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We'll see price hikes this week

Larry Thomas -- Furniture Today, April 28, 2011

HIGH POINT — Everyone's least favorite topic - price increases - will be in the spotlight this week as soaring raw materials costs have forced most case goods, upholstery and bedding resources to hike prices on at least a portion of their line.

Producers say they don't like it. And retailers say they like it even less. But significant cost increases on everything from the steel used in recliner mechanisms to the glass used in curio cabinets have left producers with little choice.

"I am taking as much as I can bear and then passing some along," said Page Wilson, president of case goods and occasional resource Pulaski. "Nobody likes it, but for the most part, everybody understands it."

Most of the price increases are in the 3% to 5% range, but vary widely depending on the product.

Upholstery and bedding resources, for example, have been hammered by multiple increases in the price of foam, while upholstery producers have also seen increases in the cost of fabric and fiber - especially materials coming from China.

"The price increases from China have just been insane," said Chuck Tidwell, vice president of merchandising and product development at upholstery producer Franklin. "We're trying to absorb as much as we can, but some of it has to be passed on."

Stein World President Richard Olmeda said China is facing inflationary pressures due to increased domestic consumption, and spot labor shortages caused by migrant workers who have job opportunities in other high-tech industries.

What's unusual is that upward pressure is occurring during a period of low demand. It's typically seen during periods of higher demand, he said.

"Everything in China seems to be going up," added Ray Steele, co-founder of Gail's Accents. "It's 2% here, 3% there."

Steele said his company hasn't raised prices - yet - because container shipping costs have gone down in recent months. However, neither Steele nor anyone else ruled increases out entirely.

"Nobody likes price increases, but if your margins have eroded, you have no choice," said AICO President Martin Ploy. "If you want to stay in business and offer products that people want, the quality they expect and the service they deserve, you must raise your price to be able to satisfy your customer without compromising the value of the product."

Nathan Cressman, vice president of merchandising and marketing at Magnussen Home, said the bedroom and occasional resource was reviewing its pricing structure on the eve of market and said an spring increase is likely.

"Yes, I see prices rising," said Cressman. "We haven't determined where it could land, but it could be in the 3 to 5% range."

He added that any increase would not be put in place for 45-60 days after market, but it probably will affect most inline goods. "I don't think anything is spared right now," he said.

Tom Jordan, president of upholstery producer Michael Thomas, said recent foam and fabric price hikes leave him with no choice but to raise prices on new goods.

"There's going to be an increase in the marketplace for spring. That's already being done," according to Jordan. "It's not like prices are going up 43% or anything like that ... but maybe 8%, 9% or even 10%. That's a big increase, but not the end of the world."

Most retailers seem willing to grudgingly accept the increases, and several said they're already seeing them.

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Some price hikes expected at High Point Market

Apr 1, 2011

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