High Point Market Fall 2008: Buyers push for deals

In tough times, retailers need help

Clint Engel -- Furniture Today, October 20, 2008

HIGH POINT - Retailers shopping this week's High Point Market here say unrelenting pressure on consumers' pocketbooks, job worries and a continuing slowdown in business will keep buyers pressing harder than ever for values and deals.

And, with exceptions, they'll probably do very limited buying.

Economic uncertainty is ruling the day for both consumers and retailers, and until they believe a rebound is on the way, retailers say they will be cautious in their merchandising moves.

Inventory levels already are on the high side, so some say they will look for suppliers that warehouse their goods and can ship quickly. Better terms also will be important as retailers' cash flows are constricted.

If there is one piece of good news, it might be that price increases may have eased - at least temporarily - now that the price of oil has slid from more than $140 a barrel to under $80.

"We don't really have an open to buy," said Howard Freed, owner of Freed's Home Furnishings, which recently opened its second midpriced store in the Dallas-Fort Worth market. "Our inventory is up. Our sales are soft, and it's going to have to be a really good deal for us to make a buying decision."

Freed said that with the current economic turmoil, he can't project what his sales will be. And as cash flow slows, price and terms become more important.

Freed tries to stay in stock on the top 20% his best sellers, and says he will be looking for suppliers who can keep up with demand.

"If we're keeping our inventory lean, we may be able to make those sales if (suppliers) can fill our needs faster," he said. "Consumers want it now. They want it cheap. They want everything."

Freed said he'll focus largely on starting price points at market. He is seeing increased interest in some of his store's less expensive bedroom furniture - four-piece groups from $1,500 to $2,000. The Old World look, with a lot of heft and carving, still sells well, as does large-scale furniture.

Freed also will be look at contemporary styles, which continue to gain appeal. He'll shop formal dining, home theater seating and casual dining, including popular counter-height tables.

Keith Koenig, president of Fort Lauderdale, Fla.-based City Furniture, thought business was finally rebounding in Florida as August sales took a decent bump. But that was followed by a "conga line" of Atlantic hurricanes and then the financial meltdown, which "cast a gloom" over shoppers.

"September was a particularly challenging month for everyone," he said. "We lack clarity of what the future is going to bring. Everyone has to be a little more cautious going into the fourth quarter.

"If I were a manufacturer, I'd be coming out with great basics and fabulous values, because we're seeing the consumer be very, very value oriented, and we have responded by sharpening our pencils everywhere we can," he added.

That said, Koenig believes shoppers are still out there, and City is continuing to open stores as it looks at its long-term future.On his shopping list are casual, comfortable lifestyle looks, contemporary and modern styles - which Koenig said is distinguished from contemporary by its cleaner and simpler look and smaller scale, friendly for condominium and apartment living.

City operates City Furniture and Ashley HomeStores, and Koenig said he's also eager to check out Ashley, which has a lot of new product at market.

Jake Jabs, CEO and owner of Englewood, Colo.-based American Furniture Warehouse, said he'll be looking for less this week than at any market in recent memory.

"With the economy slowed down, being flooded with special purchases we're buying, and factories shipping quicker, we really just don't have an open to buy, and that's unusual for us," he said.

Jabs and his buying team usually spend four days here, but probably go with three this time around. He said his business has been off an unprecedented 10% to 12% this month, hurt in part by the crush of political commercials that have shut out AFW's TV advertising.

Despite this, there are a still a few things on the retailer's list, including better occasional tables. Jabs said his buyer will shop at showrooms including Hekman, Hammary and Marge Carson because his main import sources "don't seem to want to make nice occasional tables" that can be retailed at $399 to $499.

Jabs also will be looking for an Old World-style bedroom group to replace Ashley's popular Casa Mollino, which the manufacturer is dropping.

He added that he has talked to two suppliers that have indicated there may be a few price reductions this market, a welcome relief from the rash of price increases that have hit the industry lately.

Even for some retailers who have seen their sales hold up in these tough times, the emphasis here will be on deals.

Diane Daniels, president of the three-store, promotionally oriented Daniels Home Furnishings in Cleveland, said she plans to shop market like her customers shop Daniels.

"I want it all for a cheap price," she said. "The most important thing is value and a deal, and great closeouts also don't hurt."

Her shopping list includes contemporary sofa and loveseat packages she can retail for $599 to $699.

For the five-store Jerome's of San Diego, business has been up about 5% for most of the year, but in the past two weeks was down about 10% from the same period a year ago.

"It's tough," said President and CEO Lee Goodman. "What's happening is absolutely making everyone uneasy. I know I don't feel like buying anything."

But unlike some other retailers, Jerome's won't be holding back. Goodman said the retailer has fared well in a weak economy compared with its competitors, in part because of merchandising and marketing shifts it has made - moving away from an emphasis on deferred payment offers and toward selling fashion-forward product, for instance.

"Previous markets we were looking much more at making some fashion statements to give us an edge," he said. "This market we're really going to be looking for value, value, value. We want to sharpen our price points and show value out there for consumers who can use the relief."

That means the Jerome's team will hone in on the lower end of its price spectrum. Goodman said the retailer already offers outstanding value with sofas it sells for $299. Its buyers will look similar deals that "shout value" across all categories, including master bedroom groups under $1,000.