The American furniture store is changing. So will the way consumers shop for furniture.
Large, multiroomed furniture stores are giving way to small boutiques, mail-order suppliers, specialty retailers and chain stores. Consumers are finding recliners in a recliner store, 18th-Century reproductions in a gallery that carries nothing else and a variety of furniture through mail-order catalogs.
How we`ll shop for furniture is just one of several changes occurring in the American furniture industry. Others are:
– Mergers and acquisitions. Family owned and operated furniture companies are almost a thing of the past.
– Competition. Furniture imports reached nearly $3 billion in sales last year. American manufacturers had sales of $25.1 billion in 1986.
– Consumer awareness. The industry has been forced to improve quality, even at the low price range.
For consumers, the most obvious change is that their favorite department store is probably carrying less furniture than in the past. Furniture takes up a lot of space, requires inventory in a warehouse and doesn`t turn over fast. Department stores do better to devote the space to soft goods, such as clothing, that moves quickly.
The number of retail furniture stores in the United States has dropped from 24,000 in 1978 to 16,000 in 1986. According to officials at the Southern Furniture Market Center, the drop is due to a number of larger chain stores replacing small, family-owned businesses. Larger stores also are beginning to set up galleries within their showrooms for individual manufacturers who show goods in coordinated room settings.
And big companies are buying smaller ones. Kay Anderson, market researcher for Furniture Today, the weekly newspaper of the furniture industry, said merger activity has been so frantic it`s hard to keep accurate figures.
”In March, we reported the Top 10 manufacturers comprised 28 percent of U.S. shipments of furniture. Since that time, two of the Top 10 have gobbled up two others in the Top 10.”
OPTION EXPLOSION
All parts of the furniture industry are becoming more focused, and that includes the development of specialty stores,” said Charles M. Egan, executive vice president of Mohasco Corp., a furniture conglomerate. ”Such stores give consumers more selection. A recliner store offers 3,000 to 4,000 square feet of just recliners, whereas a department or furniture store might offer just four or five styles.”
Specialty stores also help the consumer make choices. ”The variety of styles and different price points available in furniture is truly mind-boggling,” Egan said. ”And that`s one of the problems. It`s very
difficult for consumers to have confidence in their own decisions. It creates anxiety to have so many choices. People want to deal with someone they can have confidence in. That`s why furniture galleries are catching on. Consumers want to buy a brand name they recognize.”
American consumers want and expect great variety in furniture. That`s what keeps the industry so labor intensive, said Don A. Hunziker, chairman of the board of Ladd Furniture. ”Though Europe is a leader in design, the furniture industry is not as labor intensive and there are not as many variations. Here consumers want something special. The attitude seems to be,
`If you have it, I don`t want it.` This is what has kept American manufacturers `job shop` labor intensive. You can make great quantities of furniture by automation, but consumers won`t accept it.”
It`s not only consumers who expect variety. Dealers and sales personnel also demand it.
”We have markets two times a year, twice as much as the auto industry,” said B.M. Brammer, vice president and treasurer of Bassett Furniture. ”We`re becoming a fashion industry with new models in the spring and fall.
”It`s crazy,” said Brammer. ”Big dealers want to see the furniture before the market to tell us what they need. They may say, `In our part of the country this bed won`t sell, or this finish won`t go.` Dealers actually dictate to the manufacturer. If the big dealers say they won`t buy, we`re dead. So we have to revise the design or refinish at the last minute in order to get the stuff to market.”
Manufacturers ”turn their line more than they want to,” added Hunziker. ”You may have a good pattern on a dealer`s floor, but salesmen get bored with it. They want something new.”
PRODUCT OVERLOAD
Nevertheless, some designs have remarkable staying power with dealers and consumers. American Drew`s Cherry Grove collection, for example, is 26 years old. And the Lorraine 6 collection by White Furniture of Mebane has been in production 36 years.
”We manufacturers tend to introduce more products than the market can absorb,” said Hal McAdams, vice president of marketing for White. ”One of the good things coming out of the merger of furniture companies is that we`ll be bringing out fewer new products, but we will market them better.”
Traditionally, the furniture industry was a father-son type of business. Companies stayed in the family, sometimes for generations. White Furniture of Mebane, N.C., for example, considered the oldest furniture manufacturer in the South, was owned by the White family for 104 years until it was bought by Hickory Furniture in 1985.
Because of the competition, a furniture company has to be big and diversified to stay healthy. That leaves small family-owned companies in the lurch.
”In the past, there were few public companies in the furniture industry,” said Hunziker, whose firm, Ladd, owns Lea, American Drew, Daystrom, Barclay, American of Martinsville and Clayton-Marcus. ”But companies are getting bigger and going public. Small companies have difficulty responding to mergers. It`s hard for a small company to spread its advertising dollar and thus to compete in the marketplace.”
Hunziker said he believes mergers can be beneficial to small companies if their holding company allows them to keep their identity and their name. Mergers also appear to be successful if the holding company is in the furnishings business itself.
Mohasco Corp. is a prime example. A carpet manufacturing company, Mohasco began acquiring furniture businesses in the 1960s. Now under the Mohasco umbrella are Stratford, Barcalounger, Trend Line, Avon, Peters-Revington, Chromcraft and Super Sagless, all with their own presidents and identity. A giant in the industry, Mohasco shipped $380 million worth of furniture in 1986.
According to Wheat, First Securities, a Richmond, Va., firm that monitors the furniture industry, the top company in terms of shipments is Intercom, which owns Broyhill and Ethan Allen among others, with an estimated $620 million in annual sales; followed by Bassett, $430 million; La-Z-Boy, $405 million; and Masco and Mohasco, both at $380 million.
A number of ”name brand” companies have been acquired or merged recently. Chicago-Pacific, a railroad company, bought Kittinger. Kohler, a bathroom and kitchen fixture firm, bought Baker. Masco, a major producer of kitchen and bathroom faucets and cabinets, bought Henredon and Drexel-Heritage.
FAMILY SUCCESS
Century Furniture of Hickory, N.C., is an example of a large, highly successful, family-owned company. It was founded by Harley F. Shuford Sr., 75- year-old chairman of the board, and is run by his children, Harley F.
”Buck” Jr., the president; Alex, head of the upholstery branch; and Nancy S. Garrison, vice president of advertising and public relations. Another son, Pope, runs Shuford Mills, the original family business, which was bought from cousins. Century has seven plants, 1,500 employees and a diversified line including antique reproductions, contemporary case goods and upholstery. Century produces such fine 18th-Century English reproductions, in fact, that they are in demand in England. Harrods in London devotes a gallery to Century furniture.
”It`s a challenge to keep a family business today,” said Buck Shuford, 49. ”The furniture business is a relatively easy transition from father to son, but it`s hard to make the transition to the third generation. A company can be splintered among too many offspring. For example, there are 13 grandchildren in our family.”
Furniture imports also have forced companies to diversify. According to Furniture Today, imports reached $3 billion during the latter part of 1986.
”The latest figures dash the hopes of American furniture manufacturers who thought that the second-quarter decline signaled an ebbing of the import tide in the wake of the lower value of the dollar,” the newspaper said.
Because labor is so cheap in the Orient, a great deal of furniture can be produced and sold cheaply. The biggest competition has been in occasional and dining tables. Because most furniture from the Orient is assembled by the customer (often called knockdown furniture), tables are the easiest to ship. This forced a lot of American manufacturers out of tables and into bedroom furniture. Now there`s more competition in bedroom furniture.
”This is a world economy and there is strong competition from the Orient,” Hunziker said. ”We`re going to have to be efficient manufacturers and marketers. Ladd buys certain components overseas and mixes them with our own. We use the Orient as an opportunity as opposed to a threat. Our basic premise is that we`re going to be successful.”
The competition from the Far East is felt on the assembly line as well as at the conference table. Jim Crawford, personnel manager at a Bassett case goods plant, says he reminds his 450 employees that they must produce quality furniture in order to compete with the imports. ”I preach quality; if we don`t achieve it, we will work ourselves out of a job,” he said.
However, the ”existing Oriental manufacturer may have a new challenge developing from the Communist Chinese, who have their own timber supplies,”
writes W.W. Epperson Jr., senior vice president of Wheat, First Securities, in its long-term forecast for the furniture industry. ”More challenges are coming from unlikely areas such as Mexico, Thailand, Brazil and even Europe, including Yugoslavia.”
DOG EAT DOG
Family tradition, along with the fact that the American furniture industry is headquartered in the South, has given it a folksy feeling.
But impressions can be deceiving.
”High Point is Old Home Week,” said B.M. Brammer, vice president and treasurer of Bassett Furniture, during an interview at the Bassett plant in Bassett, Va. ”Everyone knows everyone else. They`re huggin` and kissin`, but the minute they get out of the cocktail party, they`re knifing each other in the back. When the competition goes under, we all clap, or we will try to buy it for a few cents on the dollar. If there`s a bankruptcy, we will cheer and make a ridiculous offer.
”It`s a highly competitive business,” he added. ”It`s too costly to build new plants, so anytime we can pick up a bargain, we`ll buy and remodel.” –
