March 15,
2007 by in UnCategorized 
By Home Furnishings Business in Upholstery on March 2007
The number of customers using Thomasville Furniture’s online upholstery design tools—which provide images of custom configured upholstery products—has increased 1,100 percent after the company switched to new technology that’s easier to use and produces higher-quality images more quickly, according to an announcement by Scene7, the technology provider.
Prior to switching to the technology by Novato, Calif.-based Scene7, Thomasville used an upholstery design system in stores and online that took up to three minutes to produce a rendering.
“Since launching with Scene7, the feedback from our customers and the stores has been overwhelmingly positive,” said Eric Tessau, ebusiness manager at Thomasville. “The stores are able to get better quality renderings more easy, and much more quickly.”
With Thomasville’s previous solution, new color and fabric options had to be loaded into the system at stores with CDs that were sometimes out of date by the time they arrived. With the new system, the updates can be processed in real-time. Also, photo-quality printouts make it easy for customers to create and print designs at home. Those designs are easy to transform into orders when shoppers bring the printouts into a store, officials said. The company’s 150 independently owned Thomasville Home Furnishings stores and 400 dealers provide up to 800 fabric options and 200 leather options.
March 15,
2007 by in UnCategorized
By Home Furnishings Business in High Point on March 2007
Lifestyle retailer Room & Board and the Union Square Showroom Building in High Point are putting their money behind the Sustainable Furniture Council’s High Point Market kick-off party.
The Minneapolis-based retailer is a founding member of the council, and the owner of Union Square is a supporter of the council.
The party is set for Monday, March 26 at 6 p.m. in the South Cone showroom at the Union Square Building. The event is open to all market-goers with food, beverage, live music by West End Mambo and dancing until 10 p.m.
Steve Gretzinger, World Wildlife Fund’s Global Forest Trade Network coordinator for Latin America, will make a presentation at 7:30 p.m.
Other events surrounding the emerging interest in eco-friendly furniture including Merchandise Mart Properties’ GREENStyle Pavilion at the Suites at Market Square.
The Sustainable Furniture Council, Merchandise Mart Properties, the High Point Market Authority and Furniture/Today have partnered to bring Danny Seo, an environmental lifestyle guru, author and radio and television host, to the market. Attendees will have the opportunity to meet Seo at a party Thursday, March 29 at 6 p.m. in the Market Square Courtyard. Seo will be signing copies of his Simply Green books.
March 14,
2007 by in UnCategorized
By Home Furnishings Business in High Point on March 2007
Tom Mitchell is senior vice president for showroom and trade-show manager Merchandise Mart Properties Inc.’s High Point operations. MMPI didn’t invest in the market until almost eight years ago, but since then has not only established itself as a major showroom resource, but also helped lead the way in making the High Point Market a friendlier place for buyers. Mitchell and MMPI brought a team mentality to a town and a market that had long been strong on parochial interests. A major player in civic, regional and state efforts to promote High Point’s raison d’etre as far as the furniture industry goes, Mitchell sat down last month with Home Furnishings Business to talk about MMPI’s approach to showroom management, and how that relates to High Point Market as a whole.
After a pretty late start in terms of High Point Market history, Merchandise Mart Properties Inc. is the second-largest manager of showroom space in town. As a powerful but relatively new player in High Point, what has MMPI offered in terms of vision for the High Point market, and how do you think its suggestions have been received?
It’s fair to say our vision is to grow and improve the market, and we’ve certainly grown the market in terms of space with the Suites (at Market Square) and Plaza Suites to now manage 2 million square feet here; and we’ve grown attendance by marketing to buyers in hundreds of new ways.
But building consensus and leadership are key, too. You can’t effectively lead if you’re not a team player, so what’s good for the market as a whole is good for MMPI.
You know we’re one of the largest trade-show producers in the country. I have about 25 years in the business, and Chris (Kennedy, MMPI president) has about 20 years ... Our team has a lot of experience.
We’ve led the way in forming and funding the High Point Market Authority. When we first came to High Point, Chris and I went to see Bruce (Miller, who at the time headed the International Home Furnishings Center) one day. We just wanted to be good neighbors. We pretty much said, “This is a great show, and we see an opportunity to grow this.” ... The High Point Market Authority grew from that conversation.
I remember going to the (North Carolina) general assembly, and it was the craziest speech I think I’ve given. I said, “I’m actually here to ask your permission to let us tax ourselves to fund (the Authority).”
We’ve engaged the community and region on the importance of the market and making visitors feel welcome.
We’ve been creative in marketing from name entertainment—we’re the ones who brought in the Neville Brothers—to go-anywhere vans to building a buyer service team whose sole responsibility is accommodating buyers’ needs.
We keep our costs low for our exhibitors—no one likes being nickeled and dimed.
Our staff is trained regularly on customer service—no one ever says, “That’s not my job.” If you do, you’re fired. If you’re working on our loading dock and you take a tip, you’re fired.
We’re out visiting every major show in the world, at every industry event, out meeting customers and speaking with them directly. No one’s more fully engaged.
We’ve been here a little over eight years and feel we’ve had significant impact in terms of the future strength of the market and a focus on growth and improvement; and never being satisfied, because you can always improve.
At the recent Las Vegas Market, officials there went on record as saying they want to be the “dominant market” in the home furnishings industry. In your opinion, what must High Point do to keep that from happening?
Our job is to continue to provide value.
For buyers, that means having the most resources in all categories and prices in one place at one time—that’s efficiency. For exhibitors, that means delivering the most buyers for the lowest exhibit cost. At an average of $15 to $20 per square foot, no other market can compete with that cost/benefit ratio. It’s a question of where will you find the most buyers for the lowest price.
But it also means perceived value—while the Market Authority has reduced hotel and rental car rates, we’re constantly negotiating for more.
There’s a more important, deeper answer, and that’s that High Point is clearly the home of the (furniture) industry. There are more industry companies headquartered here, more sales and marketing offices, more product designers; more fabric, finish and hardware companies; more photography studios, more freight lines and distribution centers. The trade press is all here. The industry associations are all headquartered here.
More commitments are made every day. Baker moves to North Carolina, Lifestyle (Enterprise) invests more than $1.5 million in land to build a new showroom, Legacy Classic’s new headquarters, La-Z-Boy’s new offices.
That’s a reflection of the city’s and the state’s commitment to the industry, because they both understand the market’s $1 billion annual economic impact.
And, did you know that furniture companies own over 60 percent of showroom real estate in High Point? That’s a statement of commitment.
What did you think of the recent headline in the High Point Enterprise telling its readership that the threat to High Point Market was lessening?
We’re aware of other markets and know their strengths and weaknesses, whether they’re in Shanghai or Cologne. Competition is a healthy thing, and we’re very focused.
Looking at MMPI as a whole, how important is the aspect of residential trade shows to its overall business?
That was the foundation of the Merchandise Mart in 1945 when Joseph P. Kennedy bought the building (in Chicago) from Marshall Fields—that’s over 50 years ago—and residential furniture was what we put in there.
Between High Point, New York, Chicago, Washington, D.C., Boston and Los Angeles, over half of the 8 million square feet we own and manage is dedicated to residential furniture. You bet it’s important, and no one’s more committed nationally than MMPI.
We believe we do more marketing for our exhibitors than any other space. Say an exhibitor has 300 accounts and 200 come visit them at High Point. You tell me who the 100 you don’t see are, and give me their rep’s name, and we’ll put those in a matrix with our top 25 exhibitors to get them on the phone. We offered that to 100 exhibitors last market.
We aren’t out there saying, “I’ve got this box I want to rent.”
It’s a question of who are you trying to sell, who are you selling today, and who do you want to sell five years from now.
We’re asking how can we really help you do business the way you want, not “Here are the keys, have a nice day, and see you in five years when the lease comes up.”
What do you see as the key to MMPI’s success in the competition for attracting exhibitors in High Point?
Contributing to the success of the market as a whole is the key, but we set pretty high standards, and we strive to have the very best exhibitors; the friendliest, most knowledgeable staff; the best food service and the closest free parking.
All the components of a successful mall—that’s the best analogy I could make. You need the best anchor tenants, the best in-line tenants, and a place that’s well-lit and secure. It must be a pleasant place to go shop and spend your money. You do all that, you’ll have a successful operation. We believe we have the nicest buildings in town.
We spend a lot of time, money and effort every market on being prepared. What happened last market that went wrong, and what do we do to fix it?
What are the new and fresh things we can do to make it better? Whether its the American Furniture Walk of Fame or a fresh new buyers’ lounge where we can greet customers or let them just take it easy after a long day.
It might be going across the street (from Market Square) and buying a property, tearing down an ice house and putting up a sign that says “Free Buyer Parking.”
We prepare intently for each market and always try to do more for our customers. You have a meeting with 35 people, because wee need to have feedback from the loading dock, security, everyone involved. We maintain a staff of 35 year-round, and hire and additional 75 for market.
And so far, that strategy has paid off.
What’s MMPI’s ratio of permanent to temporary space in High Point, and is that ratio satisfactory to the company? If not, how are you addressing the issue?
We have the most diverse spaces in the market, not only in terms of location, but also temporary versus permanent space, and price point.
All our locations in High Point are focused on a different customer base—Market Square draws a lot of high-end business, Plaza Suites (exhibitors) might be looking for container business, while Hamilton Market, with the exception of Master Design, which has the whole second floor, has a designer orientation.
About 85 percent of our space is in permanent showrooms, and 15 percent in temporary space. Of that temporary space, the Showtime fabric fair is the only other trade show we handle here besides High Point market. The exhibitors on the top floor of the Suites at Market Square have to move out for that, but on the other levels, the tenants aren’t affected.
You asked earlier how important the residential furniture industry is to us—it’s important enough that we aren’t going after other tradeshow business for the bulk of our temporary space. Those temporary exhibitors who don’t have to move (for Showtime), around 90 percent, can customize their own space to a much greater extent, and they can leave their product there. All they have to do market to market is just move the old and new goods in and out. That’s an economic advantage for exhibitors and a tremendous marketing advantage for us.
Most of our temporary exhibitors can tell customers, “I’m not going to get bounced around, so come back and see me right here next market.”
What do you do for fun outside running a showroom management business?
Since I’m away from my family all week, I spend most of my free time with them. But I enjoy being outdoors—camping, hiking, golf. HFB
March 14,
2007 by in UnCategorized
By Home Furnishings Business in Advertising on March 2007
For furniture stores right now, one of great unanswered questions is just how much consumer spending is being lost to new rivals such as Costco, Target and TJ Maxx, all of which are dramatically expanding their home offerings.
Among analysts who track the sales figures, estimates on how much of the $83.1 billion industry furniture stores still control ranges widely from nearly 75 percent to 52 percent. What virtually all observers agree on is that furniture stores are steadily losing ground as Costco, Sam’s Club, Wal-Mart and Staples each have seen revenues in the category approach or exceed $1 billion annually.
Those trends are worrying, especially for smaller furniture stores, as the warehouse clubs and other multi-category retailers continue to add stores and increase space devoted to furniture. Even Kroger grocery stores are getting into the game by adding furniture departments to the chain’s new, large-format Kroger Marketplace stores.
“More Concerned About Direct Competitors”
With all those trends in mind, it’s surprising that many of the veteran furniture retailers interviewed for this story say they spend little time worrying about the $399 leather recliners and $469 name-brand mattresses on sale at warehouse clubs. “Companies like Costco and Wal-Mart are tremendous retailers, so you have to be aware of what they do, but (warehouse clubs) have not really had much an affect on us,” said Rooms To Go President and CEO Jeff Seaman. “We’re more concerned about the direct competitors we face in every one of the markets we’re in.”
Issaquah, Wash.-based Costco located one of its first stores near Lewiston, Idaho, more than 15 years ago. At Folletts Furniture, less than a half-mile from the warehouse club, General Manager Greg Follett judges Costco as his biggest rival in the small market. “There’s not a major furniture brand that is not represented in (Costco) anymore. It has affected (sales). It just flat-out has,” he said. “The only way to compete against those kind of (discounters) is to continually highlight what you do that they don’t. You have to be more specialized, focus more on special orders, have a larger selection and provide honest-to-God service.”
He said Folletts also tries to avoid brands or products that Costco carries. Folletts long ago dropped Sealy—which has a major presence in Costco stores. At the time, he said shoppers would stop in to ask Follett’s bedding sales associates questions about mattresses they’d been eying at Costco. A Sealy spokesman did not respond to questions from
Home Furnishings Business.
Impulse Furniture Purchases
Britt Beemer, chairman of America’s Research Group, a market research firm specializing in furniture, said, “Furniture retailers don’t see that customer, because there’s no cross-shopping. Our research shows that only about 12 percent of consumers who bought furniture in a warehouse store also shopped at a traditional furniture store... It’s all impulse shopping. They’re spur-of-the-moment purchases, just like any of us who go into a warehouse club and end up buying lots of things we hadn’t planned on.”
An analysis by Retail Forward, Columbus, Ohio, last year found that warehouse clubs like Costco and Sam’s Club accounted for more than 8 percent of U.S. furniture sales in 2005—up from near zero in 1999. Meanwhile, furniture stores accounted for 52 percent total industry sales, a steep decline from just five years earlier when furniture store market share totaled 62 percent, according to the research and consulting firm. “I would not attribute all of the decline to warehouse clubs,” said Retail Forward Senior Consultant Nick McCoy. “What’s happening, in my opinion, is that large furniture (chains), discount stores and warehouse clubs are really hurting the small furniture stores. They’re the ones who are really struggling to compete.”
Retail Forward’s analysis of market share shows far greater gains by warehouse clubs and other non-traditional rivals than other industry researchers. For example, Mann, Armistead & Epperson cites U.S. Commerce Department figures in stating that furniture stores account for about 75 percent of all furniture sales, with warehouse clubs taking about 2.8 percent of the market.
More Billion-Dollar Players
McCoy said Retail Forward’s figures put a heavy emphasis on published estimates that furniture sales at Costco and Sam’s Club total nearly $1 billion each. In addition, Wal-Mart’s furniture departments are a $2 billion-a-year business, and office specialists like Office Depot and Staples are both nearing $1 billion in furniture. Added together, McCoy said, those mass merchants—plus department stores, catalogers and others—are taking a substantial share of the $83.1 billion consumers spend on furniture each year.
That impact is growing, especially in the warehouse club sector. Costco, with 48.5 million members in the U.S., expects to add 33 stores in 2007, and the 49-million-member Sam’s Club expects to add up to 30 locations in the coming year.
Analyst Jerry Epperson, Mann, Armistead & Epperson’s managing director, said the warehouse clubs often feature lower prices on some furniture products. “The last time we looked at it, they had add-on margins of about 18 percent to 20 percent, and the average furniture store (has) add-on margins of 41 percent. But, for the warehouse clubs, those (18 percent) margins are among the best of any category they sell.”
Still, he said traditional retailers have plenty of weapons against warehouse clubs that offer extremely limited selections, delivery options and little service.
At Breuners Arizona in Scottsdale, General Manager Tom Daley said warehouse clubs can be strong in select categories like leather upholstery, but added, “Overall, I don’t think (they are) a major factor against our business where we’re positioned... They’ll bring an item in and it will be there for six weeks or until they run out. There are not a lot of things they carry on a year-round basis.”
He said the Phoenix area is filled with discount-oriented furniture sellers, including Razzmatazz, which specializes in higher-end closeouts. “You always have to watch it. If there are products being offered at stores that don’t offer the service we do, we’ll avoid those lines and those products. With most of them, it’s all sales final, no service, but you have to justify to the customer why your price is higher. You can justify it, but I don’t know if the customer really cares at that point.”
Taking “Half A Loaf”
At Glendale, Calif.-based mattress specialist Sit ‘N Sleep, which has 16 locations, President Larry Miller said he has essentially blunted the impact of warehouse clubs with ads that promise to beat any competitor’s price. “We meet or beat their prices. So, we take a few short deals and we take that customer out of the market, but it’s better than losing a customer for life,” he said. “It’s better to have half a loaf than none.”
He said some customers will always gravitate to the discounters. “It’s really not an issue for us. We have 150 beds, and they have four. Some people are going to go to Sam’s or Costco, but that’s the commodotized part of the market. I don’t see it as a threat for the upper-end bedding at all.”
Beemer said warehouse clubs are being filled with more and more brand-name merchandise. In some cases, manufacturers need to find new outlets to replace retail accounts that have shifted to private-label goods. In addition, he said, “the manufacturers that sell to the warehouse clubs are not getting as much flak from furniture retailers as they did five years ago. They’ve just quit fighting it.”
Retail Forward’s McCoy said changing fashion tastes may also be boosting mass market stores. “Consumer preferences seem to be shifting more to stylish, less expensive furniture that can be replaced more often as tastes change and away from so-called heirloom furniture... I think some of the smaller furniture stores are kind of locked into a particular type of (traditional) product.” HFB