Not long ago, Rowe Furniture's future looked bleak and irreversible.
The 61-year-old Elliston, Va.-based custom upholstery manufacturer struggled with the installation of an enterprise resource planning (ERP) system, which delayed deliveries and weakened customer confidence. At the same time, its sister company Storehouse Furniture suffered financial difficulties. Subsequently, parent Rowe Companies filed for Chapter 11 bankruptcy in September 2006.
"The combination of the challenges the two companies were facing at the same moment in time is what caused the ultimate problems for our parent company," says Stefanie Lucas, president and CEO of what is now called Rowe Fine Furniture.
A year later, Rowe Companies and Storehouse Furniture no longer exist, but new ownership and other significant changes have enabled Rowe to again fulfill its mission to "provide the best quality custom upholstered furniture, delivered in about 30 days."
Business at the October High Point Market served as a gauge for the turnaround. "We had a very good market," Lucas says. "We were up double digits over the year prior."
Rowe Furniture's woes started three years ago with the decision to install an ERP system from SAP. "It was very, very challenging for us," says Lucas. "We had system problems that took us about six months to smooth out. The problems hurt our delivery times, and we're a company that has been built on delivering quickly."
Rowe didn't foresee all the support requirements and other complications it faced with the new system. "We're a small company to be using the kind of ERP system that we're using," Lucas says, "and you feel the pain more when you're not a huge, layered organization."
The ERP system is running fine now, Lucas says. Despite the problems, she believes it was the right decision. "For a company our size to be running a system like that is really quite state of the art, and we're thrilled with the system as a great business tool for us," she says. "It gives us a competitive edge."
While Rowe Furniture worked on fixing its delivery problems, other changes were taking place. The Poplar Bluff, Mo., manufacturing plant was closed and consolidated into the existing Elliston, Va., plant. "We built the facility in Elliston a number of years ago with added capacity for growth," Lucas says. "So from an efficiency standpoint it made a lot of sense." Rowe continued to operate its Salem, Va., wood framing plant.
Rowe Companies sold Storehouse Furniture in October 2006. In January 2007, an affiliate of Sun Capital Partners Inc. became Rowe Furniture's new owner. "We feel thrilled that we were purchased by Sun Capital," Lucas says. "They've been a great support for us." With the purchase, Rowe Furniture became Rowe Fine Furniture, and Lucas took the helm in March 2007.
She attributes the company's turnaround to Sun Capital's financial support and to operational improvements. "We were not performing on the operations side for our customers at the level we needed to, so we've made a tremendous effort to really improve customer service, quality and delivery times."
The bottom line was restoring customer confidence. "We have spent the past year ensuring that we are consistently performing for our customers," Lucas says. "That has been our top priority to show them that there are no longer any problems that are going to stop us from doing our job, and there isn't anything that's going to stop us from being a strong partner."
Lucas says the past year has created a cultural shift from a team perspective. "It's natural when you go through a very difficult time that you become a survivor in a way," she says. "We've rallied together as a team and know the value of Rowe Furniture in the marketplace. We're all very focused and aligned in building this business back, and that team effort is tremendously important and has a tremendous impact on the business."
New products, acquisition
At the recent High Point Market, Rowe offered additions to its Mini-Mod collection of sofas, chairs and sectionals for smaller-scale living spaces, as well as a second line of couture-inspired upholstered seating for its Banfi Zambrelli collection for Robin Bruce.
The company introduced the Eco-Rowe collection of upholstered seating made with natural-fiber fabrics and cushioning made from plant-based, renewable raw materials, and affirmed its commitment to sustainable manufacturing practices.
Prior to the market, Rowe purchased Clayton Marcus Co., an upholstery manufacturer based in Hickory, N.C., from La-Z-Boy Inc.
"The acquisition of Clayton Marcus has added a whole new traditional collection into our portfolio, which we really didn't cover before," Lucas says. "We're trying to diversify and make sure we're covering every style and taste out there." Clayton Marcus, which also experienced double-digit growth in business at the October market, will continue to operate its two Hickory, N.C., plants.
Rowe Fine Furniture is "very excited about 2008," Lucas says. In addition to being able to offer Clayton Marcus products, it plans to strengthen and build customer partnerships. "It's going to be important for retailers to find companies they can align with and partner with that are going to make their lives easier and their businesses more profitable," Lucas says. "We like to think that we're a good resource for that."
Rowe's products and services have undermined the import impact. "As the furniture industry has gone through tremendous change and challenges in the past few years, especially as it relates to imported products taking a bite out of U.S. manufacturers, we've been able to survive because we're good at what we do and because there's a need on the customer's part to have special order and quick delivery," she says. "It's very difficult to compete with that value proposition from overseas."
Overall, Lucas expects 2008 to be a challenging year for the residential furniture industry. "As manufacturers, we have to be smarter and more creative about how we're going to be successful," she says.
"That isn't easy, but the challenge to me is what's exciting about it. Imports will continue to affect the market, so again it requires manufacturers to have a point of difference and a point of view that's going to be enticing for retailers to want to partner with them."
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