Retailers build upon RTA furniture sales - ready-to-assemble furniture - Discount Industry Annual Report, part 2

Discount Store News, July 20, 1992

The ready to assemble furniture category at full-line discounters was bolstered by the soft economy last year, as more consumers decided to try their hand at putting together a new wood-look utility cart for about $99 rather than paying hundreds of dollars for a solid wood model that would do the same job.

Improvements in RTA style and its ease of assembly are expected to win over more consumers in 1992.

Full-line discounters took a two-pronged approach to the RTA category last year. Chains expanded their assortments of opening price-point basics in 1991: bookcases and basic storage cabinets in medium oak finish were being promoted at nearly giveaway prices. At the same time, high-styled, gross margin-makers like juvenile furniture, entertainment pieces with video storage, and bedroom furniture in black, white and detailed oaks comprised the balance of the RTA assortment.

The lifestyle furniture department - including RTA and other furniture like bean bag chairs, bar stools, and jewelry armoires - went through an expansion at Kmart, a downsizing at Rose's and a facelift at Venture (as part of their new prototype presentation.) Next year will bring new merchandising improvements as leading manufacturers offer display systems to maximize the selling area while adding POP that helps makes the sale.

The potential for selling better quality, partially assembled RTA will become apparent this year as membership warehouse clubs and discount-oriented furniture stores become more aggressive in the category.

Catalog showrooms, despite their overall problems, continue to build their RTA business. RTA is a natural strength for catalogers since the format allows them to present fully accessorized room settings in both their stores and catalogs without needing to accommodate boxed stock like discount stores.

Chains like IKEA have turned out to be a mixed blessing for the category. When IKEA opened its first stores in the U.S., it was thought that the added spotlight on RTA would help discounters because consumers would become familiar with furniture assembled at home. But, until recently, IKEA had a hard time keeping its stores stocked. Customers were leaving empty-handed. The acquisition of the IKEA clone called STOR further burdened IKEA's supply lines. IKEA is working with U.S. manufacturers to help resolve the problem created by its heavy reliance on overseas suppliers.

RTA Furniture
$1.4 Billion
Full-Line Discounters   $0.7B
Catalog Showrooms       $0.1B
Membership Warehouse    $0.2B
Specialty Discounters   $0.4B
Full-Line Discount
Store Productivity
Sales               $0.7B
Sales Per Store     $88,000
Dept. Size          500 Sq. Ft.
Sales Per Sq. Ft.   $175.00
Turns               NA
Initial Markup      NA
Gross Margin        NA
NA - Not available or not applicable