FBI's Scozzafava shares outlook
By Furniture Today Staff -- Furniture Today, January 6, 2008
St. Louis — Furniture Brands International's move in December to eliminate its Thomasville reps caused a buzz throughout the industry. Ray Allegrezza, Furniture/Today's editor in chief, quizzed Ralph Scozzafava, FBI's CEO, on this and other issues.
F/T: What prompted the decision to eliminate the Thomasville reps?
Scozzafava: As someone who spent a good portion of his career in sales — I was a rep, a regional sales manager and a national sales manager — I have a firsthand appreciation for a sales rep. This was a very difficult decision, but one that had to be made because the role of the Thomasville rep has changed over time as the business model has changed. As you know, a very large portion of that volume is to dedicated Thomasville stores and galleries. As a result, the role of the Thomasville rep had transitioned to more of a service role than to an actual selling role. That was the crux of the decision.
F/T: Who made the decision?
Scozzafava: This was a joint decision involving input from Thomasville President Ed Teplitz, myself and others.
F/T: A letter we received from a Thomasville dealer indicated that his rep provided a number of support functions such as training, communications, merchandising and more. Will that support now go away?
Scozzafava: Absolutely not. We have internal positions to handle those functions. In fact, the most important thing we can do is to make sure that we support our dealers so that they can best support our mutual customers. If we thought that we would lose that capability, we would have done something differently.
F/T: Do you have plans to cut off Thomasville retail accounts that are not Thomasville stores?
Scozzafava: Not at all. We believe that Thomasville is a great brand and will continue to aggressively drive sales to both stores and galleries.
F/T: Can you specify how much of what Thomasville sells currently goes to Thomasville stores?
Scozzafava: We send a good portion to both Thomasville stores and galleries. In this current retail environment, I couldn't predict how that might change during the next five years. What I can tell you is that we think the current model is fine. We just want to operate it better and in more markets.
F/T: Along those lines, are there many Drexel Heritage dealers today who may not be carrying the line in a year or so, because they are not Drexel Heritage stores? Also, will you eliminate the Drexel rep force or the rep forces of your other brands?
Scozzafava: Not at all. I also think you will also see the Drexel Heritage sales force become bigger. We think Drexel is a terrific brand. And remember, the functions of a rep for Lane, Drexel Heritage or Broyhill are very different from those being performed by a Thomasville rep.
F/T: Do you have plans to open more Thomasville and Drexel stores?
Scozzafava: We have plans to expand both brands. However, a lot hinges on the right sites being available in the right markets.
F/T: How is the current economic environment affecting what FBI can hope to accomplish in restructuring?
Scozzafava: For openers, I think restructuring is somewhat of an extreme word. We see it more as a realigning. Having said that, this economic climate and the impact it is having on our category is not to be ignored. While we don't have a good prediction about when things will change, what we do know is that we can only control our controllables, such as bringing great product to market, controlling our brands, working on supply chain efficiencies and continuing to focus on our customers.
F/T: What is your outlook for 2008?
Scozzafava: Near term, I think 2008 will be a lot like 2007, which means we will have to be smarter this year in terms of managing the business. But take a look at a company like Disney. They had a great year, which tells me that when consumers spend money to visit the Disney parks or to go on expensive vacations, the money is there. Similarly, suppliers of flat-panel televisions, cell phones and video games all had a great year. Our job is to get the consumer just as excited about making her home beautiful.
F/T: Will retailers see any results of the new product development strategy in 2008, or will that take longer?
Scozzafava: They got a glimpse of some of it at the October High Point market at Thomasville, Broyhill, Lane and Henredon, and will see even more in Las Vegas. The plan is to really dial it up at the next High Point Market.
F/T: How can FBI compete against Ashley, particularly at the price points where Lane and Broyhill compete?
Scozzafava: Ashley is a terrific operator and I really like what they do. But I also really like what Lane and Broyhill do. And I probably have a slightly different perspective in that we look at the competition in terms of other high-ticket consumer durables. So, from that perspective, our competitor is a $3,000 flat-screen television or the $2,000 she spends at Home Depot for pressure-treated lumber to build a new deck. Those are dollars that she could have spent on a new bedroom suite.
F/T: What can Furniture Brands Asia do to keep retailers from simply buying direct, or shopping for the lowest-cost importer?
Scozzafava: What we can do is what we are doing now — offering great design, tight specs and very careful and close supervision of all aspects of the manufacturing process. When you are talking imports, quality assurance becomes critical. We have our own testing lab in Asia. We also make sure that the cost and transportation logistics are at a best-price level. Finally, we continue to focus on flowing the goods so that the retailer doesn't have to carry high inventories, or get caught with inventory they have to discount.
Many retailers deciding to direct import assumed it would be high risk, high return. But over time, many have told us they realized the world of difference between first cost and final cost at the end of the day.
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