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Larry Thomas

Producers see challenges, opportunities for leather

HIGH POINT - Furniture/Today asked leather furniture sources what they see as their biggest challenges and opportunities for 2012. Here is a summary of their responses.

Harry Cierler, director of North American operations, Chateau d'Ax
     "Our biggest challenge is to continue to be a style leader and offer our customers new and exciting products that can be promoted to drive both traffic and sales. We believe our customers come to us for new and exciting styles and new leather colors. China, with its unfair laws, makes it very difficult for a manufacturer like Chateau d'Ax to stay on top of the market as the China manufacturers are very quick to emulate styles.
     "It seems, if I believe the people who provide us with news, that the housing market has bottomed out and is starting to turn around. If this is correct it will bring new furniture buyers into the market and hopefully they will be buying our products because they are new and different. I feel that since we have gone through three to four challenging years that there could be pent up volume and we are hoping to get our share."

Jackson Carpenter, president, Simon Li

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     "The leather industry has the same challenges as the rest of the industry, and I see confidence as our number one challenge. The economic conditions and the conservative nature they generate have caused a self-fulfilling prophecy in many cases. One of our biggest challenges as a ‘by container' manufacturer is overcoming the conservative mindset of many our retail customers, which is the understandable result of a prolonged weak economy. We have been fortunate enough to see our products perform very well at retail, yet our customers are often sold out before they even have back-up containers on order. It's no fun to find out that our goods have sold out in two weeks only to realize that we will be off the floor for a couple of months.
     "From a fashion perspective, consumers with money to spend are taking the time to buy what they really need, and/or what really stimulates them to buy from a fashion perspective. Unless they get one or the other, they are not buying. We have to do better in order to make consumers want to buy.
     "As manufacturers, we have invested in higher inventory levels to maintain faster turns and we have expanded our price points, showrooms, distribution models and product categories to take advantage of as many opportunities as possible. Consequently, we have our highest backlog ever and have experienced sales growth in every quarter in 2010 and 2011."

Michael Parasmo, president, Prestige Motion
     "As I see it in the leather arena, the economy has played down the buying appetite of all Americans, and with the loss of jobs and the housing market upside down, people are very concerned about their future and their living expenses.
     "Leather quality has never been better, prices are in tune with demand, but can leather products bring the volume they once did? Our biggest challenge is having enough retailers left in the game to fill high-capacity factories with enough orders to stay afloat.
     "We have seen a steady, positive attitude and better order writing since the October market, and if we get a surge in business, the biggest opportunities will be from the risk takers who have a positive stock of inventory of raw goods on hand ... because they believe and invest in that inventory to handle the demand. That demand, in my view, will be the best of all time. We are loading the wagons and are positive it's going to be a heck of a ride."

Stephen Barr, president, Man Wah USA
     "The leading challenge in 2012 is the continued lack of innovation and inspiring furniture in the marketplace. Tough economic times have spurred cutbacks in R&D and product development. This creates mass copying to get a piece of the pie. There is a lot of Cheers furniture being sold, but not all by us. Copies are openly sold. It has become accepted.
     "The biggest opportunity will be in leather furniture versus all the versions of faux/bonded imitations. I feel that we will be one of the few suppliers with a broad leather offering. A few short years ago, everyone tried to get a piece of the hot leather market, but now they have quit or gone into substitutes. We will be showing more leather, and I think this will cement a leadership position for us. Our mission is to create fresh styles and pay attention to all of the details and set our furniture apart from others. We have figured out how to grow in a slowing economy. I expect to continue this."

Cary Benson, president of sales and marketing, Palliser
     "Our biggest challenges revolve around our ability to continue the sales growth and momentum that has

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happened since the April market.
     "Several factors...including the closing of Berkline, a new program with a major U.S. retailer, the addition of many new accounts, and expanded lineups with existing retailers, all contributed to an increase of over 20% of incoming orders over last year, since mid-May. Ramping up both our supply chain and production capacity to handle this increase has required a team effort from all parts of the company. Although we did experience some delays due to material and inventory in the summer, we are now producing and shipping in our standard lead times of about 30 days.
     "Looking ahead, we are projecting a double-digit increase in sales for 2012, and believe that we will continue to increase market share. We are averaging about 25 new accounts a month as more retailers look for domestic manufactures that can offer selection, quality and service.
     "We also see expanded growth in our home theater seating market segment, as we have been successful in expanding our distribution to sell to electronic retailers as well as furniture stores.
     One surprising development has been the interest in this category from international customers. In the past few months we have started selling home theater seating in Russia, Turkey and Colombia."

Phil Cooper, executive director, Comfort Design
     "We expect the upward pricing pressures experienced over the last 18 months to begin to lessen, especially as we approach the second and third quarters. The greatest challenge will be to maintain our momentum, which has been built through a concerted team effort in customer service, quick delivery, selection and quality, while providing great value. We also must never stop listening to our customers....
     "Our biggest opportunities lie in our ability to innovate in a conservative furniture manufacturing sector. Listening to our dealers, then reacting quickly to their needs, coupled with our maintenance of discipline should enhance our outlook for 2012. In football terms we have quickly learned how to ‘block and tackle.' Now we must continue to do this as we implement an exciting wide open offense in the new year."

Mike Campbell, president, Leather Italia USA
     "At Leather Italia USA our biggest challenges are going to be monitoring the global raw material markets and balancing the raw material cost in the event they continue to increase. It has been calm and somewhat stable, but an area that keen insight must be directed towards. In addition, the challenges of forecasting and product flow due to our continued growth and expansion is critical. I also feel that working with our retail dealer base and factoring partners in unison to create positives through the compression of credit will be important.
     "Our biggest opportunity is within our internal business model regarding our domestic warehouse locations, which are Leland, N.C., Houston and Anaheim, Calif. Our opportunities in offering our new Never Out program are stellar. We anticipate a great 2012 and our entire dealer base is very excited about what we continue to offer in regards to stable values and customer service."

Scott Davis, president, Luke Leather

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     "It's critical to implement professional sales training at the all three levels of the sales process - wholesale, retail and consumer.
     "There are more and more manufacturers that are manufacturing more a n d more product in more and more different countries. There are factories producing bonded fabric and pigskin that is being sold and represented as genuine cowhide leather. There is no bottom to the price and the consumer is the one who continues to be at risk.
     "The biggest challenge we face at Luke Leather is making sure that we continue to develop outstanding styling and designs in all 100% genuine cowhide leather product. We have to be able to get our people excited, confident and enthusiastic about the opportunity that they have. If we are able to do so, it will translate to the retail level and then the consumer level....
     "We have many outstanding opportunities with several of the nation's largest retailers heading into 2012. Since our inception in 2004, Luke Leather has always targeted independent retailers and design firms. This is due in large part to our focused strategy and controlled growth plan.
     "We maintain a large inventory ... and have over 850 active retail partners all over the United States and Canada. The benefit to our partners is that they can order one piece at a time or 10 pieces at a time. This gives them the flexibility to have no inventory and only order sold orders or stock orders when needed. This makes them much more efficient. We have been able to execute this strategy very successfully with computerized ‘rate of sale' and ‘flow of product' analysis that has us rarely out of stock."

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