Mass maintains dominance in thriving RTA segment - Home - Home furnishings gorwing in discounters and warehouse clubs - Statistical Data Included

DSN Retailing Today, August 12, 2002 by Mike Duff

ShopKo has emphasized product coordination and decor packages, giving customers an ability to develop a room in a manner similar to what they might find at a furniture store. Coordination was not only a priority among pieces, but with accessories, as well.

While furniture stores have created matching display sets, mass merchants can use adjacencies to suggest coordination. In a store in Suffern, N.Y., for example, an ample home furnishings section is set adjacent to an endcap offering area rugs. The pairing is conspicuous. Yet, the drive to get customers to synchronize several segments doesn't end there. The store tied in related categories and seasonality in the merchandising sales push by placing product in the power aisle adjacent to furniture, including a futon sofa/bed on a metal frame, a couple of compact refrigerators and a dining room set.

Mass market retailers have been using seasonality to rotate product in and out to boost the categories' efficiency on the floor. Kmart, for one, featured a $99 metal-frame futon sofa/bed on the floor for back-to-school. "We've had that for years," said Nicole Dowswell, a spokeswoman. "It's big for back-to-school." But the retailer's commitment to furniture goes further, having evolved to include entertainment, home office and, increasingly, kitchen products. The futon sofa/bed was positioned on the floor at a store in White Plains, N.Y., in company with a display of dining sets, with two at 129.99 and a third at $169.99. A Ridgewood Charleswood buffet hutch complemented the dining sets.

Home furnishings provide an important benefit in a market that is increasingly being driven by consumables.

Cost Plus has long offered a wide selection of consumables, including a substantial selection of food and beverages, and has credited home furnishings with beefing up margins at a time when the economic environment overall is weak, Murray Dashe, the retailer's chairman, president and ceo, noted during a recent conference call, "First quarter margins exceeded plan due to continuing strength in home furnishings."

Cost Plus has provided furniture and accessories for years, but the selection was always relatively limited. It has recently increased selection in several directions. For example, a departure from its traditional wicker-and-rattan furniture image is a gothic media cabinet the company offers on its Web site for $379. And a Kensington upholstered sofa was listed as a "hot buy" at $249.

The growing success enjoyed by the mass market suggests that consumers are willing to accept new formats for furniture shopping. "The consumer in general continues to look at product offerings from alternative distribution channels," said Dountas. "Traditional channels have changed in the market often. The elimination of venues, such as Sears' Homelife, Wards and myriad of others, sends consumers out in marketplace to see who fills the void."