High-end or low, RTA's hot at discount - high or low priced ready-to-assemble furniture

Discount Store News, April 6, 1992 by Mary Ellen Kelly

Are discounters trading up or trading down on RTA furniture assortments? Depending on the individual chain's history with ready-to-assemble furniture, some regional full-line discounters have opted to differentiate themselves by offering pre-assembled, higher ticket furniture, while others are intensifying efforts to provide basic RTA at hot piece points.

Regardless of approach, discounters are the primary store that consumers visit when shopping for RTA furniture, according to new research conducted for DSN last month by Fairfield Research, Lincoln, Neb. Forty-two percent of consumers surveyed said their last purchase of RTA was a t a discount store. When asked about where they would make a future purchase of RTA, an additional 5% of the survey population *47% total) said they would shop at a discounter.

Caryn Sandler, buyer of home decor at Hills, the Canton, Mass.-based discounter now reorganizing under Chapter 11 protection, said the chain has expanded and "revamped the entire department," and is focusing on "moderately priced" RTA. The price ceiling was raised slightly to $129.97, she noted, but the vast majority of merchandise is concentrated at opening price point levels. In some of its remodeled stores - which are projected to comprise 46 of Hills total 154 units by back-to-school season - square footage for the department has been increased by about 10%.

"My philosophy is to satisfy customer needs. I am on a never-ending quest," said Sandler. Her "quest" is expected to lead to new white finished pieces for kitchen or bedroom applications. She will be looking for new white finished and niche items to test at remodeled stores at the upcoming International Home Furnishings Show in High Point, N.C., this month.

Sandler projected that furniture department sales at Hills could be up 15% or more for 1992.

Jamesway's buyer, Roshan Wijerama, said he is also developing his opening price point business and expects to find additional niche items at High Point. Metal furniture and computer desks which sold well during the second half of last year at promotional prices between $49 and $69 will be expanded, as will juvenile furniture.

"One of the most successful promotions we run are the $19.99 items from Affordable Furniture. Even if we run it every month, it always sells well. Low priced promotional furniture is our bread and butter," he noted.

The new Jamesway "store of the future" prototype, two of which opened last week in Delaware, roughly doubled the size of the typical Jamesway RTA department, which averages 2,000 sq. ft.

In contrast, at nine-unit, southern California regional discounter Fedco, the RTA category is more of a promotional section than a full category, according to Philip Jick, executive vice president, director of merchandising. "We have less than 100 sq. ft., mostly items like entertainment centers, TV stands and occasionally a desk on promotion."

The reason for Fedco's scant RTA mix is its dedication to the traditional furniture Store," which is operated as a separate store, devotes, between 10,000 and 20,000 sq. ft. to as many as 15 vignettes each of bedroom, dining, upholstery and other traditional furniture settings. While the assortment is composed of traditional pre-assembled furniture, the prices are discount, said, Larry Crink, general manager, Your Furniture Stores.

Swallens is another regional discount store chain which handles RTA more as a promotional item than as a category, while focusing on a furniture selection that rivals better furniture galleries. The Cincinnati-based nine-unit chain-which typically occupies small three-story building - frequently uses its ground floor as a traditional furniture showroom. The chain has four buyers for office, juvenile and home furnishings.

By devoting footage to upscale furniture - both RTA or pre-assembled - these discounters are luring upper income households into their stores, according to DSN research.

Contrary top common beliefs, the research indicated that as annual income increased, so did the likelihood that a consumer would purchase RTA About a third of households with less than $20,000 annual income purchased RTA, while about 45% of households with more than $75,000 annually, reported purchasing RTA.

Despite the greater incidence of purchase among affluent shoppers, discount stores continue to command the lion's share of the market, with 42% naming a discounter as the place they made their last purchase.

Department stores (26% - which include 6% mentions for Sears and Montgomery Wards combined) and home centers (13%) were the second and third most often named stores, respectively. And because RTA is a product which, unlike most other goods, has its origins in discount retailing, as the category grows in popularity, discounters are apt to be the first place a customer decides to investigate an RTA furniture purchase.

The Northeastern and Western regions of the United States were found to have more consumers who have purchased RTA furniture within the past year - 36% and 34% respectively. The South and Midwest were found to have 29% and 26% of respondents buying RTA last year. Households with children were more likely to purchase RTA than households without children - 36% as compared to 26%.