Panel: Industry must use its strengths
By Clint Engel -- Furniture Today, February 23, 2004
GREENSBORO, N.C. — GREENSBORO, N.C. — Panel of industry specialists has seen the enemy and it's not Wal-Mart or Costco or even China.
It's ourselves — when we come to work but leave our passion at home, when we forget that it's all about the consumer, when we fixate on price and when we don't take advantage of better business models.
These were some of the points made by eight industry experts on a panel at the 2004 Carolinas Industrial Woodworking Expo here last week. The topic was "Furniture's Future in the Retail Revolution," and a key message was that the industry needs to correct its inefficiencies while honing in on what it does best.
"We think it's necessary for retailers to wake up and realize what their strengths and weaknesses are," said Jerry Epperson, managing director of Mann, Armistead & Epperson and the panel's moderator.
It's not price, he said. Wal-Mart will always have the lowest recliner price, but those recliners may only come in two colors. Conventional furniture stores, meanwhile, have the advantage in selection and service, yet "all they talk about is price."
Urs Buehlmann, assistant professor at North Carolina State University, echoed Epperson, noting that survival hinges on a company's uniqueness, or ability to offer something that others cannot, which doesn't necessarily mean the product itself.
"There will always be someone who beats you on price," he said.
Nevertheless "promotional powerhouses" such as Rooms To Go and Value City and "Herculeans" like-Mart and Costco are two commodity-priced concepts among six retail types that former Wickes CEO John Klein identified as winning formulas today.
Retailers need not be low-cost providers, he added. Many focus on demonstrating strong values and providing display excitement, which he said is emerging as a key strategy for some stores.
Without directly mentioning the antidumping and the import-related price deflation issues facing the industry, Klein said imports are here to stay.
"Our furniture industry today is an international business, and there's no getting away from that," he said. He believes that in the next 10 years, the industry will see foreign manufacturers or investors partnering with U.S. retailers through equity stakes in the in the retail businesses — something Wickes once tried with Taiwan's Master Home — and outright purchase of U.S. retailers by foreign companies.
Momentum also will continue to build for vertical integration at both retailers and manufacturers, said panelists Klein, Epperson and Steve DeHaan, executive vice president of the National Home Furnishings Assn. The reason: as retailers continue to import directly or devote space to store-brand lines they source themselves, manufacturers will defend by controlling their own selling space.
A couple panelists pointed what they called inefficiencies and backwardness of the industry.
Art Raymond of A.G. Raymond and Co. said the "value chain is broken" and needs an overhaul. He said the industry should start with consumers' dreams in mind, "helping create a beautiful home."
The industry should focus on customization, because consumers are willing to pay more for it, and it needs to think about speed in delivery, he said.
Raymond also urged the industry to "cooperate up and down the value chain," and noted that the "furniture civil war" over the antidumping issue is not the best example of this kind of cooperation.
Ultimately, the homeowner doesn't much care about where her furniture comes from or which channel of distribution sells it to her, said Mary Frye, president of the Home Furnishing International Assn.
"We need to limit the amount of time we spend thinking about how we've always done it, with whom we've always done it, and concentrate on doing our part to make furniture a desired, accessible, indispensable part of people's lives," she said.
