From Home Furnishing Business
Phoenix-based Trendwood, now a major player in youth furniture, got its start in 1985 in an entirely different furniture category – waterbed furniture.
Capitalizing on the flotation frenzy of the 1970s and 1980s, the company did a brisk business making waterbed frames and headboards for waterbed specialty stores. The furniture was made of Ponderosa pine, a wood known for its strength and durability that could support the heavy bags of water that made up waterbed mattresses.
Scott Coor, Trendwood’s vice president of marketing, recalled that many in the waterbed business were convinced the frenzy would last forever, but by 1990, he said the company began to see indications the industry was peaking.
“What we did best was cut long pieces of pine, so when waterbed sales began to stall out, I started looking for other applications for that process, and we settled on bunk beds,” he said. “There were a ton of guys making little cheap bunk beds, and there were some real expensive ones out there, but nothing in between. So I thought if we could make a really strong, durable bed … we might have something.”
So, in 1992, Trendwood secured a small, temporary exhibit space at the now-defunct San Francisco furniture market to show its first three bunk beds – while still making its line of waterbed furniture.
Coor said it took a couple of years for Trendwood to establish credibility as a bunk bed producer – after all, the waterbed business had more than its share of questionable operators – but the program finally started humming.
The timing couldn’t have been better. Waterbed sales began a breathtaking decline in 1992, and by 1996, the once booming industry – not to mention Trendwood’s waterbed furniture business – had all but disappeared.
Parents and grandparents often recoil at the notion of spending hundreds and hundreds of dollars on furniture that a child may outgrow in a few years.
They face a similar dilemma with clothes, shoes and toys, but at least those items can be passed along to a sibling, sold at a yard sale, or donated to charity. It’s not as easy to do that with a captain’s bed.
That makes youth furniture a much tougher sell at retail – so tough that some furniture retailers have abandoned the category.
But many youth furniture suppliers, for obvious reasons, think that’s the wrong approach. They say youth bedroom, just like master bedroom furniture for adults, is transitioning into an item business. That means retailers should focus on the items consumers want most – and de-emphasize the 20-sku collections that once were a staple of the category.
“Gone are the times when Mom and Dad went into the big box store and bought bed, dresser, mirror, nightstand and chest for the new little girl,” said Fran Scheller, vice president of merchandising and product development at full-line furniture resource Bernard’s. “That has definitely impacted the dollar volume of the youth business.”
But Scheller and other executives say the category is still quite vibrant – as long as manufacturers and retailers can deliver what the consumer really wants. That usually means a sturdy, safe bed and something that has lots of storage.
“If you look at the demographics there are still a lot of kids out there who need a place to sleep and a place to put their stuff,” said Scot Coor, vice president of marketing at Trendwood, a Phoenix-based youth furniture producer. “Most people want to buy something that’s a durable, safe product, but bottom line, they don’t want to spend a whole lot on it because they know the kid is going to outgrow it or tear it up.”
That’s why Coor and Scheller said their companies are now focusing on beds -- in many cases designing them with storage space that’s either under the bed or part of the headboard.
One of Bernard’s best-sellers, for example, is a design called a lounge bed that features a bookcase storage unit built onto one side of the bed. That allows it to be placed against a wall, which saves space in the center of the child’s room. Plus, it has storage drawers underneath the bed.
“People are still buying functional pieces that give them a variety of uses and lots of storage options,” Scheller said.
Don Essenberg, president of full-line resource Legacy Classic, said his company’s Legacy Classic Kids line is still experiencing growth, but acknowledged youth furniture is “a tough category” because products typically occupy a small footprint and separate, distinct section of a retail sales floor. That makes it essential for a retailer to promote the category heavily in order to be successful, he said.
“People who do the best with kids’ furniture are the ones who advertise it,” said Essenberg. “You have to let that mother whose out shopping for youth furniture know that you have it.”
“You had better be really good if you’re going to do youth, because the competition is fierce,” Scheller added. “It’s not like master bedroom, which is a fashion statement. It’s more like mattresses and recliners. It’s price driven and it’s need driven.”
Essenberg said his company’s line, which is at the upper end of the market, also is seeing less interest in purchases of multiple pieces, and said desk sales, in particular, have weakened.
“Desks aren’t an automatic. It’s not the essential SKU in the kids’ bedroom anymore,” he said. “It about sleep and storage now.”
Coor said Trendwood’s desk sales also have been sluggish, but said he has seen a slight uptick in sales of models that have a power supply and a charging station.
“For a desk in a kid’s room today, you better have a charging station. If you don’t, you’re selling an antique,” Essenberg quipped.
Research by Impact Consulting Services, parent company of Home Furnishings Business, showed that only 13.4% of consumers who recently purchased youth furniture were interested in adding a desk. But 26.5% of those surveyed were interested in buying a second bed – often a bunk bed or loft bed.
And interestingly, a majority of those surveyed were hoping their youth furniture would last a lot longer than the youth for whom it was purchased. Some 29.2% of respondents said they hoped to use the furniture in a spare bedroom some day, while another 36% said they hope the child can use it as an adult in their first apartment or at college.
In addition, the survey said 26.2% of respondents purchased their furniture for a child who was over age 13, while 17.9% bought it for a child age 10 to 13, and 17.6% bought for a child age 6 to 9. The highest percentage of purchases, however, were made for a child age 3 to 5, who was the recipient of 29.5% of the purchases.
Essenberg and Scheller said the majority of product from their companies are purchased for girls, which is not surprising because white remains the most popular youth furniture color.
“We still do well with the classic white girls’ groups in our line, whether they’re a little more transitional or the typical ornate Victorian look,” Essenberg said. “But the last couple of years, we’re also starting to do well with girls’ groups that are not in pure white. Some of the taupe and putty colors are doing well.”
Coor said Trendwood’s furniture is made of solid Ponderosa pine and has more of a unisex look, and noted that his company doesn’t keep track of whether the user is a boy or girl.
“Most of our product is developed around a youth’s need, be it a boy or a girl,” Coor said. “Neutral colors are not going out of style. They seem to be the most popular.”
At a recent management meeting with one of my clients, we were discussing how to help younger new hires understand that they could develop a very lucrative and rewarding career with us in retail. Many of the articles we have read state that the value structure of the Millennials and younger generations seem to be quite different from the Boomers and their parents. Not better or worse, just different.
One of the major aspects of this is that they desire and therefore demand more from their job than perhaps the previous generations did. Not necessarily from an income or financial security standpoint, although that is certainly very critical, their focus appears to be on what they personally get out of the experience. They are often equally or more concerned about what it does for their feelings of self-worth than how it impacts their net-worth. Don’t get me wrong, money is still very important to these younger people, but in many cases they have even bigger dreams than we did. However, their satisfaction in life is more determined by the inner rewards they get from what they do, than it is by how much money they make and what they can buy. As a result, they may value things from their job and ultimately their careers, that perhaps they don’t feel we in retail are offering them.
We all know that a successful sales person on our floors can make a very good income. In most cases better than they can in other industries after spending more time and money on additional education. However, even when we show them what they can earn, many of the ones we really want, turn up their noses and go elsewhere. Why is that? Perhaps it is centered on the fact that they are more interested in “making a great living” than just a good income. In other words, they are focused on the total picture of what we can do for them as employers and we are mainly talking about only one important aspect of it.
So, the most important question becomes: in addition to money, do we indeed offer the type of lifestyle and self-worth rewards they seek? In other words, can we feed their soul as well as their pockets? I firmly believe that we do have the potential to be a very attractive career opportunity for many of the younger, potentially successful sales people that we are either not getting or not keeping. The problem is that we ourselves may not fully understand how vitally important we are to our customers. Even if we do, we don’t properly and consistently communicate it. Therefore, when we talk to prospective employees we do not give them a vision of what our real mission truly should be and if we do hire them we don’t constantly reinforce it throughout our training, coaching and management efforts.
The fact of the matter is that we spend far too much time and effort selling our products, when it is the result of the service we perform for our customers that is really the most important thing we deliver. The products are a big part of it, but they are mainly a means to an end for us. To better illustrate this, let’s go back to one of the basic elements of selling anything – a thorough understanding of the features and benefits of what you sell, be it a product or a service.
When I first started in the furniture business, Sears was the king of the hill for most home products. They were very different from the shell that remains of the former giant. For years, Sears offered a great lifetime career opportunity, including top earnings potential and solid benefits to all employees. A major factor in their success was that they trained their people and had a solid selling process in most big-ticket departments, including appliances, tools, furniture and bedding. A big part of my first role with their largest furniture resource was helping in that training effort. Before I could do that, I had to be taught the Sears approach to selling, which at the time included a heavy focus on product knowledge and understanding how to use it in the selling process to find the best product for your customer.
Their approach was that a feature was a physical element of the product and the benefit was what it did for the consumer, or as they said: “Features TELL and Benefits SELL”. The first session I attended began with that statement. To emphasize his point, the trainer held up a power drill and asked, “If this drill is the feature, what is its corresponding benefit?” No one got it. Then he said, “OK, tell me what this drill does for the owner?” Finally someone said, “They can drill holes in things”. Then the trainer said, “So what does the owner get from the drill?” It actually went back and forth a bit until some bright person said, “A hole!” The trainer responded, “Exactly, they get a hole. Therefore, the major benefit the buyer gets from owning the drill is a hole, basically wherever they want it. The feature is the drill and the benefit is a hole.” In this simple example nothing else matters, because when the drill isn’t producing a hole it provides no other benefit and ownership of it does nothing else to enhance the customer’s life, unless he is Tim the Toolman.
Later in my career I realized that while this was a very useful analogy to help understand the relationship of a feature to its benefit, it does not really help us learn how to better use features and benefits in the selling process beyond that. Since I am kind of Tom the Toolman, I developed a way to use the drill analogy as an example of how important product knowledge is in driving the selling process, through the understanding of the benefits a product provides to the owner. It goes like this:
A guy walks into Sears and the clerk says, “Hi, what can I help you with today?” The guy replies, “I need a power drill”. The clerk says, “Well we have dozens of them. Here’s our best seller at $19.99, you want it?” The customer says, “I guess so” and buys the drill. Simple deal. But was it really what the customer needed or not? Truth is, we don’t know because the clerk didn’t ask enough questions to find that out before recommending a product.
What if instead of a clerk, the customer encountered a caring sales person when he entered the store? The conversation might have gone like this: “Hey, welcome to Sears Brand Central, thanks for coming in today! What project can I help you with?” The customer thanks him and says, “I need a power drill”, to which the sales person says, “Well you certainly came to the right place because we have every kind of drill you could possibly need. If you let me ask you a few questions we will find exactly the one you want”. The ensuing conversation goes as follows:
Sales Person: Are you planning to use this drill only to drill holes or will you be driving in some screws with it? Because if you will be doing that I strongly suggest a reversible drill so you can also unscrew any you want to remove.
Customer: Oh yeah, I have a deck to repair and other projects where I will want to drive screws, so a reversible drill makes perfect sense.
Sales Person: OK. Next I need to know if you are planning on using it to drill into several different materials, because as an example, you need to drill at a much higher RPM in metals than in wood.
Customer: Yes, I have a lot of different needs as far as the materials I will be working with.
Sales Person: Well then, I highly recommend you consider getting a variable speed drill so you can use it for all those different materials.
Customer: Wow. Yeah that makes sense too!
Sales Person: Great. Do you plan on just using this drill in the workroom, garage and deck or will you be using it in many different places where you might not have access to power?
Customer: Well I have a boat and some other things I work on that aren’t near the house or any power supply.
Sales Person: Then I think you will be much happier with a rechargeable drill. Our better models do everything that the ones you plug in can do and come with two batteries plus a charger in a nice case. Charge one battery while using the other and you don’t run out of power!
Customer: I like that idea a lot!
Sales Person: Ok. Lastly, we have a new quick release chuck option on our better drills that makes it much easier to change bits. No chuck key to lose either!
Customer: I definitely need that option. I’m always misplacing things like that!
Sales Persons: Great! So, you need a variable speed, reversible drill that is rechargeable and has the quick release chuck option. We have our 18-volt model on sale. It has all the power you will need, includes the case, charger and two batteries I mentioned for only $99. Can I get one for you?
Customer: Yes, I think that is exactly what I want.
The key is that it is the same customer in both scenarios. In which case do you think he will end up most pleased with the ownership of the product he bought? Obviously, it is the second one, where the sales person used his knowledge of his products’ features and the benefits they deliver to the customer to drive the selling process.
So why tell you this big long story? Because In many cases, we need to have a complete paradigm shift from our current focus on “selling furniture” or “helping our customers find the product they really want” to what our customers truly desire as the ultimate benefit or end result of their relationship with us. If we think it is the pride of owning our products or only the fact that their room is prettier or more comfortable, we are short changing ourselves, and what we do.
We have a much higher calling than just providing products to people. Our overriding mission should be to make people’s lives better by helping them be happier in their home, which is the center of their life. Think about it, we don’t just sell furniture for a living, we live to make our customers happier with their home and in turn their life. I never want to hear anyone I have trained tell someone they sell furniture for a living. Instead they should say they consult with people to make their home a better place to live.
In other words, the main feature of our service is that we sell home furnishings products and the ultimate benefit of our efforts is that our customers are happier with their homes and thus their lives. Now that is a really great feature/benefits story if I ever heard one!
Perhaps if we look at what we do in that way and carry that message down to our entire staff, plus use it in the job descriptions we give to prospective employees, we can change the perception of our career opportunity and get better people who stay longer. It is sure worth a try!
In October 2013, Bob Sherman stunned the mattress industry when he resigned as CEO of Serta, the nation’s largest-selling mattress brand.
It was a brand that had become No. 1 during his 25-year watch, aided by effective marketing programs like the Counting Sheep and a revolutionary product line called iComfort that would rack up $1 billion in retail sales faster than any brand in the industry’s history.
But Sherman, who spent more than four decades in the mattress industry, soon realized he wasn’t ready to ride off into the sunset. So he and his wife, Barbara Bradford, a former Serta executive who has been in the mattress business more than four decades herself, began looking for ways to get back in the industry.
And in January of this year, the 65-year-old Sherman again stunned the industry by announcing he had formed a company called Visionary Sleep Products that had acquired a pair of Restonic licensees that operated factories in Buffalo, N.Y., Fayetteville, N.C., and New Albany, Ind. The deal included the licensees’ stock in Restonic, giving the new company majority ownership of the Restonic brand.
Sherman recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about what it’s like to be back in the mattress business and what he hopes to accomplish with his new venture.
Home Furnishings Business: Why did you decide to come out of retirement and return to the mattress industry?
Bob Sherman: We’re a 24/7 mattress couple. We would go out to dinner at night and talk about how the day went, and we really missed those conversations. We missed the people that worked for us for 25 years and helped us build the company. We missed the retailers, the excitement of the business, the analysis of the business, the weighing of the competition and looking for opportunities.
A couple of our former management people left their jobs, and we had conversations with them, and they really wanted to get back into the business. So we decided to set the criteria: We were going to be happy working in that environment. We decided that we wanted control over whatever we were going to do. We didn’t want to be owned by a private equity group. We did not want to take on substantial debt. And we wanted to have fun!
For over a year, we looked at numerous opportunities, made an offer on a couple, but they just didn’t work out. And all of a sudden, this one came into play, and we really thought the situation was perfect for what we wanted to achieve. And so far, it has been a blast. I’ve really enjoyed being back. My wife is enjoying it. Our management team, which is younger than I am, has bundles of energy, and they’re really putting in an ‘A’ effort.
How can you not have fun when you have a 50-foot banner (announcing his return to the industry) at the Las Vegas Market? (laughs) I mean, that’s really what we’re about…being creative…making a statement…getting people to think and talk about you. We know how to do that, and it’s fun.
HFB: It sounds like those guiding principles are similar to the ones you had at Serta.
Sherman: Most definitely. The company we have today is not a heck of a lot smaller than what we started out with. Our first (Serta) license was $4 million in sales. And Serta back then was only about $200 million (in annual sales). Obviously, the industry was smaller, and the competition was smaller, but we’re really putting in a lot of the same principles that we utilized there.
HFB: What are some of the more significant changes that have occurred in the industry since you left?
Sherman: The biggest change I’ve seen is the consolidation at retail. Mattress Firm, over the last 3 ½ years, has purchased a lot of their competitors. Most markets had two or three sleep shops competing against one another. Today, a lot of them only have one. That has really opened up a phenomenal opportunity for the large local retailer or the regional retailer to step up his bedding advertising, to go after that business, to get into the sleep shop business if he desires. Bedding was growing in importance when I left, but the departments today are so much larger. Some of these large furniture retailers are carrying 60, 80, or 100 sets of bedding on the floor. They’re not afraid to have 5,000 to 10,000 square feet in their store dedicated to it. That is really a change from where it was a few years ago.
I’ve also seen consolidation of (furniture) retailers. The big chains are continuing to grow. The mom and pops are disappearing. In almost every market I look at, the retail furniture environment is so different from what it has been. There seems to be one dominant retailer that is growth oriented.
Obviously, the bed-in-a-box has also been a big change. A few years ago, it was a few retailers doing a lot of business online. But I think a lot of that has been replaced by the bed-in-a-box. (The success of online companies such as Casper) just reinforced that people do not enjoy the bedding shopping experience. Some of the stores are starting to understand that they must make this a more enjoyable process. And I’m not sure all the retailers know how to deal with the bed-in-a-box. I don’t think they know how to deal with social media and the digital advertising that needs to be done today. I think most retailers are floundering in that regard.
HFB: What opportunities do you see for your company and the Restonic brand as it goes up against several much larger competitors?
Sherman: Today, you go onto a floor and all the mattresses are gray, black, and white. It’s very male oriented. They look like sweat pants (laughs). The women who design our products view this as a tremendous opportunity for us going forward.
The industry has gone to inward thinking, where a supplier will look at a floor and say, ‘how can I make more money on this floor.’ We look at it and say, ‘how can we help them get more business and make more money.’ It seems like all the analysis today is about how to improve profit. It’s not really thinking about how to help the dealer grow his business. We’ll make money if the dealer grows his business.
Today, there are a lot of people selling similar products. The major lines today put out a lineup, and you pretty much have to pick from this lineup. We do it a little differently. If you’re best-selling bed is $799, we want to figure out how to make you a $999 product that’s different so you can step up and sell better bedding. If you’re key price point is $999, we want to work on $1,299, and so on. We feel we have the flexibility of working with retailers to customize product to fill whatever the dealer’s needs are.
The national promotions that are being run by the majors force dealers sometimes to take reductions in costs that aren’t completely supported by the manufacturer. Retailers believe they have to match those prices in order to be competitive. That’s quite beneficial to the manufacturer, but less beneficial to the retailer. This provides us an opportunity for merchandising and marketing what the retailer wants to sell, instead of what the manufacturer wants to sell.
HFB: Serta became the largest brand in the industry while you were CEO. Do you have a similar long-term vision for Restonic?
Sherman: No, not really. When we started Serta, it was not our goal to be number one. Our goal here is pretty simple. We want to have an increase every year that is larger than the industry. So if the industry is up 5%, we want to be up more than 5%. That means we’re capturing market share and somebody is losing market share.
At our monthly meetings, we remind ourselves that we’re here to have fun. We’re not here to take on a lot of debt. We want to enjoy that we’re doing.
As we go forward, it’s not our plan to go out and just keep buying (more factories) and growing. We want to do it strategically. We want to make sure we can handle it. We want to make sure that it fits with what we’re doing, and how we’re doing business.
HFB: How have the other Restonic licensees reacted to your new company?
Sherman: Their support has been really exciting and encouraging. I met with them a couple of months ago -- every owner showed up -- and we had a discussion about what the vision could be and what we could do together and what it would take in terms of cooperation. Restonic has been extremely strong in regional pockets, but hasn’t really had the ability to do anything outside of where the factory is located.
The thing you have to remember is that each of these licensees … are all successful in their own markets. So to make investments, whether its people, equipment or facilities, sometimes is very difficult. So for the licensees to step forward and say, ‘let’s do this,’ was very encouraging.
For example, we have rented a new space at the Vegas market, and will move there in January 2018. It’s twice the amount of space we currently have. We want to make a stronger statement. This requires an investment in the build-out and rent, and things of that nature, and the other licensees were unanimous in their support to do this. They have been extremely cooperative.
HFB: Will your company be taking the lead in product introductions, or do the licensees do that in their own markets?
Sherman: We laid it out for the licensees that there had to be consistency of product from one facility to another. There had to be consistency of specs. We are instituting national specs and putting together product lines that really tie everybody together. They are embracing that concept.
However, our number one goal is to help the retailer grow his business, and sometimes retailers need special products or special tweaks. So the local plants have the flexibility to design products to fill the need for major retailers in their markets. We’re really doing the best of both worlds. We’re providing a national umbrella and national specifications, and that’s going to be the majority of our sales, but we don’t want to take away that ability (to be flexible) because then we’re just like the other major companies. We want the local plant to fulfill the dealer’s needs so he can do more business.
For 80 years, Restonic has been building outstanding beds. One of the big surprises that we came across is that they really overbuilt beds. They just didn’t spend millions on marketing. If anyone took the time and actually compare (Restonic with competing products) spec to spec, they really had an outstanding value. We just want to add consistency to it.
In 1917, A. Leon Capel got his first look at a mechanical tractor, and quickly realized there wasn’t much future for his tiny business making rope plow lines that farmers tied to their mules while working their fields.
The forward-thinking Capel was undeterred, however, and decided to buy a sewing machine so his ropes could be braided instead of twisted. The braids were then sewn together to form the first-ever reversible braided rug.
Two years later, Sears Roebuck bought 5,000 of them and included a picture of Capel’s creation in its famous catalog.
And the rest, as they say, is history.
One hundred years later, those braided rugs (and woven rugs, as well) are still produced in the small town of Troy, N.C., where the company’s founder fashioned that first rug. About 150 of the company’s 200 employees work at facilities in Troy, and its domestically-made product accounts for roughly half the company’s annual sales.
The founder’s three sons, A. Leon Capel Jr., Jesse Capel and Arron Capel ran the company after their father retired, and when the trio retired a decade ago, four of the founder’s grandchildren took the helm.
Today, Leon Capel Jr.’s daughter, Cameron Capel, who is vice president of national accounts, and her cousins Ron (managing director of the company’s eight retail stores), Richard (director of manufacturing), and Mary Clara Capel (director of marketing and administration) are leading the company into its second century. But they’re taking time to celebrate the first 100 years with a year-long series of events that have included a cake-cutting ceremony at the High Point Market and a festive catered lunch for employees, where each worker received a $100 gift card.
Recently, Cameron Capel spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the challenges of running a 100-year-old family business and the growth prospects for the rug category.
Home Furnishings Business: As you know, a very small percentage of family-owned companies remain in the hands of the founding family in the third generation and beyond. What have been the keys to keeping the business strong – and family members happy – for such a long time?
Cameron Capel: It can be challenging, and not even because it’s family. In any work environment, you’re going to have disagreements, but when you’re family, it obviously brings other challenges. There are four of us from the third generation who are involved, and we each have our own strengths. We all handle different areas of the business, so we’re not stepping on each other’s toes. It just kind of worked out that way.
When we come together for board meetings or management meetings, sometimes there are disagreements, but we’ve found that the four of us are very open to listening to other points of view. We keep an open mind. It’s not just ‘my way or the highway.’ You can’t have that in a family business.
Plus, we’re able to leave (problems) at work and not bring them home. We don’t let it get in the way of birthdays, anniversaries, holidays and other family events.
HFB: What are your earliest memories of the company?
Capel: I remember going to visit my Dad in his office when I was a little girl. Just being a little kid, I didn’t really understand what was going on. But I also remember going to the outlet store (in Troy) and climbing on piles and piles of rugs. It was like a jungle gym (laughs). That was before we had display racks.
All four of us started working here in our teens. Some of us worked in the outlet store, learning to sell rugs. I worked in the office -- answering phones or filing. The boys did a little harder labor. They got to drive forklifts and stuff like that.
After college, the other three came back to Troy and started working for the company. I went straight to New York and worked in the Garment District in the fashion industry for two years. I always say I went from rags to rugs, but it was an easy transition.
HFB: In addition to parties earlier this year in your Las Vegas, Atlanta and High Point showrooms, what other anniversary celebrations are being planned?
Capel: We’ll continue to celebrate all year. We’ll be doing a big party in High Point on Oct. 14, the first day of the October market. One thing that we did in April that everybody seemed to like was ‘pop a balloon for cash.’ When you placed an order, you got to pop your balloon. Inside was anywhere from $20 to $100 in cash. Some people who got $20 were just as excited as the people who got $50. We’ll continue to do that, because I think that was a big hit.
Recently, we had a big employee celebration here in Troy. We had lunch brought in for all of our employees. They didn’t have to work for a couple of hours, and everybody got a $100 gift card to celebrate our 100th year. I think they really appreciated that. We wouldn’t be where we are without all of our loyal employees.
HFB: What challenges and opportunities do you see for the rug category?
Capel: The market has shifted so dramatically over the past decade. The price points have had a major drop. It’s such a different animal now, and it’s constantly changing. For years, our sweet spot was $499 wholesale for a five-by-eight. Now, with machine-made rugs, you can get down to $99 or $199 for that five-by-eight. But I feel like we were able to respond to that change the past two markets with some great-looking products.
We have really worked hard on revamping our line and listening to our customers’ needs. We have had a lot of introductions (in the past year), and we’ve had a great reaction to them. I think it’s because we’re listening to our customers and giving them what they want.
The Millennials are the ones driving these lower price points. They’re buying rugs at $199 or $299 retail. They move around, and since they didn’t spend much money on their rug, they’ll just leave it and go buy another one. As they grow and settle down and become more prosperous, I think they’ll spend more money on rugs and home furnishings in general. But they’re buying them more often because their tastes change, or they move. We’re not specifically marketing to them (Millennials), but we’re responding with product lines at those lower price points. That was a huge focus for us at the April market. There was a time when we really didn’t have a product that was applicable to that generation.
HFB: Does is present any special challenges being a domestic producer in this pricing environment?
Capel: It does. We have thought about going offshore to complement our braided rugs with a less expensive line. We’ve toyed with that, and even brought in some samples and some proprietary items for (specific customers.) But we’ve found, frankly, that the quality is just not there. Yes, it’s less expensive, but there are a lot of reasons why it is less expensive. We’re completely vertical, and there’s a lot of labor involved. But we feel like we make the best braided rug out there. People appreciate the quality. They appreciate that it’s American-made. And they will pay more for an American-made product. And they will pay more for quality.