Monthly Issue
From Home Furnishing Business
April 10,
2018 by HFBusiness Staff in Business Strategy, Industry 
But survey the extra-large kitchens, great rooms and even family rooms of many of today’s homes, and you’re likely to find a dining table and chairs. Granted, it’s probably used for a lot of other activities besides eating, but at meal time, the homework papers and craft projects disappear – only to be replaced by plates, cups and utensils.
So dining room furniture is anything but dead. Producers say the category is still very vibrant, but it clearly has taken a sharp turn away from formal.
“The floor plans in newer homes certainly are more open, so you’re dealing with a space that is being used differently,” said Neil MacKenzie, director of marketing at Universal Furniture. “We’re trying to meet that demand by having something that looks tasteful and elegant, but more functional in terms of everyday use.”
And from the perspective of MacKenzie and other executives, functional usually equals casual.
“We’re still seeing a lot of activity with larger table sizes, but with more casual finishes and a more contemporary, modern look,” he said.
Erin Sullivan, vice president of product development at Fine Furniture Design, said the dining table has become “the central command center of the home,” particularly those with open floor plans that combine kitchen, dining, living and entertainment spaces.
“Casual dining tables serve as more than just a spot for meals,” Sullivan said. “And because of their connection to other rooms, consumers need more choices when it comes to size, finish and fabric options.”
And dining room furniture producers clearly are taking a cue from their upholstery brethren when it comes to customization. And just like upholstery, customization is a rapidly growing segment of the category.
Bassett Furniture, in fact, has an entire factory in Martinsville, Va., devoted to its custom dining program, and even with upgrades that were completed about a year ago, the facility is still running at or above capacity. And Fine Furniture Design has worked with its factories in China to develop a program that offers 14 table base options, 36 finishes, more than 65 chair styles, and more than 200 fabric and leather covers.
“Consumers today want the ability to ‘make it their own’ and express their uniqueness through the products they purchase,” said Sullivan.
Another upholstery trend that has made its way to the dining room is performance fabrics. MacKenzie said Universal is seeing significant demand for such fabrics on dining chairs – largely because they have become more affordable as a dining room option, and it’s simply a common-sense choice. “It’s something livable, as opposed to something that’s lived around,” he said. “After all, when you eat, you’re probably going to spill something once in a while.”
But the open-concept floor plans in today’s homes hasn’t meant weaker demand for smaller sizes of dining tables. If anything, MacKenzie and Sullivan say it has given that niche a jolt because of the predominance of casual styles there.
“Smaller-scale round dining tables are casual in style and versatile in how they are used, whether it’s a casual card game or dinner for four in the family room,” Sullivan said. And in some cases, these tables find their way into a larger, open-concept kitchen, enabling the consumer to “create the dining experience that is just right for you,” she pointed out.
A survey of recent dining room furniture purchasers by Impact Consulting, parent company of Home Furnishings Business, showed that, to no one’s surprise, tables and chairs were the most common formal dining items purchased.
Tables were purchased by 63.89% of those surveyed, while chairs were acquired by 75%.
A buffet or sideboard was purchased by 30.56%, while a china cabinet was brought home by only 11.11%.
Other pieces were cited by 8.33% of buyers, and for Universal, MacKenzie said the company is seeing increases in multi-functional pieces such as bar carts, and bar storage units – often taking the place of a sideboard because of their increased functionality.
When asked the style of furniture in their formal dining room, traditional and country/European tied for the most responses at 22.22% each. Contemporary was next at 19.44%, followed by transitional at 16.67% and country/rustic at 11.11%.
The only other style mentioned was cottage, which was cited by 8.33%.
According to the survey, cherry, mahogany and oak are the clear leaders among the respondents’ preferred wood or finish. Mahogany led the way with 34.75%, cherry was cited by 33.05%, and oak was named by 22.03%
The only others mentioned were maple (6.78%) and pine (3.39%).
When asked how much they would expect to pay for a formal dining room set (table and six side chairs) today, 25% said it should be below $1,500. However, 55.56% said the price should be $1,500 to $3,999, and another 16.67% said they would expect to pay $4,000 to $11,999.
Only 2.77% said they would expect to pay more than $12,000.
April 10,
2018 by HFBusiness Staff in Business Strategy, Industry
Many of those cities and towns don’t have an Art Van store currently, but if CEO Kim Yost’s growth plan is carried out after he retires later this year, that will soon change. And in larger cities, it won’t be just one store. He wants enough stores to become the largest furniture and mattress retailer in that market.
“Our goal is to become number one in all the markets within that 600-mile radius,” he said.
The growth plan has gotten off to a flying start, as the retailer has grown from being present in 28 markets three years ago to 51 markets today. Much of the growth has come from opening new stores, but the acquisitions of Levin Furniture and Wolf Furniture last fall added the key markets of Pittsburgh, Cleveland, Baltimore and Washington, D.C. overnight.
Yost recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the challenges of such a rapid expansion, the decision to keep the Levin and Wolf names, and Art Van’s expansion into several new product categories.
Home Furnishings Business: What are the major challenges faced by such a rapid expansion?
Kim Yost: One big challenge is finding the right locations. We’re looking for anywhere from 45,000 to 75,000 square feet. Rents have to be at certain targets to achieve our financial thresholds. We look at each city with the view of having enough stores to get to number one in market share. We will buy existing buildings, lease existing buildings or build from the ground up. But going forward, leases (will be the priority.) We’re looking at these Toys R Us stores, as an example, to see what’s available.
Another big challenge is building the team for growth. Art Van has several leadership and sales courses for our team to help that development. As you build the stores, you have to staff them with great talent. We’ve had the opportunity to send in some of the talent from our Michigan headquarters, but that can only take you so far. You’ve got to have great education, sales and leadership courses to transfer your skills and your culture to these markets. And that’s not easy.
The difficulty is transferring your culture from your base to new markets. Culture eats strategy for lunch. You’ve got to realize that each market will have a degree of uniqueness.
HFB: Why did you decide to keep the Levin and Wolf names instead of converting them to Art Van stores.
Yost: Both our new brands have 100 years in business in their respective markets. We conducted an extensive survey in all four markets (Pittsburgh, Cleveland, Baltimore and Washington, D.C.) and came to realize that, unaided, these two brands had equal awareness to what we had in Michigan with Art Van. This is huge. When you’ve been in business for 100 years, like Levin’s, and over 100 years like Wolf’s, you’ve got two- and three-generation purchasers. You don’t want to take that great brand equity and just disregard it.
We’re going to maintain as much of the brand’s strengths as we can, whether it’s people, unique products, services and culture. Our goal is not to assume that one size fits all. In this particular case, we call it the power of three. We believe that by taking the best from Levin’s and the best from Wolf’s – combined with the best from Art Van – and bringing their synergistic secret sauce, we can create this power of three, and maximize the performance of all three brands.
HFB: Going forward, what will be the mix of product exclusively designed for Art Van vs. manufacturer’s brands?
Yost: The majority of our product mix is targeted to be exclusively designed and produced by our current domestic and import providers. We like to work with our current providers and then work from their lines so that the majority of our assortments are exclusive. We can’t differentiate ourselves unless we have a high propensity of exclusively designed and produced merchandise for Art Van.
Here are three examples of private label programs that have been incredibly successful. The new Detroit Sofa line that we’ve developed as a private label is made domestically. We also have a private-label leather line called Roma. And we have an upholstery line that’s one of our strongest, called The Style Collection. That’s also made domestically by one of our current suppliers.
We also have found great success by partnering with national brands like La-Z-Boy and Natuzzi to represent the quality perception from our consumers. There are not a lot of furniture brands that have that great perception like La-Z-Boy and Natuzzi.
You have to have lots of secret sauce in your merchandise. You have to have a strong position of uniqueness. It gives you a really good position in the marketplace. If you’re in the middle of the road with your merchandise, you’ll get run over.
HFB: Is your e-commerce effort focused nationally or in local markets?
Yost: Although we can deliver white-glove to all 48 contiguous states, the vast majority of our online sales are where we have existing stores. We believe that’s driven by brand awareness, by having physical stores in high profile trade zones, by the concentration of our advertising, and by our ability to offer in-store pickup.
What we’re finding is that more and more online transactions are being consummated after the store visit. It’s a new phenomenon.
Let me give you an example. They come in. They look at a sofa. They narrow it down to two colors. And when they go home, they make a definite decision on one of those two colors, and they complete the sale online – as opposed to coming back to the store a second or third time.
HFB: Will Art Van’s product offerings expand to include non-durable categories?
Yost: In April, we are going to move down the path of changing our name from Art Van Furniture to Art Van Home. We are going to concentrate a big portion of our product growth and merchandising and marketing growth in a new division called Home.
We will be expanding our flooring galleries in all Art Van stores. We are in the early stages of doing window treatments. And we’re going to expand greatly the traditional home categories – lighting, wall art, tabletop, top of bed and gift. In addition, in our new Home division, we will be launching dinnerware, stemware and glassware relating to six style categories. Online, we will be looking to expand in all rooms and product categories that relate to the home, including storage for the garage, exercise and fitness equipment.
If you need it for your home, Art Van is going to carry it. It’s going to drive traffic – both online and in our stores -- and it’s going to raise the average ticket.
HFB: What was the thought process behind your decision to retire later this year?
Yost: The timing is right. The company is well positioned for growth with our partners at T.H. Lee and the power of three with our brands. The heavy lifting for this next stage of growth is behind us, and it could never be a better time to bring on a new leader with a new vision and new excitement for the next phase of growth. Change is good.
We feel incredibly confident that we’ve got terrific partners, we’ve got an amazing financial foothold, and we certainly have a strong plan for the future with our 600-mile radius and our goal to be number one in all the markets within that 600 miles.
March 12,
2018 by Jane Chero in Business Strategy, Industry
Another element of the Home Furnishings Business vision is to establish a future perspective. In the words of Wayne Gretzky, “to win you need to know where the puck is going, not where the puck has been.” In that light, we should consider the beginning of the buying process before the consumer starts shopping.
Recent research from FurnitureCore, the marketing arm of Home Furnishings Business, provided the insight that 68% of consumers anticipate purchasing furniture this year. Research also tells us that 73% visit the internet to conduct research before beginning the serious buying process. Additionally, 40% scout the store before committing to shopping the 2+/- retailers they want to include in the buying journey. These are the facts.
Unfortunately, many of the planned shoppers do not follow through with their intent. What are their barriers? For the most part it’s the time strapped consumer. However, it is also the fear of beginning. The typical consumer is challenged with the subject of style — what is in style and what is my style? The emergence of eclectic styling where anything goes has not helped the situation.
The next barrier is the layout. As the room sizes decrease or the new open floor plan concepts gain popularity, the consumer is even more design challenged.
This is an opportunity that traditional retailers must seize. It is an accepted fact that with a “home plan” created by a visit of the sales associate to the home, the ticket is four times larger and the probability of closing the sale is 80+%. I am not referring to high-end designer stores but the more mainstream retailers.
Several high preforming retailers, such as Steinhafels and City Furniture, have robust designer programs that generate a significant percentage of their transactions, and yes, they really charge for the process. Again, this is accomplished by trained sales associates, not just interior designers on staff. Many retailers offer the service “free design consultation,” but do they “sell” the process? What impact would having 30-40% of your tickets being generated by home visits? You do the math.
The challenge for traditional retailers is to execute the next strategic change before the other distribution channels. Assisting consumers with in-home design will be the next frontier. The online decorating services, such as www.laurelandwolf.com, are launching major television campaigns offering design service with price guarantees for all products recommended. Wayfair has a special site dedicated to interior design.
Traditional retailers, let’s get there first instead of playing catch-up.
March 12,
2018 by Jane Chero in Business Strategy, Industry
Couple these demographic shifts with industry workforce needs in a changing e-commerce environment, and the U.S. workforce could be in for a wild ride in the not so distant future, according to projected data by the Bureau of Labor Statistics released in the fourth quarter of last year.
In addition to slow growth in the labor force, changes in the way consumers purchase products via e-commerce will dramatically shift the need and type of workers in many industries, especially retail. Not since the exodus of consumer goods manufacturing from the U.S. will the need for workers be so impacted.
Industries are changing and growing alongside the population. As shown in Table A, the retail industry is adapting to a changing economic structure and many brick and mortar stores are forecasted to decline in employment over the 10-year period 2016 to 2026. Among these are traditional furniture stores, as well as electronic, department and clothing stores. Furniture Stores are expected to take a 10.2 percent negative hit in employment over the 10 years to 2026. Meanwhile the success of Home Furnishings Stores is expected to boost this channel’s employment 7.4 percent. In the same time period, Electronic Shopping and Mail-Order Houses are expected to gain 23.4 percent more employees.
The Labor Force 2026
How will the Labor Force look by 2026? And will there be enough workers to meet the specific needs of American industry? In 1996 all Baby Boomers were within the prime 25 to 54 age segment – roughly 72 percent of the total labor force. Thirty years later, projected in 2026, Baby Boomers will be 62 to 80 years of age and many will have exited the job market – leaving just 63.5 percent of the labor force between 25 to 54 years old (Table B). Between 2016 and 2026, the other significant change to the workforce will be among 35 to 44 year olds as the Millennials dominate this age group, growing from 20.6 percent of the workforce in 2016 to 22.2 percent by 2026. They will be the only age group under 65 to gain share of the workforce.
Figure 1 shows the percent change of the workforce by age group. Of particular note is the continual decline in workers ages 45 to 54, tempered by the growth in the 35 to 44 group.
The growth of both men and women in the labor force plummeted after 2006, due to both the recession and a slowing population growth. Although not the fast rise seen between 1996 and 2006, labor force growth is expected to increase for both sexes between 2016 and 2026, 5.3 percent and 8.0 percent respectively (Table C). The forecasted boost of women in the labor force brings their percent distribution up to 47.4 percent in 2026, but men remain in the majority at 52.6 percent (Table D).
Due to the influence of immigration on population growth and the projected rise of participation rates among Asians and Hispanic immigrants, the labor force is expected to become more diverse. As the current population ages, the growth of White non-Hispanics in the labor force will decline further after falling 3.6 percent from 2006 to 2016 with an additional projected drop of 2.4 percent over another decade (Figure 2). As shown in Table E, both the Hispanic and Asian groups will increase their share of the labor force to 20.6 percent and 7.2 percent by a projected 2026.
Figure 2 shows the percent change in the labor force by race for the 10-year segments. Note the large Hispanic growth that occurred between 1996 and 2006.
As the younger generation’s participation in the labor force declines, and the workers over 65 increases, the median age of the Civilian Labor Force is projected to continue upward. Regardless of race, the median age of the labor force has climbed since 1996 and by 2026 all races are expected to have a median age above 40 with the exception of Hispanics at age 39.3 (Table F).
Labor Force Participation
Civilian Noninstitutional Population
Refers to people 16 years of age and older residing in the 50 states and the District of Columbia who are not inmates of institutions and who are not on active duty in the Armed Forces.
Labor Force
Labor force is the sum of employed and unemployed persons (actively looking for work).
Civilian Labor Force Participation Rate
The labor force participation rate is the labor force as a percent of the civilian noninstitutional population over age 16.
The labor force participation rate is the percent of the people working or looking for employment, divided by the total number of people over age 16. There are many reasons adults do not work. Some are too old or ill. Others chose to stay at home with children. Some have dropped out of the workforce and are no longer looking for employment. Others are unemployable for various reasons. Data from the Bureau of Labor Statistics in the fourth quarter of last year paints a picture of varied growth patterns in labor force participation rates among different age, gender, race and ethnic groups. These participation rates highlight some the economic and social frustrations in America today as government entities, education leaders and communities struggle to find solutions.
While growth continues in both the adult civilian population and labor force, as discussed earlier, the rate has slowed and is projected to continue to slow (Table G). In the 20-year period between 1996 and 2006, both grew at about the same rate – 1.3 percent average per year for the population over age 16 versus 1.2 percent labor force growth. However, during the 10-year period of the Great Recession and subsequent recovery 2006 to 2016, the rates got out of whack, with the civilian population over 16 years of age growing on average 1 percent annually while the labor force grew only half that rate. The gap between the civilian population over 16 and the labor force population (those working or looking for work) will narrow only slightly in the years ahead to 2026 (Table G).
Depicted in Table H the large 65 plus older total population is on course to grow exponentially from 2016 to 2026 with most leaving the workforce. And while age segments 25 to 34 and 35 to 44 show growth during this decade, the number of 16 to 24 year olds is expected to decrease alongside 45 to 54 year olds. Those ages 55 to 64, many still choosing to stay longer in the workforce, projects a flat population growth.
As the labor force gets older, the overall labor force participation rate is projected to decrease – down to 61 percent by 2026 (Table I). But the individual age groups are of particular interest. For the youngest age group 16 to 24, participation in the workforce declined steadily each 10-year span – from 66 percent in 1996 to a projected 53 percent in 2026. This decline in workforce participation is associated in part with a lower high school dropout rate and increased attendance at colleges, all positive factors. In fact, in many retail labor markets, senior citizens are filling the slots once held by teens and young adults.
Most worrisome, however, is that labor force participation rates among 25 to 54 year olds have trickled down, but all still expected to be above 80 percent in 2026. And while population numbers for 55 to 64 year olds are projected to hold at 41.3 million over 10 years, the labor force participation rate is expected to increase by 3 percent with more people working longer. For seniors 65 to 74, the Bureau of Labor Statistics predicts 30 percent will still be working in 2026.
The labor force is taking a huge hit with men leaving or not returning to the workforce. At a 74.9 percent labor force participation rate in 1996, the rate for men is projected to fall 11.6 percentage points to 66.2 percent by 2026 (Table J). However, contrary to strides being made by women in the workforce, just 56.1 percent of adult women 16 and over are expected to be in the labor force by 2026 – down 5.4 percentage points since 1996.
The workforce participation decline among women is only in two age groups – 16 to 24 and 35 to 44 year old women. Many in the 16 to 24 year old group are among the population staying in high school and then attending college. The 35 to 44 age group in part reflects women who have delayed marriage and child birth and who have exited the workforce to stay at home. The declining participation in this age group is expected to stabilize to 2026. Interestingly, these women are projected to return to the workforce by 2026 as demonstrated by the 45 to 54 year age group which will have the highest labor participation rate of any female age group at 76.4 percent.
Workforce participation rates were highest in 2006 just prior to the Great Recession in all race and ethnic groups, except White, non Hispanics (Table K). Rates in 2016 are projected to continue to decline among all race and ethnic groups from 2016 to 2026 as the population ages with the exception of Hispanics. Hispanics have more of its adult population under the age of 65 than any other race or ethnic group and are less impacted by the aging workforce. Hispanics have the largest percentage of its adult population ready to work at 65.9 percent, with Hispanic men having the highest participation rate of any sex or race at 74.4 percent.
In its purest form, full employment implies that any person wanting a job has one. The issue with employment data is that the Civilian Labor Force definition leaves out the number of people not looking for employment. These are the hidden numbers that are a challenge to economic growth.
The Bureau of Labor Statistics uses the Economic Dependency Ratio to highlight the impact of the non-employed which they define as the ratio of the number of people in the total population who are not in the labor force, per 100 of those who are. This is the portion of the population “dependent” on the working population. The BLS projections for 2026 highlight the growing economic pressure of the aging population on those in the workforce. Figure 3 shows that growth in the dependency of ages 65 and over will increase from 24.9 people per 100 workers to 30.9 older Americans. Even so, seniors still have the lowest dependency ratio. The dependency ratio of 16 to 64 year olds not in the labor force increased steadily to 2016, but is projected to lessen slightly by 2026. In 2026 there will be an estimated 35 Americans between the ages of 16 and 64 who are not working per 100 American in the labor force. Children under 16 still have the highest dependency ratio, but it has declined from 45.4 per 100 to a projected 2025 ratio of 38.9.
A high dependency ratio can exacerbate the problems a government faces in health, social security & education costs, which are most used by the youngest and the oldest in a population.
March 12,
2018 by Jane Chero in Business Strategy, Industry
Buoyed by an HGTV show that showcases their down-to-earth personalities and practical style preferences, Drew and Jonathan Scott charged onto the home furnishings scene a year ago with a 400-SKU collection that become an instant hit at Coaster.
This year, the twin brothers are back with an additional 250 SKUs that was a hit at the recent Las Vegas Market, as buyers again crowded into the expansive Coaster showroom to marvel at the expanded Scott Living lineup and get a selfie with the brothers.
The product additions feature a mix of materials, textures and finishes focusing on natural and organic roots as well as mixed media with an industrial flair and a clean and sleek contemporary look. The collection includes a variety of pieces that allow buyers an opportunity to create finished rooms or find a unique piece to add to their existing décor.
Dining room sets retail at $599 and up, five-piece bedroom sets start at $2,499, sofas open at $699 and accents start at $199.
But the Scotts didn’t stop there. They also ventured to the Restonic showroom in Las Vegas to take more selfies with buyers and unveil the Scott Living mattress line. It features innerspring, hybrid and latex sleep sets that retail from $1,099 to $2,199.
Just like their hit TV show, “Property Brothers,” the Scotts aren’t afraid to get their hands dirty when it comes to designing furniture and mattresses. They say they’re heavily involved in the entire development process, and it’s more than just their name on the carton.
“We are thrilled our collection with Coaster has continued to grow and remains one of the most popular home furnishing collections available,” Drew said.
During their visit to the Coaster showroom, Drew and Jonathan took a break between selfies and sat down to chat with Larry Thomas, senior business editor of Home Furnishings Business.
Home Furnishings Business: Why has this line been so successful?
Drew: Everyone who has watched our shows over the years knows that we hold dear our principles of helping families. So when you take what you see on our shows and you push that into our different collections with Scott Living, I think that’s what gets people really excited.
Jonathan: We try to think about how real families, real homeowners will use all of our products. We get a half-million messages a week each from of our fans on social media…and they tell us what they’re looking for. We’re trying to push the boundaries so people can get a little bit more, but at the same time, give them stuff that’s going to last.
Drew: Also, I don’t know if you saw the fine print on the box, but it says ‘free kitchen renovation with every furniture purchase’.” (laughter)
HFB: Are you trying to reach the interior design community with this line?
Jonathan: We work with local designers in every community we go to. And a lot of their clients feel that a lot of the beautiful stuff they see out there is not within reach. We’ve said to them, we can give them the quality, we can push the boundaries of design, keep people on trend and still make it attainable for the average family. We’re trying to bridge that gap between what designers want and what consumers want….and I think we’ve successfully done that.
Drew: We never want someone to look at something a family would love to have in their home and never be able to attain that. So, Scott Living is something like you will see on our show. We really know how to stretch a budget, and we know how to give you that wow factor and that function you need.
I think one thing people are starting to realize, as they look at us as designers, is that design doesn’t have to mean extremely expensive. It doesn’t mean that you have to break the bank just to have a beautiful piece of furniture in your home.
Jonathan: Drew’s shoe collection, on the other hand, that is really expensive. (laughter) But I think we’ve really raised the bar, and by watching shows on HGTV, (homeowners) have really raised the bar with their expectations, so you have to jump high these days if you’re going to get over that bar.
HFB: Are you pleased with the reception so far to the line?
Drew: What means a lot to me is that, when we’re at market, we have industry people, industry experts, coming up to us and saying you guys are changing the mold; you guys are breathing fresh life into the furniture and décor design world. That’s what excites me. And we see that on the consumer side when they’re buying our product.
If you ever buy one of our products, post a picture of it in your space, hashtag ScottLiving, because we will engage with you. We will interact with you. We want to see how you’re using it.
Jonathan: It’s all about the little details (such as) technology and storage. All of these little things, we try to infuse in the style.
To see a video of the full interview, go to http://hfbusiness.com/Magazine/Videos.