ITEM: Wickes Furniture of Wheeling, IL, is asking suppliers to agree to let the retailer defer payments of what it owes each of them until July 2009.
ITEM: Levitz Furniture of New York, NY, recently filed for bankruptcy for the third time in 10 years. Levitz was the largest U.S. furniture retailer in the mid-1990s and now operates approximately 75 stores.
ITEM: Bombay Furniture of Fort Worth, TX, is closing all 384 U.S. furniture and home accessory stores in accordance with its Chapter 11 bankruptcy plan. Gordon Brothers Retail Partners and Hilco Merchant Resources recently purchased Bombay’s business operations at an auction and are in the process of liquidating all of the retailer’s assets.
ITEM: Furniture Brands Intl of St. Louis, MO, announced plans to close about half of the 44 stores it owns, Lane and Broyhill retail outlets will likely be affected most.
No doubt, the housing crunch has chilled most retailers’ sales. Judging from these and other recent industry news items, though, it seems to have made the business climate particularly frigid for residential furniture retailers.
This leads me to wonder, does anyone make money selling furniture?
Over the last two decades we have watched the domestic home furniture manufacturing industry steadily erode to a shell of its former self in the face of ever-mounting imports. That erosion accelerated with the emergence of China as a manufacturing juggernaut in the mid-1990s.
Over the last 10 years, dozens upon dozens of U.S. and Canadian manufacturing plants have closed their doors and tens of thousands of furniture jobs have been lost in the process. Some manufacturers went out of business because they could not compete with the attractive prices offered by Chinese manufacturers. Many others closed their plants in favor of having their products manufactured overseas. While U.S. furniture companies looked to sell their off-shore-made wares to domestic retailers, many of the national retailers began importing furniture direct. The turf war got ugly in 2004 when a group of U.S. manufacturers and retailers butted heads over the antidumping petition against Chinese wood bedroom furniture manufacturers.
Conventional wisdom would have us believe that selling Chinese-made furniture, benefited by ultra-low employee wages and relaxed environmental standards, would be a recipe for big profits. Yet, Bombay and Levitz, two of the biggest importers of furniture, struggled to profit from the sale of off-shore-sourced products. Meanwhile, Furniture Brands, which continues to pursue a blending strategy of domestic production and imports, is reorganizing its operations in hopes of improving its financial performance.
I’m sure there are exceptions to the rule – IKEA springs to mind – but even in better economic times, too many major furniture retailers have gotten tangled in the hype of sale prices and easy credit, rather than value and aesthetics.
Maybe it’s just a matter of time before a major Chinese furniture manufacturer opens a national retail furniture store chain here and proves or disproves my rhetorical query.
(Not to go out on the limb with a prediction, but La-Z-Boy sold the Pennsylvania House name to Universal Furniture, a Chinese company, last year. Wouldn’t that be an ironic twist if the Pennsylvania House name rebounded on store signs across the USA at some future date?)
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