1989 Ad

Discount Store News, March 20, 1989

A Case Study in Furniture

Southern Furniture Market show highlights the competition between RTA and case goods

The products to be shown in High Point, N.C., at the spring Southern Furniture Market will spotlight the struggle between case goods and ready-to-assemble furniture manufacturers for a share of the total furniture market.

In RTA, home office furniture will be the star of the show, based on early interviews with discount retailers and RTA vendors.

RTA furniture manufacturers are designing products specifically for traditional furniture stores, while traditional furniture vendors are investigating ways to convert their pieces to RTA for mass market sales.

"We're very anxious to penetrate the traditional furniture markets," explained James E. Kirby, senior vice president of sales and marketing at Bush Industries, Jamestown, N.Y. "There will be some dedicated product development that will focus on home furnishings as opposed to electronic furniture ... a bedroom ensemble is likely to be among our showings at High Point," he added.

Kirby is quick to note that sales to traditional furniture retailers are meant to be a supplement to, not a substitute for, Bush's electronics store sales.

"We sell to some department stores and to a few furniture retailers; we're not moving away from our core business ... Most of the '89 growth will be via our traditional distribution channels."

Fournier, St. Louis, is also pursuing entry into department store and furniture store outlets. The firm will introduce at High Point a new "Deluxe" line for this class of trade.

"For the traditional furniture and department stores we recently appointed a special vice president of sales, Tom Johnson, and 15 to 20 rep organizations to work specifically with them," said Gary Liebscher, president.

Right now the growth is not that strong, but eventually that segment will explode. Those channels require a different product. They don't want to compete with discounters. We have been especially aggressive in this area because we believe in their future growth, he said.

The Deluxe line is expected to be priced between $90 and $400. Also at the show by Fournier will be specialty items like grandfather clocks and curio cabinets.

As many RTA vendors are interested in entering the traditional furniture store channels, others like Soundesign, headquartered in Jersey City, N.J., are intensifying their commitment to the discount store retailer. "A lot of manufacturers are abandoning the low end. We're trying to fit the area these people have abandoned," explained Ben Levy, director of Soundesign's ready-to-assemble furniture division. "Our growth will be with the mass merchant."

Soundesign has yet to finalize the lines it will introduce at the show, but Levy said there will be about 10 new sku's roughly divided between home office and home entertainment pieces.

Don Hunzicker, chairman of the board of LADD, which owns furniture companies such as American Drew, Barclay, Daystrom and Lea Industries, acknowledges the rising competition between the traditional and ready-to-assemble furniture vendor. "Eventually we're going to clash. The consumer will win. The result will be more creative efforts by both types of vendors."

As RTA vendors chip away at doors previously closed to them, it is possible companies like LADD might further explore the RTA direction. "If the department store wants to handle KD [RTA] products, then we'll have to answer them, but right now most of them don't want to handle those products," he said.

Among products aimed at mass merchants and discounters, home office furniture is expected to steal the show. It is also among the areas expected to result in double-digit sales increases during 1989 for vendors like Bush Industries, Fournier, Charleswood, Chesterfield, Mo., and others.

Home office furniture tops many discounter's shopping lists, including that of K mart's senior buyer, Don Metz.

"We don't go looking for a specific item. However, we will be looking for home office pieces in particular as well as limited bedroom items and some storage pieces. Home office is something that we'll be getting into strongly. The larger stores will have a minimum of 20 linear feet on an everyday basis. We got into home office last year, but the bulk of the year it was on a promotional basis."

Metz projects RTA sales growth to as much as double the roughly 5 percent rate the category experienced between 1987 and 1988.

Regarding competition between case goods and ready-to-assemble vendors, Metz commented, "More ready-to-assemble is going into both discount and traditional retail outlets. I've seen RTA in at least a handful of traditional furniture stores."

Metz agreed that competition between the two types of retail outlets will be escalating this year.