Function a given, RTA can now boast form - Furniture Update

DSN Retailing Today, April 7, 2003 by Mike Duff

Costco, in expanding its furniture business, has become a leader among mass-market retailers that are making significant inroads into a category long dominated by specialty stores. Costco certainly isn't the only retaller that is making efforts to build a bigger furniture business, but its recent moves indicate that it will be among the more aggressive.

The root of mass market success in furniture has been functionality, but middle-market retailers and their vendors have built on that foundation to create a unique and dynamic partnership that continues to make inroads. For Sauder Woodworking, the shift to building furniture functionally came with the popularity of the microwave oven, noted Susan Dountas, vp of merchandising at Sauder Woodworking. "Function has always been one of the keys to Sauder and that dates back long ago to the advent of microwave furniture," she said. "Since then, we've followed the trends where they go--whether in office or home."

Much of the need for more functional furniture has been driven by electronics, products increasingly sold at mass-market outlets. Indeed, the first great electronics furniture revolution came literally hand in glove with the growth of the first great electronics revolutions. Radios, and later televisions, initially came installed in cabinets because nothing existed to house them. Case-goods makers later developed various entertainment centers and cabinets to house electronics, but case goods are expensive and can be a barrier to the consumer who wants to trade up to new products that often have very different configurations from model to model and generation to generation.

RTA furniture makers looked at new needs and produced product that was either more flexible or less expensive and, thus less of an impediment to consumers who wanted to trade up on electronics. Frequently, they did this in the context of retail outlets that wanted to sell the electronics and found it desirable to offer shoppers a product and a place to house it. Thus, RTA is found not only at discount stores but in electronics and home office outlets.

Vendors began producing better products at the same time, giving them the capacity to compete with case goods in traditional furniture segments such as end tables and kitchen cupboards. Products also became easier to assemble. With greater consumer acceptance of RTA, mass market retailers began to ex pand their assortments. ShopKo and Lowe's particularly became renown for innovative merchandising, with an em phasis on vignette displays and the combination of products. Target took a lifestyle spin on furniture, establishing collections m country, traditional and contemporary styling. Kmart and WalMart reworked their merchandising and expanded selection, growing segments including home office and kitchen.

"Generally speaking, the quality of RTA furniture in the market is improving," Melissa Berryhill, a Wal-Mart spokeswoman said. "Goods are easier to assemble and composed to a greater degree of such materials as glass and solid wood."

Nobody has made a science of mass-market RTA the way Ikea has. Clive Cashman, an Ikea spokesman, said technology and good design have and will continue to be a significant driver of furniture in mass channels.

"There are, of course, many factors playing into the drive and demand for RTA furniture. Style, finish, design, price, ease of assembly and so on. In specific segments such as entertainment system furniture or professional and home office, technology becomes a huge influence--the level and sophistication of what is available, new technologies like DVDs, and the emergence of flat screen monitors. Here, it's adaptability and flexibility that count, and the ability to respond in a timely way to important trends," he said.

At Ikea, the process of development draws in all elements of the process of designing, manufacturing, selling and moving furniture.

"Our designers and product developers work with packaging specialists in each product area, as well as the suppliers themselves and our model shop, to design rational production and ease of assembly in from the very first prototype," Cashman said. "We have people from all the trades--metal, plastic, wood--who can build and test essentially anything, and advise with their years of knowledge of these materials and production. Continuous development is important also in the ease of instructions, the simplicity of the hardware and the product design techniques. Here we have our own hardware division with this focus."

It also starts with the customer, however. "Of course, the bottom line is the end user, so we do clinics and test and monitor feedback from customers through our stores," Cashman said.

Last autumn, Costco began to discuss a new kind of furniture initiative. Already, the company had introduced upholstered furniture to its warehouses, as had its competitors. Costco combined imported sofas and U.S. names such as Lane, but moved assortment in and out of stores, always offering a few furniture items but flexing selection to take advantages of the opportunities the marketplace offered. Recently, it offered case goods from Status Furniture as a special event. Such merchandising events at Costco not only provide a bit of excitement at the store, but act as tests of new product lines or segments as well. The Status products ranged in price from a $299.99 night table to an $899.99 armoire. But the initiative that caught the attention of many retailers was Costco's decision to develop a furniture specialty store at a 100,000-square-foot former HomeBase store in Kirkland, Wash.