From Home Furnishing Business
By Sheila Long O’Mara
No doubt about it, home furnishings markets are big around our industry. It’s a biannual marathon that keeps every one of us in planes, trains and automobiles skirting bouncing from Atlanta to Dallas to Las Vegas to Tupelo. Toss in a few of the international markets like Cologne, Toronto and Shanghai, and the road warriors among us are in full force schlepping from place to place.
Right or wrong, the rituals of semi-annual markets carry a great bit of cachet. They’ve become—dare I say it—a necessary evil in the cycle of the furniture supply chain. No retailer “wants” to miss market and miss seeing the hottest introductions. No supplier “wants” to miss out on the opportunity to capture more retail floor slots. However, getting away from the office or store can make for tricky time and business management issues.
Markets are exciting and invigorating. We, as a collective group, come together to share, learn and seek out the new. The events are like a huge brainstorming meeting where great ideas blossom.
Here, at Home Furnishings Business, we jump into the market fray, too, and eagerly plan out market issues, interview schedules and showroom visits. It’s a big darn deal.
As part of our planning, we look at the best, most efficient way in which to cover the Markets and to provide our valuable readers the most useful information possible. Our goal is to arm you with valuable tools and knowledge that can be used to better your business strategies back at the storefront.
As part of our strategy, we deliver to you this, our first-ever double issue. We’ve doubled up on some of our most popular features to give you a jumpstart on the New Year and the new Market cycle. Inside, you’ll find two times the cover stories— one on sales management and the other on sustainability in the home furnishings realm.
You’ll also find two consumer surveys in which shoppers who have recently bought furniture share their tales from the retail floor. What Sells zeroes in on the dining—both casual and formal—category. Our expanded On Bedding explores consumers and their mattress buying preferences and features top-selling frames from the supply viewpoint.
We’ve also included a look at products being showcased at the Las Vegas Market to whet your buying appetite for the show. Here’s to doubling down in Vegas and kicking off the New Year in home furnishings in fine fashion. Our entire team will be at the Market; give us a shout across the courtyard or in the hallways. We’d love to catch up. Happy 2014! Here’s to a great year filled with new adventures.
By Sheila Long O’Mara
Big screen televisions and other consumer electronics are holding a tight grip on the top of the holiday wish lists this year. Why not? The category is sexy and bright and is a source of in-home entertainment. Furniture retailers are holding out hope that consumers hold on to enough dough to cover the cost of a home entertainment console or wall unit to accommodate those electronic purchases. Quality and design of home entertainment products top the list—even above price consideration—of purchase influencers for consumers of the category. That’s according to the most recent consumer survey conducted by Home Furnishings Business, in which more than 160 consumers participated. Those consumers had recently made home entertainment purchases and shared insight into the product and their likes and dislikes.
Not surprisingly; the bulk of home entertainment purchases landed in either the living room or family room. That’s where 93 percent of the pieces are housed. An interesting note —and one that retailers and manufacturers should keep in mind—10 percent found their way into bedrooms. Those bedrooms, smaller than family rooms, require smaller pieces that can still accommodate electronics.
Storage needs remain a priority for the home entertainment consumer. Many of them have accumulated a library of DVDs, video games and Blu-Rays over the years, as well as a variety of components. Eighty-eight percent rank disc storage as somewhat important to very important in their home entertainment unit. More than 56 percent own flat panel televisions and more than 18 percent have a satellite or cable box that needs to be housed.
Features and functions built into the furniture is an added, often required, benefit that consumers for which consumers are shopping. More than 42 percent want to be able to hide those components. Also ranking above the 35 percent thresh hold are display space for knickknacks; and built-in powerstrips. Another jewel could be docks for MP3 players and tablets. The majority of our panel bought their furniture from a bricks and mortar store, In fact, 62 percent bought from furniture stores, followed by 15 percent at other and eight percent at a warehouse price club. Must shunned the Internet as a shopping source, and most report that they’d likely follow that same protocol for future purchases. Only 18 percent said they’d be very likely to buy home entertainment online.
Compare that to consumer electronics where more than 43 percent said they’d be very likely to buy those products online. More than 76 percent of our consumers spent more less than $2,000 on their home entertainment purchase. The good news from our panel is that they are mostly satisfied with their purchases based on quality, style and functionality. More than 83 percent give their new furniture the thumbs up on style; 78 percent give high marks on function; and 68 percent give a passing grade on quality.
With the sleek, sexy design of televisions and other components these days, consumers are eager to show them off. Gone are the days of armoires where the doors could shutter and hide the fact that the great room was used as a viewing spot. Instead, 72 percent are looking for consoles that also accommodate component and media storage. When asked specifically how important it was to hide the television, 82 percent said not at all. Why spend all that money on a great-looking TV without being able to show it off to your friends and family, right?
Just so you’ll know. The second option, falling at a distant 18 percent, would be to hang the screen on a wall. And, when it comes to screens, size does matter. More than 88 percent of our panel have at minimum a 37-inch television as their primary viewing screen. More than 28 percent report having a 55 inch or larger television as their primary choice for viewing. So what does the future hold for our home entertainment consumer as far as purchases go? Well, more than 65 percent will be buying a 37-inch or larger television within the next six months to one year.
Here’s looking for an uptick in home entertainment sales as they fill the need for additional space to hold those TVs.
What Retailers Say
SUNNY DESIGNS 2733RO
“It’s vintage oak with mixed media. It’s a pretty big look in our market. When it goes in the family room, our customers like that mixed media.” Retail is $799.
Gene Stoltz, CEO
Ashley Furniture’s W430-28 TV Stand
“It’s a great updated country style that gives a modern feel but works great in New England homes. It fits today’s most popular size flat screens and gives ample storage.” Retails for $398
Bill Abrams, vice president
Allen Wayside Furniture
THE CABANA COLLECTION (1) AND GRAND HACIENDA (2) BOTH FROM LONE STAR RUSTIC
“Both looks are rustic, but one is more refines rustic style. Both of these looks out through the sometimes sameness of traditional looks. The consumer seems to be looking for something unique and different that they can identify with for their living space.” The Grand Hacienda 60-inch console retails at $487.97; the Cabana 60- inch console is $467.97 and is available in 72 inches for $497.97.
Phyllis Zaepfel, COO
Sunny Designs’ 3403DC
“The different colors of the slate make this wall unit suitable to match many collections that we carry. In addition, it has great dimensions and price point. It also has built-in media storage, pullout game drawer and wire management. These characteristics seem to be very important to our consumers.” $999 for complete wall unit.
El Dorado Furniture
Miami Gardens, Fla
Hooker Furniture’s TELLURIDE CONSOLE
The Telluride’s console-hutch format has increased in importance for Hooker Furniture for some time now. Hank Long, senior vice president of merchandising and design, said it is a best-seller because it accommodates a 60-inch television, offers a lot of look for the money, and two major retailers are running it. Telluride is featured in hardwood solids and veneers in a black paint finish with rub-through and physical distressing with carved leather panels and nailhead trim for a masculine looking entertainment center furniture. Hutch and console as shown retail around $3,198.
RIATA BY RIVERSIDE FURNITURE
Part of the newly introduced 39-piece whole home collection, this entertainment console offers casual contemporary styling. Designed to target younger consumers, Riata offers clean lines with sophisticated, rugged hardware.
Stanley’s La Palma Media Wall
What makes is saleable: The La Palma media wall’s casual styling accommodates up to a 60-inch television and has plenty of room for media storage. The unit also can be repurposed as an etagere. Suggested retail is $3,600.
SLIGH DIVISION OF LEXINGTON HOME BRANDS’ 100SB-660 PACIFIC ISLE MEDIA CONSOLE
Phil Haney, president and CEO of Sligh’s parent company, Lexington Home Brands, credits the Pacific Isle media console’s striking design as a reason it sells so well. “It is a significant design statement in its own right, even before the electronics are considered,” he said. Other pluses include trademarked functional features such as Smart Eye, Strong Arm and Smart Fan. IMP is $2,929.
Sauder’s 412922 CARSON FORGE ENTERTAINMENT CREDENZA
The Carson Forge credenza accommodates up to a 60-inch television weighing up to 135 pounds. A flip-up panel reveals a digital dock for parking, recharging and synching mobile electronics and game controllers. The adjustable center shelf holds audio/video equipment. There are two adjustable shelves behind each framed, safety-tempered glass door. The drawer with metal runners and safety stops features a patented T-slot assembly system. This piece is inspired by recovered materials. The reproduction finish and riveted wrought iron hardware will add authentic craftsmanship to any modern home. Manufacturer’s suggested retail price is $299.
Twin-Star International’s Enterprise
A fresh white finish with smoke tempered glass doors and clean simple lines make the Enterprise one of Twin-Star International’s top selling home entertainment consoles. It can wireless stream audio from any Bluetooth enabled smartphone, and it has a built-in docking station that play’s audio and video from Apple mobile devices while simultaneously syncing and charging. An integrated sound bar has four main speakers, two tweeters, rear facing passive bass ports and a powered subwoofer. The added bonus – a realistic looking electric fireplace in the center to warm the room. Retail is $999.99.
Bush’s AERO 60-inch Television Stand
The Aero’s sleek design provides plenty of functional space, and it accommodates flat screen televisions up to 60 inches and 154 pounds. It has a durable gray tinted glass top shelf; open top compartment for components or a sound bar; cabinets with adjustable shelves and tinted glass doors; a solid back panel that hides wiring and provides stability; and wire management zip ties and pass through slots. The unit is tested to Bush standards for tip stability. Retail is around $249.
This 60-inch media unit is finished in the company’s Urban Lodge Brown and features a unique rough-hewn style. The 087-60 is a versatile with sex drawers and three openings that can be used as a media unit, accent piece or in the dining room as a server. The media chest is also available in 42-inch and 50-inch units.
Martin’s Carlton CN360 Television Console and CN 970 Pier
Carlton boasts modern architectural flare with clean lines and clear bourbon finish; and compliments a variety of home decors. The piece is inspired by the Kathy Ireland Home Architectural Style Guide; and is manufactured in Mexico. Retail is $1,349.
Home Entertainment Snapshot
The home entertainment category has remained in lockstep with the industry as a whole. The category has remained relatively stable with little growth since 2012 when it jumped 6.73 percent. Some of the strong growth in 2012 can be attributed to the boom in consumer electronics and new technologies coming into the marketplace. After all, those wide screen televisions needed a place to rest. Through the third quarter of this year, home entertainment sales have slipped just 0.01 percent when compared with the same period last year. Sales through the third quarter in the category are $2.4 billion. Home entertainment accounts for 28 percent of the overall occasional category with sales of $3.19 billion in 2012.
2014 Should See More Business for Furniture Retailers, But Shapes Up for another Slow Growth Year.
By Powell Slaughter
First the good news: Furniture and bedding sales will rise again in 2014, and at a faster rate than this year. The not so good news: That rate of growth remains slow. Home Furnishings Business predicts furniture and bedding sales to reach $76.3 billion dollars next year, an increase of 2.4 percent over a projected total of $74.5 billion for 2013. While faster than this year’s 1.3 percent overall growth, our industry probably will advance less than half as fast as overall retail in 2014.
That’s a little frustrating, since indicators such as employment, housing and the stock market are trending well overall. As the nation creeps forward from the depths it hit in 2009, the only indicator that really seems to count in our business is consumer confidence—and that’s certainly been a roller coaster ride this year.
Ken Smith, managing partner of High Point accounting firm and industry consultancy Smith Leonard, said our forecast for 2014 is in line with what he’s hearing. “The consensus is we’ll bump along with the economy in general, and we’re looking at 2 to 2.5 percent GDP growth” next year, he said. One might think consumers are getting a little numb to Washington shenanigans, or other drags on their confidence. “I tend to agree in part that they are a little numb to some of the negative headlines—that seems to be all they get—but I do think there’s an impact when you start talking about shutting down the government and how that affects the world,” Smith said. “Everyone I talked with at Market said things were bumping along pretty well until the shutdown.
“I’ve about come to the conclusion … that consumer confidence is the key driver to our business. You look at all the other factors—housing’s coming back, we have great interest rates and the stock market’s doing well. All those positives are out there, but it’s still slow.”
Causes for Optimism
Industry analyst Jerry Epperson, managing director at Mann Armistead & Epperson, Richmond, Va., is optimistic about the coming year, when some of those positive indicators could start pointing more dollars furniture’s way. “We’re pretty upbeat. From an economic point of view things are in our favor—housing’s up, employment’s up, and mortgages are affordable,” he said. “We need to consider life outside Washington, D.C. ...
Political brinksmanship has become more like ‘crying wolf’ for the American consumer. “If you look back at the functions that determine our business, it’s been a long time that things were going our way like they are now. Housing wasn’t a driving factor until 2012, that’s kicked in, and that determines our fate. The economy’s been recovering, but we did not participate until now. Other sectors did, and now it’s our turn.”
What’s driving the outlook?
Indeed, industry sales continued to creep up this year, totaling $19.2 billion in third-quarter 2013, combined growth for furniture and bedding of 1.9 percent above the same period last year; and 6.2 percent ahead of this year’s second quarter. Despite breaking that $19 billion barrier in the third quarter, though, year-to-date furniture sales were flat after nine months, bedding up 2.5 percent. So what will impact business for the coming year? There are some demographic trends that should give retailers pause for the next few years, both in terms of age groups (see sidebar, “Baby Bust?”); and in population make-up.
America’s the melting pot, and the immigrant population—especially Hispanics—continues to grow. The best time for thinking about how you’ll approach the unfamiliar people you see in your marketplace is right now. These trends won’t change, and retailers have to figure out how these growing segments fit into their business; or whether they’ll develop and hone a more “traditional” niche. Household formations have risen steadily, close to 120,000 million in 2012. That’s good, but a lot of those could be younger people without a lot of spending power, or immigrants unfamiliar with the brands and retail experiences they see. And while households are forming, a lot of those are thinking about what kind of television they’ll buy versus what they’ll sit on to watch it.
Retailers need to get creative in getting potential customers to see the value in creating a comfortable environment for watching their latest Netflix selection.
A Pricing Conundrum
Average annual household spending on furniture peaked in 2005 at a little north of $450. Even before the recession, when such spending bottomed out at under $350 a year, that figure was in rapid decline, dropping under $400 by 2008. By 2012, the last year for which we have an average figure, annual household spending on furniture remained a little below $400.
Retailers still rely on “lower pricing” as a way to drive traffic, but that tactic hasn’t had much effect on overall volume. And it’s killing margins. In 1983, the Consumer Price Index for all items, furniture, new cars and housing was roughly the same at around 100. By this year, “all items” and “housing” were hovering around 230, “new cars” just under 150. “Furniture”? It was around 120.
This year, consumer prices for furniture fell 1.9 percent. It also hasn’t helped that the United States has moved toward a service economy. Personal expenditures for services, motor vehicles, non-durables, and furniture and equipment were not far apart from one other in pricing shifts. By 2012, services accounted for close to $8 trillion in personal expenditures, while furniture and bedding has essentially flat-lined in comparison. It’s no wonder there’s a problem with household expenditures on our products.
Retailers who’ve decided to compete purely on price as the motivating factor for their shoppers in the coming year will be forced even more than usual to watch costs and trim inefficiency in order to have any hope of maintaining margins at levels sufficient for making their business sustainable.
Confidence Remains a Problem
Home Furnishings Business projects unemployment under 7 percent by the end of the year. That indicator is moving in the right direction, but not enough to drive business to the furniture industry.
And while jobs are being added the number of people not in the labor force will grow as Baby Boomers retire. That will be a factor for another decade or so. Coupled with the slowness of economic recovery, the impact another round of Washington brinksmanship on consumer confidence could put a damper on industry performance the first half of the year.
Housing continues to improve, both in sales and new starts, but gradually. Home improvements are an area where furniture retailers might think about grabbing some consumer mindshare. Those were climbing steadily before the recession, and the downturn’s effect on people’s ability to sell their home kept that an area where they spent money. Retailers could get into the consumer’s thought process early by cross marketing with local home improvement specialists.
The Right Attitude
Whatever else is going on in the world around furniture, Epperson said retailers had best project confidence if they want to increase their business in the coming year.
“I’d take a look at my store and make sure I’m in recovery mode and not hunkered down in a recession mentality,” he said. “More people are moving, and that means more bedroom, more mattress sales. And there’s no reason furniture stores shouldn’t be getting ready for the holidays.”
A number of retailers are making moves—our newsletters are once again reporting on more store openings than closings; new store concepts; and special events that get people in the store and make it part of the community, and get employees excited.
“We’ve been so shell-shocked for so long, people keep acting as if the world has ended We have factories that are expanding, and we haven’t seen that in a while,” Epperson said. “A big part of what we’re doing involves getting over the recession mentality.” HFB
Who’s Hot, Who’s Not?
Forecast is for low single digit increases – Individual results may vary.
While Home Furnishings Business forecasts furniture and bedding sales to rise 2.4 percent next year, it’s important to note significant variance could occur depending on the size of your market. Bottom line overall? The larger your market, the larger your chance is to meet or outperform the industry overall in terms of percentage sales increases.
Breaking It Down
We took a look at sector business in metropolitan statistical areas comparing third-quarter 2013 performance with the same period last year. Third-quarter business across the board was up 1.9 percent in this year’s third quarter. Keep that figure in mind when reading the following.
We found the 10 MSA’s that accounted for $1 billion or more in 2012 furniture and bedding retail sales accounted for 19.4 percent of overall business during 2013’s third quarter. Those regions were up 2.7 percent over the prior-year period, the largest increase among MSA groupings.
The 24 MSAs that rang up $500 million to $999 million—21.8 percent of overall business—saw an quarter-to-quarter increase of 2.2 percent in the third period. Forty-one MSAs running from $250 million to $499 million brought in 19.2 percent of U.S. sales in the quarter, and were up 2.1 percent over the prior year. There’s a pretty fair drop-off from there in terms of quarter-toquarter increases, as market size declines. Seventy-seven MSAs that had $100 million to $249 million in furniture and bedding sales last year, and 14.9 percent of third-quarter 2013 business, were up just 1.4 percent that period compared with last year’s third quarter.
The 71 MSAs in the $50 million to $99 million range in 2013— representing 6.5 percent of third-quarter national sales—increased 1.3 percent; and 100 MSAs doing $25 million to $49 million, accounted for 4.9 percent of Q3 sales, when they were up 1.1 percent over the prior year period. Sixty-one MSAs that did less than $25 million last year represented 1.5 percent of third-quarter sales; and were down 0.9 percent for in those three months. “Micro Statistical Areas,” which number 575 did 8.5 percent of third-quarter business, and increased 1.5 percent; while rural areas representing 3.5 percent of business in the quarter saw their furniture and bedding sales rise just 1.3 percent in the period.
Size Isn’t Everything
We also observed significant variation among markets of the same size. We took a look at those MSAs broken out by furniture and bedding sales in 2012, and compared performance from that year’s second quarter through the same period in 2013. Following are the best and worst performing MSAs in the same market size categories as above, and their percentage change in sales during the period measured.
Here’s a tidbit to consider not only for 2014, but for years to come—consumers ages 35 to 44 years, have been declining in numbers since the early 2000s. Traditionally a prime target for the furniture industry, this segment will continue to decline for the next decade creating a significant “head wind” for the sector.
The trend calls for strategic thinking from furniture retailers. Ken Smith, managing partner at Smith Leonard was in Chapel Hill, N.C., in mid-November, where as a board member of UNC Hospital, he heard a detailed presentation outlining changes in demographics— the baby boomers aging, the next generation coming along, the growing immigrant population. “That was all in reference to the effect on health care, but retailers, manufacturers and distributors are going to have to focus on where they fit into all of that,” he said. “You have a large number of new consumers coming along, but most of them won’t be looking for high-end product yet. “I think we’ve learned by now that you can’t be everything to everybody, and you have to figure out where you fit in the demographics you’re dealing with.”
There’s a lot to look forward to demographic-wise— the upcoming Millennial generation is big and will create a boom, but retailers will need to cater their shopping experience to this tech-savvy gang.
REPUTATION, EYE FOR OPPORTUNITY HAD WOLF FURNITURE EXPANDING AMIDST A NATIONAL AND REGIONAL DOWNTURN.
By Powell Slaughter
One might not think western Pennsylvania and Maryland would be a prime area for a furniture retailer to expand during a recession, but that’s what Wolf Furniture did. The Bellwood, Pa.-based retailer grew during the downturn, filling in its regional market presence by acquiring stores that were going out of business. In the 10 local markets in Pennsylvania and Maryland where it operated, 82 competitors went out of business, while only one new operation opened, according to CEO Doug Wolf.
This past Labor Day the retailer entered northern Virginia with a store in Leesburg. How did Wolf grow while others closed? “Some of that was simply economics,” Wolf said. “You had a lot of mom and pops with good locations and good employees who just couldn’t make a go of it for whatever reason.
“We tried to come in and inject some capital into those stores, which had a lot of residual goodwill among their customers. We’re a known name in the region, and consumers and employees actually welcomed us in those instances. We have a lot of longevity within our areas, and we’re a family business.” While the furniture retail business didn’t start until 1902, the Wolf family’s retail roots in western Pennsylvania trace back to the 1860s, when it started a hardware operation.
The furniture business is now under its fourth generation of family management—Doug’s father, John Wolf, remains active in the operation as chairman. That family touch goes a long way in the smaller and mid-size cities Wolf serves. If a customer has an issue, they get a response from someone with the same name as the one on the sign. “I get every positive or negative customer reaction in our organization,” Wolf said. “It’s an opportunity to praise an individual or get in touch with local management to make corrections. “We also tend to be a very loyal client to our suppliers, and that perhaps is not as common as it once was,” he said.
During the recession, Wolf wasn’t worried about being dropped by its suppliers, and they weren’t worried about being replaced on the floor at the drop of a hat.
ADJUSTING TO THE TIMES
Wolf was in a position to make moves during the recession, but it was no more immune to the drag on business than any other retailer. The store went the extra mile to create a positive environment for employees and customers alike. “When your business is down, that creates the danger of a high-pressure sales environment,” Wolf said. “We decided to go to non-commission compensation for our salespeople across the organization. It took away the immediate relationship between closing the sale and making a car payment; and it made for a more pleasant shopping experience for the customer.”
Speaking of the shopping experience, Wolf spent a lot of dollars on food and drinks during major traffic hours so that customers would spend more time in the store. And while Wolf expanded, it did so with prudence. “On average our preferred footprint was 60,000 to 67,000 square feet, but the last couple of years it’s been 40,000 to 50,000,” Wolf noted. “That reflects the scaled-down volume, both for ourselves and our industry.”
ESTABLISHING A BASE
Fortunately, Wolf had repositioned itself before the recession hit. “Our executive team started trying to figure out which direction we’d take in the ‘90s,” Wolf said. “We’d been a cross between a smalltown credit house and full-service retailer. Shopping was moving from downtowns out into the suburbs, and we had to think about where we wanted to be.”
By 1992, the operation had grown to 27 stores in three states. That’s when Wolf evaluated an offer for sale of 14 stores to national chain Heilig Meyers, deciding to hold onto three stores located in Altoona and Johnstown, Pa.; and Frederick, Md. Wolf’s own research found that while it was the store of choice for many consumers in its markets, as their families matured and tastes changed, they were moving away. “We decided to broaden our appeal with a quality focus and be a little more fashion forward, especially as the Value Cities and Ashley Homestores started appearing in our market,” Wolf said. “We’d buy things you might not find in a chain—Jaipur Rugs, Four Hands. We merchandise that sort of product into our assortment. We also try to merchandise where a third of our store is available in-stock for immediate delivery; and product with choices and options are on quick-ship programs. “A lot of the mom-and-pops are gone, and we’ve tried to step in and fill that void. We want to be the dominant full-service store in the market.”
SPREADING THE WORD
Wolf said another reason it made it through the recession was a decision to keep advertising.
“We, like many survivors, have never met an ad we didn’t like,” he said, characterizing the stores’ advertising approach “relentless.” “There are months when run 30 different commercials— departmental, lifestyle, community interest, financing,” Wolf said. “We have mixed messages—we don’t believe we can give you a positioning commercial in the same spot where we’re screaming about a sale.” Television is the dominant medium, and Wolf is doing a lot more mailintensive promotion to preferred customers. That approach helps the retailer achieve a business mix split evenly between existing and new customers. The store is big on asking customers about their experience. For a new customer, for example, Wolf gathers information that includes, among other things, age and income; whether she’d come back; ratings for the showroom and delivery experience; what else she might buy and when she plans on buying it. “With our confidence ratings, we feel we can get the new ones back in a second time,” Wolf noted, adding that senior management spends a lot of time ensuring Wolf has more happy customers than the other guy. “If you’re a store manager, you’re way more likely to hear from me about a customer satisfaction survey than how business is going,” Wolf said. “Profit is a by product of doing something well, and in our case it’s keeping customers happy.”
Wolf Furniture at a Glance
Homebase: Bellwood, Pa.
Store Stats: Founded in 1902, Wolf Furniture operates 12 stores and a clearance center in Pennsylvania, Maryland and northern Virginia. Stores range from 40,000 to 65,000 square feet; and employ around 500 people
Key Industry Affiliations: A member of an Impact Consulting performance group and a FurnitureCore client
Key Management: Doug Wolf, CEO; Gene Stoltz, president; John Wolf, chairman; Doug Shaffer, senior vice president of store operations; Germaine Crocker, treasurer
Annual Revenue: Around $100 million
Key Vendors: La-Z-Boy, Southern Motion, Catnapper/Jackson, Smith Brothers, Restonic, Sealy, Craftmaster, Broyhill, Daniels Amish, Sunny Designs, Klaussner.
Web site: WolfFurniture.com
Consignment Model Gains Steam
Allegheny Furniture Consignment, a furniture consignment concept developed by Wolf Furniture CEO Doug Wolf, is picking up momentum.
Right now AFC has one existing store in Harrisburg, Pa., with another set to open in another Wolf market in next year’s first quarter. And last month, it gained its first outside license with Laurel, Del.-based Johnny Janosik. “We believe this is going to be, and not only for us, the next big move on tie breakers,” Wolf said, adding that he gives a lot of the credit for the idea to Mann, Armistead & Epperson’s Jerry Epperson. “He talked a lot about how you have to give her a way to get rid of the stuff she has to make room for new furniture.”
Wolf found that the store’s employees were referring customers to consignment outlets for unloading old goods on many occasions. “We realized that if we can provide customers with an outlet store for their old furniture, we can get two sales from the same customer,” he said (68 percent of customers consigning with AFC are Wolf customers). “You have additional gross margin revenue with no additional inventory.” Sales are up 40 percent this year at Wolf’s AFC outlet, selling more than 8,000 consigned orders so far. AFC is scheduling consignment pick-ups out almost five weeks. Wolf started pitching the concept to other stores when he took a booth in the resource center at the 2012 Home Furnishings Industry Conference in Palm Springs, Calif. Almost two dozen furniture retailers are interested in the project, and some of those are ready to commit.
“We have licensing contracts out for eight more retailers at the moment,” he said. “I don’t want to name names right now, but we have a lot of friends out there, and we’ve been able to pick and choose.”
A Look at the Markets
Wolf Furniture serves markets ranging from small to mid-size cities in Pennsylvania and Maryland to a college town (State College, Pa.), and, with the opening this year in Leesburg, Va., the outer fringe of the Washington, D.C., metro area.
Through this year’s third quarter, 10 markets totaled $1.8 billion in estimated home furnishings retail sales. That includes a new market, the D.C. area, but for the markets Wolf historically served, the total is $717.4 million. With the exception of State College, where Pennsylvania State University’s college-age population skews the count, those markets have very similar age demographics. Pie charts are virtually identical. Excepting State College, the under-25 population in Wolf’s Pennsylvania and Maryland markets ranges from 3.17 percent in Bethasda-Rockville-Frederick, Md., to 4.41 percent. Consumers age 25 to 34 vary from 11.6 percent in Johnstown, Pa., to 18.29 percent in State College. Most of the others are in mid-14s to 15s percentage in that age group. The 35 to 44 segment offers a bit more variation. That age bracket accounts for 15.4 percent of customers in Lancaster, Pa., to 16.5 percent in Altoona, with Johnstown and State College in between. Five markets for those ages range from 18 percent in Chambersburg, Pa., to 20.9 percent in Bethasda-Rockville- Frederick, Md. The income sweet spot for furniture retailers, consumers in their prime earning years, age 45 to 64, ranges from 35.2 percent in Chambersburg to 45.1 in Johnstown, Pa., in the store’s historical markets; with the only outlier from that range being 30 percent in State College.
As middle to upper-middle retailer, Wolf is well-positioned for its traditional markets’ income levels. Only three markets are below 60 percent in the middle income segment, households with annual incomes of $35,000 to $99,999. In that income demographic the range goes from 47.8 percent in Bethesda- Rockville-Frederick, Md., to 57.8 percent in State College; 59.1 percent in Johnstown; 61.5 percent in Altoona; 62.4 percent in Harrisburg-Carlisle, Pa.; 63.8 percent in Hagerstown-Martinsburg; 65.9 percent in Lancaster, Pa.; 66.2 percent in York-Hanover; and 66.4 percent in Chambersburg.
Wolf Furniture CEO Doug Wolf is fortunate enough to be able to mix business with pleasure. “I’m an avid fisherman and snowmobiler,” he said. “I’m a very lucky guy in that there’s a broad group of home furnishings friends who share those passions, too.” It’s easy and natural to talk shop when out with friends in the winter snow or on the water. Wolf isn’t picky about what he goes after either—he just loves fishing of all sorts. “I can enjoy fishing for catfish as much as fishing for sailfish,” he said.
Welcome to our third annual Home Furnishings Business Power 50 ranking.
The ranking—our take on how the industry’s retailers should be ranked— takes into account retail sales volume, social media power through Klout scores, the popular vote and new for this year, market share. It’s a different spin on home furnishings retail rankings, and throughout the next several pages, you see the different ways in which we sliced and diced the data. Dissecting things in a way that shed a bit more light on our industry’s retailers.
To those of you who took the time to vote with our online ballot: We salute you. Your input makes ourPower 50 a retail ranking with some personality. Thank you!
Enjoy the lists.
Click here to see the list.
An Independent Front
Independent retailers make up a huge chunk of the furniture retailing community. We thought it would be interesting to shake up the bag and see how the independent retailer— those with less than $50 million in annual sales and operating in one state—stack up.
Here’s our look at the top 20 independent retailers.
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Regional chains tend to make a big splash in their markets. For our classification purposes, regional chains are those retailers with stores in states other than their own home base. Retailers like Rooms To Go and Havertys who bring big name recognition into the markets in which they operate rank on this list. Other retailers, like Art Van and Grand Home—which have more recently ventured out of their home state to broaden their consumer reach—make the list, too.
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Large independent retailers tend to rule their markets. They have annual sales in excess of $50 million, and operate stores within one state. Name recognition among consumers is powerful, and the large independent retailers generate the rewards from owning the lion’s share of their markets.
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The line between manufacturing and retailing continues to blur, and vertical retailers are gaining steam. Suppliers see great benefit in the ability to control the message and presentation of their brand. Retailers like the Williams-Sonoma lineup of brands, reap similar benefits in controlling look, feel and scent of their products and stores. Here are our vertical lists for both manufacturers who cross over into the retail side of the business and for retailers who step over into the supply side of furniture land.
Click here to see the list.