Turnaround specialist: Industry still has challenges
December 20, 2013,
Consultant Peter Tourtellot speaks at Furniture/Today’s Leadership conference on the challenges and opportunities facing the furniture industry.
But it still must overcome challenges - including finding ways to market and brand itself - if it wants to succeed in the future.
That was a key message from Peter Tourtellot, a principal in Greensboro, N.C.-based turnaround specialist Anderson Bauman Tourtellot Vos. He spoke on Mastering the Landscape, one of the topics covered at Furniture/ Today's 2013 Leadership Conference here.
Tourtellot said the industry is much stronger in 2013 than in 2009, with many companies experiencing gains in sales and profits. While sales fell in 2009, they have risen 4-6% every year since, he said.
Imports continue to rise as do export opportunities for manufacturers, he added. U.S. manufacturers, he said, even face improved prospects due to rising labor costs in Asia and increased shipping costs. Combined with fluctuating oversea currencies, manufacturing in parts of the U.S. and Mexico will be as economical as in China, he said.
"That's quite a shift over the past five to six years," he said, adding that Mexico will become a major source for less expensive furniture, while high-end products will continue to be made in the U.S.
But despite these opportunities, furniture companies need to do a better job marketing and branding themselves, he said. He said furniture companies' marketing efforts have traditionally been weak, with little research done on consumer shopping patterns. Instead, the industry resorts to price discounting.
"Investing in a marketing plan is less painful than declaring bankruptcy," he said, adding, "A brand cannot be built in Las Vegas or High Point."
Tourtellot suggested the industry embrace nontraditional forms of promotion including mobile device advertising, highly targeted Web advertising, use of social media and word of mouth promotion.
"Those who understand branding and its importance will benefit greatly," he said. "Without a brand, you are at the mercy of your customers."
He said retailers should care about brands, particularly due to the mobile nature of consumers. "When people move, brands go with them," he said. "In a new community, a store name might be unfamiliar, but a brand name carried by that store is recognizable."
He added that if a store doesn't carry recognizable brand names, that will affect the consumers' perception of that store.
Tourtellot also said that product development is "badly in need of streamlining," with less than one-third of new product introductions going into production and less than half of those retailing well. The old process, he said, is costly, slow and full of waste. Design piracy also continues to be a problem that is often encouraged by retailers.
Tourtellot also said the industry needs to be aware of trends in the housing market. While housing is on the rebound, he said, it has not necessarily translated into furniture sales but should show more strength by year's end.
He also said that smaller home sizes will change the way people buy furniture. For example, in apartments that averaged 982 square feet in 2013, people will purchase more wall-mount TVs versus TV consoles, much less entertainment centers. Many homes also have built-in cabinets and walk-in closets that eliminate the need for dressers and chests.
"This is something you must pay attention to," he said, adding that such changes have had a "tremendous effect on your industry. If you can't fit it in (your home) you are not going to buy it."
He noted there is also less distinction between kitchens, living rooms and dining rooms, which ultimately will dictate purchases, particularly in dining and upholstery.