Patio furniture weathers uncertainty with orders up

Discount Store News, Jan 20, 1997 by Richard Halverson

The loss of numerous discounter outlets especially Best Products' 163 catalog showrooms, and uncertainty about the direction Sunbeam may take under probable new owners are generating the greatest buzz in the outdoor furniture industry in the new year.

As for what lies ahead, housing starts are up and interest rates are low, two signs that a good year lies ahead for outdoor furniture. The last two years have not been good ones for the industry.

Retail sales of casual furniture are estimated to grow 6% to 7% a year through the year 2000 from a base of $1.4 billion in `95, noted The Casual Outdoor Furniture Market, a 1996 study released by Packaged Facts, New York.

Metal, including aluminum, wrought iron and extruded steel, accounted for $607 million, or a 43.3% share of the category; resin, $425 million, 30.3% share; wicker an rattan, $193 million, 13.8% share; wood, $115 million, 8.2% share; and umbrellas, $62 million, 4.4% share.

By distribution outlet, the mass market held a 51% share of the market, specialty shops a 42% share and other retailers a 7% share.

By the year 2000, retail sales could total $2.11 billion, the study projected.

Retailer consolidation has been one of the major factors bearing on casual furniture. In addition to the Best Products showroom liquidation, L. Luria dropped its catalog showroom format at its 43 units last year in favor of a new gifts, perfume, jewelry and housewares format. This month the retailer announced that it will close one-third of its stores.

Other retail closings: Rich's is liquidating all 20 of its stores; Brendle's is liquidating its 12 remaining catalog showrooms; Bradlees, operating in Chapter 11 bankruptcy, has closed about 12 stores; Caldor, also in Chapter 11, has closed more than 10; and Kmart continues to close stores, shuttering about 40 in `96 on top of some 200 in the two previous years.

Previously a Sunbeam customer, Kmart now has gone offshore for casual furniture, sourcing most of its needs direct and using importers in a couple of exceptions. Moreover, it is reducing furniture skus, a spokeswoman said, but is increasing display space for the smaller number of sets it will feature. For example, Kmart will carry only one resin set, a seven-piece set with a 75-in. oval table at a $199 price point.

Kmart is devoting more space to all of seasonal, including grills, said spokeswoman Laura Mahle. "Although we've reduced our offerings, we are providing more space for better display."

Fedco, Santa Fe Springs, Calif., had been a Rubbermaid customer before Sunbeam bought that company's resin furniture operations in 1994, said Bob Berger, assistant vp and buyer for seasonal.

Although wrought iron is booming nationally, it doesn't do well in California because consumers don't want to bother with repainting to hold down rust, Berger said. Fedco carries no wood in its 10 stores because of the same demand for maintenance-free products.

As for aluminum, Fedco buys from Mallin Products, a Los Angeles vendor that has been in operation for more than 30 years, Berger said. A popular price point for a sling, cushioned aluminum set is $499.

In resin, sourced from Bemis, Sheboygan Falls, Wis., Fedco creates an exclusive look by designing its own fabrics for cushions tailored to fit individual chairs.

For the `97 season, Fedco has purchased a new Grosfillex high-back chair that is a knockoff of the Hartman chair from Europe, Berger said. With a retail of $25, the chair offers the hot new textured look with a cane-look insert in the back.

White and hunter green remain the strongest colors, Berger said, but Fedco also has had great success with burgundy.

Given the Sunbeam assurances that it will continue to fill all orders under new owners, Pamida is continuing to purchase the Sunbeam line, buyer Jan Somers said.

"We've got it in writing that Sunbeam will continue to honor its commitments," Somers said. If necessary, other manufacturers would produce products for Sunbeam, she said.

Jack's, Quincy, Ill., is also standing by Sunbeam, buyer Bill Reuter said. Sunbeam has filled the original Jack's order for spring, Reuter said, and has assured the chain it will have no problems filling additional orders through the season. Jack's bought one fashion aluminum set from Sunbeam and some resin chairs, he said.

"Jack's is buying for a good season," Reuter said. "I'm looking for the category to be hot this year. If the weather cooperates, I expect a 10% sales gain."

An East Coast regional discounter is also sticking with Sunbeam. Requesting to remain nameless, the chain's seasonal buyer said, "Sunbeam has always done right by me. I'm confident that management will remain in place after the sale," the buyer said.

Sunbeam, which last year dropped 4,500 skus of products in aluminum, steel, wrought iron, resin and wood, and then closed one of three aluminum furniture plants, has retained Chase Securities to secure a buyer. Chase is holding conversations with several interested buyers, said John Oppenheimer, vp of casual furniture. Sunbeam hopes to secure a buyer for the entire division by the end of this month, he said.