From Home Furnishing Business
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.
Welcome to the fourth annual Home Furnishings Business Power 50 retail ranking. The retail ranking — our take on how retailers should be ranked — takes into account retail sales volume, social media and market share. This year we made a few changes to better reflect overall performance.
With regard to social media, rankings are influenced by Klout subscribers. If a retailer wasn’t a Klout subscriber, we used Facebook likes and Twitter followers as the criteria. This year, we replaced the popular vote with industry involvement in associations like the National Home Furnishings Association, buying groups like Furniture First or Furniture Marketing Group, as well as organizations like the Furniture Hall of Fame.
We also broadened our net this year by expanding our sample from 1,000 retailers to more than 4,000 retailers under consideration. We expanded our pool by tossing in our subscribers, as well as subscribers to our sister company FurnitureCore and other industry entities.
Information on social media resides in the public marketplace; that’s where that data came from. Retail sales are pulled from industry data and public filings where applicable. We promise we did not use proprietary client information to create the rankings.
Enjoy the lists.
1 RC Willey Home Furnishings Salt Lake City, Utah
2 Nebraska Furniture Mart Omaha, Neb.
3 American Furniture Warehouse Englewood, Colo.
4 Hill Country Holdings New Braunfels, Texas
5 Art Van Furniture Warren, Mich.
6 Raymour & Flanigan Liverpool, N.Y.
7 Gardner White Furniture Co. Auburn Hills, Mich.
8 Mathis Bros. Oklahoma City, Okla.
9 Lacks Valley Stores Pharr, Texas
10 HOM Furniture Coon Rapids, Minn.
11 Rotmans Furniture & Carpet Worcester, Mass.
12 Steinhafels Furniture Waukesha, Wis.
13 Ikea Conshohocken, Pa.
14 Big Sandy/Pieratt’s Franklin Furnace, Ohio
15 Jerome’s Furniture San Diego, Calif.
16 Grand Home Furnishings Roanoke, Va.
17 Levin Furniture Greensburg, Pa.
18 Johnny Janosik Laurel, Del.
19 Wolf Furniture Bellwood, Pa.
20 Jordan’s Furniture East Taunton, Mass.
21 Rooms To Go Seffner, Fla.
22 Miskelly Furniture Jackson, Miss.
23 Sheely’s Furniture & Appliance North Lima, Ohio
24 American Home Showplace Dalton, Ga.
25 City Furniture Tamarac, Fla
26 Broad River Furniture Charlotte, N.C.
27 El Dorado Furniture Miami, Fla.
28 Slumberland Little Canada, Minn.
29 Weekends Only St. Louis, Mo.
30 Sam Levitz Furniture Tucson, Ariz.
31 Wayside Furniture Akron, Ohio
32 Cardi’s Furniture/Matt ress Plus Swansea, Mass.
33 Gallery Furniture Houston, Texas
34 Royal Furniture Memphis, Tenn.
35 Ashley Furniture HomeStore Arcadia, Wis.
36 Kane’s Furniture Pinellas Park, Fla.
37 The Old Cannery Furniture Sumner, Wash.
38 Olum’s Vestal, N.Y.
39 Dufresne Spencer Goup Memphis, Tenn.
40 Bernie & Phyl’s Furniture Norton, Mass.
41 Home Furniture Lafayett e, La.
42 Walker Furniture Las Vegas, Nev.
43 Bob Mills Furniture Co. Oklahoma City, Okla.
44 Mor Furniture for Less San Diego, Calif.
45 Furniture Enterprises of Alaska Anchorage, Alaska
46 Bob’s Discount Furniture Manchester, Conn.
47 Woodley’s Fine Furniture Longmont, Colo.
48 Gardiners Furniture Baltimore, Md.
49 Story & Lee Furniture Leoma, Tenn.
50 Morris Furniture Fairborn, Ohio
By: Powell Slaughter
Sometimes retailers are surprised at what strikes a chord with customers in the communities they serve—the sort of thing that makes a business a local institution.
In Knight Furniture’s case, it was a scale—an antique in front of the retailer’s main store in Sherman, Texas.
“We had a scale in front of our store that’s apparently become a community fixture,” said Joey Gunn, director of advertising and buyer at Knight, who represents the company’s fourth generation of family management. “It’s an old scale from the 1920s or ‘30s. It broke, so we pulled it inside until we could get the part.
“It’s so old that you can’t just go out and find parts for it anywhere, so we had it in back for a while until we could get it replaced.”
Gunn found himself inundated with messages asking where the scale was—apparently a lot of folks liked to stop and check their weight.
“I flirted with the idea of running a ‘save the scale’ sale,” he joked.
It might not have been a bad idea. Knight Furniture indeed is a local institution—dating back to 1912, when the store was founded. Knight operates two namesake stores in Sherman and Gainesville, Texas, on the outer fringe of the greater Dallas area; and an Ashley Furniture HomeStore it opened in Sherman two years ago.
CHANGING TIMES, CHANGING MARKET
Knight Furniture was founded 112 years ago by Joey Gunn’s great uncle, J.B. Knight. Back then Dallas was a lot farther away than it is now. While Knight Furniture competes today in a bigger world—metro Dallas—than its founder did, the store still has a “hometown” approach to dealing with customers that works.
“We’re about quality and value, and while that sounds old, you have to remember we’ve been serving this area for over a hundred years,” Gunn said. “We hear about customers buying things here that have become family heirlooms. We’re not going to be the place that sells the $100 sofa they’ll throw away in a year.”
Pretty soon, Knight and every other furniture retailer in metro Dallas will face a well-financed competitor that’s about to make a cannonball into the local pool—Nebraska Furniture Mart’s half-million-plus-square-foot showroom set to open next year.
Gunn actually looks forward to that challenge, since it will put a spotlight on furniture for miles around.
“They have a great organization, and I’ve been to their Kansas City store,” Gunn said. “They will make furniture popular in Dallas, and that’s a good thing, they’re going to make furniture cool—but if furniture’s going to be cool again, you have to be relevant and be part of the conversation.”
That kind of completion had better make retailers in the area pay attention to what they’re doing.
“You can’t get lazy—no matter what you’re telling your customer, they deserve more than that,” Gunn said. “Competition brings everyone up.”
Not only that, Gunn doesn’t think other furniture stores are Knight’s real competition as long as it takes care of its own business.
“The home furnishings industry competes with movie theaters, with maybe buying another car or a boat,” he said.
It’s all about what people have to spend, and with all the options out there, Gunn welcomes anything that puts furniture front-and-center in consumers’ minds.
All of which is not to say Knight Furniture is just waiting for a rising tide of furniture awareness. The retailer is in the midst of a remerchandising effort at the main Sherman store that will put key categories front and center in the three-story facility.
While bedding sales have run a respectable 18 to 21 percent of revenue, Knight was worried it was losing sales in the category. Right now, it’s moving its bedding department from the third to the first floor in an area designed by Connie Post.
“There were customers who came in here, purchased product and loved us, but never made it to the third floor,” Gunn said. “One of my worst fears is that people buy their furniture here but don’t even know we have bedding. And the Mattress Firm fraternity makes sure those people know they can get it at their stores.”
The Sherman store is on a square in town that gets a lot of foot traffic—and attention, remember the scale?—and Knight is big on window merchandising.
“We’re always changing what’s in our front window,” Gunn said. “Since we’re on a square, we have a lot of people walking by, so we pay a lot of attention to those front windows.
“We create what we call ‘lifestyle pods’ where we offer a complete look. We change a lot, because all of a sudden that look can get stale, and we aren’t relevant.”
Knight Furniture’s window clings also capitalize on the retailer’s foot-traffic curb appeal.
“We have those themed along lifestyles like ‘Relax’ or ‘Comfort,’” Gunn said. “One of our tag lines for advertising is ‘We’ll make you feel at home,’ so we play to that.”
REACHING THE AUDIENCE
Figuring out the new advertising landscape is a challenge.
“Before 2008, you could get your advertising on TV and make sure the whole region saw you,” Gunn said. “Now, a lot of people have Dallas channels, Sherman channels, then you throw in cable and U-Verse.
“We’re still promoting a family feeling, and that it’s about the relationship and not necessarily making the sale. Sometimes we’re so busy selling something that we forgot to make a friend.”
Knight also is latching onto the days that get shoppers shopping. An event like Black Friday wasn’t important to Knight Furniture even a couple of years ago.
“I don’t know if it was because we didn’t have our message out there or that we’re just now catching up with what shoppers are doing in other categories,” Gunn said. “The amount of business we do on non-holidays versus holidays? There’s a lot of water flowing downhill out there, and you can tell when you’re hot and when you’re not.”
UP AND COMERS
Joey Gunn, 31, is heavily involved in an industry effort to build bridges among the rising generation of retail and vendor leaders—Next Generation Now.
After working in his family’s business since his warehouse days at age 14, he was very glad to encounter other young folk that wanted to carry on a tradition.
“Five or six years ago, that kind of thing wasn’t important to me, and I wasn’t important to them, but then I got to where I was making decisions here,” Gunn said. “I walked into a room and found a bunch of people with the same problems.”
By dint of age, Gunn and his fellow generation members find their elders looking to them for answers to breaking ground in areas such as e-commerce and social media as it relates to furniture retailing.
“They want us to solve the ‘technology crisis,’ and we’re front and center on that,” Gunn said. “That’s good, but even though I started working in our warehouse when I was 14, as far as being in a decision making role, it’s only been about five years.”
He said his focus is finding out who Knight’s customers are and who’ll they be in the next few decades.
“We’re at a very tricky stage,” Gunn said. “We want new customers, but we can’t lose our base. If we don’t get hold of the ones who are coming, we won’t do well.”
By: Sheila Long O'Mara
Over the last several Years, the team here at Home Furnishings Business has written much about the consumer and her hot-and-cold relationship with shopping for furniture. We’ve delved into her psyche; we’ve explored her disposable income; we’ve looked at how and where she likes to shop; and, how she wants her home to look, feel and smell.
We’ve dug into how retailers communicate with the consumer, and how manufacturers try to connect and help her create the perfect environment for her family and friends through beautiful home furnishings. We’ve connected with her through surveys to find out how she’ll use her newly purchased sofa or dining table or bedroom furniture. We’ve shared in family celebrations of babies and vacation homes.
We’ve gathered intelligence into her way of thinking and her way of shopping. We’ve examined her social media preferences and her exploration of furniture on the Internet.
We’ve watched the life stage shift from a one-person, single household to a double-income-no-kids home to a busy working mother of 2.1 to an empty nester ready to downsize into a zero-lot-line home.
We’ve seen her adapt with technology and use it to her advantage in uncovering the best deal on a Surya rug or Restonic mattress or Cresent bedroom.
The gist is that she (or he — it’s just much less complicated to use one pronoun) is constantly evolving. The life stages are not stagnant; they never have been, and they never will be.
The furniture she needs for her first apartment is — and should be — different than what she needs in her late 20s or early 30s. And, that furniture is different than she needs in her 40s and 50s and beyond.
That folks, is what we should all continue to hope for. That our target consumer continues to evolve and her tastes and needs change along with her. For that is what keeps this industry churning.
Inside this month’s issue, you’ll find detailed information about how retailers are connecting with consumers, data on income shifts and a look at retail models and which ones are faring well.
Welcome to the first installment of Home Furnishings Business’ new feature, Take 5.
Each month, we’ll pose five questions to a mover and shaker in home furnishings. We kick things off with Steve Stagner, President and CEO of Houston-based Mattress Firm, who discusses the bedding retailer’s acquisition strategy during its eight-year growth spurt.
Home Furnishings Business: Mattress Firm has made 18 acquisitions since 2006. What’s the driving strategy behind the acquisition mode?
Competitors have entered our markets, and some have done well, but as we develop a fortress position it enables us to drive profitability. Those 18 acquisitions since 2006 enabled us to build that fortress position faster.
(Acquisitions) help us leverage scale for several advantages: increasing advertising at a more efficient rate; increasing our presence in the marketplace; and increasing our ability to educate consumers in those markets about the benefits of better sleep.
HFB: Mattress Firm will be up to 2,030-plus stores with the latest acquisition of Sleep Train. Is there still an appetite for more?
Stagner: We have a long history of doing acquisitions, and right now we have a lot going on with Sleep Train (311 stores), and concurrently Back to Bed (135 stores).
Our primary focus right now is on digesting these acquisitions. We want to ensure a smooth transition and success in the long term. That said, there is an appetite for more. We could do some smaller ones where it makes sense in the near term--our stated goal is to go coast-to-coast and build a national presence.
(Digesting) is our preference right now, but we do have a fantastic organization that's demonstrated a capacity to handle a lot of activity.
HFB: Do you plan to convert any of the new brands to the Mattress Firm name, or will they continue operating under their own banner?
Stagner: Our first focus is to expand the Mattress Firm brand across the country to leverage the benefits of advertising, so yes, we will convert some locations to Mattress Firm.
That said, many locations, particularly with Sleep Train, have done a fantastic job building brand equity in their markets. We'll examine that over time. Sleep Train currently has a multi-brand approach on the West Coast, and we're comfortable with their experience operating a multi-brand company.
We feel the market can sustain multiple brands.
HFB: Something about the companies you’ve acquired obviously caught your eye. What criteria do you consider when looking at an acquisition?
Stagner: We look at a variety of things such as the quality of the real estate, the quality of the culture.
One of the most important things is what their position in the marketplace is. What share do they have? How does that fit our goals in that particular marketplace where they operate?
HFB: Moving ahead, what challenges do you see for the bedding retail segment? What indicators are most important to ensure Mattress Firm remains successful?
Stagner: The largest challenge we have is battling an apathetic consumer. There are a lot of consumers, based on our research, who have mattresses that are more than 8-years-old.
We believe that, both as retailers collectively and the wholesalers, the opportunity to provide in our advertising the benefits of better sleep. We can unlock a lot of consumers who, candidly, are sitting on the sidelines.
We look to strategic indicators such as what is our relative market share?
We also measure our turnover rates. We have lower turnover rates than most of our peers and retailers in general. We focus on our culture and our people. We focus on our customer care and response time.
Those are the leading indicators--the overall effectiveness of our people and culture, and our customer service. If we take care of those, the lagging indicator of profitability will be fine.