Daily News Archive
Brought to you by Home Furnishings Business
January 31,
2007 by in UnCategorized 
By Home Furnishings Business in Accessories on February 2007
Retailers like Robb & Stucky and Ethan Allen have become synonymous with fine merchandising, beautiful displays and deftly selected accessories.
Yet, merchandising experts say there is also a lot to learn from lower-end and mid-level furniture stores that have successfully jumped into the accessories category in recent years. They want to reclaim accessory sales from lifestyle retailers and discounters like Target and Costco that are emphasizing sharply priced designs for the home.
Enter one of the five Jerome’s stores in San Diego, for example, and you’ll be surrounded by richly accessorized vignettes in which the rugs, the lamps and even the bed coverings are all for sale. “When you go into a clothing store to buy a suit, you’re almost always going to come out with a tie, a belt and some socks, too,” says Jerome’s President Ann Navarra. “That’s the type of thing we’re trying to do with our accessories. The primary reason is to make the furniture look that much better, but, in the bargain, you can increase the size of sales tickets, too.”
In Denver, accessories now account for about 7 percent of sales at American Furniture Warehouse, or double the percentage of a few years ago. “The reason our stores look so nice is because of all the accessories,” said Jake Jabs, CEO of the 11-store chain. “We’re also telling our sales people to really push the accessories because customers might think their new furniture looks pretty sparse when they get it home, especially if it’s a living room group.”
Shopping Every Few Months
Versus Twice A Decade
Ashley President and CEO Todd Wanek says his company’s focus on accessories for Ashley dealers and HomeStores is aimed a bringing in customers much more frequently. He said the effort began six years ago. “The average consumer shops for home accessories four times a year, but they typically shop for furniture only once every five to seven years. You have to find ways to get the customer into the store and get them excited about the fashion items and help them discover the furniture, so they’ll buy that, too,” he said.
Ashley’s approach is evident in the sales circulars of its network of HomeStores. In December, the ads featured $19 chenille blankets, $149 area rugs and a $69 pair of lamps. “I think our industry was the primary shopping destination for those types of products 20 or 30 years ago, but now people think of different types of stores for those items,” he said, naming lifestyle stores and Linens ‘n Things as examples.
There are no industrywide figures on accessory sales, but experts say accessories have typically accounted for about 3 percent of total sales in furniture stores—and reach far higher at retailers like Ethan Allen that have long had a strong emphasis on the category.
Frustration Rising As Other Channels Capture Sales
Many retailers have long been frustrated when “customers come into a furniture store to buy case goods, but then walk down the street to buy accessories at Crate & Barrel,” said Steve Crowder, president and CEO of Decorize, which provides sets of accessories to match furniture collections at retailers like Rooms To Go and manufacturers like Broyhill. “You’re seeing more and more (retailers) trying to jump into the accessories category and for some of them it will be too late. It’s just a huge learning curve, and they’re going to have to teach their sales people to sell accessories versus case goods. Some of them will get it, but some will miss the opportunity.”
Crowder believes small retailers, in particular, have difficulty selling accessories because they don’t have inventory control systems capable of tracking the sales of hundreds of accessory items, making it difficult to accurately reorder fast-moving products and clear out slow-movers.
Martin Roberts, president of Grid2, a store design and display firm, said he frequently sees furniture stores that are struggling with the accessories category. Their showrooms are typically overcrowded with accessories and displays are cluttered with items that are ill-suited to the collections they’re supposed to complement. “It’s difficult to do well” in the accessories category, Roberts said. “The ones who do it well are able to create displays that change with the seasons throughout the year.”
Accessories are so important that retailers like HOM Furniture in Minneapolis and Costco Home’s stores in Washington and Arizona have dedicated store-within-a-store displays to the category.
Expectations Increasing
Designer Connie Post, whose firm specializes in store displays and merchandising, says shoppers have higher expectations after years of exposure to displays they see in catalogs and stores of lifestyle chains like Pottery Barn and Crate & Barrel. “Gone are the days when you could just line the furniture up as a commodity,” Post said. “What consumers really want are solutions to (design) problems. Lifestyle retailers have done a great job of creating whole-room vignettes and that’s the kind of approach shoppers want to see.”
One factor that’s making it easier for retailers to deliver richer displays is that importers are offering buyers a huge variety of products at ever-lower price points. “They are providing good accessory designs at really affordable prices. The lines have blurred to the point that (lower-end) retailers can create really great looks,” Post said.
In the past, the tendency of some retailers has been to dress up lower-priced furniture with high-priced accessories. That created mismatches in which a $300 lamp was displayed on a $299 table. Today, the emphasis is on seeking out a $79 lamp that is a perfect complement to the $299 table.
Is This For Sale?
Because shoppers have become accustomed to seeing high-priced props in store displays, many are not comfortable buying items like wall art in a traditional furniture store. “The shoppers don’t like taking accessories off a dining table, because they think it’s a prop,” Wanek said. “It’s a challenge for the industry: How do we create a clean display so the shopper is comfortable taking the product out of the store? We have to figure out ways to display these items better.”
Earlier this year, Ashley introduced a set of boxed tabletop accessories that included vases, a dish and bowls in a single package. Ashley is also having success with bed-in-a-bag packages, including sets that were recently advertised for $199, which is less than comparable sets generally sell for in major department stores.
Navarra said Jerome’s has also had a lot of success with top-of-the-bed packages, and adds that the pillow-and-comforter sets also help sell bedrooms. “The better dressed the beds are, the better they sell. I think (top-of-the-bed packages) are becoming more and more popular with our customers because, like so many things that are made offshore now, the styling and the quality is so much better than it was even two or three years ago.”
Better Pricing
Jabs said accessories in American Furniture Warehouse stores are priced below virtually all local competitors. After noticing local decorators and designers buying accessory items, American Furniture Warehouse began offering a 5 percent discount to design professionals. He said more than 1,000 designers and decorators have signed up for the program.
To simplify the accessories category, major manufacturers have started to sell matched sets of products to make buying easier and reduce the need for retailers to investigate all of the hundreds of accessories showrooms in High Point in Las Vegas.
Broyhill Furniture introduced a program called Broyhill Home Collections that give dealers access to more than 1,200 products on the company’s Web site. All of the products were designed especially for Broyhill collections over the past two years, said Deborah Blackburn, director of the manufacturer’s Home Solutions Program. In the past, Broyhill, like most manufacturers, steered retailers to preferred accessories vendors, but developed a new approach to enable retailers to order via the Web and receive orders within a few days.
A Big Commitment
Merchandising experts say many retailers hesitate to jump into the accessories category because adding hundreds—if not thousands—of SKUs is a daunting commitment. Many have experimented in the past, and have gotten caught with inventory that didn’t move. “You can buy a lot of dogs that just sit there,” Wanek said, adding that stores have to invest in skilled designers who can manage the category. “It’s a big investment out the outset, but as I look at opportunities, this is a major opportunity for all retailers in home furnishings. We have to figure out how to get back some the business we’ve given to other retail channels.”
January 31,
2007 by in UnCategorized
By Home Furnishings Business in Las Vegas on February 2007
After three decades in top roles at several high-profile home furnishings companies, Harvey Dondero left North Carolina in September for his hometown, Las Vegas, to take on a highly visible role as the chief executive officer of the World Market Center. As the former CEO of both Universal and Broyhill, he is intimately familiar with the project from an exhibitor’s perspective. He also came into the job with experience in a variety of home furnishings categories, having started his career with Wedgwood and serving as the CEO of Maitland-Smith in the late ‘90s.
Now, back home in Las Vegas, Dondero says he’s enjoying his latest challenge and is pleased his first market will be a major celebration as the World Market Center unveils a new 300-tenant structure, Building B, with a series of special events.
After just over three months in the new job, how are you enjoying the move from manufacturing to overseeing the World Market Center?
It’s fun. It gives me a different perspective on the industry, having been in the manufacturing part for so long. You get a little ... isolated is, I guess, the right word. Now, I’m getting to know a lot of different companies, and it’s fun getting to know so many more people from a different angle. It’s a challenge, and I’m learning a lot. There are parts of this industry that I’ve never been exposed to as deeply as I am now. Not just the (market) part of it, but also construction, real estate and so on.
With the opening of Building B and its space for 300 tenants at this market, how will it change the market experience for attendees?
As our ad says, ‘B is for Bigger.’ It will be a much bigger show. We’ve been extremely successful so far with the one building, the Pavilions and the temporary part of our show. And, now, we’re more than doubling that in the permanent part, and the building is beautiful. If you haven’t had the opportunity to see it yet, it’s absolutely fantastic and, along with the original building, serves as sort of our monument dedicated to the furniture industry. I think attendees will also enjoy seeing the fact that Building C is also coming out of the ground now and so is our parking structure. With all of those things happening, there is going to be a lot of energy and excitement associated with this show.
As an exhibitor at the World Market Center from the beginning, did you come to the job with thoughts on any challenges the World Market Center may face when it comes to meeting the needs of its tenants?
From the beginning, I agreed with the vision and the strategic intent of the World Market Center and opportunity it has. Otherwise, I wouldn’t be here. I’m here to drive that vision, and, as far as recognizing that there are things to be changed, the answer is that that’s minimal. We’re focused mainly on making things even better ... It’s such an easy market to shop, and it’s efficient and effective for the buyers. Speaking as a (former) exhibitor, you are assured that all the buyers at this market will pass in front of your showroom, so I think what the World Market Center offers is just a fantastic opportunity to do business and be very effective.
When you came on board, you talked about how the World Market Center is much more than a building. What did you mean by that?
The World Market Center wants to be the destination for the home furnishings industry, and that’s really what we’re looking at. There’s more than bricks and mortar here. The bricks and mortar are very important, and they give us the opportunity to facilitate change in the industry. We see ourselves as being able to offer vast resources and a lot more to the industry than other shows are able to do because of who we are and where we are, and we see that as an important aspect to our business.
There are competing markets here in the United States, but do growing markets in China and other countries in Asia have the potential to attract buyers away from Las Vegas? We’re the most vibrant market, and we present something here to the trade that I don’t think people in other countries can. It’s been tried in the past to have markets in other countries, but they end up being very local markets. It depends on your perspective of the U.S. market, but this is a very special place and (Las Vegas) is where a lot of that commerce is going to be done.
As the World Market Center gets bigger and adds a third building, does its increased size create more challenges or benefits?
It’s a very good question. I think the answer is benefits. The buildout size is going to be eight buildings, and, as we build more buildings, it will all be under one roof. As you enter our complex, you won’t have to go outside again to shop. We integrated the benefits of what we’re doing into the construction model, so as we get larger, it actually gets easier in a sense to shop more showrooms. It’s like a city, and as the city grows, the neighborhoods become more well-defined and easier to shop. If you’re a category shopper, that becomes easier. The ability to be able to see everything—and not miss anything—is very important to any buyer, and our infrastructure makes that very easy.
What spurred the World Market Center to expand the hours of its shuttle system and make other improvements that were announced recently?
We’re in a constant research mode with our attendees, so we’re getting feedback all the time on how to improve and how to get better. We’re not just working to improve on what we have, but focus on what our attendees really want. Our objective is always to provide what the buyers want and, by extension, address what the exhibitors and tenants want, as well. We’ve introduced a continuous improvement process to our market, and when it comes to creating a more effective shuttle system, it really helps to be able to tie into the great infrastructure that Las Vegas already has to make going back and forth as seamless as possible.
How are you going to celebrate the opening of Building B at this market?
Well, B is going to stand for Bombastic when it comes to that. We have a very exciting opening party planned with very big-name entertainers and lots of entertainment. We’re going to open up all 15 floors of Building B and have parties on every floor, as well as parties in the courtyard and parties in Building A. We’re just going to try to entertain as many people in the industry as we can, and, hopefully, all the thousands and thousands and thousands of people in our industry who come to Las Vegas are all going to enjoy the party. It’s one of our small gifts back to the industry. HFB
January 31,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on February 2007
With furniture stores at low and middle price points fine-tuning their merchandising for the entire home, the challenge to high-end retailers looking to separate themselves from the pack has never been greater. Customers walking into, say, a Bassett Furniture Direct or Ashley HomeStore location will find an array of top-of-bed, lamps, wall art and other items to complete a room’s look that are on par, if not in scale and price but in scope, with the total merchandising schemes that have long defined more upscale retailers.
“By middle price points addressing accessories more successfully, it forces the high end to do better, and that’s how it’s affecting us here,” said Jim Gabbert, Chairman and Chief Executive Officer of Gabberts Furniture & Design Studio in Minneapolis. “We’re not in the position or mindset to advertise lamps to sell more lamps, for instance, but we make sure the lamps we do carry are consistent in style and quality to the rest of the components that go into a particular home’s look.”
Accents and furniture with big impact for not so much money are available to the masses through value-price-point retailers who spend heavy dollars on high-impact television advertising, and that has raised expectations for total-home service across all demographics.
“The problem for high-end retailers is that you can find things like high-thread-count sheets at places like Target these days,” said Todd Banik, vice president of merchandising at Treasures in San Diego. “I look at what’s going on at the lower-end price points to make sure we’re distinguishing ourselves. You need table lamps that aren’t seen at the local lighting store. ... It has to provide some kind of value.”
Austin, Texas-based Louis Shanks uses the same approach it takes for furniture—high-impact, one-of-a-kind items—to create a total merchandising package that tells consumers they haven’t walked into McDonald’s.
“We’ve gone with a lot of larger, higher-impact accessories, because that’s what will look right next to, say, Henredon furniture,” said Mike Forwood, president of the company’s five high-end stores in Austin, Houston and San Antonio. “We have a 60-by-90-inch picture from John Richards, for example. That makes customers stop and take notice. People want that type of thing, but they often don’t know where to buy it.”
What’s Your Culture?
At Fort Myers, Fla.-based Robb & Stucky, nobody walking through the door will think they’re anywhere but a place they’ll find the best, and merchandising is a key, along with customer service and a cadre of floor personnel who know their business.
“Our advertising communicates with the customer to reinforce this culture,” said Claire Goldhagen, upholstery merchandising manager at Robb & Stucky, which has 12 locations in Florida, Texas and Arizona. “So even if our store architecture differs by market, our message is consistent.”
The high end is all about better fabrics, better finishes and better woods than what customers will find at lower price points.
“The average consumer doesn’t know everything that goes in a sofa, but they do know when what they see is better,” Treasures’ Banik said, adding that high-end floor schemes go beyond the actual product for sale. “We merchandise with more expensive, high-end greenery. You’ll see ficus trees at all the discount stores, and we just don’t go there.”
The visual-impact factor reigns supreme when it comes to Louis Shanks’ merchandising.
“I want to have something that, when the customer walks by, they stop in their tracks and say, ‘Wow!’ We’re very big on those jewelry items that are unique and that set us apart from the basic furniture store,” Forwood said, pointing to Theodore Alexander as the type of vendor that helps him achieve that goal. Shanks’ TA business jumped 78 percent last year.
“It’s all about design, and you have Paul Maitland-Smith there designing product,” he said. “You go into their showroom at market and feel like a kid in a candy store. It’s that kind of product that sets you apart.”
Gabbert paraphrased Hickory Chair’s president, Jay Reardon, to describe how the high end can set itself apart at the retail level.
“Options unused are simply overhead. What the vendors and retailers both have to do is a better job of representing the options the product presents,” Gabbert said. “You have to talk about what’s available in terms of finish on wood, and fabric or arm shapes on upholstery. Delivering the total look is much more complex than in the past. Customer expectations are so much higher.”
Goldhagen at Robb & Stucky said making the shopping experience pleasurable and educational, while striving to meet affluent customers’ emotional needs, is the merchandising key at higher price points.
“High-end retailers must offer the sales/design expertise, as well as consistent customer service satisfaction to establish customer loyalty to their store brand,” she said.
Measuring Performance
The upper price-point retailer serving one market faces a different set of performance measures than one serving a single area.
“Our measures at R&S are very specific and focused to our targeted markets—Florida, Arizona, Texas and soon Las Vegas, Nevada,” Goldhagen said. “We utilize store merchandise managers and visual managers to give us feedback about the trends, sales opportunities and creative input that will separate R&S assortments from others. In addition, the corporate merchants are visible in the stores getting feedback from our sales/design staff. They are the closest connection to the consumer’s wants and desires.”
Robb & Stucky, of course, uses as much market-exclusive product as possible.
“We certainly look at turns and profit margins, and we keep track of it by price points and vendors, and if we see a certain category getting hot will increase that mix,” said Shanks’ Forwood. “It’s a constant balancing game. Everybody has chased the prices down, and there’s so much out there that looks the same. We’re chasing our prices even higher.”
For Louis Shanks, that meant the installation of a 7,500-square-foot design center in one of its Houston stores in order to target premium price points with vendors such as E.J. Victor and Guy Chaddock.
Beyond sales and gross margin, speed of delivery is a key metric at Gabberts these days, particularly when a special order is involved, and the reliability of vendor information relating to orders.
“If the manufacturer says it will ship in four weeks, it needs to ship in four weeks—five weeks won’t cut it anymore,” Gabbert said. “We’re selecting those vendors who are reliable and accurate. Who’s delivering consistent quality when it comes to special orders? If a product doesn’t come in right, the vendor says they’ll take care of it, but it’s at the expense of the customer’s time. A product on the floor at the high end represents not only its collection, but also the reputation of the vendor.”
Where to Improve?
Are there furniture or accessory categories underserved at the high end of furniture retailing, or particular opportunities that more stores catering to the upscale market could better address?
That’s an easy question for Shanks’ Forwood.
“Our single biggest area of growth is fine designer accent pieces–it doesn’t have to be a collection, per se, but rather standalone items that really make an impact in the customer’s home, and in the store,” he said. “It doesn’t cost a lot of money to develop those lines—if a vendor brings out 50, and 25 don’t fly, you can churn it to get the right mix.”
Accessories and fine accents are a big winner at Robb & Stucky as well.
“Our accessory departments have accelerated the selection for unique, high-end and exclusive product,” Goldhagen said. “The Gift Boutique offers the luxury customer a selection of the best domestic and imported tabletop, and top of the bed of the finest quality. The Boutique at R&S presents to the customer the newest and most exciting accessories not otherwise available.”
Robb & Stucky also has seen dramatic growth in its leather business through establishing an assortment of non-promotional product.
“To become the ‘headquarter’ store, we concentrate on domestic and imported sources with unique styling and upscale leathers exclusive in our markets,” Goldhagen said.
Casual dining needs more attention at upper price points, said Banik at Treasures.
“Unfortunately when you think of casual dining, you typically think about lower price-point vendors,” he said. “It’s a hard category to shop, and I think it’s a category that high-end manufacturers tend to ignore.”
“Our job is to help our customers create a beautiful home, and it has to be founded in the relationships, trust and talent we have in helping them to do that,” Gabbert said. “Merchandising helps that by giving the interior designer or decorator what they need to put together the total solution. What about window treatments and bed fashions? What about paints and wall coverings? We’ll never get into appliances such as faucets, but there are people who do that well, and we can partner up with them. There are plenty of areas we can address that way.”
January 31,
2007 by in UnCategorized
By Home Furnishings Business in Case Goods on February 2007
It’s too early to tell whether any of the technological breakthroughs unveiled during January’s Consumer Electronics Show (CES) will one day rival past CES intros such as the VCR (1970), the camcorder (1981) or DVD movies (1996).
As soon as CES opened its doors on Jan. 8, the products that generated the most excitement were new flat-screen TVs that have grown to enormous proportions—with screen sizes of up to 108 inches on one SUV-sized, $70,000 set by Sharp. At the same time, industry observers were voicing concerns that intense competition between rivals like Best Buy and Circuit City is pushing down the prices and profit margins for hot-selling TV technologies, including plasma and LCD sets.
According to the Consumer Electronics Association, more than 13.5 million flat-panel TVs were sold in 2006, and retailers can expect to sell more than 20 million LCD and plasma screens this year. Many of the dozen or so furniture manufacturers and importers in Las Vegas for CES say those numbers represent big opportunities since nearly 70 percent of entertainment furniture purchases are prompted by a new TV purchase.
The situation has electronics retailers looking to furniture as a promising source of add-on margins. “If you go to an electronics chain to buy a $3,000 television and a $300 stand, that retailer is getting nearly the same amount of margin (in dollars) on the TV that they get on the (furniture),” said Jeff Morris, a spokesman for Minneapolis-based Sanus Systems, which sells to big-box electronics stores and specialty audio-video dealers.
Bush Industries, a long-time CES exhibitor based in Jamestown, N.Y., gave up its spot at the Las Vegas Convention Center and instead worked to attract electronics dealers to its permanent furniture showroom in the World Market Center. James Schmidt II, vice president of sales, said the move was successful both in lowering the company’s exhibiting costs and allowing for more focused meetings without all the distractions of the CES show.
In light of the dramatic price cuts on flat-screen TV technologies in recent months, Schmidt said electronics dealers were receptive to Bush’s message that add-on furniture purchases can help recapture lost profits. “The message is, ‘Getting attachment (or add-on) sales on the furniture that has higher margins is a strategy for how you’re going to achieve higher margins,’” he said.
As a result, big-box dealers are starting to stock higher-priced furniture costing over $499, which has long been a top price point in those stores, according to several manufacturers at CES. In addition, big-box retailers that typically favored ready-to-assemble furniture are adding more fully assembled pieces and are seeking to provide more stylish wood cabinets.
Competition Heats Up
Increasingly, the offerings at electronics stores are starting to rival those of traditional furniture stores. At Martin Furniture, which was exhibiting at CES for the first time, Vice President of Sales Karl Eulberg said, “The consumer is confused about where to go because at the consumer electronics stores, the furniture is really sharp and contemporary, and the furniture stores have the lifestyle looks they want in entertainment furniture, but the function is not state-of-the-art.”
Gil Martin, the company’s owner, said he opted to exhibit at CES for the first time to reach the companies that supply furniture to electronics stores and to learn about emerging technologies. “Getting the cabinet right with all of the latest features and functions is our main goal, and I think we’re learning a lot from the electronics dealers who face those consumers every day.”
In both electronics and furniture stores, there’s also been a shift away from large five-piece entertainment walls in favor of one-piece TV consoles that can easily house today’s TVs, which are both narrower and lighter than older technologies. Since the smaller TV stands typically cost far less, traditional furniture retailers have been fighting an erosion in sales-per-square-foot figures in their home entertainment departments, Eulberg said. To help retailers battle that trend, Martin was showing TV stands in a stacked formation that shows shoppers more choices without taking up more floor space—and boosting sales-per-square-foot figures as a result.
At Bush, Schmidt said traditional furniture retailers need to fight to “communicate to the customer that you have entertainment furniture that’s relevant to today’s technology. A lot of (furniture retailers) still have armories that are designed for old-format TVs” that are much more square and heavier than new wide-screen TVs.
Pointing to the company’s best-selling TV stand, Schmidt said traditional furniture stores face challenges in selling it because it can easily be mistaken for a coffee table when it’s not displayed with a TV on top. As a result, Bush created its own prop TVs and, over the past year, has built a gallery program called E-Zone. More than 50 retailers now have E-Zone galleries devoted to top-selling entertainment and furniture products, including consoles that are specially designed for the latest videogame consoles.
At the same time, electronics specialists like Sanus and Bell’O are developing more casegoods with designs that hold appeal for the Pottery Barn customer, but are “engineered to appeal to serious audiophiles” with features that included advanced heat dissipation to protect expensive amplifiers and other components, said Morris, the Sanus spokesman.
January 28,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on January 2007
Contemporary retailer Design Within Reach has received another extension for filing its quarterly report for the third quarter ended Sept. 30.
The Nasdaq Listing Qualifications Panel has extended the company’s deadline to Feb. 20. If the retailer is unable to meet the deadline, the panel will delist Design Within Reach’s stock.
Last year, the retailer was told it was subject to delisting if it did not file its report for the second quarter ended July 1, 2006, as well as any other restatements, by Jan. 15.
Design Within Reach met the deadline for filing the second quarter results.
The retailer said the late filing of its third quarter results is because of the “substantial commitment of personnel and other resources that were necessary to complete the reconciliation of a previously announced unreconciled difference between the company’s accrued inventory sub-ledger and general ledger and to finalize” its filing for the second quarter.