Higher-end furniture sales are the ticket

Home Channel News, May 3, 1999 by Kate Griffin

With more dealers homing in on outdoor living, home centers focus on a price segment

When Richard Laplante ordered a $2,500 Canadian (US$1,677) solid teak patio set earlier this year for his store, Builder's Warehouse, he thought it would he a novelty item primarily for display.

But the set -- six chairs, an oval table and parasol, retailing for $2,500 Canadian (US$1,677) sold quickly. And by April. Laplante, Builder's Warehouse's president. was ordering more. In the past month, his store has sold four more teak sets, and an assortment of other higher-ticket lawn firmotire sets.

Of the 68 million households that garden, 11.4 million bought at least one piece of outdoor furniture in 1997, a 40 percent increase over figures in 1992, according to National Garden Association statistics. But where homeowners go to buy outdoor furniture has been problematic for home improvement stores that must compete for sales - especially at the low-end - with discount stores, specialty outlets, even some supermarkets and drug stores.

Consequently, home centers, such as the Orleans, Ontario-based Builder's Warehouse, are differentiating themselves by offering higher-end furniture, a niche that has become profitable in a healthy economy.

Two of the country's leading manufacturers of outdoor furniture, Bemis and Grosfillex, generate between 25 percent and 35 percent of their furniture business in home improvement stores. Each is expanding its assortment of better-quality merchandise because sales to this industry segment have been stagnant.

"The general economic conditions lend themselves to higher price points," said Scott Crumrine, commercial director for outdoor products for Robesonia, Pa.-based Grosfillex. Crumrine added that Home Depot's decision to back away from resin products hasn't helped matters, either. (Calls to Home Depot for comment were not returned.)

Bemis, based in Sheboygan Falls, Wis., this season expanded its patio line colors from the traditional white and green to include cashmere sand and olive green. "We're trying to get back into the arena where we offer a broad array of products from an opening price point to the higher end," said Skip Campbell, the supplier's national sales manager. Currently, the pieces in Bemis' line include stack chairs for $3.99, deck chairs for $39, and a 48inch resin table with a glass top for $129.

Grosfillex is moving up its pricing with upgraded versions of resin. "Everybody else is selling $3.99 chairs," said "We're selling $20 chairs and $70 tables; that's our response to the market." The company last year introduced its Atlantic line, which is made of a resin composite but manufactured to look like wood. Grosfillex also manufacturers decorative resin by lining its furniture molds with plastic film of silk screen graphics, creating a mosaic tile look that is scratch resistant.

While resin is part of the product mix at Orchard Supply Hardware's 78 locations in California, the higher-end pieces and sets introduced last year have been the first to sell, said buyer Kathy Sweeney. This year, Orchard added a steel gazebo and cast aluminum bistro to its outdoor line. The dealer's 13 different five-piece patio sets from five manufacturers retail from $49.95 to $489.99. Outdoor furniture, which generates 25 percent of Orchard's seasonal sales annually, is displayed within 2,000 square feet of the average 36,000-squarefoot store.

Space limitations continue to be the main reason why so many dealers keep at arm's length from this category. Even the 50,000-square-foot Builder's Warehouse, which devotes 7,000 square feet to furniture within a huge, brick display area in its parking lot, rents a nearby warehouse from mid-April through mid-July to store inventory.

Other retailers either don't have the space, or aren't willing to devote it to displaying tables and chairs. "If you look at home centers, everybody is getting squeezed to produce more revenue per square foot," said Bemis' Campbell.

Charles Devine, owner of four D.G. Ace Hardwares in Sarasota, Fla., puts a small selection of resin tables and chairs outside in his garden centers because they look nice, not because they're profitable. "If you come across anyone who ... makes money in the category let me know," said Devine, whose stores might try wrought iron outdoor chairs to boost margins.

Devoting ample display space can be a profitable move, though. Laplante said that consumers who used to buy one folding chair or other outdoor item now purchase lawn furniture, barbecues and swing sets at once. "The bulk of sales used to be below $500 -- now it is above," said Laplante, who expects Builder's Warehouse to do C$500,000 (US $335,400) in outdoor furniture sales this season.