Office trends report tracks current trends in the contract furniture industry

Office World News, Oct 1999

Wirthlin Worldwide, an opinion research and strategic consulting firm headquartered in McClean, VA, has released some of the findings of its most recent Office Trends, a semiannual study that tracks developments in the contract furniture industry.

Prices have changed little in recent years. Though contract furniture prices vary a bit from year to year, the long-term trend is remarkably flat. For the most part, average prices for the major categories of contract furniture differ little from what they were four years ago.

In one section of the survey, Office Trends asked a representative sample of contract furniture dealers, interior designers, and facility managers from small, medium, and large companies to estimate the average net selling prices for the furniture they sell, specify, or buy. Respondents were asked to estimate current prices in budget, middle, and high-end categories. Chart A is a rundown of the current budget and high-end price ranges reported by all groups of panelists for the major categories of contract furniture.

Almost without exception, designers reported the highest price in each range. The lowest price usually came from either dealers or facility managers from small or mid-size companies. Facility managers from large companies typically reported paying somewhere in the middle of the ranges shown.

In a few cases, the average prices shown are slightly higher than those reported in 1995. Usually, however, they're comparable to-or even a bit below-1995 prices.

Discounts for large orders top out at 70 percent. Buyers, sellers, and specifiers of contract furniture have long known that the list price quoted by manufacturers is only a suggestion. Discounting is rampant in the industry, meaning actual prices are typically only a fraction of list.

But is there any way to gauge how deep those discounts are? Wirthlin Worldwide has done just that by querying a representative sample of contract furniture dealers, interiors designers, and facility managers.

"Dealers report the deepest discounts for large orders, while facility managers from large companies seem to be getting the best deals on smaller orders," said Anne Aldrich, an office furniture industry specialist with Wirthlin Worldwide.

On average, dealers and designers reported that list prices are commonly knocked down by one-third to two-- thirds, depending on the size of the order. Dealers said that product-only discounts range from 37 percent for the smallest orders (less than $5,000) to 70 percent for the largest (over $5 million), while designers placed the spread between 35 percent and 63 percent (see Chart B).

Facility managers from large companies reported that the discounts they're receiving fall into a narrower range-from 45 percent for the smallest orders to 60 percent for the largest. Not surprisingly, facility managers at smaller companies reported proportionately smaller discounts-but only for relatively small order sizes. This pattern disappears as order size increases.

Chart B shows the average discounts from list price reported by each group of Office Trends panelists at various order sizes.

Bear in mind that the chart reflects product-only discounts. Office Trends also tracks discounts for furnishings that are delivered and installed. On average, dealers say product-only discounts are three or four percentage points more generous than the discounts granted when furnishings also are delivered and installed. Designers and large facility managers say the spread is a bit steeper than that, while small facility managers think it's much greater-double digits at many price points.

Typical turnaround time for quickship orders is seven to ten days. In today's fast-changing business world, getting new office furniture in a hurry is often a priority. So what's the fastest delivery you can reasonably expect? About four days-but only if you're buying from Miller SQA or Global.

Office Trends surveyed a representative sample of contract furniture dealers, interior designers and facility managers to obtain a snapshot of current delivery times being achieved by leading manufacturers.

The time to beat is four days, according to dealers. They report that both Miller SQA and Global are shipping product just four days after receiving an order for furniture included in their quick-ship offerings. The typical turn-around time for quick-ship orders from other manufacturers is seven to ten days.

"Dealers are the most likely group of Office Trends panelists to order quick ship, so they have the best take on which companies are setting the pace for quick-ship orders," said Aldrich.

Miller SQA also leads the way in standard delivery-just three weeks, according to dealers and designers. Meanwhile, facility managers say HON's standard delivery time of about four weeks is tops.

Dealers say Global is right behind at four weeks, as are Anderson Hickey, Egan Visual, Herman Miller, HON, Steelcase, Turnstone and United Chair. Designers perceive the next fastest delivery as five weeks (from HON and United Chair), while facility managers put it at six (from Meridian and Steelcase).