American home furnishing manufacturers and retailers and have degenerated into world champion complainers because it is far easier to complain than it is to innovate for change. The only change our industry has seen for the past 15 years is change for the worse. The majority of North American retailers have been followers who gave tacit consent to the manufacturers to write a prescription for suicide for both manufacturing and retail sales. The NHFA, which is the only national organization that really binds American furniture retailers together, never addressed the present situation as it came down the road because it was too invested in selling services and getting support from the manufacturers. Neither the retailers nor the NHFA came up with creative solutions to the gathering storm of troubles. The AHFA (American Home Furnishings Alliance) has done nothing for the manufacturers.
Before the Internet Age, the manufacturer movement to support North Carolina direct shippers at the expense of independent retailers across the country was never seriously stymied by any consequential banding together of retailers to the disgrace of the NHFA. The traditional fabric of distribution was being destroyed long before the Internet became problematical. How many out-of-business retailers can you remember that have been buried since Johnny Blackwelder started the direct ship movement (only to be buried himself)? But direct ship is old news and Furnitureland South is its final triumph. In the Philadelphia trading area that I live in, which encompasses Philadelphia, southeastern Pennsylvania, Delaware and southeastern New Jersey, more than 193 furniture retailers have gone out of business in the recent decades according to a count given to me by a surviving road rep friend of mine.
Now we are in a situation where over half the retailers who were doing business 15 years ago are forgotten names, no matter how venerable they might have been. I would venture a guess that there presently is more manufacturing capability nationally than there is retail floor space to support or sell it. We might even be able to say at this moment that there is more manufacturer wholesale furniture showroom space than retail furniture showroom space. How does that make sense? Small and mid size retailers are quickly becoming relics of the past. Many large chains of furniture retailers like Levitz have all but disappeared. Big box chain retailers like Target, the Internet, and alternative retailers like Wal-Mart, Big Lots, going out of business sale liquidators, your local grocery chain and Home Depot etc. are bottom feeding by scooping up pieces of what is still viable. We even have a chain of furniture stores called The Dump.
Welcome to the Dump
The concept of naming a regional retail chain of furniture stores The Dump is interesting because it so exquisitely
exemplifies the furniture retailing Armageddon we are floundering in. Furniture manufacturers became lovesick with low- priced Asian manufacturing costs. They became drunk with cheap Asian carving costs. They gave the buying public indigestion with over-embellished, over scaled-merchandise believing buyers might think they were getting more bang for their buck. They traded our industry’s fashion image in for a commodity image at price points where there was no bottom to price.
The original entrepreneurs who founded the industry began to exit the business by selling their companies in the early 1970s because of death taxes. The industry conglomeration that resulted brought in hordes of interchangeable part bureaucrats from outside the industry, who either never really understood the business, or never bothered to
learn the business once they came into it. When the older entrepreneurial management with furniture in its bone
marrow departed to retirement, the industry was left with outsider decision makers. We all remember the Masco Fiasco which eviscerated so many of our finest companies like Henredon. The North Carolina bean counter controlling management of the industry moved their companies from being product driven to becoming totally production and price
driven. They believed they could sell more if what they sold could cost less. They also believed that offshoring production would obtain higher profit margins for themselves. The mistake U.S. furniture manufacturers consistently made was to be willing to spend capital on production and not on product development. They completely forgot that furniture was a fashion business. They all but shut down domestic casegoods production in favor of Asian production. Upholstery and bedding have been fast on the heels of case goods.
Production over design
As a result our product offering became more and more vanilla because Chinese factories were not capable of
producing the subtle distinguishing details and finishes that so enriched the U.S.-made furniture. China itself had no
historically recent tradition of furniture consumption because furniture as it existed in China had only been for a privileged few. So how could its manufacturing culture comprehend what it might be missing? At the outset the Chinese just wanted to be contract manufacturers. Their new million plus square foot plus plants had to make large production runs to be profitable. As a result, every product decision had to be a winner. Decision makers could not experiment with new ideas as they might have in the past. Gone were the days of retailer sampling and testing. Suddenly all decisions were large
container full buying decisions. The end result was that everyone was copying what everyone else was doing that had already proved itself. The decision makers were also driven by their bonuses for each quarter’s figures. No new product
design approaches which could create new markets rather than follow market trends were allowed to be born.
The upshot of no new product advances for a sustained period of time was that the market became a sea of
boring, flavorless Chinese brown. There were no companies left that understood the ultimate consequences of placing the emphasis on the production of the goods rather than the design and function of the goods. Furniture no longer was
considered a fashion industry by the industry decision makers. This was why branding suddenly became so important. Branding was just a panacea for lack of product development creativity. For the furniture industry, branding truly
became the emperor’s new clothes saga. What so-called designer name, dead personality or exotic place that you know ever brought anything new to our industry? Certainly not Pierre Cardin, Ralph Lauren, Martha Stewart, Kathy Ireland, Humphrey Bogart or Bahamas Whatever Retreat. They brought guilt by association value by sticking their names with chewing gum on our products. For the most part they just recycled designs from grandmother’s attic and gave us poor interpretations of Art Deco and Mid Century Modern.
Furniture has not increased its share of disposable income for decades now. Cheap Asian prices reduced our product to the commodity level. The public no longer sees any real long term intrinsic value in home furnishings. So why shouldn’t they be happy with spending less on furniture? Our parents and generations before them had a concept of heirloom
furniture which could be passed on to their children. None of the new “Generation Whatever’s” today can even conceive of what that means. Our parents were excited by new designs which they felt could better define who they were by making their interiors more adequately reflect their personalities and aspirations.
The final reduction of our product to its lowest level of value was for the creative minds that started The Dump to actually name their business, The Dump. The Dump buys overstocks and showroom samples from many higher end manufacturers. It can afford to sell them for very low prices while still making a reasonable profit margin. The Dump’s theme song is
the ultimate devaluation of home furnishings: “Come to the Dump, to the Dump, to the Dump, Dump, Dump.” While I
applaud them for their originality, I shudder to think how their successfully wide spread advertising totally devalues every other retailer’s product offering, to say nothing about the entire home furnishings industry itself.
The definitively final disaster is that while that we have cut the costs of home furnishings by 33 to 50 percent, we
forgot to realize that we could not increase our customer population by 33 to 50 percent each year. So we now are faced with having to sell 33 percent to 50 percent more units to keep even with last year’s dollar volume.
In the end this fifteen year journey has been an exercise in futility. Since all of you retailers have bought into this insanity by supporting the manufacturing debacle, you have been complicit in your own demise. Your stores are filled with over scaled, non-ergonomic, dark Asian brown/coffee/black/beige, masculine, boring, uninteresting merchandise that no
one can get excited about spending money on. Large flat screened TV’s are sexier and more prestigious to own. You may not even be old enough to remember what well designed furniture that inspired buying looked or felt like. You are still
screaming no, no, no and we are in the midst of the worst economic Repression any of you have seen in your retailing careers.
You are hardly equipped to come up with creative solutions singularly on your own. What are you going to do to save
yourselves? Are you ready to step forward out of the little boxes of your businesses and become the forces behind
a Furniture Retailers’ Saving Remnants Club?
You who are left are the remnants of a once vital retail/manufacturing sector. If you do not act together beyond your own
individual businesses to save yourselves, you will not survive another five years. Your business share will be handed on a silver platter to large and often foreign conglomerates because you will have chosen to do nothing to defend yourselves. Many of those big companies will be Chinese because all the money will have migrated to China. Now that China is evolving from an OEM to a proprietary product mentality, China will have the cash to buy up U.S. retailers and manufacturers, which will be available at bargain basement prices. Can you look at yourselves in the mirror tomorrow morning and really
believe that you will be around much longer if you do not change?
I could suggest that the NHFA should directly address this as an opportunity to establish some true value to save its own
future and that of the industry it represents. But the NHFA is in North Carolina and North Carolina has been the most complicit state in the union causing the demise of one of its most important industries, furniture -- to say nothing about its textile industry.
So I find it hard to imagine that creativity would come from that corner of conservative, unimaginative thinking. And for those pundits who will angrily repudiate what I have been saying by shouting about cheaper labor and unfair
competition, I have this to say. The Asian manufacturers have huge modern plants on one floor with the latest
machinery. We in the U.S. have not built a one million square foot plant on one floor let alone a five million square foot plant on one floor with the latest machinery in one fell swoop in the entire history of our industry. Labor is only a fraction of the cost. The real cost competition that exists is that the Chinese factories for furniture are like the Japanese factories for cars in the U.S. and elsewhere. They are more up to date and very easy to set up for changing designs very quickly in comparison to U.S. manufacturers. We did not reinvest in our industry. We fell into the same trap as steel, glass, porcelain, textiles and floor covering before us. Not reinvesting and reinventing ourselves was the death knell decision.
Retailers need to network
You retailers need to start a forum to actively, daily network through. How often do you network with other similar dealers across the country in the course of a week? When was the last time you picked up a phone to personally talk with a dealer locally or far from you who could give you some insight into a problem you could not solve?
Furniture First is about the only decent sized buying group left in the U.S. that is tailored for small to mid-sized independent retailers. It can only take in so many members from a region and sadly its product offerings are as pedestrian as the rest of the market is. Have any of you thought about starting a new alternative buying/alternative marketing group, which would create its own product that would go counter to the market with fresh exciting design approaches? I say
counter market because following the market, which everyone is currently “lemming-doing”, is accomplishing absolutely nothing to create new business or make consumers want to part with precious Depression dollars for furniture.
If you stay with your present product mix you will continue to bore your customers into spending less and less with you because:
--It has no eye candy.
--It has no aesthetic “must have” feeling and gives no sense of status or pride.
--It completely ignores the physiology of one third of the female decision makers who have shorter legs and arms than the rest of the population, who would be called petites in a clothing store.
--It is uncomfortable ergonomically whether you are 5’5” or 6’2” tall.
--It is too large scaled to fit into or get delivered into a large percentage of living spaces.
Is no one hearing the buying public complain that all the stores have the same look and they are bored with
what they see? Certainly you manufacturers have not heard that or reacted to counter the problem. Instead of investing in
product design and creation you are running to D.C. to lobby for tariffs on Chinese made furniture, Cobra problems and unionization problems. It has not occurred to you that the whole paradigm has shifted and your responses are to a
market that no longer exists.
A time of great economic tribulation like our current moment is also a time of great opportunity if one knows how to take advantage of it. All your business models will have to be jettisoned or greatly modified for survival.
For factory management which might be reading this article, you need to overcome the fact that there is not enough retail space left to support you. There are some very creative solutions to give you additional showroom space to retail your merchandise. However the solutions are maverick solutions and will require you to recreate your business models. Your product is out of sync with the times. It has no passion to make customers want to part with money to own it. What new approaches can you come up with? Can you see the advantage of bringing production back to the U.S. based on the business realities of the past 18 months which have redefined the distribution patterns and abilities? At the moment not one US manufacturer has taken advantage of the phenomenal marketing opportunities staring them in the face. Buyers do not want to have to have their capital floating on containers and loading up their warehouses under these economic conditions. What is it about U.S. furniture manufacturing executives that anchors them so much to the past that they would rather resignedly watch their businesses die than rebirth their businesses for survival?
Business as usual will only make fodder for those GOB guys -- you know them -- they are the ones with the big expensive ads at the back of every Furniture Today issue. These are our undertakers who dispose of both manufacturers and retailers. You will need the company and ideas of the other Saving Remnants to discuss and come up with business strategies to rebirth yourselves. It could start with discussion group on LinkedIn or it could be a special section of an industry web site or some new approach could be created. Whatever it is, it will need some seminal leaders who have a strong desire to survive and truly understand that united in purpose you can prevail while divided you may as well call yourselves dinosaurs as soon as you decide not to participate. The landscape of the home furnishings industry will look totally different in five years.
I, for one, am open for discussion and welcome any constructive pioneers to the round table who are willing to volunteer for rebirthing for survival. I have lots of new concepts and business strategies to enact with both retailers and manufacturers. I only need home furnishings business people with vision, energy, open minds and drive to survive to share
them with. Are you ready to sign up for The Saving Remnants Club?
Robert W. Mark, Chadds Ford, PA [email protected], 610-388-2090
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