Prices, promotions & pollution, oh my
Carole Sloan, Senior Contributing Editor -- Furniture Today, April 27, 2008
Random notes from the recent High Point Market...
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Looks like there's going to be an abundance of stuff to be cleared out of warehouses both on the supplier side and the retailer side. This will have a definite impact on pricing structures across all categories in furniture for at least the next season.
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The drive to attract customers will become more intense as the year moves along. Already there are indications that consumers are responding less to furniture retailers' no-no-no promos and are instead using their own credit cards, for a multiplicity of reasons. We've now reached the point where we are promoting free furniture as well as even more extended terms. Case in point: a recent Raymour & Flanigan circular offering no-no-no terms until January 2013, a full four years and eight months, plus a free furniture bonus offer.
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Price increases from suppliers are a real world scenario. No pay, no make, no ship is the operating philosophy. Americans, especially the giant retail organizations, are not accustomed to being told they WILL pay the higher prices, but in this new world of business, this is the fact of life. There are too many factors affecting pricing to avoid the pain. The challenge will be, will this market see the potential to create a product with added value rather than resort to an even lower price point or cheaper version of the same item? Not only does the latter approach denigrate the appeal and quality of furniture, but lowering price points, as we have seen in recent years, certainly doesn't increase unit sales nor reduce operating expenses.
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Looking ahead to the Olympics in Beijing, it's still not official, but there's a growing sense that factories will be closed to attempt to stem pollution. The sense is that shipments from China from July to September will be an iffy thing.
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