Monthly Issue
From Home Furnishing Business
March 24,
2015 by in Furniture Retailing, Industry 
By: Janice Summers
Retail buying groups offer members discounts, rebates and an immeasurable wealth of networking opportunities.
Does size matter?
There are dozens of buying groups in the furniture industry. Some have thousands of members and billions in annual sales. But some, like Contemporary Design Group, are much smaller.
“We are not a classic buying group,” said Howard Haimsohn, president of the group and co-owner of San Diego-based Lawrance Furniture. “We originally formed the organization to give stores that had a similar product mix and style the opportunity to share the cost of printing color marketing circulars. It had nothing to do with power buying, but we bought the product that was advertised in the brochures. We created strong relationships with vendor partners who did business with most or all of us.”
The group was formed in 1983 with seven members. Today, CDG remains an intimate collection of 26 companies with similar business models and revenue of between $2 million and $10 million each.
“Don’t make the mistake of thinking your company isn’t big enough to be in a buying group,” said Chris Cooley, president of Michael Allen Furnishings and a director of Furniture First, another industry buying group. “Take the time to look into them and understand the benefits.”
Who gets in?
Each group has its own qualifications for membership¾perhaps it’s a certain credit rating, a specific merchandise offering, a minimum amount of time in business, geographic or regional location or a willingness to share. All require some type of investment.
“When we began, most of our members were on the West Coast, primarily Seattle and Portland, Ore., but some of our members were as far east as St. Louis,” Haimsohn said. “We are very exclusive by trading area, and allow only one member in a metro market. Our members are some of the best contemporary retailers in the country. It’s also about personality—who fits in with the group.
“We are proud to have partners that stay with us for a long time,” he added. “That’s more important to the group than people who pay a lot but bounce in and out.”
Fringe Benefits
Members typically receive rebates and discounts, but may also have access to merchandising concepts, private-label products, communications, including best practices, best sellers, best ideas, industry trends, real estate advice, store design help and marketing programs, as well as conferences, symposiums, and regional meetings.
“We also have staff that conducts research, negotiates special consumer rates with national finance companies, and sets up committees to select and negotiate with manufacturers and importers for special programs,” said Cooley.
Furniture First has more than 200 members representing 450 furniture retail stores across the U.S.
“We work together to leverage our purchasing power with leading furniture manufacturers and suppliers,” Cooley said. “Because we work together, we can bring great values in high quality home furnishings to our community.”
Group staff and volunteers work to provide the best value to all their members. Their duties may include keeping up with new innovations, changing technology, and the best partners for the membership. They might also maintain relationships with preferred vendors in operating systems, website development, insurance, all categories of the products sold by member retailers, and others. Everything changes more quickly than in the past, and it’s a challenge to keep up with it all.
“We’re super efficient,” said Mike Herschel, executive director of Furniture Marketing Group, which has 112 members representing 800 retail stores. “We have only three full-time and three part-time employees. “We try to keep 90 percent of the benefits going to the retailers.”
Some groups offer different types of memberships, depending on need.
“We have five levels of partnership, with increasing benefits and required investment,” said CDG’s Haimsohn. “Our higher-level partners can request custom surveys and reports on designers around the country. We promote them more heavily, and they have access to better programs.”
He added, “I encourage new members to come in at the lowest level so their investment isn’t steep, and they can discover what works best for them before committing to a higher level.”
Because members don’t compete, they are free to share information, and the resulting networking is a huge benefit.
“We’re actually more of a networking group than a buying group, said Herschel. “Of course, discounts and rebates are a huge component, but our members also benefit from sharing merchandising, warehousing, and other back-office information.”
“Contemporary Design Group evolved quickly to a networking group. Within 10 years, it started to evolve into a performance group, and we began sharing financial information,” said Haimsohn. We have a huge amount of trust. We talk. We share information. We have great relationships with each other.”
He continued: “Today we do some collective buying, and some products are made for us. We have very strong vendor relationships, but our main strength is collaborative information sharing.”
Vendor Benefits
Buying groups act as a conduit between manufacturers and retailers. New or smaller manufacturers who would usually be overlooked by the largest retailers see it as an opportunity to be noticed.
“For the suppliers and vendors, it’s all about communicating their benefits to the members through our communication tools,” noted Herschel. “We have a variety of marketing assets for fostering those partnerships.”
“We spend a day and a half with the vendors,” said Haimsohn. “It’s an annual conference like no other. Our partnership is not just about how to get a special price from them.
“We don’t have a strict policy for adding vendors,” he added. “If they want to invest, I decide if they’re a good match. A lot of our vendors have partnered with us for 10 to 30 years. Many vendors want to invest with us because they think we will be a good target audience in the future and want to build a relationship. We have manufacturer partners. They help us financially, by giving us programs, information, and specials. We share a lot of data and information with them.”Relationships are key.
Most buying group members benefit from the rebates and discounts, which often far exceed the cost of membership. But many say the best part of belonging is the relationships that have developed over time.
“When we formed 25 years ago, we were all about buying at a better price and negotiating with our supplier base,” said Herschel of Furniture Market Group. “Our mission was to basically become a conduit between the members and selected service providers. Now, it’s more about relationship building and providing better information to grow our members’ businesses. We have a large annual conference each January. We also have membership meetings at each High Point Market along with an occasional regional meeting.”
Because FMG targets higher volume, larger independent retailers who can negotiate good deals on their own, its main focus is to foster relationships between members of like size, and to better their relationships with suppliers and other retailers.
“I’m in the relationship-building business,” Herschel said. “That’s my first mission. We try not to overlap market areas so members can talk business among themselves and not be worried about talking to a competitor.”
“I am proud of how the group has held together,” Haimsohn said. “Some members have been in the group 25 years. Our relationships with vendors are equally strong. It’s like a marriage. There’s compromise, you have to make a commitment.”
Perhaps Cooley summed it up best.
“It is vital to belong and give back to the home furnishings industry to help educate, share good business practices with other furniture families so that we may all prosper and learn together,” she said. “The more we help others the more it helps the industry as a whole.”
March 12,
2015 by in Business Strategy, Industry
By: Bob George
When I began to think about this issue, I put on my nostalgia glasses and reflected on the past, the past of gallery programs, clean distribution, and manufacturers defined by a single product category or even a specific style.
It all seemed so straightforward heralding a simpler time. However, after talking with those who lived it, my memory realigned with reality, and I concluded it was not as perfect as I had remembered it to be.
Today, manufacturers are pursuing e-tailers they once sworn not to sell. Retailers are embarking on trips to the Far East and are encountering the manufacturers they will see in the near future at Market. And, don’t leave out consumers. After spending an afternoon in a local retailer’s showroom being educated on the features and benefits by an informed sales person, they are joyfully surfing the Internet to find a better price for goods. The question becomes—Is anyone loyal anymore?
Everyone makes excuses.
Manufacturers
· E-tailers allow us to make a better margin.
· Retailers take my product shots offshore and buy direct.
· And so on. . . . .
Retailers
· Why not go direct? The manufacturer doesn’t provide services anymore. Manufacturers’ representatives no longer train our sales associates.
· Where is product photography when they have collateral? They don’t supply the images I need.
· And so on. . . . .
Consumers
· Why not buy on the Internet? It is convenient. Why pay for that store? They make too much profit.
· They don’t sell the total look.
· And so on. . . . .
Could it be that partnership is the answer? Sometimes the more you have to define it, the less likely it will succeed. The question becomes how do you define workable partnership for the furniture industry? Let’s look at this from three points of view.
Manufacturers believe they can conceive a product that consumers would really want. They also feel they can produce that product on a timely basis at a level of quality that the consumer anticipates.
On the other hand, retailers believe consumers in their communities recognize the value that they as retailers can deliver at a level of service they expect. They also understand this purchase needs to be in an environment that makes the transaction a pleasant experience.
Consumers believe retailers should make a profit and also stand behind the products they sell. In addition, they expect the retailer to be a contributing member of the community and a supporter of the well being of society.
I know you’re asking to what utopia am I referring? The answer may be a version of utopia, because in reality the question becomes, how do we get each party to ‘own it’, to look at things from the other party’s perspective?
Or is it all over?
Many of traditional retailers and manufacturers competing are from distribution channels that do not have two distinct partners. In other words, the retailer is the manufacturer or the manufacturer is the retailer. As traditional retailers source more and more product offshore, will the channel just collapse? Who wins? Will our industry, perceived as low profit, emerge with this new structure?
What will we lose? I believe a great deal.
March 12,
2015 by in Industry
By: Sheila Long O'Mara
Off a small, nondescript Road in the Lowcountry of South Carolina, one can find what has been reported as the oldest thing—living or man-made—east of the Mississippi River. The Angel Oak, a giant live oak that some say is around 1,500 years old, stands impressively sprawling.
To say the least, she’s a sight to be seen. She stands a mere 65 feet, relatively short for an oak, but her canopy provides more than 17,000 square feet of shade with her outstretched boughs. Her circumference is nearly 25 feet, and some of her limbs rest on the ground due to their size and her age.
She’s tired and gracefully aged, but she’s managed to weather the worst of hurricanes, including Hugo in 1989. She’s witnessed the founding of the United States. During her life, she survived the Civil War, the Civil Rights Movement in the heart of the South, and more recently, the threat of encroaching development.
Oh, the stories she could tell if she were able.
Maybe she’d recount tales of sweetgrass baskets being woven in her shade. Perhaps she’d share the ugly part of our history that includes the horrific treatment and unjust murders of people of color.
Maybe those outstretched limbs offered cover for people trying to escape slavery.
Like this stately oak tree, roots in the home furnishings business run deep and wide. The history isn’t always pretty, but it has brought us to this moment in time. We, as a group, have created our now, and we are now laying the foundation for our future. We’ll shape how tomorrow looks.
Whether we like it or not, we are an industry built, and one that thrives, on relationships. Just as in our personal lives, those relationships can become strained, but most are worth the extra effort required to mend them.
And, the next time you’re in Charleston, S.C., do yourself a favor and drive the 12 miles from downtown to John’s Island to see Angel Oak. She’s worth the short trip.
March 12,
2015 by in Industry
Youth and infant furniture makers and retailers have reason to rejoice. A slow-and-steady resurgence in U.S. births hold promise to benefit the category.
Over the next five to 10 years, children of Baby Boomers will be moving into prime childbearing age. The recession slowed birth rates, but those sluggish rates have bounced back somewhat. Projections now call for a 3.2 percent increase over the next five years and a continuing ascent over the upcoming 30 years.
While the under 5 age group continues to catch up, the 5-to-9-year-old segment will experience shrinking numbers through 2020, and the 10-and-over group will remain stagnant.
Birth Projections
Births peaked in the United States in 1957 with the birth of 4.3 million babies. The number of births in the United States did not reach that level again until 50 years later in 2007 when 4.32 million babies were born.
After that, the recession hit, and the number of births started its descent.
While birth rates are now on a slow increase, it will be another 30 years before births in the United States exceed the annual 4.3 million level.
Table A showcases the up-and-down progression of births from 1950 and the projections into 2045. The statistics and the projections are derived from the United States’ Vital Statistics System from the Centers for Disease Control.
After the 8.6 percent downward spiral in the three-year period from 2007 to 2010—the recession—births are projected to grow an average of 1.4 percent every five years until reaching a total of 4.34 million in 2045.
10-Year Outlook
The under-5 age group is expected to have the highest population gains by 2025 with an increase of 5.2 percent. That forecasted growth rate will leave the three older youth age segments behind as each of them are projected to experience multiple dips and minimal growth when compared to the under-5 set.
Shown in Table B as the blue line on its upward trajectory, the under-5 group will be soaring for the next 10 years.
The group encompassing ages 5 to 9 are reeling from the lower birth rates during the Great Recession, and the group is expected to decrease 1.4 percent in the next three years from 2015 to 2018. Children under 5 will continue to age into this group creating an estimated 4 percent increase from 2018 until 2025.
In the next 10 years, the tween and teenage groups are projected to diminish or remain flat. Neither group will gain steam again until more than 10 years out when grandchildren of the Baby Boomers migrate into these segments.
Under 5 Set
Now that the recession has ended, the birth rate in the United States has picked back up giving the new players—those under 5—the power to boost the growing youth population.
As shown in Table C, the under-5 age segment has the highest population bump in the forecast. By 2020, youth under 5 will grow by 3 percent from 2015 and 5.2 percent by 2025 over the 10-year span–increasing from about 20.6 million to 21 million.
Ages 5 to 9
Children between the ages of 5 and 9, as shown in Table D, are expected increase in number by 2.1 percent in the 10-year span from 2015 to 2025. After a projected drop of 0.9 percent in five years, the under 5 set will provide this group a 3 percent boost, resulting in an estimated population of 20.9 million in 2025.
Ages 10 to 13
Table F illustrates that with an overall flat growth of 0.1 percent from 2015 to 2025, age group 10 to 13 shows signs of an initial slight increase of 0.8 percent by 2020. However, this segment is expected to fall 0.7 percent in the five-year span between 2020 and 2025.
Ages 14 to 17
The oldest age group in our youth report, ages 14 to 17, continues to decline and is projected to decrease 0.4 percent in 2020 and post another dip of 0.3 percent in 2025.
This dwindling population outlook for the two older youth segments can be attributed to a combined slowing of birth rates over the last five years trough the recession and the glut of the Baby Boomers’ grandchildren who have not yet reached their teenage years.
Forecasting beyond the next 10 years into the next decade—2025 to 2035—ages 10 to 13 and the age group of 14 to 17 are each expected to grow more than 4 percent.
Women of Childbearing Age
A key factor in determining the future of the youth furniture category is the projected population of women of childbearing age.
Key considerations are whether they are increasing in numbers whether they are having enough children to support healthy youth furniture sales.
Table H shows the projected population of women of childbearing age through the next 10 years in five-year increments. While the crude birth rate—number of births per 1,000 women—continues to decline and is expected to drop 3.2 percent from 2015 to 2025, the population of women of childbearing age—18 to 44—is expected to increase 6.5 percent during the next decade. That would account for an increase in projected births.
The number of women ages 18 to 24 will show no growth over the next 10 years, dropping 1.2 percent, as the children of Baby Boomers begin to leave that age group.
Meanwhile, women ages 25 to 34 in their prime childbearing years, are expected to increase in population with 7 percent growth over the next 10 years.
The highest growth will be women ages 35 to 44. This group is expected to increase by 12 percent in the next 10 years as the children of the Baby Boomers filter through their prime furniture purchasing years.
According to the National Center of Health Statistics, the number of first births to women 35 and over is nine times higher than in 1970. These women are delaying childbirth or having additional births well into their mid- and late-30s.
While adult children of Baby Boomers are jump starting the increase in births, they are still projected to have fewer children on average than their parents. In the short term these births will fuel the demand for furniture targeted toward infants and children under 5. However, it will be more than five years before there is an increase in the number of 5-to-9 year olds, and 10 years before we see growth in the 10-to-13 year old segment.
Editor’s Note: For additional in-depth information on the topic contact Lexi Benson at lexib@furniturecore.com or via phone at (404) 390-1525. Statistically Speaking is proprietary information from Impact Consulting/FurnitureCore research and any reuse is by permission only.
March 12,
2015 by in Furniture Retailing, Industry
By: Sheila Long O’Mara
Winter has been brutal in many parts of the country this year, and people are eager for the big thaw. With sights set toward spring and dinners al fresco, consumers are eager to turn toward decorating and using their outdoor spaces.
More than 55 percent use their outdoor furniture at weekly. Eighteen percent said they use their casual furniture daily, while another 18 percent said they enjoy their purchase two to three times a month.
That’s good news for furniture retailers adding outdoor furniture vignettes to showroom floors for the category’s big selling season. Of course, the category is a bit regional and dealers throughout Florida and Southern California sell outdoor furnishings year round.
No matter the case, it’s always a smart strategy to know where the consumer stands on a certain matter or category.
According to a Home Furnishings Business survey of 146 consumers who had recently bought outdoor furniture, retailers should be aware that most of the shoppers opted to spend their money on the category with either a home improvement store (37.7 percent) like Lowe’s or The Home Depot, or at a mass merchant (23 percent) like Walmart or Target. Only 6.6 percent—the lowest percentage—bought from a traditional furniture store, and another 19.7 percent turned to an outdoor furniture specialty retailer.
Consumers did not leave traditional furniture retailers out of the research stage of the shopping process; they just opted to buy elsewhere for whatever reason. Nearly 14 percent (13.8 percent) said they shopped at a furniture store while considering their purchase.
Furniture retailers are losing traction to alternative channels of distribution for the outdoor category. That 13.8 percent is a significant drop from last year’s survey that showed 21 percent of consumers surveyed shopped with traditional furniture stores while researching outdoor furniture.
Price Matters
When it comes to pricing of outdoor furniture, consumers are a tight-fisted bunch. Nearly 56 percent said they spent less than $500 on their most recent purchase. Another 18 percent spend between $500 and $999; and 9.8 percent opted to spend $1,000 to $1,499.
When compared with the stores from which consumers bought, the prices fall in line with the products found at the mass merchants and the home improvement stores.
When asked about difficulties encountered while shopping for outdoor furniture, slightly more than 20 percent (20.4 percent) said prices were too high. Another 24 percent said they had trouble finding exactly what they wanted from a design point. Fourteen percent said the selection in their area stores was too slim.
Now that they’ve bought their outdoor furniture, consumers are in a long-term relationship. More than 39 percent expect it to last between three and five years. Another 26 percent think it will last six to eight years.
Want More?
A more in-depth report on the outdoor category is available for purchase by calling Natalia Hurd at (404) 390-1535 or via e-mail at NataliaHurd@ImpactConsultingServices.com
4.79%
Outdoor percentage of 2014 furniture sales
$3.59 Billion
2014 outdoor furniture sales
2.6%
Outdoor furniture 2014 sales growth
Retailers Say...
Lloyd Flanders Contempo
“It’s a very transitional contemporary setting with a very sophisticated look and feel. It’s very livable and a better quality. Eighty percent of the Contempo we sell is special order.” The sofa retails at $2,699.
Tom Lias
Gorman’s Furniture
Novi, Mich.
Agio’s Heritage Collection
“The customer sees a lot of value for the price in this collection on its solid construction, and the fabric selection lends itself to be used in many different environments.”
Sofa retails at $999.
Nathan Smith
Miskelly Furniture
Jackson, Miss.
Monterey from Castelle by Pride Family Brands
“The collection offers simple lines with a beautiful old world feel with the sand-cast detailing on the arms and back with cast rivets added to the backs of the deep seating pieces. Customization is a large part of the success of the collection.” Retail depends on fabric selection.
Debbie Allison
Furnitureland South
Jamestown, N.C.
Agio’s Haywood 5-Piece Fire Pit
“The chairs are comfortable, and everyone is loving fire pits right now. At $1,499.99, it is a terrific value.”
Jeff Child
RC Willey
Salt Lake City
Manufacturers Say...
Flight by Brown Jordan
Transitional styling gives Brown Jordan’s Flight an abundance of versatility. It is available in both sling and woven options with dining table tops available in glass or aluminum.
Amari by Janus et Cie
The lounge chair is available in a high- and low-back design and a variety of finishes. The chair’s sweeping curves complement a variety of décors, create a comfortable seat and work indoors and out.
Cassley by Klaussner Outdoor
Crafted of polyethylene over a powder-coated aluminum frame, the collection feature Klaussner’s drain-through cushion construction for ease of care.
Island Estate for Tommy Bahama by Lexington Home Brands
The hexagonal Island Estate fire pit serves as a focal point for an intimate seating arrangement of high-back wing chairs. Upholstered seating offers full customization, including trims and custom fabrics for a designer look.
Barcelona by Summer Classics
Outdoor furniture with indoor appeal, this lounge chair is crafted with weather-resistant outdoor materials including Sunbrella fabric and welded aluminum. The collection offers a number of cushion options.
Adele by Walker Edison
The four-piece woven rattan conversation set is welcoming in a classic warm mocha finish teamed with plush, tufted-back cushions. Set includes two chairs, loveseat and cocktail table.