Daily News Archive
Brought to you by Home Furnishings Business
May 31,
2008 by in UnCategorized 
By Home Furnishings Business in Furniture Retailing on June 2008
Of course, in the furniture industry, mistakes can have far more dramatic consequences than a flubbed lyric, a missed note or, even, an affair with Ava Gardner. You only have to look at the spectacular flameouts of chains like Wickes and Sofa Express to see the results that strategic errors—coupled with a difficult economy—can have in today’s complex business climate.
Yet, furniture store owners who shared the biggest mistakes of their careers with Home Furnishings Business echoed Sinatra’s philosophical approach to overcoming business hurdles, with virtually every respondent focusing more on the lessons offered by their miscalculation than the mistake itself. Even in cases where the errors carried multi-million-dollar price tags, the retailers involved are able to look back and focus more on the lessons that were learned—and continue to shape decision making—rather than agonize over short-term losses.
The retailers Home Furnishings Business contacted were surprisingly forthcoming in discussing career mistakes that had occurred, in some cases, quite recently. All of the participants have been highly successful over a period of years, and each addressed a different area of their respective businesses. Topics ranged from buying a competitor to showing too much loyalty to employees. The responses from a dozen top retailers were edited for clarity and space limitations.
Andrew Tepperman
Tepperman’s Furniture, Windsor, Ontario, Canada (four stores)
Keeping Up with Expanded Duties
“On the people side of the business, a mistake that has occurred a couple of times involves leaving people in a position after (the job) outgrows them,” said Andrew Tepperman, president of the 83-year-old family business that has significantly expanded a couple of locations and added a 85,000-square-foot store in recent years.
“In most cases, these were good people who had hit their ceiling. In other cases, these were great people who excelled in a specific area and who were promoted, but received minimal training to excel in the new position,” he said. “While (negative) financial and operational issues are an aspect of what can occur in those situations, it’s also not fair to the person. My personal mistake in these situations comes both from being sympathetic to the person and seeing the situation as one where I had failed by not being able to develop those employees.
“What has happened in every case where the person moved out is that results and morale improve,” he said. “... While drive, ambition and a willingness to learn is important, we also see that the company must take on a greater role in a continuous development program. As a company, we are much quicker to act when there’s smoke. We’re also more aware and in tune in training internally promoted individuals.”
Jake Jabs
American Furniture Warehouse, Denver (11 stores)
‘If We’d Had A Little More Time To Investigate ...’
In about 1997, American Furniture Warehouse of Denver purchased a dozen Webergs and Rhodes stores from Heilig-Meyers in what Owner Jake Jabs recalls was a take-it-or-leave-it proposition on an extremely short timetable. The plan was to buy and close a least nine of the 12 stores, giving AFW a bigger share of the market.
“If we’d had a little bit more time to really investigate the operation, I wouldn’t have bought it,” said Jabs, who now operates 11 AFW stores. “I didn’t realize how poor of an operation it was and how much junk (inventory) they had. ... We walked all the Denver stores, but we should have also gone to those other stores” elsewhere in Colorado, he said. “They had trailers sitting outside they couldn’t unload because of all the customer returns, damaged merchandise and other junk that was packed inside. ... There were also a lot of leases involved, including one we just got out of over in Westminister. ... Two years ago we bought Homestead House’s three stores in Denver. We just sort of low-balled that offer, and kept two of the three stores. We had learned a lesson from (Webergs/Rhodes) to tread more lightly and make sure it’s a good deal. We had lost quite a bit of money, plus there was the heartache of a lawsuit on the one of the leases. That was a huge mistake. They went bankrupt three years later, and that would have wiped out all the leases we got hung with.”
Ken Loring
Boston Interiors. Stoughton, Mass. (six stores)
Test-Driving Merchandise
Not every collection or sofa that’s gone on one of Boston Interiors’ six showroom floors has been successful, but Ken Loring doesn’t think of those duds as “mistakes.”
“I prefer to call them ‘tests,’” said Loring, president of the Stoughton, Mass.-based retailer. “You have to have some strikes to get a hit, and one or two are home runs.”
The key to keeping too many tests that don’t pan out from taking too big a bite is to have detailed, accurate performance measurements for each slot. “See what characteristics are in common in the best sellers, and what characteristics are in common with those that aren’t,” Loring said. “We always analyze a slot for its production. You should constantly test merchandise on the floor to see if it’s above the mean or below the mean.”
Boston Interiors sometimes even “overbooks” when it comes to ordering at markets.
“We’ve ordered product that never got made, and I’ve had vendors tell me they couldn’t send me something I ordered” because of distribution issues, Loring said. “We shop a lot of the smaller guys since sometimes (larger companies) have already tied up something I like.”
Sometimes a product arriving at the store just doesn’t measure up to what Loring saw at Market. In those cases, it’s best just to unload it in a hurry to make room for a winner.
“We had some beds come in that we couldn’t assemble” due to faulty connectors, Loring said. “Our repair guys are as good as people in the factory, so we repaired it and got rid of it. Sometimes you have to run it at clearance. We’re testing some goods from Brazil right now. If it doesn’t work out we won’t reorder it.”
Dean Embler
Direct Furniture Factory Outlet, Shelby, N.C. (three stores)
Hoping Things Get Better
“Right now, I have two giant tent sales going on in Lexington and Greensboro, and I’m spending $10,000 a week advertising them, and I should have spent, maybe, $5,000,” said Dean Embler, who operates out of three former Wal-Mart buildings with a combined size of 300,000 square feet. “Last week (right before income taxes were due on April 15), I should have spent nothing. It’s just the economy is so far off. ... The mistake I make is chasing the consumer with advertisements that cost so much. The mistake is spending too much on advertising in the hope things will get better, and they just don’t.”
On the positive side, Embler said the furniture industry downturn is making it easier to find the closeout deals he specializes in. “So many of the major (manufacturers and importers) have so much excess inventory, we’re able to get truckloads of closeouts and discontinued items on 50 percent to 70 percent off. Closeouts (are) what I’ve done for 30 years, and the market is flooded with them right now. I was just helping a lady in the store who was looking at a (name-brand) painted table. The factory wholesale price was $187, and I was selling it at $149, so it’s nearly $40 cheaper than wholesale, and she tells me, she’ll have to think about it. People don’t realize a deal when they see one, but if she looks for that table at any other store, she’ll be right back here in a hurry.”
Doug Kays
President of the National Home Furnishings Association
Holding on Too Long
Seven years ago, Doug Kays was a senior vice president at Heilig-Meyers, and after the chain’s liquidation, he joined with a partner in 2001 to lease eight stores and lined up $14.4 million to finance a business plan that called for opening up to 34 Premiere Home Furnishings stores up and down the West Coast. Unfortunately, that credit deal fell thorugh in the wake of the attack on the World Trade Center, which was eight blocks from the financiers that had backed his business plan. So, he had eight operating stores, but lacked the financing to grow bigger as planned.
“For the next four years, we operated the business out of cash flow, and the eight stores were positioned across the West Coast (including Washington) in a way that didn’t make a lot of sense without more fill-in stores,” he explained. “From a personnel standpoint, we had a general manager and three regional supervisors who I didn’t really need unless the company was expanded as we had planned. There were a lot of mistakes, but most of it was circumstances that couldn’t have been anticipated, but I think the main mistake was holding on to those very good, very loyal employees when I didn’t have the store structure to justify it. ... They were fairly heavy payroll positions, and I held on to them for way too long because they were great people and I wanted to show the same loyalty and support they had shown me. ... When it became clear early on that we would have to start over again on the financing, it would have been better to have made the dramatic cuts.”
In the end, Premiere operated with eight stores for about two years, and then wound down gradually as stores were liquidated one by one over a four-year period to pay creditors off without resorting to bankruptcy.
Peggy Burns
Circle Furniture , Acton, Mass. (five stores)
What’s in a Name?
Back in 1989, Circle Furniture operated three locations when, as Peggy Burns recalls, the management team decided to re-brand as Choice Seating, a concept that was a forerunner to today’s factory-supplied franchise stores.
“It sounded like a great idea at the time to go with a concept that was all special order, so we would have no inventory,” she said. “We were going to close all three Circle stores to go to the Choice (nameplate). But, instead of closing all three, we kept the Cambridge store as Circle Furniture, and we opened a third (Choice) store right as there was a recession.”
The owners embraced the concept so strongly that the Cambridge Circle store dropped upholstery to focus on case goods. “It became really complicated to market both concepts,” Burns said. “It’s very expensive to advertise in Boston, so we tried to market Circle and Choice together in our ads in different ways for several years, and it just confused people.”
After struggling with those complications for more than five years, the ownership team decided to again embrace the Circle Furniture nameplate across all four stores.
“We switched back, and business improved 50 percent almost overnight,” she said. “Since we had been in business (as Circle) for such a long time, people remembered us. The concept was something that looked good on paper. The whole idea was that customers would order a sofa, love it and keep it, but they didn’t always love it and sometimes didn’t keep it, and the marketing became so confusing with the two names.”
Keith Koenig
City Furniture, Tamarac, Fla. (15 stores)
Not Getting Out of the Comfortable Waterbed
“My biggest mistake back when we were in the waterbed business was not listening to Bill Lindler, who is a consultant (based in Atlanta) and a dear friend. He said, ‘You guys ought to get into the furniture business. You could be a lot more successful,’” said Koenig, who ran the 37-year-old retail chain as Waterbed City with his late brother, Kevin Koenig.
“We finally opened our first City Furniture store in 1994, but it was several years after Bill had told us we could sell a lot more in furniture than in waterbeds, which was a business we knew and thought we could continue to be successful in. As it turned out, he was right and furniture was a lot better business than waterbeds. If I had to do it again, I would have figured out a way to get into the furniture business earlier. Even though furniture sales are down across the industry right now, it would have been quite a bit tougher for us if we had stayed in waterbeds.”
Todd Lehman
Inter!ors, Lancaster, Pa. (one store)
‘It Was Pretty Ugly!’
“I think my biggest mistakes in this business have been around the ‘people’ part of the business, including in interactions with customers that have ranged from me being too much of a pushover to not taking time to think things over long enough,” said Todd Lehman, president of the family-owned Inter!ors. “As much as I believe that all of our people are doing the best they can and being totally open, when there’s an issue I should be sure to speak to the customer and not just listen to our people.
“As an example, we had a situation where a customer had custom-ordered a $5,000 sofa and after it arrived, they didn’t like it and wanted us to take it back,” he said. “We normally charge a (30 percent) re-stocking fee for that, which they weren’t willing to pay. After the issue went through the designer to the sales manager to me, I’d heard that it looked fine, so in my conversations with the customer I defended the designer. After an hour-long phone conversation with the customer and her husband, we took it back, but I wasn’t happy about it and the customer wasn’t either. Then, when the sofa came back to our warehouse a couple of days later, the manager there called me and asked, ‘Who in the world ordered this ugly sofa?’ I kind of chuckled to myself about it as I realized that in a situation like that, it would have been much better if I had taken it to the next step and actually gone to the customer’s house to see it. If I had done that, I probably would have looked at it and said, ‘You’re right; it is ugly and you shouldn’t have to pay for it.’ The way it turned out, it got to be a pretty heated discussion when it shouldn’t have been, but, in the end, they came back to us.”
Jim McIngvale
Gallery Furniture, Houston (one store)
‘It’s Like Drugs; You Have to Wean Yourself Off’
“I’d say my biggest mistake in furniture retailing is getting enamored with buying containers of furniture from China,” said Jim “Mattress Mac” McIngvale. “By that, I mean buying too many (directly) versus buying domestic or buying from a wholesaler. It kills the inventory turns, and all of the sudden you have 10 containers spaced out over four or five months. When the product (sales) slow down, you have 40 sets of something you can’t give away. The high margins are enticing and look great on the front end, but they aren’t so great when you figure out the total cost. The complexity is overwhelming. This is a lesson I’ve learned over the past couple of years. It’s like drugs; you have to wean yourself off of it. I think the entire American furniture industry is fixing to learn the same lesson.”
Gerard Kvasnovsky
Danker Furniture, Gaithersburg, Md. (five stores)
Round-the-Clock Fire Drill
A small retail organization can have the same atmosphere as a hospital emergency room, and that hectic environment can affect the quality of management’s decisions, said Gerard Kvasnovsky, a partner and the key buyer for Danker Furniture, a five-store retailer based in Gaithersburg, Md.
“If you’re the doctor in charge, people are pulling on you for answers from all different directions,” he said. “You’re always putting out fires, and quite often you don’t realize which fire you’re extinguishing or even if it’s the right one. That’s a mistake I made for a long time.”
While the fire-hose approach can make an owner feel productive and busy, the problem is that all problems tend to get the same amount of time and depth of consideration. “Should I call Mrs. Jones about the sofa that doesn’t fit in her house or call my bank to negotiate my $1 million line of credit?” Kvasnovsky said by way of example. “You want to please your customer, but those two problems just don’t call for the same amount of time and thought.”
Kvasnovsky’s solution carries his emergency room analogy a step further: a “triage” of issues facing the store manager, preferably carried out at the end of the work day when there’s time for reflection, and listed in a memo for next-day resolution. “You put a dollar amount to each issue you’re going to resolve, and consider the time frame affected by your decision,” he said, noting that a lease, for example, might involve a 10-year commitment, whereas a bank line of credit typically covers a year. “Isolate yourself in the morning and work down through those items you prioritized the day before. I’ve found it’s best to make heavy decisions first thing in the morning when you aren’t tired.
“It sounds simple, but we sometimes don’t isolate ourselves enough to be able to think clearly.”
Terri Bowersock
Terri’s Consign & Design, Tempe, Ariz. (nine stores)
Finding Your Inner CEO
“Because of the way all of us are raised as women, I felt that I had to find a male CEO to act in a lead role. ... Plus, I remember when I opened the first store, reps would come in and, at some point, they’d always ask, ‘Where is your husband?’ They were assuming that a man was (behind the scenes) running it,” said Terri Bowersock, whose chains sells a mix of new furniture and consigned goods. “Even though I started the business and had all the creative ideas, I did hire a male CEO as we started growing. I think I hadn’t given myself permission to have power, and I thought he ran things well because he was consistent and was sort of stern with people. ... I think, as women, we tend to try to maintain a one-for-all, all-for-one kind of a family structure. (Looking back), I should have let him go five or six years before.”
In short, there was a major falling out between the pair, and Bowersock again found herself holding the CEO reins. She leads with an entirely different style. It’s more collaborative and rarely involves simply giving orders. There’s a lot of listening, too.
“I try to step back and say, ‘I hear what you’re saying. I think we’re all here to try to do our best, but I really believe my idea will work if you try it with me.’ We talk it through,” she said. “In the past, I didn’t want to be the CEO, but now I’m comfortable with it. I think the lesson is to not sell yourself short as a woman. If I had done that from the beginning, I think we would be further along today. I’m finding out that I’m a darned good CEO, and I wouldn’t have said that a year and a half ago.”
Marty Cramer
Cramer’s Home Furnishings, Ellensburg, Wash. (five stores)
‘Don’t Let Excitement for the Deal Cloud Your Judgment.’
“The first time I bought a store from someone who was retiring, I didn’t pay attention to the smaller parts of the deal. In other words, the inventory was valued at a certain number, and I just accepted that,” said Marty Cramer, owner of Cramer’s Home Furnsihings. “The reality was, probably, 30 percent of it was dead. We ended up having to sell some of it for less than what I paid just to get it out of the system. It took me a lot longer than I expected to move that inventory out, so it clogged it all up, and I couldn’t get my own inventory in there. There were just a lot of issues like that, and I learned a lot from it. I’m still in that location, and it’s a great location, but it was a bigger undertaking and it cost me quite a bit more than I expected.
“Since then, I have acquired other stores, and I’ve done a better job,” he said. “I have a checklist process, and I also have developed a way of explaining why some part of the deal may not work for me. When it comes to taking the inventory of someone who is retiring, it’s typically not all suitable for my stores. It’s higher-end, more expensive, and it has to be taken down to a sellable price or it will just sit there in my store. In fact, I still have a little bit of the inventory from that store I bought four years ago, mostly in the accessory department. What I learned mostly is don’t let your excitement for the deal cloud your judgment.”
May 31,
2008 by in UnCategorized
By Home Furnishings Business in Bedding on June 2008
If anyone deserves to be called an “industry leader” in bedding, it’s Charlie Eitel. The longtime chairman and CEO of Simmons Bedding Co., Eitel also assumed the duties of company president last year following Gary Matthews’ resignation. In addition to his multiple roles at Simmons, he’s the chairman of bedding trade organization the International Sleep Products Association (ISPA).
Like other industry leaders, Eitel faces tough times ahead. While the bedding industry is expected to weather the storm of a down economy better than other sectors in the home furnishings business, Simmons still faces the same challenges every category currently does—consumers’ limited budgets, price cutting all around, and a wide variety of products competing for shoppers’ dollars.
Eitel spoke with Home Furnishings Business about his plans to grow Simmons’ business in such a climate, the company’s efforts to go green, and his vision for ISPA’s role in the industry’s future.
While furniture stores and furniture manufacturers currently report steep drops in sales, mattress sales have continued to grow. What can mattress manufacturers teach other furniture segments about creating demand?
One thing we did that’s very different: We have a just-in-time model and so you really don’t have to wait for mattresses. If you buy a product today, it will more than likely be delivered today or tomorrow, so the majority of domestic manufacturers have the ability to make the the order very quickly and get the product to the furniture dealer. Obviously, they get it straight to the consumer, so speed is one of the key items. The other factor is mattresses inherently are really a little bit more important, I think, to the consumer than furniture, because sleep’s more important than sitting. So I think it’s a production model and marketing model, and also we do a really good job at educating retail sales associates on the importance of a good night’s sleep.
It’s hard not to notice makers of foam and other bedding working to create a negative perception of inner-spring beds with phrases like “pressure points” or “an old bed with steel coils.” Has that created challenges for Simmons?
We acquired ComforPedic® last summer, which is the next generation of memory foam product. We also have a wonderful latex line called Natural Care™, so we want to make what our dealers, retailers and consumers want to buy. If it’s a wire bed, if it’s a latex bed, if it’s memory foam—we make it. If it’s a combination, a hybrid, which is really one of the hot new selling categories for us, we call it Beautyrest® Next Generation—and that product is flying off the floors. It’s a combination of the legacy of Simmons Pocketed Coil® with the next generation of memory foam. So Simmons doesn’t have any sort of campaign to protect steel. We’re on a campaign to provide retailers and consumers with what they want. I think we’re doing that better than anyone, in that we have everything, whatever they want, from an open-coil traditional inexpensive product all the way up to $7,000 beds in both memory foams and Beautyrest Black™ and combinations thereof.
Are people shifting to more reasonable bedding due to today’s economy?
Not necessarily. People who have money are spending it, and when they’re spending, they’re going to buy the best. So we’re faring very well in our premium segments. It’s actually the fastest-growing segment in our company, but there’s no question it’s kind of a high/low. I think you’re going to see a lot of people go low because of price, and you’ll see people who have money go high. It may be here in the middle that ends up a little bit more under pressure.
There’s a lot of talk lately about “green” furniture and bedding. What’s Simmons doing to be a part of this movement?
We’re rolling out our Natural Care™ line in coordination with Danny Seo, the environmentalist. I’d say it’s very important to not greenwash—that nobody claim they’re doing something they’re not. I’m personally very sensitive to that—to be sure whatever we say is completely true and it’s also not misleading. From there, it’s a marketing story, and it’s interesting, but that’s not the solution to green. Green is all about product design using all components from either recycled or upcycled products. The industry’s already doing a pretty good job with 100-percent recycled or upcycled steel, as well as with wood harvested from sustainable forests. Even the foam manufacturers, Future Foam being one, are doing some nice things with more environmentally responsible processes, so I think the industry is doing a pretty good job at the manufacturing level and now you’re going to see some of that flow through at retail—hopefully with nobody misleading the consumer.
Are you using your role as ISPA chairman to encourage bedding manufacturers to be more environmentally responsible?
Yes, I am. In fact, that’s really one of the three or four things that I’m really focused on—to help lead the industry to be more sustainable, and clearly the biggest problem is the back-end, where products are being taken out of people’s homes and sold to renovators who are illegally operating to sell bedding to the underground. So to me, worst-case, we’ve got to figure out a way to keep these products from being improperly sold downstream, and probably the easiest way to do it, even though it’s not the best way, is to pulverize them and then take that pulverized feedstock and try to do something with it—either use it for energy or some sort of a recycled product.
We’ve heard about the campaign ISPA is starting up along the lines of the “Got milk?” program. What can we expect from this project?
We’re in the early stages, and the problem is, where do you get the money? We held a summit in Florida in February this year, and we had nine major retailers attend, and every one of them thought it was a great idea and totally support trying to grow the industry, and to me that’s one of ISPA’s No. 1 roles. One of the ways you do that is to eliminate the obstacles, and toward that end, they all said “Yes, let’s go for a campaign,” but they don’t want to pay for it. So Simmons stepped up and said, “Look, here’s the deal: If 75 percent of the industry will follow us beginning next January, contributing $2 apiece for every foundation we sell into a fund, we’ll begin to build that fund for the campaign. The key is, you have to eliminate the majority of the free riders. No manufacturer can do this by themselves; it’s going to take at least 75 percent of the industry to fund it. If we can get the funding—and I’m optimistic that we will over time—then you’re correct, it would be a campaign much like “Got milk?” and we’ve actually retained the exact same person, Tom Nagle, to run the campaign. But we’re not developing it yet because we don’t have the commitment from the industry to do it, and it probably will take the balance of this year, if not longer, to get that commitment. But when we do, assuming we do the theme clearly, it will be a health and wellness campaign focused on the importance of a good night’s sleep, and I have tons of pieces of data that are just alarming about the number of automobile accidents caused by sleep deprivation, the health issues that are results of people not getting eight hours of sleep. So the campaign clearly will focus on the health and wellness benefits, much like “Got milk?” did. That’s the plan. It’s kind of slow-moving, but I’m going to stay in there and keep swinging and hopefully we can get it done.
Are you a sound sleeper?
Yes I am. I’m kind of obsessed with it. I sleep eight hours every night. I just go to bed early—that’s the key to it. If you don’t go to bed on time, you’re going to have a problem.
Do you constantly change mattresses at home to test out new models?
I do. Three to four times a year, I’m testing something new. A lot of our executives do that. It’s part of our own research—to be able to know what’s working.
If I need a mattress right now, there’s a mattress store on the corner, I could go to Costco or I could call an 800 number to have one delivered within a few hours. How does the Simmons brand fit within all of that? Could I or should I be able to buy a full range of Simmons products at any of those outlets?
No. First of all, a mattress is not a product that you buy over the phone, and it’s not a product that you take off the shelf. If you go to the grocery store and you want a particular product, you already know what it is—you’ve used it before. You’re just repeating a purchase that’s familiar to you. Unfortunately, with a mattress, for the average consumer it’s been over 10 years since they bought the last product, and the entire industry has changed, so you really need to be sold the product, And if you go to Costco, there’s nobody there to sell it. What are you going to do? It’s on its side and it’s a practical matter—it’s just a commodity. So if all you want is a mattress, you don’t care what it feels like, yeah, go to Costco. It’s fine, or if you want to buy something over the telephone, fine. But at the end of the day, our products need to be sold, and the three best ways to buy our product are through a department store, furniture store or speciality sleep shop. We spend millions and millions of dollars training people on how to sell our products, and not only to sell our products, but to sell period. And we believe we have the best stuff and that if we allocate our dollars to educate that person, they’re going to properly fit a consumer to what they really need.
I expect I’ll see an ad this weekend offering a Beautyrest® queen mattress for $399. Does that pose a problem from a consumer education standpoint for Simmons or the industry? I hope not. I think selling mattresses on price is a bad idea. That’s part of what we’re trying to do with this ISPA campaign—move away from price. There’s a segment of the population that has a very limited budget and they’re probably sleeping on a very old bed, and almost for sure a new bed—regardless of whose product it is—will help them sleep better, because over time mattresses do impress and there are all sorts of issues that occur because it’s a textile product that’s going to wear out over time. So a new mattress at any price is a good idea, but selling on price, and advertising on price, to me, is a bad idea and it’s a terrible habit this industry has gotten into. Frankly, I think we need to get out of it, and it’s just the way it is. But that $399 bed, you’d be surprised how seldom it’s sold, because once the consumer comes in, they’re really not going to buy a lot of product for $399. To get a really great product, you need to get up to close to a thousand dollars.
What can we expect to see in the future from Simmons?
So much of that’s dictated by us listening to our retailers and consumer focus groups. But for sure, everyone would tell you, I think, who knows anything about this business, that we have been innovators, whether you go back 100 years or eight years when I joined the company, or even right now with the Next Generation hybrid, we’ve been the innovator, and I think people look to us to be the innovator. But we don’t always innovate just to innovate. If you’re making a change to your product, you want to make sure it’s really improving people’s sleep and it’s not some gimmick. We’re not in the gimmick business. We don’t believe in inserting features into beds just for the heck of it. So I would say our product lines right now clearly are the most sound that they’ve ever been, and we are the fastest-growing bedding manufacturer in the country for sure. We gained the most share last year and we believe we gained the most share first quarter (of 2008). We think our product lines are sound, and that’s the reason we’re continuing to grow. We’ll keep tweaking it and keep listening and trying to find the next best right answer.
Besides trying out beds, how do you enjoy your spare time?
I like to be outdoors—golfing, boating, scuba diving, some fishing. I have a home in Florida. Being outside and being with my family—that’s about it.
(Thanks to Jo Fleischer for his contributions to this story.)
May 31,
2008 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on June 2008
It’s long been an axiom in the furniture industry that without good product, even the most famous of names can’t translate into retail sales for the many licensed collections that have popped up over the years.
Sometimes even a quality product isn’t enough if the furniture doesn’t fit a store’s price points, or the prices retailers and consumers expect too much from the vendor in question. Just ask Doug Bassett.
Bassett, executive vice president of Vaughan-Bassett Furniture remembers the hoopla surrounding the case goods manufacturer’s pairing a few years ago with an American icon, Elvis Presley.
In 2002, Vaughan-Bassett introduced its Elvis Presley line of licensed furniture to great fanfare. While the program garnered big media coverage and a lot of initial retail commitment, the furniture, though tied to a true American icon, didn’t fly on retail showroom floors.
“We describe that whole experience as a ‘glorious failure,’” Bassett said. “It was a failure in that the furniture didn’t retail and didn’t have the life cycle we expected. It was glorious in that it gave us the attention a company our size normally doesn’t receive, and it did bring people into our (dealers’) stores.”
“When we introduced it in High Point, we had 400 to 500 extra retailers in the showroom that normally didn’t shop us who didn’t buy Elvis but bought something.”
So what was the problem with the Elvis license? Product wasn’t the problem, Bassett recalled—it was price point.
The Presley collection elevated Vaughan-Bassett’s presence in the marketplace, as well.
“It was priced at retail above the comfort level of the key Elvis demographic that we targeted,” Bassett said. It also was at the top of Vaughan-Bassett’s own price range, too high for some of its retailers’ key price points with the manufacturer.
“What’s funny is that some of the most over-the-top pieces were the best sellers,” he added, noting that the “Burning Love” mirror, heart-shaped and decorated with musical notes, moved well at retail.
Despite the Presley collection’s demise, Vaughan-Bassett Executive Vice President Doug Bassett says that in retrospect, the company still would do it all over again, but with some adjustments. The key lesson for Vaughan-Bassett out of the Elvis Presley experience was to hit the company’s pricing sweet spot, and the company’s putting that to work in its new collaboration with Alexander Julian, who moved his license from Manchester to Vaughan-Bassett a couple of years after terminating a long run at Universal.
“We recognized the importance from a price standpoint of corresponding to the comfort level of our dealers and their customers,” Bassett said. “The advantage we have working with Alex is that we’re working with a designer, not just a famous name. We’re very good at manufacturing and logistics, while Alex and Meg (Julian’s wife) bring value to the table that’s very different from what we do well.”
“Alexander Julian Authentically American is priced smack in the middle of Vaughan-Bassett’s offerings.
“Unlike Elvis, this is in the heart of our existing lineup,” Bassett said. “We have 3,000 customers in our dealer base who can be comfortable with where we’re positioning Alexander Julian’s line.”
Making the Connection
Pricing isn’t the only factor beyond strong product that can make or break a license. Some licenses just don’t reflect the subject’s image enough in the mind of consumers whose interest might initially gravitate toward the name in question.
“The major mistake the factory makes with those collections is that a lot of the time, when you look at it you don’t really see a connection with (the license name), said Gerard Kvasnovsky, partner and buyer with Danker Furniture in Gaithersburg, Md., a middle to upper-end retailer with five locations. “When I think of (a celebrity) I have a picture in my mind, and I’m not convinced the factory always makes furniture with the person in mind.”
Collections such as Tommy Bahama and Nautica have done a good job making that link, Kvasnovsky said.
“Usually a consumer reacts to the visual appeal of a the collection, and if they have a name attached to it, that can attract some sales,” he continued. “Martha Stewart and her organization obviously get involved with what’s done with her collection (at Bernhardt). The advantage there is that she’s all about the home.”
Sometimes a license that works one place isn’t the right fit for another store. One that didn’t work out for Danker Furniture was the Eddie Bauer line from Lane.
“The name was good, but I found the collection very simplistic, and it didn’t fit in our store, our quality level,” Kvasnovsky recalled. “We’ve ended up buying very few (licensed collections). They often don’t work for the simple reason that the value isn’t there.”
Ken Loring remains unconvinced that a famous name really makes that much difference to consumers. Loring is president of Boston Interiors in Stoughton, Mass., which has six stores in the Boston area.
“We’ve traditionally overlooked opportunities for licensed collections,” he said. “The home furnishings consumer identifies more with the store than another name. Either they like it our they don’t.”
Loring did note that Kathy Ireland’s furniture collections have done well at Boston Interiors, but he doesn’t believe the name has all that much to do with its success at the store.
“It’s good value, good furniture, and that’s why our customers like it,” he said. “We’ve really had no big mistakes with licenses because we really don’t try to sell off a name.”
The Ideal Couple
Sometimes a long-running furniture license is as much a matter of good “philosophical” chemistry between vendor and licensor. Think Stickley and Colonial Williamsburg, or E.J. Victor and Newport.
“I think the issue is when the personality picks the wrong manufacturer, someone who doesn’t really fit the price level that’s appropriate for (the licensor),” said Chris Pelcher, vice president of Levin Furniture, a 12-store operation based in Smithton, Pa., that does well over $140 million in business a year. “I’ve seen some marriages that don’t work for the majority of people working in a traditional furniture store.”
And with the huge variety of price, design and market models at furniture retail, licensing isn’t a one-size-fits-all proposition.
“I know one thing that didn’t work out here was Antiques Road Show,” Pelcher said. “That was before my time here, but from what I’m told, it had good advertising support but just didn’t connect with our general public. On the flip side, one thing that’s working out very well is Better Homes and Gardens from Universal. It’s got great values and a lot of features and benefits, and the retails aren’t crazy for us on a four-piece bedroom or dining collection (under $3,000). There’s a lot of visible value like function and dovetailing. Some of the others are overpriced for the value.”
How does a license fit a store’s overall advertising strategy?
“We’re very intrigued by things like the Cindy Crawford line—our belief is that it’s good product and good value, and television advertising is why it works,” Pelcher said. “We’re thinking of whether we’re able to mix that into our advertising strategy. The Build-A-Bear youth program is doing well from what we’ve heard from other people. That’s a natural fit with the category.”
Finding the right vendor took a lot of time at Hearst Castle. Dallas Saunders is licensing representative for Hearst Castle Collection and is developing a variety of home furnishings categories tied to the California home of legendary publishing magnate William Randolph Hearst. A new furniture collection debuted at the April High Point Market with Habersham.
Second Marriages
It’s not Hearst Castle’s first foray into furniture. Retailers might remember around 10 years ago when Lane introduced a huge, but short-lived license with Hearst Castle. She wasn’t around for that group, and therefore didn’t want to comment much on it. Saunders likes the new collection’s chances because of a higher-end focus and an emphasis on adaptations of architectural and design themes throughout the property rather than near-reproductions of the furniture there.
“Lane was a mid-market product, and that level of design isn’t something that really relates to the property,” she said. “I chose to position (the new collection) very differently in the market. When you see a product line that’s successful now, like Kathy Ireland, it’s promoting a lifestyle. She’s been very successful at the mid-market.”
Saunders feared that taking a license such as Hearst to middle price points was the wrong move, and felt a smaller high-end manufacturer would give the program the attention it deserved.
“I felt that the mid-market wasn’t the right area,” she said. “I was afraid it would have a life of a couple of seasons. I looked at the furniture market, and it seemed the high-end was more stable for something like Hearst Castle. I chose to work with smaller manufacturers who’d take their time with us and design with quality so it would have a real impact for them as well.”
Habersham, not a huge vendor volume-wise in industry terms, is Hearst Castle’s largest company among home furnishings licenses.
Biltmore For Your Home, the home furnishings licensing arm of Biltmore Estate, the Asheville, N.C., mansion of George Vanderbilt, also had multiple marriages with furniture manufacturers. In the early 1990s, Drexel Heritage had a line with the estate. The license later moved to Craftique before working with a high-end collection through Habersham and a middle-price collection at Magnussen Home that debuted in 2004.
Tim Rosebrock, vice president and general manager of Biltmore for Your Home, said those earlier efforts failed through a combination of debuting early in Biltmore’s learning curve in developing licensed goods, but also from external factors.
“There were some similarities between what we did with Drexel and Craftique,” Rosebrock said. “Both launched at the tail end of a bull market, and for both companies, Biltmore was the most expensive line they’d ever made. With Craftique (a domestic producer), at the time we went to market with them, it was the same when Asian production and quality were on the rise. It was poor timing.”
Keeping It Real
Licensors look to authenticity, telling a story for successful furniture collections.
By Powell Slaughter
Sometimes finding your soul mate can take a couple of tries, and the same holds true for furniture licensors looking for the right manufacturing partner. As in marriage, licensing success demands ongoing adjustment and careful attention to both partners’ needs—maintaining authenticity for the licensor, and marketability for the licensee’s retail customers.
Biltmore Estate learned some tough lessons moving through vendor partners for its furniture line before teaming with Habersham at the high end and Magnussen Home at middle price points. And the work continues, said Tim Rosebrock, vice president and general manager of Biltmore For Your Home, the home furnishings licensing arm of Biltmore Estate, the Asheville, N.C., mansion of George Vanderbilt, and America’s largest private home.
External economic factors and industry devlopments played a role in the end of arlier collaborations with Drexel Heritage in the early 1990s and Craftique in 2000, but Rosebrock said part of the blame went to Biltmore itself.
“We’ve found that when a retailer has the tools provided to them for telling the story, and the expertise a licensor brings to that, can add upscale sales and higher-margin sales,” he said. “When a retailer has those things in hand it works.”
Biltmore could have done a better job in that regard—and still can when it comes to the furniture line. Rosebrock said the first Magnussen collection with Biltmore, Chateau (since replaced by Seven Oaks) is an example.
“Our relationship with Magnussen is evolving,” he said. “In 2004 we failed to create those tools for selling the brand like sales training and creating a presence in the store. As a result some of the independent retailers carrying the line did well, but some struggled. Right now we’re still evaluating those tools.”
The Biltmore brand has evidence of strong potential at retail, and its overall licensing business has grown 25 percent the past three years, Rosebrock said.
“We’ve recognized other consumer products where our brand is powerful,” he said. “We’re selling 160,000 cases of Biltmore wine every year in a highly competitive marketplace. Also, our direct-to-retail licenses with Belk department stores has done extremely well. (2 yo bedding, bath, tabletop, high performance cookware and cutlery) Our brand is their top tier private label. In our second year with them, we’ve already hit year-four projections.”
Biltmore’s applying those lessons in its furniture efforts.
“We’re changing our whole approach to furniture in the middle market,” Rosebrock noted. “We’ll add more tools for the retailer for sales support and merchandising,” adding in mid-May, “We’re with in three months of having an announcement of those changes. The model works, and we’re tweaking it.”
Hearst Castle, the California home of legendary publishing magnate William Randolph Hearst, unveiled a new high-end collection with Habersham at April High Point Market. A little more than 10 years ago, a collection at Lane, a mid-market vendor, didn’t last long, and this time there’s a better vendor fit in terms of price points, said Dallas Saunders, licensing representative for Hearst Castle Collection. She’s is developing a broad range of home furnishings categories for the estate. The key to the new furniture line is a focus on authentic adaptations of architectural and design elements found at Hearst Castle versus a lot of straight reproductions, or nearly identical recreations of the furniture.
“I’m an art director and have a fine arts background, and Hearst Castle is an amazing resource for furniture design interpretations,” she said.
Saunders noted that the film “Citizen Kane,” the late Orson Welles’ fictional take on William Randolph Hearst created an image of a bizarre collector who acquired things just for the sake of having them. The reality was that he worked hand in hand with Julia Morgan, the castle’s architect and designer.
“The truth is that he was a phenomenal art collector who really knew what he was doing,” she said. “He found a third-century bust that was a Roman road marker. Julia Morgan used it for lamp stands all over the estate. There are letters back and forth between Heart and Morgan discussing this type of thing.”
Habersham is producing the line the same way, she added. Breakfronts in the new collection, for example incorporate window frames from Hearst Castle.
“We wanted to work with people who want to go to the estate, see an element and turn it into something else,” Saunders said. “There isn’t a celebrity around to market this themselves, so there’s a need to keep the integrity of the collection in terms of what’s at the estate. The way we promote it is to educate the public about what’s there.”
At Biltmore, Rosebrock said he’s pleased with progress on the high-end segment of its furniture line.
“Our Habersham business will expand in October with a major collection that could include upholstery. That’s still in the works,” he said, noting, “The days when you could license out a name and just let the manufacturer run with it, and have it be sustainable, are over.”
May 29,
2008 by in UnCategorized
By Home Furnishings Business in High Point on May 2008
Lifestyle Enterprise has elected not to move ahead with a showroom expansion, and the City of High Point has agreed to buy back a 1.5-acre site the fast-growing importer purchased two years ago.
Lifestyle Managing Director James Riddle said Friday morning that the company determined that it has adequate showroom space in its Forbidden City Complex on Commerce Street and space it leases a block away in the Centennial Station building. The building would have signficiantly expanded the size of its Commerce Street Forbidden City complex, which has been a distinctive landmark that has attracted streams of buyers since it opened five years ago.
“We didn’t want to make a $20 million to $30 million investment in a new showroom right now,” Riddle said, adding that Lifestyle saw its sales rise significantly in 2007. “Obviously, the home furnishings business, overall, is in the pits, and I don’t see it getting a whole lot better any time soon.”
He said Lifestyle remains solidly committed to High Point, but noted it is one of 20 Markets worldwide where the company is an exhibitor. Riddle also said Lifestyle has no plans to add a showroom in Las Vegas “at this time.”
High Point City Manager Strib Boynton said the 2006 agreement to sell a municipal parking lot to Lifestyle included a provision that the city would buy the land back for the original purchase price of $1.6 million if Lifestyle opted not to move ahead.
“Whether Lifestyle continues to lease showroom space or build here is a business decision only they can make. We’re happy to have them here in High Point, and we’ll do all we can to support them,” Boynton said.
Boynton said Lifestyle has “changed the face of High Point with its Mini-Market in January that has opened showrooms to more buyers during another time of the year.”
Lifestyle began hosting its January event in High Point three years ago, and it draws upwards of 700 retailers to the city each year for a three-day event in which it offers special deals, entertainment and the chance for at least two retailers to drive home in luxury sports cars.
May 29,
2008 by in UnCategorized
By Home Furnishings Business in Bedroom on May 2008
Companies hoping to receive a share of duties collected in 2007 on wood bedroom furniture from China have until July 29 to get certified for collecting a portion of money collected on those goods by U.S. Customs and Border Protection.
According to an announcement from the U.S. Department of Commerce in Friday’s Federal Register, certifications and any other correspondence should be addressed to the Assistant Commissioner, Office of Finance, U.S. Customs and Border Protection, Revenue Division, Attention: Leigh Redelman, 6650 Telecom Drive Suite 100, Indianapolis, Ind. 46278. Any delivery by an express or courier service requiring a street address may be addressed to 6650 Telecom Dr., Suite 100, Indianapolis, Ind. 46278.
For general questions regarding preparation of certifications, contact Leigh Redelman, Revenue Division, (317) 614-4462. For questions regarding legal aspects, contact William G. Rosoff, Office of International Trade, Regulations and Rulings, (202) 572-8807.
Since the so-called “Byrd Amendment,” which provides for distribution of duties to domestic producers affected by a dumping case, has been repealed, only those duties collected before Oct. 1, 2007, will be distributed, after which such distributions will cease.
Domestic producers that are not on the U.S. International Trade Commission list of eligible companies list but believe they nonetheless are eligible for distribution of duties under it are required, as are all potential claimants that expressly appear on the list, to file their certification(s) within 60 days after publication of notice. Certifications that are not filed in a timely manner within the requisite 60 days will be summarily denied.
The USITC list of companies and organizations currently eligible for distribution of duties includes:
American Drew
American of Martinsville
Bassett Furniture Inds.
Bebe Furniture
Carolina Furniture Works
Carpenters Industrial Union Local 2093
Century Furniture Industries
Country Craft Furniture
Craftique
Crawford Furniture Mfg. Corp.
E.J. Victor Inc.
Forest Designs
Harden Furniture
Hart Furniture
Higdon Furniture Co.
IUE Industrial Division of CWA Local 82472
Johnston Tombigbee Furniture Mfg. Co.
Kincaid Furniture Co.
L & J G Stickley
Lea Industries
Michels & Co.
MJ Wood Products
Mobel
Modern Furniture Manufacturers
Moosehead Mfg.
Oakwood Interiors
O’Sullivan Industries
Pennsylvania House
Perdues
Sandberg Furniture Mfg. Co.
Stanley Furniture Co.
Statton Furniture Mfg.
T. Copeland & Sons
Teamsters, Chauffeurs, Warehousemen and Helpers Local 991
Tom Seely Furniture
UBC Southern Council of Industrial Workers Local Union 2305
United Steelworkers of America Local 193U
Vaughan Furniture Co.
Vaughan-Bassett Furniture Co.
Vermont Tubbs
Webb Furniture Enterprises Inc.