Monthly Issue
From Home Furnishing Business
December 4,
2014 by in Furniture Retailing, Industry 
The old mantra size matters couldn’t ring more true than in the home entertainment category.
Retailers selling and vendors supplying case pieces and consoles built to accommodate the ever-growing television screens on the market are sure to reap the rewards as consumers continue to upgrade their viewing habits.
The consumer electronics business has been on a steady growth trajectory over the last few years, and forecasts call for the increases to continue.
The Consumer Electronics Association estimates that sales of consumer electronics will close out 2014 with a 2 percent increase to hit record sales of $211.3 billion. Looking ahead to 2015, the association expects industry sales to grow by 1.2 percent, with industry revenues reaching an all-time high of $214 billion.
Televisions remain a key category as vendors continue to evolve their offerings with larger, crisper screens and other relevant features. What does all this mean for the furniture industry? It could result in a possible boost in home entertainment sales.
Innovations within the television category have brought larger screens and premium displays, which have piqued the interest of consumers and pushed many to upgrade their home video experience.
This year, television sales are expected to reach $18.4 billion. Specifically, ultra HD TVs continue to gain momentum, earning an estimated $1.9 billion by yearend, and the subcategory is expected to top $5 billion next year. Not too shabby for a category that barely existed three years ago.
Lest we’ve put you into a frenzy trying to figure out how to make a connection between televisions and entertainment centers and consoles, here’s a look at what consumers are thinking when it comes to outfitting their home theaters.
In the latest Home Furnishings Business consumer survey including 150 consumers who had purchased home entertainment in the last 12 months, report that size is a consideration when it comes to television screens. In fact, more than half (53.8 percent) said the primary television in their home was between 37 inches and 52 inches. More than a third (36.6 percent) said they own a television that is 55 inches are more.
When asked what size television they would consider purchasing in the next six month to a year, more than a third (34.3 percent) said they’d be in the marketing for 55-inch or larger screen. Just under a third (32.4 percent) said they’d opt for a television between 37 inches and 52 inches.
As televisions have gotten sleeker and sexier, they’ve pushed out the trend of hiding the screen behind closed doors. Armoires our definitely out — check out the products on the next few pages — and open walls and cool consoles are the styles of the day.
The trend meshes well with what our consumer panel shared on their preferences. Hide the television? Consumers said no way with 77 percent saying hiding their television was not important to them in the least. More than 60 percent (63 percent) said they’d prefer to put their flat screen television on top of a console featuring media storage. Just over 26 percent said they’d hang the television on the wall and forego home theater furniture.
Want More?
A more in-depth report on the bedroom category is available for purchase at FurnitureCore.com—Industry Info—Industry Reports—Home Entertainment or by calling Natalia Hurd at (404) 390-1535.
December 4,
2014 by in Furniture Retailing, Industry
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.
December 4,
2014 by in Furniture Retailing, Industry
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
December 4,
2014 by in Business Strategy, Industry
By: Sheila Long O'Mara
As we tie the bow on the last issue of 2014 and eagerly look forward to 2015, I have to say I’m feeling a bit nostalgic. It’s an odd, overwhelming feeling for a sometimes leather tough one like me.
The husband just gives me a funny look. The boys? Well, they dish out a lot of hugs, and toss out hilarious quips about off-the-wall subjects that ensure a cacophony of laughter. Mostly, however, the family—all with the attention span of gnats—grins and graciously puts up with all of my remember whens.
I don’t think I’m all that different than many other people, consumers if you will, who are looking to freeze a snapshot of their family’s history. Their family’s story.
Walking through our home and stepping through the threshold of any room, I spy something—sometimes several somethings—that trigger beautiful memories from years past.
My grandparents’ four-poster bedroom suite, a gift to me from an aunt who knew it was an important part of my history growing up lucky enough to have grands living close by. That bedroom group, now lovingly tucked away in our guest room, can awaken memories of early Saturday morning snuggles with my MaMa while my PaPa cooked a big ol’ country breakfast. Millions of books were read and countless teeth were pulled all while sitting on that bed in that very sunny room.
The cozy club chair that resides in our den by the hearth has held me while I held little ones safely through many long nights of sick cuddles. You know the ones I’m talking about—those 1 a.m. wake-up calls from high fevers. The nights requiring all-nighters not only for the child’s comfort, but also for the parent’s peace of mind. The chair, by the way, has been reupholstered several times now, but the memories, along with the springs, remain.
There are old quilts made for very young me by my other grandmother, pictures and a slew of tangible items. The cast-iron skillet and the old cookie press, both of which have survived a few generations. All of those treasures are intermingled with newer home furnishings, each with a story of its own. Sofas where all five of us jockey for his favorite spot during movie nights. The dog’s favorite rug, and the youngest one’s spot curled up right next to her. The lamps that share warmth and light on a winter’s eve.
Homes help create memories for families. Home furnishings help turn houses into homes for those families. Our industry has that much power!
As we wrap up the year and set our sights on the next year’s goals and promises, that power is an interesting nugget to keep in mind.
Happy nostalgic holidays to all of our readers, and here’s to a beautiful, prosperous next year.
December 4,
2014 by in Business Strategy, Industry
By: Bob George
The appointment with your certified public accountant is still several months away. Your friendly banker’s annual meeting is also in the future. Therefore, your business resolutions are a matter for you and your personal business goals and objectives.
The month of December is probably budget time. More than likely, working from your financials, the chart of accounts has been transferred to a spreadsheet with your controller applying his or her best judgment for the expense items. The critical decisions regarding salary increases and topline (revenue) increases have been left for your final input. The forecast contained in later pages of this Home Furnishings Business issue may provide some guidance. Most likely the resulting bottom line will be quite similar to what you achieved last year.
Why?
Because you want a realistic budget. That’s why.
Now, finally, we get to those resolutions. Spreadsheets are wonderful tools that allow you to play the “what if” game. Increasing revenue by 15 percent; improving gross margin by two points; reducing sales expense by two points; reducing warehousing/delivery by two points; reducing general and administrative by two points – all of these actions will cause a significant change in your bottom line.
The question becomes, “How do I make these actions more than the manipulation of a spreadsheet?” The answer requires the resolve to change not the numbers, but the people, process, merchandise, and retail experience. What gives you the resolve to make these resolutions and then stick to them? First, you must know that they are achievable when compared to industry standards of good performance. You may then reinforce this by participating in a dialogue with a peer group. This group’s past experiences often can guide you in evaluating your current situation. Next, establish metrics that you monitor weekly, monthly, and quarterly. Understanding the impact of each metric is essential.
What causes the metric to change? It is simple, but you must change the metrics. The starting point is a resolution followed by hours of execution. I hope you find inspiration and input from the pages of Home Furnishings Business.
Contact us if you need encouragement.