By Ylan Q. Mui
Bill Diffee Jr. had big dreams for the expansion of the Colony House furniture store that his grandfather founded in 1936.


Three and a half years ago, he built a new store in Centreville to cater to Washington’s increasingly wealthy and growing suburbs. The store had twice as much room for Colony House’s signature high-end traditional furniture as the original location on Lee Highway, just off Route 66 in Arlington. But business never took off.

Two weeks ago, Diffee let go most of the staff and shut down the store.

“I had envisioned it to be a big success,” he said recently, sitting in the office of his remaining store in Arlington. “It didn’t work out.”

Similar scenarios have been playing out at other independent furniture stores in the Washington area. Stanis Furniture, based in Fairfax, is closing its second location, in Chantilly. Mastercraft Interiors Ltd., one of Colony House’s main competitors, is liquidating its four stores after filing for bankruptcy in May. Brown’s Wood Stuff closed two of its three Virginia stores. Even Georgetown’s home design hot spot Cady’s Alley has taken a hit, with upscale retailers Hollis & Knight and the Ambiente Collection going dark.

The sector has been assailed on several fronts: The housing boom has begun to deflate. Asian imports are lowering prices. Consumer tastes are shifting from more expensive, traditional-style furniture to cheaper and chic design. And the market keeps getting more crowded.

“The state of the furniture industry right now is very tough in this marketplace for a lot of reasons,” Diffee said. Then he asked, “Are you going to write an article, or are you going to write a book?”

The average time that a home in the District sat on the market in June has nearly doubled since last year, from 25 to 49 days, according to the latest data from Metropolitan Regional Information Systems Inc., the area’s multiple listings service. In Northern Virginia, the average has jumped from 15 to 49 days.

Some retailers and industry experts say the cooling housing market is directly related to weak performance in home furnishings. Fewer houses sold means fewer to decorate — and slumping sales for retailers.

“The softening in the housing market is definitely having an impact on what consumers perceive they need to buy,” said Janet Hoffman, a managing partner for consulting firm Accenture.

Anthony Lanier, head of EastBanc Inc. and developer of Cady’s Alley, said that when the market is hot, “it’s difficult to make a mistake.” He said, “If we assume we are going into a slower economic environment, then I think it becomes just more competitive.”

But others interpret the effect of the slowdown differently, saying it actually should wind up boosting the home furnishings industry. People should have more to spend if they aren’t saving up for a down payment, the theory goes. And since they’re not buying a new house, they might as well redecorate the old one. In fact, June retail sales data from the Commerce Department showed furniture and home decor up 9.3 percent over the previous year. Peter Greene, president of the Houseworld division of NPD Group Inc., a retail consulting firm, said sales of appliances and housewares have also been up — a sign, he said, that people are remodeling their current abodes.

“I can’t tell you a bad category,” he said.

George Stanis, owner of Stanis Furniture, said the housing slowdown has little to do with his troubles. Furniture sales generally lag six to nine months behind the housing market because buyers need time to settle in and save up before decorating, he said. By that logic, his business should be booming. But it’s not.

He is clearing out his Chantilly inventory and plans to turn over ownership to several employees. The Fairfax store will remain open and under his management.

Stanis pointed to cheap, imported furniture from Asia carried by national retailers as his biggest challenge. Much of his merchandise is manufactured domestically at higher costs, so he hasn’t been able to lower his prices much without eating into profit, he said.

“The market has been turned upside down to a large extent by the import situation,” he said.

Falling furniture prices have also changed home decorating. Furnishings are becoming more like fashion, with shoppers opting for cheap and chic pieces that they can change with each trend, rather than investment-grade furniture designed to last a lifetime.

Mastercraft has cited such shifts in tastes for its demise: Modern furniture with clean lines and friendly price tags is in; ornate and expensive 18th-century reproductions are out.

Colony House, which carries the same styles of furniture as Mastercraft, has diversified its merchandise to help it stay current. Diffee said he has expanded his assortment of “transitional” furniture at slightly lower prices over the past few years. The main floor of his Arlington showroom features a showstopping dining room table, part of the Althorp line, that costs more than $8,000 and is modeled after a table in Princess Diana’s family castle. But upstairs, a svelte cream-colored sofa by Precedent Furniture costs less than $1,400.

“Lifestyles are changing,” Diffee said. Customers “don’t know what they’re going to want in five or 10 years.”

At the same time, the home furnishings industry has become increasingly crowded. Williams-Sonoma Inc., which owns Pottery Barn, has launched three new brands in recent years — Williams-Sonoma Home, West Elm and PB Teen. Crate and Barrel has also spun off a lower-priced line called CB2. Even discounters such as Target Corp. and Wal-Mart Stores Inc. have focused on boosting their home furnishings divisions.

“It gets harder and harder for a retailer to differentiate and find that niche that works for them,” said Nick McCoy, a senior consultant at Retail Forward Inc.

Performance among national home furnishings retailers has been spotty. Sales at Bed, Bath & Beyond Inc. were up in the first quarter. Restoration Hardware Inc. also saw sales growth, though analysts remained cautious about the future. Pier 1 Imports Inc. is changing its merchandise from wicker and papasans to urban contemporary pieces dubbed Loft 21.

For Williams-Sonoma Inc., sales growth at Pottery Barn slowed during the first quarter to 1.1 percent at stores open at least one year. And at Richmond-based Rowe Cos., which owns Storehouse Inc., shipments were down 15.2 percent during its second quarter — an improvement over the previous year but still troubling for the company, which has struggled with internal issues.

“Everybody’s hoping for a better environment, number one,” said Laura Richardson, an analyst with BB&T Capital Markets. “This is definitely an environment where the best performers start to get hurt.”

Colony House owner Diffee lumps all these factors together as “the quadruple whammy.” But he remains optimistic about the future. The Arlington store is still successful, he said, especially in design consultation.

He has learned a lesson: Bigger isn’t always better. Now Diffee is trying to target his customers better. He knows they’re still out there.

“I’m happy about where we are in the marketplace,” he said. “We’re a destination.”