering if she should be saving instead.
"If the government stays shut down for a month, we'll see dramatic effects. It will be bad," he said. But he added that he's optimistic the issue will be resolved soon.
"We think 2014 is going to be a big year for us, so we're going to be shopping hard."
Lee Goodman, CEO of San Diego-based Jerome's Furniture, believes consumers have become numb to the pattern of one crisis after another. On the other hand, there are about 8,000 federal workers in his area who are idled and "we will feel that. It also hits people psychologically," he added.
That said, Jerome's is feeling the effects of an improving housing market and its own market-share grab even more, with same-store sales up for 16 consecutive months and an e-commerce business that's growing by double digits percentage gains every week."Unlike the stock market, when people feel better about the value of their home, they're more apt to invest in their home," Goodman said.
So Jerome's buyers are here with a lengthy shopping list. The retailer typically buys most of its upholstery from California-area sources, but it will have its eye out here for sectionals - between $999 and $1,699 - which are more difficult to come by locally, said Andy Andreotti, Jerome's vice president of merchandising. He'll also looking for motion upholstery at the $699 and $799 price points, "but I want gimmicks in them," he said, "like heat, power on the cup holders, something different that sets it apart."
Andreotti said step-up sectionals and motion upholstery are selling well for the retailer when the goods have those added "wow" features, including power or ratchet headrests and other touches that consumers see as cool and out of the norm.
"That's the only way I can move the price point up," he said.
In leather upholstery, meanwhile, Jerome's already has plenty to offer at the upper end of its price spectrum as well as in promotional bonded leather. Instead, Andreotti is looking for 100% leather at lower price points - $799 (which he knows will be difficult to find) up to $1,099.
Also on his list are entertainment wall units - consoles with piers and light bridges in the $1,599 to $2,499 and in traditional styles, he said, noting, "I've got plenty of contemporary." In casual dining, he'd like to find some glass top dinettes in the $399 to $699 range for a table and four chairs up to $999 for larger groups.
Andreotti said he had a fairly successful Premarket, noting he was impressed with first looks at Klaussner, Folio 21 and Pulaski, among others, so he'll be sure to stop by these showrooms again.
Lynchburg, Va.-based Schewel Furniture has seen slight sales increases over the past three to four months, said President Marc Schewel, and because most of the items on the floor are doing fairly well, he's shopping "with more of a conservative approach."
"But once we get there, if there's something new and interesting, we start discarding some of the old," he said. And there's always something interesting. We usually end up changing about a third of our program at the market."
Among the items on Schewel's list are brighter new colors in upholstery and, like Jerome's, more in the way of sectionals, a growing business for the retailer. Schewel isn't necessarily looking to move up or down in price points, he said, noting that the stores currently top out at $799 in stationary sofas and $1,299 in motion.
Schewel's case goods lineup is in good shape, so he's anticipating only a few changes.
Fort Myers, Fla.-based Robb & Stucky International does its heaviest buying during the April market, so it, too, is primarily looking to fill in, said Steve Lush, president.
Lush, like others, has seen a dramatic improvement in the housing market over the past six to eight months, and "that's helping to drive our business," he said.
Typically, starting around May, business in the highly seasonal Florida market slows for the upscale retailers like Robb & Stucky, but Lush said that didn't happen this year and that sales remained steady through the summer.
"I believe the government shutdown is already having an effect on some businesses," he said. "Reduced spending capacity by furloughed government employees will be felt at retailers like Wal-Mart.
"Because so many of the national parks and historical sites are closed, many have canceled their travel plans for the fall, impacting hotels and restaurants. If the shutdown lasts a period of days, I don't believe we'll feel an impact in high-end big ticket spending," Lush said.
"However, if it becomes weeks or even months, the ripple effect will likely have a negative effect on the stock market, and that will cause our clients to delay their big-ticket purchases."
That said, Lush added he's hoping for a quick resolution, and is not changing market plans.
Lakeville, Minn.-based Schneiderman's Furniture, which has seen a nice uptick in business this year, is in the process of doubling the size of one of its five Twin Cities-area stores, which will open up space for master bedroom, youth bedroom and other categories it's shopping for here, said CEO Larry Schneiderman.
Schneiderman's is a Furniture Brands dealer, carrying Broyhill, Lane and Thomasville, and FBI's Chapter 11 bankruptcy filing last month, along with the questions that remain about how things will play out, has Schneiderman's Merchandise Manager Susan Strong looking around this market for potential alternatives.
To protect its customers and its own reputation, Schneiderman is requiring salespeople to call and make sure fabrics are in stock before placing any special orders with Furniture Brands companies.
"We're wishing them the best and watching it, but we have to be careful and make sure we're covered on price points that are important to us," Schneiderman said. "Because we do a lot of special ordering that might mean, at least at the present time, that they aren't filled by Broyhill, Thomasville and Lane."
Schneiderman said he'll also be looking for anything that can help differentiate his stores from the competition and more at the top end of its price spectrum.
"We've seen an increase in average tickets so we're continuing to notch up what we put on display," he said.
As for the government shutdown, he called it "another example that leads many of us to question the effectiveness of our leadership," adding that it does affect consumer confidence and ultimately furniture sales.
"Will it affect our buying at High Point?" he asked. "No. We figure it will only affect everyone else."
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