Take 5: Farooq Kathwari

December 4, 2014  by in Furniture Retailing, Industry   

This month's Take 5 poses a few big-picture questions for Ethan Allen CEO Farooq Kathwari. With stores and operations across the world, we thought he'd have a good "global" view of what's coming up next year.

Home Furnishings Business: Are you a Bull or a Bear when it comes to next year's industry forecast? Explain.

Farooq Kathwari: I am an optimist by nature, and I am cautiously optimistic about the industry in general.

The road out of the Great Recession has been a journey of slow but also steady progress. Regardless of which way the economy swings, however, I see a bright green light for Ethan Allen. We are currently introducing hundreds of new products we call The Next Classics that are doing very well with our core clients and also a new generation of shoppers.

We have revamped our online and in-store retailing experiences. We have built upon our unique, vertically integrated business model that has always delivered exceptional quality and value by bringing even more of our manufacturing back into our North American workshops. We are updating and right-sizing our domestic design centers, and taking our message and retail footprint to more and more markets internationally. Ethan Allen is America’s classic design brand, and that’s a timeless idea that travels well, especially today.

HFB: What is the one thing that could make or break next year for the furniture industry?

Kathwari: I don’t think there’s any such thing as one event that makes or breaks an entire industry, whether it’s ours or anyone else’s. The smart players will always anticipate and adjust to change.

Consumer confidence of course is an important criterion we look at. When it's negatively impacted by domestic or international issues, it holds people back from discretionary spending. Having said that, people are impacted, but with so much negative news, they pay attention, but not as much attention.

HFB: Is there anything you've seen on the global economic horizon that the furniture industry should worry about in 2015?

Kathwari: The era of globalization and commoditization has impacted our industry in the last 12 to 15 years. I believe that major changes include more balancing of sourcing.

We are focused on consolidating more and more of our manufacturing back here in North America, building on our strength as America’s classic design brand.  

Global events also relate to consumer confidence. We're confident, though—right now we have 73 locations in China, and in a few days I'm going to the opening of another (Ethan Allen) Design Center in Dubai.

HFB: What kind of reputation do U.S. businesses have around the world?

Kathwari: The reputation is mixed.

On one hand, American business has created major innovations in many areas and has established great operating precedents to follow. On the other hand, short-term focus of being a public company is viewed as not helping create long-term growth. America also reflects in its diversity the microcosms of the world, which brings ideas and people to America.  

All in all, the reputation of American business is good, and that's because of innovation. At Ethan Allen, we've set up operations in Mexico and Honduras, where we established similar environmental and safety standards to those we use in the U.S.

But if you move from country to country to country to get an advantage, the people there start to think you're just a mercenary.

HFB: We're coming out of a contentious mid-term election that tipped the scales in the Republican party's favor to a level we haven't seen since 1994.

Conventional wisdom says election season is bad for retail, but now that this one is over, do you have any thoughts on how the results from Nov. 4 will affect consumer appetites for home furnishings?

Kathwari: I am glad the elections are over, as major and consistent negative advertising impacts on consumer attitudes and confidence. I believe consumers understand home is a “haven” from all the turmoil of the world and to have a happy and a beautiful home is a “luxury” they cannot afford to miss.

The national mood reflects a great desire for the political bodies and executive branch to solve problems rather than work against each other.