From Home Furnishing Business
Take Five: Greg Harden
- Larry Thomas
Founded in 1844, high-end case goods and upholstery producer Harden Furniture is believed to be the oldest furniture manufacturer in the United States, and the company’s current CEO, Greg Harden, is the fifth generation of the Harden family to run the company.
Harden oversees a campus in McConnellsville, N.Y., that employs about 225 people and includes a log yard, sawmill and kiln, in addition to the customary assembly, finishing, packing and shipping lines.
He recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the challenges facing the solid wood category, in particular, and the residential furniture industry, in general. He also discussed the company’s decision to remain independent, despite the constant pressure on the top and bottom lines.
Home Furnishings Business: Do you still see a lot of growth potential for the solid wood category?
Greg Harden: We think there’s a lot of potential for it. The percentage of consumers who prefer solid wood is significantly higher than the amount of solid wood sold in the industry, and that suggests we should be realizing some opportunities that we haven’t taken advantage of. I think solid wood is a little underrepresented at retail.
HFB: What will it take to increase the category’s presence at retail?
GH: I don’t know that consumers, at the point of sale, know what is solid and what isn’t. When I do retail sales training … they don’t talk about solid wood. They talk about wood. In a lot of people’s minds, when they hear the word ‘wood,’ that suggests solid. Our business is about two-thirds residential and one-third commercial, and we actually get a lot better traction with solid wood on the commercial side. They really want solid wood because they understand the advantages and the durability.
There has never been a time in my 36-year career where we’ve spent a much time trying to understand what’s happening at retail. To put it mildly, it seems like it’s a God-awful mess out there. We constantly hear from dealers that their traffic is terrible or their business isn’t very good. And then you look at national statistics that show that sales of home furnishings are up. The industry should be doing a lot better. I know that the (Millennial) generation doesn’t place as much value on home furnishings as prior generations, but at the same time, the research suggests that our products should be a pretty good fit for them.
I recently read about a demographic group called Henrys – High Earners, Not Rich Yet. That demographic wants products made in America, and they want products that have been touched by the hands of a craftsman. They really relate to that. But in our industry’s case, we’ve been advertising nothing but price for my whole 36 years in this business. If all you can talk about is price, that is probably what the consumer is going to respond to.
If you look at other categories of durable goods -- take automobiles, for example -- the better-quality brands like BMW, Audi and Cadillac have a much bigger market share in their industry than better quality goods in our industry. It shows that we’re really doing something wrong in this industry.
HFB: Since consumers are shopping in fewer stores than they did a decade ago, isn’t it also critical to reach them through the internet?
GH: Absolutely. The internet is still a very important source of information for consumers. Even though consumers don’t really feel comfortable buying furniture on the internet, they’re certainly using it to get all the information they need on home furnishings. So, we’ve got to be better internet marketers. Consumers are spending just as much time researching the information they want. They’re just doing less of it at the store.
HFB: In 2014, the proposed sale of Harden Furniture to a Chinese company fell through at the last minute, and you opted to remain independent. Is that still your goal?
GH: Yes, but we have an equity partner now, who has a modest stake in the company. In fact, we probably will close on one and possibly two acquisitions by year-end. One of the realities I face is that … nobody wants to lend money to a furniture manufacturer. In our industry, if you’re going to grow, you’re probably going to have to do it as much through acquisitions as you do organically. Organic growth is really tough to come by.
HFB: Is organic growth especially tough at your price points?
GH: I think so, because we’ve been running up the down escalator for years. (laughs). This industry must gain a little more confidence in itself and start talking more about features and benefits, and the value of wonderful things for the home, and less about price, price, price. We’ve got to move people up in price. We’ve got to move them up to better quality goods.
HFB: You recently began a modernization of your factory. How’s that going?
GH: We’ve got about two-thirds of it complete. We’ve held off on the other third, primarily due to funding, but also because of (our pending acquisition). The acquisition will probably close during the third quarter, and all of their production is going to come into our facility. They’ve got a good deal of the equipment that we have on our wish list.
HFB: Does it present any special challenges being in a region that’s not a furniture manufacturing hub?
GH: There’s a disadvantage in that we don’t have anybody in our local community who knows how to manufacture furniture. It’s particularly tough on the upholstery side. But there’s also an advantage to it because we don’t have any competition for that labor. I know down in Hickory (N.C.) and places like that, the labor market is very tight.
I’m on the New York State Business Council, and we’ve been pushing the state to do more vocational training, which would really help companies like ours.
HFB: How is business so far this year?
GH: I’d say it’s okay. January and February were not particularly good months, but we had a good March. By (April or May), we’re going to be right around last year’s number. We’re not jumping up and down and breaking records … but it should be a good year. One thing that’s holding our industry back is that home sales are down a little and the supply of new homes is well below where it needs to be. But overall, the fundamentals point to us having a pretty good year.
Our business was great last year until about the middle of September. (The slowdown in the fourth quarter) had to be due to the election. Retail in general was pretty soft around the election, and it just took awhile afterwards for it to pick up. Maybe all the folks who were Hillary supporters were in a bit of a funk for a few months (laughs).
HFB: Has the popularity of custom upholstery had a positive impact on your business?
GH: Absolutely. Our upholstery has grown significantly in the last four or five years -- at the expense of case goods. Partially, that’s because we’ve put more emphasis on product development in upholstery, but that’s also what is working at retail. I would say the average retailer has committed a third more slots to upholstery, relative to case goods, than they had at the end of the financial crisis.