Take 5: Leib Oehmig

September 7, 2018  by HFBusiness Staff in Business Strategy, Industry   

 

Home Furnishings Business: The outdoor segment in 2017 was a $4.4b segment growing at 7.6 percent through Q2 2017. What do you believe is driving this?

• We are seeing two major factors driving this. It’s consumers who want to spend more quality time outdoors with family and friends. That is supported by designers and architects, who are creating spaces to spend more time outdoors. At Sunbrella, our passion is to add beauty without adding stress. The whole idea of an outdoor room continues to resonate with consumers. Another factor we are seeing is an expansion of retailers for all of these outdoor products. This includes an increase in bricks and mortar all the way to ecommerce, providing great access. Interest in outdoor products comes from the areas you would expect to associate with year-round outdoor living like coastal regions, the Southeast, and the Southwest, but we are seeing interest across North America. We have been pleasantly surprised with the level of interest in some areas you might not associate with outdoor living. While historically our products have been more prevalent in the higher end of the market, we are seeing consumers across all ages. There are more new consumers, Millennials who are embracing the idea that purchasing a better product is an investment. It’s an investment in a lifestyle. We are always trying to understand our audience, and think generationally about our business, and therefore want to create products that resonate with this next generation of consumers.

HFB: Obviously, Sunbrella is a recognized manufacturing brand and growing consumer brand. How important is that and what is Glen Raven’s commitment to building it?

• For all of our 138 years, we have remained committed to working with our customers. We want to offer them something different, and so it has motivated us to push the limits of technology, utilizing our Sunbrella fibers’ texture and fashion forward design while retaining its performance characteristics. We’ve been on this journey almost 60 years, and the product has evolved, and we’ve expanded the markets we serve. It’s part of our brand’s promise to be able to deliver on all of this. Glen Raven has always sought to invest in and build the Sunbrella brand and our whole family of products, wherever we see growth opportunities. We have a global footprint. If the opportunity is in North America, we will expand here. We have a significant presence in Europe and we continue to invest in Europe. We have followed our customers to Asia, and now we have a significant business along the Pacific Rim, catering to current and prospective customers.  When I joined Glen Raven, we were heavily focused on shade, boating and automotives. We were just beginning to take these performance fabrics into outdoor furniture. I don’t know if 30 years ago we could have envisioned the evolution in fabric design. We were also beginning this journey of becoming a marketing-oriented company. We’re still a manufacturing company that has great, unique products, but now we understand a lot more about how to help our customers, the furniture manufacturers, reach consumers and move them to invest more into outdoor and indoor living spaces.

HFB: While the outdoor product category is significant, the total upholstery fabric market at retail is $28.1B. Is there a need for performance fabrics indoors?

• Absolutely. For more than a decade now, we have been asking ourselves the same question. If Sunbrella’s attributes such as spill resistance, fade resistance and ease of cleaning, are important outdoors, why would those same qualities not be important to active families for indoor living? I use Sunbrella indoors in my home, and most of my colleagues are using Sunbrella indoors. It has the same attributes, and also importantly delivers a soft, supple hand and ease of drape. These characteristics are important to both manufacturers and residential designers.

When we first introduced it to the market, we had some questions. Our research found that having these attributes indoors is certainly desirable. More than a decade later, we see the product category is one of the fastest growing segments in a broader category. Other companies have done this, but we get there a little bit differently. What you see a lot of coming into the marketplace are fabrics that have essentially been used for indoor fabrics for years with topical treatments to achieve some of those attributes. The difference is, we engineer Sunbrella from the fiber all the way through the manufacturing process to fabrics finishing. It’s embedded into the DNA of the fabric as opposed to being added on. That’s a differentiator for us. We have designers using our fabrics in most every application you can think of for indoor furnishings. It’s not only for seating, but for window treatments too. Young families have kids who are rough on furniture. Pets are rough on furniture, too. Why have a room in your house full of beautiful furniture if it creates stress when people use it? We are creating products that allow you to have beautifully designed furniture and to encourage people to use it.

HFB: Obviously, some of fabric upholstery is imported, but not as much as leather. How much of Glen Raven’s production is domestic?

The vast majority of all of our fabrics are produced in the U.S., including all of our Sunbrella fabrics. We do have major business hubs in Europe and Asia. Our goal is to produce close to our customers and where our customers want to source. We sell into more than 100 countries. We are scaling our Burnsville (N.C.) plant with significant investment in support of the growth of Sunbrella. We have five plants in the U.S. dedicated to Sunbrella, if you include Sunbury Mills and our yarn plants in Burlington and Norlina, N.C.

HFB: While 10 percent tariffs are an issue, at 25 percent they become a problem. What impact do you foresee for the furniture industry?What are Glen Raven’s views on the reworking of NAFTA?

For most everyone, it comes down to not knowing. That’s what is creating the biggest concern. Tariffs are going to impact everyone, but what we are hearing from our customers is the not knowing is the toughest part. It’s difficult for them to plan in terms of financial modeling and their sourcing strategies. It’s hard for them to have a high level of confidence in those strategies when things are so fluid. It’s too soon to tell about the reworking of NAFTA. We were heavily involved in negotiating the NAFTA agreement and we have given input as it relates to this new agreement. While we supported NAFTA, it’s a 24-year-old agreement and we recognize it needs modernization. The business climate has changed, but we did not advocate for wholesale changes to NAFTA. The reality is that it’s a global economy and decisions that are made anywhere in the world have ramifications in our parts of the world. The best way for us to have the greatest chance for success is to embrace globalization and look for opportunities around the world. We get concerned when we start seeing these trade issues come forward. It creates uncertainty. But we adapt to changes and try to make them work in our favor.