Clint Engel
\nHIGH POINT \u00e2\u20ac\u201d The retail furniture landscape has been shifting this year with an apparent spike in furniture store closings and consolidations.
\n
\nSince January, headlines in Furniture\/Today have pointed to Benchmark
\n
\n Home Furnishings calling it quits in Kansas City, Gabberts liquidating its Texas store and Leather Factory in California shutting down.<\/p>\n
In High Point, former Top 100 store Wood-Armfield said this month that it will close as well.<\/p>\n
The Bombay Company plans to close more than 30 stores this year, while Rod Kush, competing with Nebraska Furniture Mart in Omaha, said he was closing his four furniture stores. Others leaving the business: Off Main Furniture in Florida and former Top 100 companies Mastercraft Interiors in metro Washington and Bay Furniture in greater Chicago.<\/p>\n
Meanwhile, struggling Pier 1 Imports sold its United Kingdom subsidiary, Kirschman\u00e2\u20ac\u2122s agreed to sell five stores to Rooms To Go, and McMahan\u00e2\u20ac\u2122s said it will pull out of Reno, Nev. \u00e2\u20ac\u201d where it was facing a new R.C. Willey store \u00e2\u20ac\u201d and two Oregon markets (see story on page 2).<\/p>\n
Several factors appear to be fueling this recent buzz of activity, though opinions vary on how extraordinary it is.<\/p>\n
Some observers call it a normal turn. Others suggest that an extended period of weak business, and competition from the Ashleys and Nebraska Furniture Marts of the world, are putting new pressures on companies that were squeaking by before.<\/p>\n
\u00e2\u20ac\u0153In the last four years, up until nine months ago, business was very good for furniture retailers, but not everyone,\u00e2\u20ac\u009d said Julius Feinblum, industry real estate expert and president of Julius M. Feinblum Real Estate of Plainview, N.Y. \u00e2\u20ac\u0153Some just got by, surviving with minimum profit. But now, in the last few months with business getting very soft, it\u00e2\u20ac\u2122s extremely challenging, so they\u00e2\u20ac\u2122re folding up.\u00e2\u20ac\u009d<\/p>\n
Some retailers have been squeezed to the point of bankruptcy, or in the case of Bay in Chicago, an out-of-court liquidation.<\/p>\n
Some retailers are retiring or shutting the doors if they can\u00e2\u20ac\u2122t find a buyer or don\u00e2\u20ac\u2122t have a next generation interested in running the stores, Feinblum said.<\/p>\n
As Fred Berk, president of Fort Myers, Fla.-based Robb & Stucky, put it, some retailers are probably trying to determine how to get the most value from their business \u00e2\u20ac\u201d should they pump money into operations, or liquidate and sell the real estate?<\/p>\n
\u00e2\u20ac\u0153It\u00e2\u20ac\u2122s strictly a business decision,\u00e2\u20ac\u009d Berk said. (He added that Robb & Stucky, which is expanding, doesn\u00e2\u20ac\u2122t own its real estate and must focus on its business to make money. He said the company\u00e2\u20ac\u2122s philosophy is, \u00e2\u20ac\u0153We have to sell a sofa and save our jobs everyday.\u00e2\u20ac\u009d)<\/p>\n
Jerry Epperson, industry analyst and managing director of Mann, Armistead & Epperson in Richmond, Va., said he doesn\u00e2\u20ac\u2122t see anything too unusual about what\u00e2\u20ac\u2122s going on at retail these days.<\/p>\n
\u00e2\u20ac\u0153This is a natural progression of things,\u00e2\u20ac\u009d he said. \u00e2\u20ac\u0153You hate to see something like a Mastercraft go out or Kirschman\u00e2\u20ac\u2122s being bought out, but I think this is fairly normal.\u00e2\u20ac\u009d<\/p>\n
If anything, the industry hasn\u00e2\u20ac\u2122t seen a series of giant retailers going under this year like it did earlier in the decade when Heilig-Meyers, Montgomery Ward, Roberds and Homelife Furniture all filed for bankruptcy in a two-year span. Epperson noted that in some cases, the recent consolidation is really just a swap in store names, as with the Kirschman\u00e2\u20ac\u2122s stores converting to Rooms To Go.<\/p>\n
Indeed, Department of Commerce statistics show that U.S. furniture store sales were up an average of 6.6% in the first four months of this year, and consumer spending on furniture and bedding rose 6.3% from the same period a year ago. That tends to suggest a repositioning rather than contraction.<\/p>\n
Some retailers are likely to be thriving at the expense of others. Epperson called the fast-growing Ashley Furniture HomeStores, for example, \u00e2\u20ac\u0153the most powerful thing to hit our industry in decades at retail.\u00e2\u20ac\u009d<\/p>\n
\u00e2\u20ac\u0153There\u00e2\u20ac\u2122s no question Ashley is a factor,\u00e2\u20ac\u009d he said. \u00e2\u20ac\u0153They\u00e2\u20ac\u2122ve changed the competitive environment in every market they\u00e2\u20ac\u2122ve opened up. It\u00e2\u20ac\u2122s hurt some retailers, but on the positive side, Ashley has created greater consumer awareness of home furnishings, which helps others in the market in general.\u00e2\u20ac\u009d<\/p>\n
Another problem for some and not others is real estate, which Epperson called \u00e2\u20ac\u0153one of the curses of our industry.\u00e2\u20ac\u009d<\/p>\n
\u00e2\u20ac\u0153Many of these stores we\u00e2\u20ac\u2122re talking about haven\u00e2\u20ac\u2122t moved since they opened, and as a result \u00e2\u20ac\u00a6 are not well located relative to the market they serve,\u00e2\u20ac\u009d he said. \u00e2\u20ac\u0153Or the market changes around them and they haven\u00e2\u20ac\u2122t adapted to the consumer that lives close by. In either case they end up slowly declining because they\u00e2\u20ac\u2122re not on top of things.\u00e2\u20ac\u009d<\/p>\n
Big retailers and manufacturers\u00e2\u20ac\u2122 dedicated store programs, meanwhile, are all about securing the best locations.<\/p>\n
\u00e2\u20ac\u0153The labels, whether it\u00e2\u20ac\u2122s Rooms To Go, Wickes or La-Z-Boy, require better real estate,\u00e2\u20ac\u009d Feinblum said. And consumers expect that from a store, he said \u00e2\u20ac\u201d you can\u00e2\u20ac\u2122t be looked at as a leader in fashion, price and presentation and have a second-rate location. \u00e2\u20ac\u0153The two have to match.\u00e2\u20ac\u009d<\/p>\n
What\u00e2\u20ac\u2122s more, the less dynamic retailers are facing equity funds and other financial heavy hitters that have invested in players such as Bob\u00e2\u20ac\u2122s Discount Furniture, Harlem Furniture and Wickes. They have the money to spend on the prime locations.<\/p>\n
\u00e2\u20ac\u0153It has to do with financial strength,\u00e2\u20ac\u009d Feinblum said. \u00e2\u20ac\u0153They\u00e2\u20ac\u2122re out-positioning and out-merchandising.\u00e2\u20ac\u009d<\/p>\n
Continuing economic pressure on the consumer could lead to more closings and repositioning before things even out.<\/p>\n
Feinblum noted that a rise in home foreclosures and past-due mortgages are taking a toll, while rising gas and energy prices are nibbling at consumers\u00e2\u20ac\u2122 disposable income. And with rising interest rates, the housing market is cooling and the money freed up by refinancing is drying up.<\/p>\n
Epperson said he is concerned about consumers who took out adjustable rate mortgages to finance their homes. As interest rates rise, some are seeing their payments nearly double. Also, many banks last year raised the minimum amount consumers must pay monthly on their credit card debt, putting yet another crimp in spending.<\/p>\n
\u00e2\u20ac\u0153Anything that takes money out of the consumer\u00e2\u20ac\u2122s pockets hurts us,\u00e2\u20ac\u009d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Clint Engel HIGH POINT \u00e2\u20ac\u201d The retail furniture landscape has been shifting this year with an apparent spike in furniture store closings and consolidations. Since January, headlines in Furniture\/Today have pointed to Benchmark<\/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-984","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\/984","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=984"}],"version-history":[{"count":0,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/posts\/984\/revisions"}],"wp:attachment":[{"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/media?parent=984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/categories?post=984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/indonesia-furniture.com\/articles\/wp-json\/wp\/v2\/tags?post=984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}