Chains expand RTA furniture sku's; add bedroom sets

Discount Store News, March 30, 1987 by Mary Ellen Kelly

Chains Expand RTA Furniture Sku's; Add Bedroom Sets

New lines of bedroom furniture aimed at te discount market and the continued growing acceptance of ready-to-assemble (RTA) furniture among consumers has created a category that buyers say all but sells itself.

Even more important to discount store buyers, the RTA consumer is evidently willing to trade up to higher prices as long as the product exhibits upgraded style and quality.

"In RTA, you don't know how high up is," said Phil Perry, furniture buyer at Gold Circle, Worthington, Ohio, one of several discounters including Venture, Bradlees and Wal-Mart that arenow selling RTA bedroom furniture. "We just keep layering on the price points."

Gold Circle is farther along with RTA bedroom furniture than most discounters, having experimented with a new line for about a year.

"RTA had covered just about all the other rooms and bedroom was a logical expansion," Perry said. "After all, there are more bedrooms in a house than any other type of room. It's a good avenue for increased sales dollars. I'm sure bedroom sales will continue to increase."

Starting last spring with several bedroom pieces from Foremost, Gold Circle has since added selections from Royal Creations and Affordable Furniture. This spring, Perry will add a twin size bookcase and headboard from Foremost.

The new pieces will be tested in five of the chain's retrofitted stores. Two-tier carpeted platforms at these locations permit more sku's to be merchandised within the same space.

To give the category a department store image, the chain also is experimenting with tying other housewares and home decor merchandise into the furniture displays, Perry said. "We might drape an oriental rug over an end table or add a floor lamp to the display. We want to suggest a room setting," Perry added.

Gold Circle's margins on RTA furniture range from 35% on ad to as high as 50%, Perry said. While everyday prices range to about $200, the bulk of the sales volume is in the under $100 pieces, he said.

Nils Pederson, divisional merchandise manager at Zayre, Framingham Mass., said the chain has experienced "phenomenal growth" in RTA during the past year, far exceeding sales expectations. Zayre's RTA volume reached $12 million for the second half of 1986, reflecting the chain's first commitment to the category.

Last summer, Zayre offered customers only two microwave carts. Since then, the discounter has added 11 more sku's and plans to carry 17 sku's in a 72-sq.-ft. departments by fall. Pederson said by the end of the third quarter he will add four bedroom pieces to the 13 other furniture items he carries.

Keeping in touch with the needs of his inner-city customers, Pederson said he expects to stay under his present $119 price ceiling on RTA furniture, until shopping trends indicate consumers are willing to trade up to higher prices.

The Zayre RTA merchandising strategy focuses on "creating an easy shopping experience," Pederson said. Prominent signage, as well as clearly marked boxes and display furniture allow customers to easily locate the correct box on the shelf and suggest which functions the furniture unit serves.

Unlike many discounters, Zayre plans to stick with its straight-foward, gondola presentation, rather than the more upscaled, carpeted platform approach.

Richard Green, buyer for ALCO stores based in Abilene, Kan., said he is likely to add bedroom furniture to his stores' assortment very soon. He anticipates doubling RTA business during the next five years, based on a 15% to 20% annual growth rate.

"We are the furniture sellers of the 80's. It's almost too easy for us. We [RTA retailers] are like race horses at the starting gate eager to be the first with the best. There just aren't that many places to get furniture at these prices," Green said. "At the risk of sounding over-confident, right now we almost can't make a mistake when it comes to RTA."

Even the smallest of the ALCO stores have a 24-sq.-ft. furniture department. Green said he might need to weed out relatively slow movers like finished furniture--which is generally more expensive than RTA--and some of the imports, to make space for the bedroom lines.

Green said any new merchandise additions will fit within the stores' price range. At the low end, ALCO sells a small horizontal entertainmen unit with a walnut finish for $30.97. The highest priced item is a six-drawer bedroom chest at $149.

"If I had my choice, I would create a room set-up [to merchandise RTA], but thre just isn't enough space," Green said. "If possible, I'll group the pieces together by room. I think the customer would be confused about where the furniture fits into her home, what its purpose is, if I didn't do that," he explained.

The Andersons, a Maumee, Ohio-based discounter that operates 135,000-sq.-ft. stores, plans to further cultivate its strong RTA statement by blending about 10 more sku's to the 30 selections the three-store chain currently carries, said merchandise manager, Rex Hitts.