The Commodity Abyss

April 11, 2014  by in Business Strategy, Industry   

All the warning signs are flashing—Consumer Price Index —Furniture— flat when compared to all consumer products; Furniture Purchases as a percent of Disposable Income— declining, dwarfed by the increased expenditures in communication. Ignore them! We are lucky to have survived the “almost” depression. Slowly we are pulling out of the decline, but the lights keep flashing.

This issue deals with Brand, the most important element in the health of a product category. What are our brands? Let’s not “cop out” with that “retailer is the brand” scenario. Yes, the retailer has a brand. However, that brand is about service, value, experience, not product quality and style. That is the realm of the manufacturer. The question becomes, “What has happened to brand.” Yes, we have brands: Century, La-Z-Boy, Henkel Harris, Broyhill, Natuzzi, Lane, and more. Yet few of these would register with consumers under the age of 45. Why? Have we failed to maintain our brands?

A recent analysis of the leading consumer shelter magazines yielded an interesting landscape. As far as product goes, sink faucets and shower heads were comfortably out in front. And, when looking at how the consumer would acquire the product, there was heavy representation of the e-tailers and specialty retailers. It is not a surprise then that the consumer, when shopping, considers both of these retail channels on the same level as the traditional retailers who have been in the local community often for 50 years or more.

Has our lack of clarity failed to communicate to consumers that we have a difference? Are the words we are using factors? Does the term “mixed hardwoods” fail to excite in the way that “rich mahogany”, “hard rock maple”, and “elegant pecan” do? Do the often-used terms of “eclectic style” and/or “transitional” fail to communicate style trends we believe in? These terms can mean anything you want them to mean. The consumer is, in fact, searching for Brand. The rapid growth of Amish furniture is an example of this.

Amish furniture is not only about style. Rather it is more about quality, durability, value—all characteristics of a brand. Obviously, I have been addressing the furniture category rather than the bedding industry, an industry that is in direct contrast to furniture. Why has bedding outperformed furniture in the past decade? In short, it is because the bedding industry has excited the consumer with brands that promise the product will deliver something that is different, often something that will make the consumer’s life easier, happier, better. This becomes the challenge for the furniture category.

I cannot end this article without extending my compliments to those CEO’s and presidents of manufacturing operations who have withstood the pressure to make their brands less by reducing quality, infringing on designs, and other short-term actions in pursuit of short term gains. And, finally not to let the retailers “off the hook,” demand that your suppliers create and maintain their brands, that they help you to sell to the consumers by delivering their part of the process. But be willing to allow your suppliers more margin to do so. When a strictly utilitarian product classification like women’s handbags can re-create itself into a category that has women, even those with modest incomes, purchasing a product that can represent a substantial portion of their salaries, this gives hope to our industry, one that is so intimately a part of the consumer’s daily lives.