A strong case for higher quality; growing consumer preference for higher-quality furniture offer lucrative opportunities - at discount stores - HomeMarket Trends

Discount Store News, Nov 13, 1989

A Strong Case For Higher Quality

It looks like a relatively strong year for ready-to-assemble furniture. On the average, about 15 percent of consumers plan to buy some sort of RTA furniture, with bookcases, living room furniture and entertainment centers the most popular products. That marks a decline of some 25 percent over those who reported a purchase in the past year, but compared with other categories, RTA seems more likely than most to hold its own.

Over one-fourth of Americans are in the market for RTA bedroom furniture, with younger consumers more likely to buy than older shoppers. According to a survey conducted for Home Market Trends, retailers in the North Central region of the country are due for an RTA bonanza, as over one-third of consumers in that area reported plans to make a purchase in the coming year.

The news is even better in the living room, where some 40 percent of consumers plan to buy RTA furniture. The South Central region, at 56 percent, will be the primary beneficiary.

RTA entertainment centers were just slightly less popular, with 36 percent of consumers planning a purchase. The North Central and Northeast regions will see the most sales in this area.

According to the survey, the RTA market appears poised to go upscale. The market grew rapidly over the past several years as higher-quality and better-looking merchandise became available to consumers at lower prices. This boom for discount stores has not been overlooked by more upscale department stores and specialty retailers.

When asked where they planned to shop, potential purchasers were as likely to name as department store as a discount store (20 percent each). However, department stores were much stronger in every other home fashions category considered by the survey.

The survey, conducted by Fairfield Research Inc., of Lincoln, Neb., outlines a competitive pattern for 1990: discounters' traditional dominance of the category will be tested by department stores.

With RTA furniture catching the eye and wallet of more affluent consumers, some RTA manufacturers have decided to create lines geared toward the furniture and department store consumer.

K mart and Wal-Mart were each mentioned by 6 percent of consumers. In addition to the combined 12 percent who said they would shop one of the nation's two leading discount chains, another 7 percent mentioned discount stores as the type of store they expect to shop for RTA in the coming year. Seven percent of respondents said they would do their RTA shopping next year at Sears.

Consumers, on average, said they expected to spend $226 per piece of RTA. However, fewer consumers are planning a RTA purchase in the coming 12 months compared with the number that actually made a purchase in the past 12 months.

Additionally, those that do intend to buy are planning to purchase fewer pieces than they did last year. Twenty percent of those surveyed said they bought RTA in the past year; 15 percent plan to buy this year.

Last year, the 20 percent that bought RTA, on average, bought two pieces. The 15 percent that plan to make a purchase this year believe they will buy, on average, 1.7 units. However, what these consumers plant to buy might be different than what vendors are banking on.

Manufacturers, alert to an interest among consumers for home office furniture, are adding numerous sku's to their assortments this year to satisfy this perceived demand.

But the study suggests that the main area of interest is not desks, as expected, but bookcases. Based on the study, bookcases will be the mostwanted item, with 43 percent aiming to buy that particular item. Desks, on the other hand, are on the shopping lists of only 17 percent of consumers surveyed.

Despite ventures into more exotic wood tones and veneers, light oak was mentioned by the greatest percentage of prospective buyers as the finish they desired.

Name brand recognition is certainly an area where vendors could improve. According to the survey, consumers were not familiar with and really didn't care about brand names in this category. On a scale of 1 to 5, where one is not at all important and five is extremely important, the brand name scored 2.7.

While brand is not a top criterion for selecting furniture, price is also lower than it probably would have been a year or two ago.

Sturdiness, style and wood/color took the first, second and third most important spots, ranking 4.8, 4.4 and 4.4, respectively.

Price, the fourth most important RTA element, was rated at 4.2 on the scale, still a strong consideration.

RTA differed slightly demographically from most other home fashions categories in that potential consumers are mostly younger than, for instance, potential buyers of comforters. The largest number of shoppers was clustered in the 18-to-34 age group. Additionally, younger consumers were much more likely than older ones to consider exotic finishes.

Overall, consumers were averse to spending money to have their purchases assembled. When asked what they would be willing to spend, 36 percent answered "nothing," and another 25 percent weren't sure if they would spend or not. Another 12 percent were willing to pay $10 or less, with about 25 percent of consumers willing to spend $11 to $25.