RTA makers 'holding their own'
By Larry Thomas -- Furniture Today, January 6, 2008
High Point — Amid tough retail business conditions that show no signs of easing, ready-to-assemble furniture appears to be maintaining its footprint in key distribution channels.
Producers say entertainment furniture continues to be the standout performer, due to the enormous popularity of flat-panel TVs and other home electronics. Many also are reporting a mild revival in the small office/home office sector, as well as continued interest in storage pieces suitable for a number of room settings.
"We're basically holding our own, which in many respects is a gain in this kind of environment," said Jim Schmidt II, vice president of marketing and merchandising at Bush Inds.
Schmidt and other executives said the housing slump may have slightly less impact on the RTA sector because many consumers are deciding to make minor changes or improvements to their existing homes instead of moving to a new one.
Such decisions often call for RTA furniture because of the consumer's limited budget, producers said.
"I can see a very small light at the end of the tunnel," said Mike Rush, president of Rush Inds. "We've managed to stay busy ... but it's still pretty tough out there."
Producers say big-box retailers such as Wal-Mart and electronics superstores such as Best Buy, Circuit City and H.H. Gregg continue to dominate the category, since their furniture business is being driven by TV sales.
However, even these retail behemoths aren't experiencing the super-heated TV sales of winters past, which make it doubly important to sell furniture along with the TV.
"We are seeing a greater attachment rate," Schmidt said of the relationship of TV and furniture sales. "That's very encouraging."
While the just-concluded Christmas shopping season was a key TV sales period, producers say the weeks leading up to the Feb. 3 Super Bowl arguably are just as critical as consumers bring home the big screen for the big game.
"The entertainment category is more vibrant than other categories," said Steve Feldman, director of sales for upper-end producer BDI. "It continues to be such a driver of business for the electronics channel, in particular."
Office superstores such as Office Depot and Staples, meanwhile, are enjoying at least a modest revival in RTA office furniture sales, according to producers.
Several executives credit aging baby boomers for some of the success, because many are becoming empty-nest households and are transforming extra bedrooms into office space.
Many of those empty-nesters have decided, at least for the time being, not to put their house on the market. Instead, they are opting for relatively minor changes to an existing room or two.
Schmidt said Bush has been particularly successful with its new Tuxedo office furniture collection because its versatility and simple styling allows it to blend with almost any décor.
"It's not a climate where people are going to be switching homes," he said. "They're opting to upgrade what they already have."
Schmidt also has been pleasantly surprised at the company's success in selling product through e-commerce. That channel, he said, could become more important as producers develop products that are easier to ship and assemble.
Shipping is an especially critical factor for imported RTA items, and producers believe that segment of the business also will continue to grow.
Sauder Woodworking, for example, recently brought all of its imported lines under the Sauder Global Sourcing umbrella, and the company will spotlight those products when it makes its debut at the Las Vegas Market later this month.
In fact, one of the reasons the company opted to begin showing in Las Vegas was the market's ability to attract importers and buyers wishing to buy imports, said Kevin Sauder, president and CEO.
"With our growing emphasis on Sauder Global Sourcing and Gruga Seating by Sauder, we view the Las Vegas venue as a good fit for our corporate strategy," he said.
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