A changing market and fallout from the housing slump are pushing retailers
\n
\n\t\t
\n That familiar furniture store with an expansive showroom may be going the way of the old corner pharmacy and mom-and-pop grocery \u00e2\u20ac\u201d and for some of the same reasons.<\/p>\n
On Rockville Pike in Rockville, Mastercraft Interiors and The Storehouse furniture stores are closing due to bankruptcies. In Virginia, Colony House Furniture of Centerville and Stanis Furniture in Fairfax have closed. Hooker Furniture of Martinsville, Va., recently closed manufacturing plants in Virginia and North Carolina. And Routzahn\u00e2\u20ac\u2122s furniture store in Frederick is going through its toughest sales period in its 60 years.<\/p>\n
National chains, including La-Z-Boy, Ethan Allen, Bassett and Furniture Brands International, reported disappointing third-quarter sales outlooks.<\/p>\n
Overall furniture sales for the first nine months of 2013 were actually up 8.6 percent over the same period a year ago, according to a U.S. Commerce Department report, to reach $86.7 billion. Sales in August reached $18.7 billion, up from $17.8 billion a year ago. However, the September estimated sales for stores selling only furniture is off 0.3 percent compared with September 2012.<\/p>\n
So the report, along with comments from industry observers, suggests a factor that has been transforming the nation\u00e2\u20ac\u2122s retail landscape as a whole: The mega-discount stores such as Wal-Mart are grabbing a bigger share of America\u00e2\u20ac\u2122s furniture shopping dollar, while more specialized retailers \u00e2\u20ac\u201d in this case, many traditional furniture stores \u00e2\u20ac\u201d are losing sales.<\/p>\n
\u00e2\u20ac\u02dc\u00e2\u20ac\u02dcYes, furniture may be up by 8 percent, but there is a phenomenon that is affecting traditional furniture stores … this new channel which is the mass merchants,\u00e2\u20ac\u009d said Kevin Castellani, publishing director for the trade publication FurnitureToday.<\/p>\n
\u00e2\u20ac\u02dc\u00e2\u20ac\u02dcYou are seeing a whole lot of Wal-Marts, K-Marts and Costcos getting into the furniture category that is truly affecting the traditional furniture stores,\u00e2\u20ac\u009d Castellani said.<\/p>\n
According to rankings by FurnitureToday, Wal-Mart, with 2,800 stores, passed Rooms to Go stores, based in Seffner, Fla., three years ago to become the nation\u00e2\u20ac\u2122s biggest furniture retailer and has maintained that lead.<\/p>\n
Staying competitive<\/p>\n
But experts also say furniture merchants can\u00e2\u20ac\u2122t just blame Wal-Mart.<\/p>\n
Another factor is the housing slump, said David Deignan, general manager of Furniture America Inc. of Rockville, one of only a handful of family-owned furniture stores in the region.<\/p>\n
\u00e2\u20ac\u02dc\u00e2\u20ac\u02dcIt is not just the slowdown in home sales that might affect moving furniture,\u00e2\u20ac\u009d Deignan said. \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcIt\u00e2\u20ac\u2122s that questionable financing has been offered to young couples buying these massive houses. Then they don\u00e2\u20ac\u2122t have any money for furniture.\u00e2\u20ac\u009d<\/p>\n
Lie Zhang, assistant professor of marketing performance at the University of Maryland, College Park, agreed.<\/p>\n
\u00e2\u20ac\u02dc\u00e2\u20ac\u02dcThose high-end furniture stores are more vulnerable to the recent slowdown in the housing market situation. It is really sad, because they are really good stores selling good stuff,\u00e2\u20ac\u009d said Zhang, who also pointed to higher borrowing costs dampening big-ticket purchases.<\/p>\n
Still, Furniture America is holding its own, Deignan said.<\/p>\n
\u00e2\u20ac\u02dc\u00e2\u20ac\u02dcWe sell product,\u00e2\u20ac\u009d Deignan said. \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcWe don\u00e2\u20ac\u2122t sell price.\u00e2\u20ac\u009d The store sells only handmade, domestic wooden furniture. Sales have \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcheld stable\u00e2\u20ac\u009d this year, he said, but \u00e2\u20ac\u02dc\u00e2\u20ac\u02dceducating\u00e2\u20ac\u009d customers to buy high-quality pieces that last longer is becoming more difficult.<\/p>\n
Furniture America may be the exception, however.<\/p>\n
Changing habits, concepts<\/p>\n
Mastercraft, a high-end furniture dealer in the region for nearly 30 years, declared bankruptcy in May and announced it would shut down all five of its stores. The chain was $25.5 million in debt, and court records said sales of $45.3 million in 2012 were $5.2 million lower than in 2004.<\/p>\n
Douglas Gomez, founder and president, attributed \u00e2\u20ac\u02dc\u00e2\u20ac\u02dca dramatic drop\u00e2\u20ac\u009d in sales to weak consumer confidence and changing buying habits. In addition, he pointed to the shifting dynamics of the furniture retailing business with the expansion of new home furnishing concepts.<\/p>\n
Mastercraft \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcdid not come up with this problem just this year,\u00e2\u20ac\u009d said Mastercraft\u00e2\u20ac\u2122s bankruptcy attorney, Morton A. Faller of Shulman Rogers Gandal Pordy & Ecker in Rockville. \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcThey have had lots of marketing issues.\u00e2\u20ac\u009d Gomez had tried but failed to find a buyer.<\/p>\n
Bankruptcy also is shuttering Storehouse, a more moderately priced dealer headquartered in Atlanta. But its demise was less predictable. Sales grew each year from $106.5 in 2002 to reach $141.8 million last year and the number of stores grew from 60 to 73, including nine in Maryland.<\/p>\n
The foreign factor?<\/p>\n
North Carolina became an epicenter of furniture manufacturing in the 1970s because of low labor and real estate costs and the same factors are at play in Asia today, said Castellani of FurnitureToday.<\/p>\n
Furniture imports increased from $8.6 billion in 1997 to $23.6 billion in 2012, according to the Commerce Department. China was, by far, the biggest exporter to the United States, with $10.8 billion in 2012, followed by Canada at $4 billion and Mexico at $2 billion.<\/p>\n
The shift to lower-priced imports has prompted the discount giants to enter the market.<\/p>\n
Discount retailers \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcare selling pretty good furniture at discount prices and it is all coming from offshore,\u00e2\u20ac\u009d Castellani said. \u00e2\u20ac\u02dc\u00e2\u20ac\u02dcDomestic manufacturing has almost ceased. … You are also seeing the phenomenon of the younger consumer who has a passion with Crate & Barrel or Pottery Barn or Ikea, who are not shopping the traditional furniture stores.\u00e2\u20ac\u009d<\/p>\n
This report originally appeared in The Business Gazette.<\/p>\n
Copyright \u00c2\u00a9 2013 The Gazette – ALL RIGHTS RESERVED. Privacy Statement<\/p>\n","protected":false},"excerpt":{"rendered":"
A changing market and fallout from the housing slump are pushing retailers<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-2603","post","type-post","status-publish","format-standard","hentry","category-furniture-world-news"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/posts\/2603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/comments?post=2603"}],"version-history":[{"count":0,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/posts\/2603\/revisions"}],"wp:attachment":[{"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/media?parent=2603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/categories?post=2603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/tags?post=2603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}