An Issue Of Firsts
The furniture market place is becoming more competitive than ever. When supply meets limited demand, ceteris paribus, prices become depressed. Although the market outlook seems rather gloomy at the moment, things will always turn around for the better – such is the rhythm of the market cycle. The point however is how do companies stay healthy during the down cycle? That is a pertinent question we hope to find answers to with the FFE magazine’s first Furniture Leadership award.
I am really excited to share the news that we are organising the Furniture & Furnishing Export International Furniture Leadership Award (FLA in short), with our inaugural event to be launched in Malaysia this quarter. This programme seeks to recognise outstanding entrepreneurs in the country. It is also an exercise to inspire and motivate others towards leadership excellence. The Malaysian event will conclude with an award presentation ceremony and gala dinner scheduled for December. We are proud to have received official endorsement by the Malaysian Furniture Promotion Council (MFPC), the official promotion agency in Malaysia. Pending final confirmation, the award ceremony is likely to be honoured with the presence of YB Datuk Peter Chin, Minister of Plantation Industries and Commodities. With the industry’s support, it is our intention to extend this event to other countries in Asia in future.
This issue marks another first. Not only do we have our first special office furniture supplement, we are also featuring it here in our first double-cover issue. Within, you will find 26 pages dedicated solely to topics, news and products on office furniture and systems. This is a manifestation of a significant and growing pool of readers and advertisers specialising in office furniture supporting our publication. The aim is to offer more comprehensive resources for players in this particular segment. We hope to do this on a regular basis in future, corresponding to key office furniture events.
Your feedback and participation is warmly welcomed. Please either write us, or come visit our booths at these major shows where this issue brings us to:
Casey Loo
publisher/editor-in-chief
Bangkok, Thailand: The increasing number of residential unit transfers in the first half of this year has helped to increase furniture sales of the UKbased Habitat brand by 33 percent, the Bangkok Post reports. The centre, offering free decoration design services, has helped boost the company’s sales. Monruedee Narkwek, Habitat brand manager at the local franchisee Harvest Enterprises Ltd, said many customers showed their blank unit plans at the shop’s design centre to ask for tips. Their budgets to buy the company’s products ranged from THB 10,000 (US$300) up to more than THB 3 million. ‘’It started from the walk-in customers we helped,’’ she added. Habitat has also been displaying its furniture and decorative items in some mock-up units created by residential developers including Sansiri, Noble Development and Metrostar Property.
After a recent visit to the UK, Monruedee said the furniture trend in 2009 would include artificial natural colours such as lime green and ocean blue and luxury colours with an emphasis on metallic, rust and iron tones. Asian-style furniture will continue to be popular as Europeans see it as neat and warm. Interior decoration will gear toward the Moroccan style with dazzling colours and natural patterns. For the autumn-winter season, the furniture market will be dominated by two colours: purple and grey, which are moody but incredibly sophisticated in a combination, she said.
The company is expanding its customer base by the use of online marketing to communicate with customers. It launched the Habitat Dream House Makeover campaign allowing anyone to register at www.habitat-thailand.com until August 15. ‘’Online communication makes it easy to approach potential customers as people increasingly use the Internet,’’ said Monruedee. ‘’Home decoration is booming, as can be seen from all the home decoration magazines in the market.’’
Bangkok, Thailand: Home furniture and furnishing retail chain, Index Living Mall Co will postpone overseas expansion through franchising for two or three years due to global
economic uncertainties, the Bangkok Post reports. Kijja Pattamasattayasonthi, the company’s managing director, said earlier that the company had held talks with 10 foreign investors who wanted to open Index stores in countries including China, India, Russia and Dubai. The original plan called for the first overseas franchise to open in Ho Chi Minh City by the middle of this year, with eight branches in Vietnam over the next 10 years. Apart from inflation and high oil prices, Kijja said, the company wanted to study rules and regulations in each country before moving abroad in order to ensure long-term stability.
Jarintorn Pattamasattayasonthi, the vice-president of Index, said that while overseas franchises were on hold, the company would continue to export its products. However, export sales have gradually declined to 30 percent of total sales, compared to 50 percent previously. China and Vietnam are Index’s main competitors in the export markets. ‘’We will return to expanding seriously in the export markets again if the baht weakens to 35 against the US dollar,’’ Jarintorn said. Locally, 80 percent of the company’s sales currently come from its retail outlets, 15 percent to property projects and 5 percent through wholesale channels. ‘’There is high potential to attract more property projects. So, we will talk with new developers to use our products and services at their projects,’’ she said.
The company’s latest collaboration involves L’Ore{aac}al (sic) (Thailand) to provide design advice to entrepreneurs who want to open L’Ore{aac}al beauty salons. ‘’We’re interested in the hair salon market because it is big. We can find many hair salons in every province,’’ Jarintorn said. Apart from hair salons, the company is negotiating with two large coffee and fashion chains to use furniture and design services from Index. The company will deal with commercial banks to support qualified entrepreneurs.
Furthermore, the company will negotiate with the government to provide shop design free of charge as well as locate specially priced products for SMEs. The company expects to gain sales from SMEs of about THB 150 million next year. Although the country’s economy was in difficulty, Jarintorn said that Index would keep investing in store expansion locally and would also spend THB 220 million on marketing this year. Last weekend, the company opened its 17th branch in Khon Kaen. The new BHT 550-million outlet covers 15,000 sq m. The company expects a positive response due to good economic prospects in Khon Kaen and nearby provinces including Loei, Nakhon Ratchasima and Phetchabun.
Hanoi, Vietnam: Amid a global slowdown in demand, Vietnam has emerged as one of the best overseas markets for US hardwood. Shipments were up almost 17 percent in the first half of 2008 compared to the same period last year. Vietnam accounted for 50 percent of US exports of hardwood logs, lumber and veneer to Southeast Asia last year. This number is likely to increase, making it the key market in the region.
Vietnam rated as the fourth largest export market outside North America and was one of the only two markets in the top twenty countries worldwide to grow this year. Indonesia was the other, demonstrating the increasing importance of Southeast Asia to US exporters, which is turning to the sustainable supplies of US hardwood forests as one way of conserving its own depleting forest resources.
Vietnam has also become the biggest furniture exporter in ASEAN according to a recent report from the Ministry of Industry and Trade in Hanoi. Exports of wood products amounted to US$2.5 billion in 2007 and are expected to reach US$3 billion this year. Exports of wood products to the US accounted for US$450 million with other key markets in Japan, China and Europe. Vietnam has a total of 937 companies engaged in exports of wood products including furniture, of which the leading producers are still foreign-owned.
Singapore: Four Star Industries Pte Ltd (Four Star) has signed a five-figure endorsement deal with Hafiz Koh, Singapore’s youngest race car driver in an FIA (Fédération Internationale de l’Automobile) Championship. With this contract, Koh will be the face of Four Star from now till December 2008.
Four Star will also be one of the sponsors for Koh in his next race, the Formula V6 Asia held in Malaysia, Indonesia, China and Japan in November 2008. The sponsorship funds will go into travel expenses, lodging, per diems and other competition expenditures.
This move by Four Star, a member of Singapore Mozaic, marks the first step in a new direction for the company. With its focus on sleep sciences and development, Four Star reaches out to a technology and quality savvy market, offering cutting-edge materials, and expanding its range to cover the younger set as well as the mature consumer who has for years relied on the renowned mattress brand for its international standards and quality.
Neo Sia Meng, Executive Director, Four Star Industries Pte Ltd, said, “It may be hard to link mattresses with race cars, but as a company with operations in Singapore, Four Star is keen to support Singapore’s home-grown personalities that share Four Star’s drive towards excellence. Hafiz, with his strong passion and determination to excel at his field, also reflects Four Star’s own commitment to provide the best service and products available. And when it comes to achieving peak performance, we recognise that besides rigorous training, adequate rest is a must. So as we support Hafiz’s sporting efforts on the tracks, we also offer him the best Four Star support while he sleeps. We feel that Hafiz’s healthy, wholesome image, and his strong youth appeal will reflect Four Star’s mandate to be a company that keeps up with current trends and is always striving for innovation and creativity.”
Koh said, “Being a race car driver, it’s important for me to perform at my peak everyday. Whether I am practicing or participating in a race, I must always be 101 per cent alert and able to instantly react to any circumstances on the track. To achieve that, it’s important for me to have a good night’s sleep, and I’m confident that I will get the rest I need on my chosen Four Star mattress.”
Koh toured Four Star’s 4,645 sq m factory and saw first hand, the research and development laboratory and production facilities that utilise frontline technology to ensure durability, support and comfort in all Four Star mattresses. Four Star, with its full manufacturing facility located in Singapore for more than 25 years, is currently one of the fastest mattress manufacturers in Singapore to produce custom products for the furniture and bedding industry. “It’s amazing how much R&D is pumped into a mattress. It’s definitely no less than the efforts invested in developing the fastest, most efficient race cars,” said Koh.
Tokyo, Japan: Despite weak furniture sales in recent months, a luxury chair priced at a hefty JPY 300,000 (US$2,716) has been ringing up big sales thanks to demand from people who want to watch the Beijing Olympics from the comfort of the Norwegian-made recliner. Many visitors to the furniture section of Takashimaya Co¡¯s Tokyo outlet said they will pair the chair with a widescreen, flat-panel television for the Games. Roughly 10 chairs were sold at the department store each month from March through July, up 15 percent on the year despite a 10 percent drop in overall furniture sales over the same period.
The chair is built to fit the television viewer comfortably. The springs inside are designed to offer support tailored to each person’s natural sitting position. When reclined, the chair’s headrest rises, enabling the occupant to watch television more easily. People used to generally buy furniture in sets, but more shoppers are buying one piece at a time, taking time to carefully examine each item’s functions and user-friendliness.
Kuala Lumpur, Malaysia: Malaysian Furniture Promotion Council (MFPC) will hold its first National Furniture Forum on October 14. The main objectives of the forum are to update the local furniture industry on global furniture markets and the trends of brands and design developments, MFPC’s CEO, Au Leck Chai said.
YB Minister of Plantation Industries and Commodities will officiate at the forum. A dialogue will also be conducted with the minister in order to highlight issues and problems that the industry might face. Giovanni Belgiojoso, a Csil Milano researcher, will also be giving his opinions on the global furniture outlook, which includes international trade and statistics, competition and current issues, emerging markets and challenges. Tan Shyue Wern, a consultant from Temporal Consulting, will also be speaking on the branding of Malaysian furniture. The one-day forum will be held at the Putra World Trade Centre.
Hong Kong: DeCoro, a global leader in the manufacture of quality Italian leather upholstered furniture, has announced the appointment of Phillip French Furniture Agency as its exclusive agent for the UK and Ireland. This move is designed to enhance DeCoro’s market leadership in the UK and Ireland where there is strong demand for quality furniture and accessories.
“We are delighted to work with Phillip French, a leading agency in the United Kingdom and Ireland, to support our market expansion in the important United Kingdom and Ireland market,” said Luca Ricci, DeCoro’s President and CEO. “Over the past 11 years we have built a solid track record of manufacturing quality Italian leather furniture and we are well positioned to meet the rising needs of customers in the United Kingdom, Ireland and elsewhere in Europe for design-led and premiumquality furniture and accessories.”
In response to rising demand for quality furniture and accessories in markets around the world, DeCoro expanded its manufacturing capacity in China. A new factory of 83,613 sq m was recently completed in Shenzhen, increasing DeCoro’s total production space to 269,418 sq m. “The new production capability enables DeCoro to offer our collection of excellent design and high-value furniture models featuring loose cushions and Italian leathers within 8-10 weeks,” said Ricci. Based in Manchester, an English city with a strong heritage of innovation and manufacturing, Phillip French will be the key business contact for DeCoro in the United Kingdom and Ireland.
Ohio, US: Investment firm of IRG Capital Group, LLC, an affiliate of Industrial Realty Group, in partnership with Blackbird Capital Partners, has signed a letter of intent to purchase the assets of Norwalk Furniture Corp. The prospective new owners requested that terms of the sale remain confidential.
“IRG Capital Group and Blackbird Capital are a perfect match for this deal because they both believe strongly in the value of growing this company, the strength of its employees and the tradition of Norwalk’s product,” said Domenic Aversa, acting CEO and architect of the company’s restructuring plan. “These investors are committed to building on the great tradition this company has represented for more than a century, and both have a long history of doing business in Ohio and investing in Ohio-based companies.”
Meanwhile, the 106-year-old custom furniture manufacturing and retail business has fully resumed operations. Financial issues triggered by the national housing crisis caused Norwalk to temporarily suspend production on July 21, until the company could procure capital needed to implement a restructuring plan. Nearly 900 workers were temporarily sent home that week until a workable solution became feasible. After days of negotiations with a number of prospective investors a deal was finalised on August 4. This will allow the restructuring plan to be put into action and reposition the company for profitability by the fourth quarter of 2008.
Part of the plan includes a US$2 million, low-interest state loan facilitated by Ohio Governor Ted Strickland and Lieutenant. Governor Lee Fisher, who helped facilitate negotiations of the purchase. A matching loan was also provided by Mayor Paul Walker of Fulton, Mississippi, and Greg Deakle, executive director of Itawamba County Development Council in Mississippi. Norwalk’s principal bank, Comerica, has agreed to continue funding Norwalk Furniture.
“Lt Gov Fisher, the Ohio Department of Development, the city of Fulton, Mississippi, and the Mississippi county of Itawamba were all instrumental in making this work for investors, while preserving the company’s long-term future,” Aversa said. “The unions and all our employees were very supportive throughout this diffi cult transition.” “We are happy to offer assistance and to help facilitate a public-private partnership that will enable Norwalk Furniture to remain a strong business now and in the future,” said Fisher, who also serves as Director of the Ohio Department of Development. “We are committed to their success.”
Charles Rowe Jr, president of IRG Capital Group, will assume the interim role of the company’s CEO, while a permanent replacement is being sought. Rowe served formerly as CEO of The Sharon Companies, Ltd in Akron, Ohio and QualServ Corp in Kansas City, Missouri.
Missouri, US: Furniture Brands International Inc closed its second quarter with a 13 percent decrease in sales from continuing operations. It also reported a net loss of US$24 million. The company blames a loss for the second quarter on the scuffl ing US economy and expenses related to a restructuring. Ralph Scozzafava, chairman and chief executive of the Clayton-based company, said that the results are a “true refl ection of the macroeconomic environment and its impact on today’s home-furnishings industry.”
The company’s selling, general and administrative expenses increased by more than US$29 million. It is continuing with a plan announced in mid-July to accelerate the closure of Lane and Broyhill furniture stores, while also closing US manufacturing operations and expanding plants in low-cost Asian countries.
San Francisco, US: Coalesse, a new premium brand of furniture for the home and offi ce was unveiled by Steelcase, a global leader in offi ce furnishings. The collection offers a wide range of vibrant expressions, from timeless, iconic designs to new takes on classic needs. Coalesse is one of the most expansive premium furniture portfolios. It brings together select products from three of Steelcase’s most renowned brands: Brayton International, Metro Furniture and Vecta, in addition to new collections from partners: Carl Hansen & Son (Denmark), Walter Knoll AG & Co (Germany), and Viccarbe (Spain).
The new Coalesse live/work collection features more than 20 products, and complements Steelcase’s current portfolio by focusing on the increasing similarities between work and life. In order to represent the new sensibilities of the modern way people work, Coalesse has replaced traditional harsh lines and glaring surfaces with softened, contoured shapes that defi ne its live/ work collection.
"Idea-people seldom recognise boundaries between personal and professional lifestyles. They seek style, authenticity and craft, whether at home or at the offi ce. Coalesse opens the offi ce door to the higher degrees of expression and comfort we have at home. More than a new brand, it is a new way of enlightening workplaces to inspire and reward ideas, with selections that fi t as naturally in the offi ce as the living room," notes Frank Merlotti, President of Coalesse.
Built on insights gained from working with architectural and interior design customers, Coalesse is changing the contract buying experience, with richer interactive tools and a streamlined order fulfi llment process. "Coalesse is reframing the current model and starting to bring more retail sensibility and easeof-use to the contract furniture specifying and fulfi llment process, making it easier for both our professional and consumer buyers to acquire Coalesse selections," said Merlotti.
Coalesse is committed to sustainable work practices. Several products have earned SCS (Scientific Certification Systems) certifi cation for indoor air quality protection, while others are undergoing Cradle to Cradle Certifi cation analysis from McDonough Braungart Design Chemistry, LLC (MBDC) for environmentally-intelligent design. Coalesse has also taken a stand on the materials it will apply to its products. It requires all wood veneers sourced from outside of North America and approved European partners to be FSC (Forest Stewardship Council) certifi ed to ensure fair, safe and responsible methods are used to harvest and process the wood. In addition, the Coalesse NeoCon showroom, designed in conjunction with Jennifer Luce from Luce et Studio, has been designed to achieve LEED Certifi cation for Commercial Interiors (certifi cation pending).
North Carolina, US: Thomasville Furniture plans to hire more than 100 employees at its only remaining US wooden furniture plant in Lenoir – a striking change in an industry that has shifted thousands of jobs overseas in recent years. The increased cost of doing business in other countries, including rising labour costs, shipping costs and rising fuel prices, helped drive the decision, according to a company statement President Ed Teplitz announced the move to employees.
Lenoir is one of the North Carolina’s traditional furniture-making centres. But the city has been battered by layoffs and plant closings in the past six years as companies moved production to lower-cost places such as Asia. The Thomasville plant survived by taking on more contract work for the government and hospitality industry, while continuing to make a small amount of furniture sold in stores.
Meanwhile, other local factories closed and sold their equipment – making it more difficult for them to resume production if the demand existed, said Alan Wood of the Caldwell County Economic Development Commission. Broyhill Furniture Industries, a Lenoir institution for more than a century, closed its last US wooden furniture plant in early 2007. Both Broyhill and Thomasville are part of St Louis-based Furniture Brands International.
Thomasville primarily makes bedroom furniture in Lenoir, as well as some occasional tables and entertainment centres, said Ann Vaughan, the plant’s human resources manager. It will make more for the retail market as production ramps up, she said.
The plant is expected to employ about 800 by December, up from 700 now, which will allow it to increase production by one-third, the release said. That’s not full capacity, Vaughan said, so the plant will have room to grow; it’s looking for new and experienced first- and secondshift employees.
There should be a large pool of readily available workers given that Caldwell Country has lost about 6,000 furniture jobs this decade - two-thirds the number
it had in 2000 – and has experienced high unemployment. In that same period, North Carolina lost more than 30,000 furniture jobs, down from more than 79,200.
Wooden furniture, or case goods, manufacturing has been particularly hard-hit. Roughly 90 percent of Caldwell’s case goods jobs have disappeared, and the county has not had a new case goods job announcement in at least five years, Wood estimated. “We’ve (added) a lot of diversity,” he said. “But it’s also nice to have the industry you’ve depended on for generations have some jobs growth, too.”
North Carolina, US: Kellex Corp, an Ohio upholstered furniture company has announced that it has bought and started production at the Hickory Hill furniture plant in Burke County, which was set to close amid corporate consolidation. Kellex Corp plans to hire more than 50 people and invest US$1.7 million in sprucing up and updating the plant in Valdese.
The complex had employed about 160 people and shut down early this month, the town manager, Jeff Morse, said. Among the clients it had made furniture for was Kellex, which primarily serves the hospitality, time-share and health-care industries – including major hotel chains such as Hilton, Marriott, Starwood and Ritz-Carlton. When Kellex heard the plant was closing, it became interested in buying the building to expand.
In addition to placing contract orders within the US, Kellex manufactures some of its own products and the new plant in Valdese will aid in that capacity. The plant will focus on making a new line of sleeper sofas for the hospitality industry.
“We’re a very domestic-driven company,” Kellex’s president, Chris Rice, said. “Our goal is to provide opportunities for those who want to work... There’s a lot of good craftsmanship in this area.” Even as the overall US furniture industry has suffered, the company has grown. It expects more than US$25 million in sales this year, Rice said. The company has been able to compete because it custom-makes its furniture and can get it to customers faster than products made in the low-cost Asian factories that have siphoned US jobs this decade, he said.
“The clientele in our industry are looking for something different,” Rice said. “It’s not all about price. It’s about value.” The prompt delivery times and greater customisation that upholstery buyers seek make the work harder to shift overseas than wooden furniture production, which is more standardised. As a result, domestic upholstery makers have done comparatively well while wooden furniture employment has withered. State-wide, the number of wooden furniture jobs dropped by 62 percent between 2002 and 2007; the number of upholstery jobs declined only 16 percent.
The Valdese plant will be run by local workers with an extensive furniture background, Rice said. Kellex is in the process of hiring and expects to grow beyond the initial 50 jobs. The average annual wage will be US$35,160, above the county average of US$29,744. The project is also slated to receive a US$30,000 state economic development grant and US$38,000 in local incentives over three years, based on performance.
Town leaders are pleased to have found a tenant for the space – a task that can be difficult with older factories. Instead of becoming a vacant eyesore, Morse said, “it will have a tremendous visual impact as well as an economic impact.”
North Carolina, US: Some furniture companies are considering the move to shift manufacturing back to the US as rising inflation drives up factory wages in China and high oil prices make shipping costlier. Since 2000, numerous US factories have shut down as furniture companies shifted manufacturing to China in search of lower costs.
But many furniture makers are finding it difficult to return due to steep factory start-up costs and lack of skilled labour. The credit crisis that began with failing mortgages but has now led to tighter terms on virtually all loans also makes it tougher to finance a new plant. However, the cost differences are narrowing, particularly for smaller companies that never could match the big players’ negotiating power in China. Furniture maker Carol Gregg said three years ago, it was about 40 percent more expensive to manufacture in the US than in China. Today, with inflation in China and ocean freight, we’re about even.”
Ikea, the Scandinavian retailer known for its low-priced, flat-packed furniture, opened its first US manufacturing plant about 80 km north of High Point this year. The Danville, Virginia, factory makes book shelves, coffee tables and side tables for sale at Ikea’s US and Canadian stores.
“The most expensive part of the home furnishings business is actually transport,” said Ikea spokesman Joseph Roth. “For us this (move) makes total sense.” Rebecca Smothers, the mayor of High Point, hopes others will come to the same conclusion. The city, known for its twice-yearly home furnishings trade show that draws tens of thousands of visitors, has been hit hard by factory closures.
She said some European companies have expressed interest in setting up shop here. The euro’s rise to a record high against the US dollar this year has hurt European exporters. But for many of the major US manufacturers, China still holds a formidable advantage on both price and infrastructure.
Paul Toms Jr, chairman and chief executive of Hooker Furniture Corp, said he was surprised by the swift spike in oil prices and the pace of wage increases in China, and was looking for other places to manufacture. The US was not an option for the company, which has shut five US factories in recent years.
“As we closed those plants, we sold the real estate and sold off the machinery and equipment,” he said in a telephone interview. “The work force has dispersed, not only the hourly workers but the supervision, had generally moved into other industries. There’s not enough need for skilled wood workers for everybody to be able to stay in this industry.”
“So it’s not feasible even if we thought we could produce a better value product here than we could in Asia,” he added. Instead, the company is switching some manufacturing to other developing countries, including Vietnam, Indonesia, the Philippines and Honduras.
In addition to cost, distance is also becoming a factor. Jobi Blachy, president of upscale furniture makers Edward Ferrell and Lewis Mittman, said one reason why his company manufactures in the US is speed. Custom orders would take weeks longer if he had to ship them from overseas.
Blachy’s customers spend as much as US$26,000 for a dining room table, so paying a bit more for US labour is no big deal. But even for lower-priced furniture retailers, which have scant pricing power when demand is weak, distance is starting to factor into the sourcing decision.
Alan Cole, who overseas the upholstery business at Hooker Furniture, said retailers were increasingly interested in domestic-made goods as a way to keep a tighter grip on inventory when demand is unpredictable. If they place a large order from China and the economy remains weak, they may be stuck with the big stockpiles. And if it rebounds, they could be too slow to stock up.
“Retailers are trying to figure out how they can buy more products domestically and still not lose some of the economic value that imports bring to them,” he said. “That’s quite a shift in some of the retail thinking because up until probably within the last year or two years, the retailers were continuing to import more and more directly from Asia and to be less dependent on domestic products.”
North Carolina, US: A local furniture retailer that used to concentrate on special orders has adopted a new business model as it struggles with a dramatic loss of vendors and a declining economy. Black’s Furniture, now only sells furniture out of stock to walk-in customers rather than by telephone, a company spokesman said.
“When the economy got tight and we started losing lines, we decided to stop selling special orders,” said Brooks Reitzel, an attorney representing the store’s owners, Chris and Wanda Cox. “We’ve stopped trying to compete with the large furniture retailers and gone back to a mom-and-pop type of business.”
Reitzel denied reports that the business has closed. He said that over the past few years, the store has lost 80 percent of its suppliers – about 25 furniture lines. The attorney would not identify the suppliers, but a recent report in Furniture Today said they included Broyhill, Clayton Marcus, Pearson, Pennsylvania House, Hickory White, Harden Furniture, Lexington and Thomasville. Reitzel said the vendors represented millions of dollars in sales. In addition, in 2006, the owners moved from a 3,700 sq m showroom on Westchester Drive in High Point to one twice that size in Greensboro which sent overhead costs soaring.
Reitzel said, “It was the furniture world’s perfect storm: lines lost, rising overhead and a weak economy.” He said the business has gone from as many as 60 employees to “a handful” currently. As for the future, he hopes some of the suppliers will return and extend credit to the company. “If we don’t gain some of the vendors back, we are dead,” Reitzel said. “If we gain some of the vendors back and the financial institutions support us, then we can go forward. We might be limping, but we can go forward. It’s a pretty stressful time.”
Florida, US: Knoll has picked a modern furniture gallery as its retailer, one of the only two authorised Knoll Space retailers in Florida. Sarasota’s Home Resource is owned and operated by Michael and Kathy Bush. The industrial-looking store carries many designers of contemporary furniture outside the Knoll stable but to have the prestigious Knoll line added to what they already showcase is considered quite a coup in the design world. Contrary to convention, Knoll chooses the retailers to represent the line.
Probably the most famous piece of furniture in the Knoll collection is the 1929 Barcelona chair by architect Ludwig Mies van der Rohe. It was created for the German Pavilion at the Barcelona World Exposition. That chair immediately became a symbol of the synthesis of old and new, and it is still a classic and often copied. It will cost about US$4,000 to US$5,000 or more, depending on the grade of leather chosen.
A piece of Knoll furniture will take anywhere from four to 12 weeks to receive due to the custom-made nature of each item. The furniture is fabricated at five centres in Pennsylvania, Michigan, and Toronto. There is also a plant in Italy. Each piece of Knoll comes with certification of authenticity. “For some homeowners, the price of a piece of furniture in the Knoll line means a serious economic investment,” said Michael Bush. “But, it’s a good investment. Knoll furniture doesn’t loose monetary value over the years, and all that time it’s paying you in comfort and beauty.”
Bush also noted that not all Knoll furniture is that pricey. A classic Saarinen marble-top side table is US$600, and a good place to start if one is beginning a collection. Bush said his Knoll customers at Home Resource fall into three categories: people who have grown up with Knoll and don’t need to be convinced, homeowners who have coveted Knoll pieces over the years and can finally afford to own a few, and young people who have read about Knoll designers and have seen the furniture in magazines and on television and in films.
“It’s a stretch for these young people, and often they do more looking than buying,” observed Bush. “But, sometimes they determine to make a financial sacrifice and buy one great custom piece over three or four mediocre mass-produced things. They make that investment in quality and style. Over the next couple years, I fully expect to see some young engaged couples register for Knoll furniture pieces.” Bush also noted that he’s seeing more and more people confidently mix modern furniture with antiques and traditional furniture.
Alberta, Canada: The ripples of the housing market correction have left their mark on another sector, says a report from TD Financial Group. Furniture and appliance sales have been dampened, and will continue to decline, nationwide, says the report by TD vice-president and deputy chief economist Craig Alexander.
Owners of some Calgary-area furniture stores agree with the analysis, saying that the overall retail business in town has slowed from the blazing pace seen in 2006 and 2007. “We found, compared to last year, the first month of change was in February,” says Michael Andrew, one of the owners of Country Furniture, a chain with one location in Calgary. “It was booming last year and we’re still doing well, but it’s just that last year was a really booming year.”
Andrew estimates business was down 25 percent in June compared to the same time last year, but he says the store is still meeting its sales expectations. Ron Hahn, owner of Panache for Living, says that’s the landscape of the entire Calgary retail scene as he sees it. “I would say, all in all, it’s been pretty dismal since spring,” he says. “The entire retail market is slowing.”
Sales of furniture and electronic household appliances rose by 1.6 percent in April compared with the previous month, but that’s after two months of decreases, says Alexander. Compared to last year, furniture and appliance sales in April rose by 3.7 per ent, considerably lower than the 8.6 percent growth between January and the same month last year. Such slowdowns in growth are also reflected in Alberta’s overall retail numbers, down 1.8 percent in April compared with March, say TD analysts. No sector-specific date is available provincially.
“When you look at the first four months of this year, there’s no question Alberta retail is slowing down, aggravated by the bad weather,” says Alexander. “I definitely think there’s a correlation between the (housing market and furniture sales). When the housing market cooled down, you can see things (in furniture retail) starting to moderate as well.” But like the housing market, the furniture retail sector should steady itself by late this year or next year, says Alexander.
The TD Bank Financial Group expects provincial retail levels will grow by 2.9 percent this year and 5.8 percent in 2009. The sector posted a 9.3 per cent gain in 2007 and double-digit growth rates in 2004, 2005 and 2006.
Furniture retail should recover because Alberta continues to experience a tight labour market, meaning income levels continue to rise, says Lai Sing Louie, senior market analyst with the Canadian Mortgage and Housing Corp. “That bodes well for retail overall,” he says. “But with the new homes market slowing down, (furniture sales numbers) pulled back a bit, which isn’t surprising.” The province’s plan to eliminate health premiums by the end of the year should further boost Albertans’ disposable incomes and retail businesses, he says, an assessment TD’s Alexander also reaches. “When you look at the Alberta economy, a lot of the fundamentals remain quite strong,” says Alexander. “Even if things pull back, it’ll be fairly modest. We’re still talking growth. It’s much slower than previous years, but if you look at the high rates (in 2006 and 2007), it has to cool down.” Furniture sales in Calgary continue to keep pace with, if not outpace, what other cities are seeing, says Andrew.
Middlesbrough, UK: Furniture maker Barker and Stonehouse has started work on a GBP 1 million (US$1.87 million) distribution facility for its numerous products in the Tees Valley. Located at Riverside Park, Middlesbrough, the 3,700 sq m building will be operational in two months and will store up to 100,000 items, drawn from around the globe.
Managing director James Barker said: “Teesside is the hub for all Barker and Stonehouse distribution - the logistics and transport links are excellent.” He continued, “Hundreds of containers from all over the world come in to the Northeast by sea, so by avoiding southern ports we also keep down road haulage costs and fuel emissions. We are addressing environmental concerns in other ways as well, for example the new warehouse will have an on-site recycling unit along with top specification insulation, a biomass boiler for heating and it will be fully roof-lighted, cutting down on electricity. We have also recycled the site’s previous building and earthworks to create the groundwork for this one as it was the former site of the Britannia Iron and Steel works. We are proud to have our headquarters in Middlesbrough and that people recognise our name as a mark of quality.”
Barker and Stone house is headquartered in Middlesbrough and its current delivery warehouse at Cannon Park will be incorporated into the new facility. The furniture firm has been bringing the latest designs to the region for more than 60 years and was founded in 1946. It now has eight stores including branches in Middlesbrough, Darlington, Gateshead, Newcastle and Leeds.
Warsaw, Poland: Poland’s furniture industry will most likely be unable to repeat its excellent results from last year, according to a report by the Polish News Bulletin. Reports suggest the sector will be unable to post sales equal to ZL 27 billion (US$12 billion) from 2007. Furthermore, it is also unlikely to maintain export growth at its 10 percent annual rate. According to a report by Euler Hermes, a global decrease in demand, as well as the strengthening of Poland’s currency, has hit the furniture industry. The firm’s experts do not expect an improvement in the second half of the year. In their opinion, “the second half of the year and at least the first several months of 2009 mean a market decline in Italy, Spain and the UK,” and - which may be of crucial importance - a significant slowdown in Germany in 2H2008. Poland’s western neighbour is the largest buyer of Polish furniture; in total the EU buys 85 percent of Poland’s furniture exports.
Upper Austria, Austria: Upper Austrian furniture company F+G has entered bankruptcy proceedings, according to a report on Austria Today. The company, based in the town of Waldneukirchen, declared it has entered bankruptcy proceedings with a debt of EUR 780,000 (US$1.15 million), which will leave more than 20 creditors unpaid. F+G said it would not employ any new workers and hopes to become debt-free by arranging a forced settlement.
The six-year-old company cited the bad economic situation, especially the poor outlook for sales of garden furniture, as the main reason for its financial difficulties. The company has liquidated its inventory in an initial effort to improve things. The bankruptcy follows Friday’s news that Linz-based wood products company Teak Holz is also struggling to make ends meet with expectation of huge losses and possible bankruptcy as well.
Burgas, Bulgaria: Bulgarian furniture retail chain Zona for Home has unveiled an outlet in the Black Sea city of Burgas, according to a report by the South East Europe News Digest. It is the chain’s first store along the Black Sea coast and the third in the country. The retailer opened stores in Sofia and Sevlievo, central Bulgaria, in 2007. Reconstructed and refurbished in less than a year, the two-storey outlet has over 5,000 sq m of area and more than 1,000 pieces of furniture on display. The first floor hosts living-room furniture such as couches, suites, tables, bookcases, TV cabinets, kitchen and dining-room furniture. The second floor offers bedroom, baby and children’s bedroom and office items. The outlet will also provide consultancy, home delivery and installation services throughout the country.
Riga, Latvia: Latvia’s furniture industry faced a decline in exports as well as imports for the first five months of 2009, according to a report by the Baltic Business News. Within the period, Latvia exported LVL 28.62 million (US$59.98 million) worth of furniture, a decline of 19. 7 percent compared to the same period a year ago. The largest part of the furniture exports goes to Germany, Denmark and the UK, the statistics from the Agriculture Ministry shows.
According to the ministry’s data, in the five-month period, Latvian furniture exports to Germany amounted to LVL 5.82 million, forming 20.3 percent of the total furniture exports, although Latvia’s furniture exports to this country shrunk 14 percent from the first five months of 2007. Furniture exports to Denmark in the first five months of this year were worth LVL 3.42 million, down 58.2 percent year-on-year, while furniture exports to the UK declined 29.8 percent from last year to LVL 3.00 million. Furniture exports to Denmark accounted for 12 percent of the total furniture exports, while the UK received 10.5 percent of Latvia’s total furniture exports over the said period.
In January-May, Latvia imported LVL 22.46 million worth of furniture at a 21.6 percent decline year-on-year. According to the ministry’s figures, Latvia imported furniture mainly from Poland, which supplied furniture in the amount of LVL 5.66 million over the five-month period, which is 23.7 percent less than a year ago and forms 25.2 percent of the whole furniture import.
China supplied LVL 2.68 million worth of furniture to Latvia in the five months of 2008, up 34.7 percent from last year and 11.9 percent of the total furniture imports, while Lithuania supplied 43.1 percent less furniture year-on- year at LVL 2.59 million, ensuring 11.5 percent of the total furniture imports. In the first five months of 2007, Latvian furniture exports totalled LVL 35.65 million, while furniture imports amounted to LVL 28.655 million.
Frankfurt, Germany: Hosted by the Decorate Life Fair, the World Furniture Confederation held its committee meetings and General Assembly meeting in Frankfurt on July 4. On the proposal of its directors’ board, the members of the World Furniture Confederation chose Jia Qingwen, Andy Counts, Valentin Zverev and Chan Huang Choi as vice presidents of the organisations during the meeting of its general assembly.
Jia Qingwen is the president of the CNFA (China National Furniture Association), which is celebrating its 20th anniversary this year. Andy Counts is the CEO of the AHFA (American Home Furnishing Alliance), which represents the interests of the furniture manufactures in the US. Valenti Zverev is the president of Amedoro, the Russian furniture manufactures’ federation. Chan Huang Choi is the president of KIFFC, the Korean Furniture Manufacturers’ organisations and also president of CAPFA, the Confederation of Asia Pacific Furniture Associations. Mohsen Sellami, president of UTICA, the Tunisian Wood and Furniture federation was chosen as convener of the Technical Environment Committee.
The general assembly also ratified the choice of Moscow as venue of the third World Furniture Congress. The congress will be organised by Amedoro and will take place on November 10-11, 2009. Members of the general assembly also approved two new resolutions proposed by the directors’ board and by the technical and environmental committee. Resolution 3 of the WFC appeals to the national and transnational standards bodies to work on the harmonisation of a standard to measure the emissions of formaldehyde from panels. Currently, several European, American and Chinese standards are being used. This complicates the trade of furniture specifi cally considering the various legislations on this subject that are being enacted all over the world. Resolution 4 of the WFC endorses the international ISO standard 10303 – 236 as electronic communications standard for the furniture sector. It suggests the use of this open standard in software used in the international furniture trade.
The members also discussed the illegal harvesting of timber and legislative efforts to reduce this such as the Lacey Act in the US which renders all imports of illegally cut wood and wood products a criminal act or the similar EU initiative that is being discussed in the EU.
Shanghai, China: Matsu Co Ltd, a purveyor of high-end German office furniture brands, has announced the appointment of Colin Tay to the position of Director of International Marketing. Tay assumed the position in June 2008 and is responsible for developing and structuring strategies for the export business, in line with the company’s vision to be a one-stop offi ce furniture solution provider.
Headquartered in Shanghai, Matsu is the official licensee in China for world famous German brands like Kusch+Co, Planmoebel, and Burkhardt Leitner. It is also the exclusive agent for Toucan- T, Holzmedia and Renz. Tay manages all projects and matters relating to marketing, customer relations as well as communications all of these brands under Matsu’s portfolio.
Tay brings with him five years of experience as Account Manager - Inter national
Marketing at a Singaporelisted furniture manufacturer and retailer. There, he honed his skills in customer relation management, as well as product and project management. The 31-year-old Singaporean said: “This position is both interesting and challenging. My goal is to elevate Matsu’s presence and standing in the international arena. I believe that my past experience and bilingual abilities will be put to good use here”.
Future Sofa: Innovative Comfort
Combining bycast leather and fabric, Future Sofa’s new range of living seating has garnered awards for its refreshing, modern design. Attractively priced and manufactured to high standards, it is an amalgamation of contemporary and classic designs.
Tequila Kola: East Meets West
The Marga Armchair is part of the Beluga collection from Tequila Kola. It fuses European styling with Asian details. The range also includes accent pieces like mirrors and lamps.
Caluco: Happy Ending
The Mayan square end table is made of UV and weather-resistant VIRO fi bres woven around an aluminum frame. Equally comfortable indoors and out, the Mayan end table comes with a removable to glass top and plastic foot protectors.
Idealsedia: Worthy Sidekick
The low-based Alloro side table can do well as a coffee side table, a footstool or just a convenient space for book and magazine storage in the living areas. Deliberately simplistic in design, the Alloro makes strong style statement with its bold lines and architectural form.
Maku Furniture: Green With Envy
From green furniture maker Maku, the Ives Sectional Sofa is made of plantation grown teak. With top quality hardware and dove-tail joinery, Ives is available in four custom colours: Earth, White Sand, Sunset and Green.
Design Kollection: Natural Relaxation
The Uzit coffee table is constructed of synthetic resin Jalan fibres for an authentic rattan look. It is handwattled, resulting in a rustic handicraft aesthetic. Ideal for creating exotic living spaces with an airy feel, the Uzit is maintenance free.
Tonin Casa: Ambience Enhancer
The Italian designed Viveca side table is made of a continuous piece of glass for a sleek, fluid line. It comes in a set of two nested tables, enabling users to control how much surface one needs. It is available in three colour options: Aquamarine White, Black and Red, and two finishing options: clear or frosted.
Lane Furniture: Coffee And Friends
The Surrey entertainment collection reflects a warm appeal. Featuring a planked cherry top and heavy distressing, the coffee table in the collection exudes a laidback charm. The Surrey Collection is available in a variety of configurations to suit every living need.
Adriana Hoyos: Siesta Fiesta
The Tagua Day Bed features an internal motor, allowing users to change positions smoothly. Its cushion is upholstered in a combination fabric of 83.5 percent polyester and 16.5 percent cotton. It is available in six different colour options.
Summer Furniture: Clearly Classy
Made of tempered glass, stainless steel, aluminium and carbon steel, Summer Furniture’s glass coffee table can be swivelled for extra surface area. The table top features 10mm tempered glass, whilst the base is made of thicker 15mm tempered glass for stability and durability.
BDI: Old-School Cool
Marina TV stand takes its design cues from the 1950s, with clean lines and a glossy white finish. With a thoroughly modern interior, it is suitable for modern flat panel TV displays and audio-visual equipment, featuring tempered glass shelving and an integrated cable management solution.
Eurosa: Contemporary Elegance
Launched early this year, Eurosa’s 443-702 rectangular dining table and sideboard with steel legs was created by its in-house design team in a contemporary style that defines elegance. Exported to UK, USA, Australia and the Middle East, both table and sideboard are manufactured using solid elm with an elm veneer.
G-Pacific Enterprise: Extra Convenience
The Boston Dining Set from GPacific Enterprise comprises chairs of traditional design and a butterfly extending table that comes in a rich mahogany colour. With its orange tiled surface, the dining table is robust and spill-resistant. Made of rubberwood, a sustainable and environmentallyfriendly timber, the Boston dining set is constructed using a knock-down system for easy assembly.
Tom Dixon: Linear Flexibility
The Slab Dining Table from Londonbased designer Tom Dixon is made of solid wood and is available in black stained or natural oak. With its wide table top, it can be used either as dining table or for meetings. Its linear appearance and durability makes it a great addition to any room in the house. The table can be paired with Slab chairs or bench.
Gervasoni: In And Out
Paolo Navone’s InOut table for Gervasoni combines the beauty of handmade ceramic with the practicality of teak. The dining table, which can be used indoors or outdoors can be paired with InOut ceramic stools to create a striking ensemble. Buyers can choose from various sizes or different coloured ceramic bases. The influence of east and west is evident in this collection.
Koda: Classic Comfort
Strike a balance between modern design and outstanding value with Koda’s Clinton Collection. The bold natural steel base complements the wood and glass top combination, adding dimension while providing classic comfort for any gathering.
Design Cast Furnishing: Concrete Beauty
The Montallegro Dinette (Sahara) table, manufactured by Design Cast Furnishing has a smooth finish and can be easily moved as it is lighter than tables with solid concrete tops. Produced in a variety of colours and textures, the tables are produced using a technology that combines a lightweight engineered wood core with a concrete surface. Design Cast offers three types of surface finishes: smooth, distressed or veined.
Eurosa: A New Spring Must Come
Furniture industry veteran Tony Lin, President of Eurosa Furniture, speaks on
competing effectively amidst a market slowdown and the power of optimism in
the face of adversity.
By Ong Hong Tat
Established in 1982, Eurosa Furniture is a manufacturer and exporter of American prestige furniture and European contemporary furniture worldwide. The Singaporebased company takes on OEM and contract orders as well as outsourcing services to its customers. Over its 26-year history, Eurosa has weathered many storms. The skipper of this hardy vessel is the company’s founder and president, Tony Lin.
For Lin, the old adage holds: ‘the early bird catches the worm.’ Always a step ahead, Lin, led the company into China in 1995 when most furniture manufacturers were still hesitant to do so. And just when China began to heat up as the defi nitive manufacturing base, Eurosa entered the Chinese retail market. Today, Eurosa is a brand name in the mainland strongly associated with quality and value. Its retail business also provides another source of revenue for the company distinct from its manufacturing activities.
By diversifying revenue streams, companies can score more points on competitiveness. In times of economic downturns and declining consumer spending that resulted from the recent sub-prime woes and rising fuel prices, this edge is key to survival. This is why Eurosa Furniture’s retail operations have become an integral part of the business. Rather than succumbing to these challenges, Lin chooses to look at it from another perspective.
Ever the entrepreneur and survivor, Tony quotes an oft-heard Chinese saying, “In crisis there is opportunity.” No stranger to turning the tide, Lin said, “This is not the fi rst time that the furniture industry has been hit. With strong foundations, a company can weather the storm well and emerge stronger.”
He continued, “In furniture, we don’t have a sunset industry. We have sunset companies”. Furniture is a basic consumer need, but enterprises that do not adapt and ride new waves will eventually fl ounder. “What the market needs now is much different from what it needed a few years ago,” Lin said.
With increasing affl uence in the developing countries, demand for value has superseded demand for low price. With the knowledge that price competition would not work for Eurosa, Lin crafted a strategy that produces quality, durable and reliable furniture with a design emphasis.
Pricing is one area often close to the consumers’ hearts, especially with the ongoing infl ation. While others might assume a simplistic lowest-price-is-best mentality, Lin views this differently. “Your price must refl ect the market segment that you want the product to be in. Premium products command premium price. Pricing premium pieces low might just cause misunderstanding. Consumers may assume that it is an inferior product. Value, not absolute price, should be the main consideration,” Lin said.
With regards to his retail business in China, the right knowledge of Chinese consumer psyche aids this businessman in making astute decisions. “The common belief is that China is a counterfeit haven. But today, those with real spending power don’t want to buy fakes; they want the real thing. For example, you’ll fi nd that usually the customers for copy watches are foreigners, not the native Chinese.”
“Knowing what your customers demand is an important piece of business intelligence,” added Lin. “Classical/traditional furniture lines are moving slowly in China at the present. The Chinese are gravitating towards contemporary pieces with clean, modern lines. The Chinese want design originals, not fakes. To satisfy consumer appetites and stay relevant, furniture manufacturers should constantly monitor trends and adapt accordingly.”
Realising that brand image plays an integral part of purchasing decisions. Eurosa set on creating a solid brand name for itself in China that would form a key pillar for success. “We cannot compete purely on costs alone. Although our prices must be competitive in the category our product is positioned, Eurosa has always focused more on making quality furniture. It necessitates branding to further differentiate our products from our competitors. When consumers recognise a brand, they will be willing to pay a premium for the assured quality,” said Lin. Eurosa’s lifestyle bent is so pronounced that it has prompted Chinese trade media to term Lin a ‘lifestyle artist’.
Citing the power of branding, Lin said, “Chinese made furniture is good. But most Chinese consumers want imported products because they carry an assurance. If you think about it, this peace of mind is the reason that consumers are willing to pay slightly more.” This is where the importance of marketing comes in. To succeed in the Chinese as well as the world market, one must create the right environment. Good product and sound manufacturing practices are the rudimentary standard. A good sales force will be the driver of growth,” Lin said.
Other than a trusted brand name with assured quality guarantee, what sells? The answer is in product design. Lin said that strengthening design capabilities does not simply mean making pieces that appeal to him. From a business perspective, “you may like it very much but that is no guarantee for market success”.
Relying on accurate market surveys, Lin shared that the innovative use of materials will take centre stage in the years ahead. Eurosa has already taken steps to arrest the demand. “Our table tops are made of solid wood, not veneers or plywood. This is even ahead of the Italians. For steel, we use only 304 standard stainless steel,” Lin said. Using more solid wood in its creations may mean higher production costs. However, exercising cost control to the detriment of product quality is akin to shooting one’s own foot. “I have always wanted Eurosa to make good furniture, so that is truly my priority,” Lin asserted.
The economic slowdown is an opportune time for Eurosa to procure the materials he needs at a good quality and lower price, in bulk. “When times are bad, prices are often depressed. This applies also to raw materials,” Lin said. Of course, enterprises that operate on tight cash flow will be hard strapped to take advantage of this. In the fastpaced business world, a certain level of conservatism can be useful. Maintaining a healthy balance sheet and keeping expansion plans under manageable levels brings about more flexibility should adverse business climates strike.
The US will continue to be world’s largest economy and biggest consumer market for a long time. “When America sneezes, the world catches fl u,” Lin stated. This assumption has evidenced to be true. Earlier in the year when the subprime crisis came to a head, numerous sectors of the world economy declined correspondingly. “Banks are more wary of extending loans. Suddenly, cash fl ow became a challenge for many enterprises,” Lin said.
Lin has faith in Asia’s manufacturing capabilities. “Centres of production might shift from country to country but the place to manufacture in the foreseeable future is still Asia,” Lin said. “America’s economy is 70 percent service, 30 percent manufacturing. In Asia, it’s the other way around.”
That said, Lin is too aware of the complexities of overseas manufacturing, “Manufacturing in China incurs some hidden costs because infrastructure, though improving, is lacking,” Lin said. “Neighbouring countries like Vietnam are now looking more attractive. Backed by governmental support, it holds promises.”
Times may be bleak but Lin urges optimism. “No matter what, you have to sell to remain in business. Think positive. Instead of focusing on the bad, think of it as a natural process of recovery. A new spring must come.”
Laura Ashley: Enviously Green
While price tags of interior furnishings were pressed and slashed to pits, most outdoor
furniture has been retailing higher and higher over the past decade. Capitalising on consumers’ fancies for brand names and their green consciousness, Laura Ashley Outdoor Living is reaping its harvests in the greener pastures outdoor.
By Nicole Liang
There is no greener pasture in the furniture industry today than the green outdoors.
Price tags of interior furnishings have been slashed to pits since China became the world’s low-cost factory over the years. Most outdoor furniture, however, has been retailing higher and higher recently. If not buying from massmarket giants, consumers can expect to pay several hundred dollars for an ottoman to several thousand dollars for a multi-resistant outdoor sofa. For instance, the opulent Dune Daybed & Ottoman – designed by Vladimir Kagan, a living legend in modern American furniture, and made by respected teak manufacturer Barlow Tyrie – is retailed at GBP 1,943 (US$3,631). Such is the price for owning a branded piece of seating offered by two renowned names.
And there is market enough for such luxuries in the sun. According to Zoe Brady, outdoor living buyer for John Lewis, gone are the days when consumers bought cheap goods; they are now going after quality, long-lasting furniture.
Laura Ashley Outdoor Living, a high-end range of outdoor furnishing line associated with the well-known fashion and home accessories label, justifi es its prices also by brand namemarketing. Launched in 2007, Laura Ashley Outdoor Living is the fi rst-ever collection of garden furniture associated with a major brand and has proved popular in the UK, Europe and the Middle East. EOL was approached by Laura Ashley to develop an outdoor living concept and obtained license in 2006.
But more than that, the range commands a premium by going green.
“Laura Ashley Outdoor Living is a green name with green footprints that is way ahead environmentally and ecologically,” said Gerald Bloohn, managing director of Exclusive Outdoor Living Ltd (EOL), the exclusive trade-only supplier of Laura Ashley Outdoor Living. The company took a year to get its products and components certified with a full Forest Stewardship Council (FSC) accreditation. This was a necessary, useful and important step, said Bloohn: “The whole world is becoming more aware of its environmental responsibilities to only be involved with materials that are sustainable and subject to strict international independent supervision. The FSC accreditation is essential for future sales and developments”.
With this positioning, while home furniture exporters mull the challenges of fuel, raw material and labour prices, EOL comes through unscathed. Bloohn shared, “At the moment it is hard to tell what impact higher costs will have on our export business. Some new markets are actually looking for higher priced goods”.
The 2008 collection, which hit the stores in April, was created using a combination of FSC approved teak, stainless steel, glass and man-made wicker. It offers six distinctly different ranges reflecting totally unique approaches to outdoor living. The range of outdoor furniture comes with matching cushions, parasols and accessories in Laura Ashley fabrics. Everything is low or no maintenance and all fittings are made from stainless steel. Where wood is involved, only environmentally sustainable and FSC certified teak is used. The Chain of Custody from all stages of production is also fully traceable. The company said that certified teak furniture in the 2008 range will all carry the sought-after green FSC swing ticket and retailers will be keen to highlight this significant benefit. Bloohn reiterated, “We have to be responsible in our choice of timber. There can be no questioning as to our stand on forest exploitation.”
EOL exports the complete Laura Ashley Outdoor Living range out of its OEM partners in China, Vietnam and Thailand. Its wicker range comes from China while Thailand supplies the teak and teak with stainless steel range. EOL manufactures its FSC teak and FSC teak with aluminium products in Vietnam. Deckchairs, cushions, rasols,
accessories and tabletop items are made there as well. Raw materials are not generally sourced locally. Timber comes from FSC sources or well-managed forests and plantations.
The quality of accessories is given equal care and attention. All of the fabric designs of current and future collections are protected by the worldwide Laura Ashley copyright. They are water repellent and designed to cope with traditional British weather. Soft furnishings are produced using Trevira CS integrated yarn, the industry standard for the highest quality fire retardant fabric. The parasols come in a very high-grade UV40 treatment and a very tight weave fabric to give maximum protection from the sun’s rays.
The UK-based supplier owns a by-appointment-only showroom of 150 sq m in Hertfordshire and a warehouse facility of up to 500 sq m. The pieces are mostly made-toorder because EOL has a minimal back up stock of a limited range in the UK.
Currently, Laura Ashley Outdoor Living’s major markets are the UK, Japan and Dubai. The outdoor range is not sold in or with any other Laura Ashley departments. Like the business model he adopted at first in the UK, EOL will sell only to specialist shops and major garden centres. Bloohn said this is due to the space required to display furniture and associated products. Also, in some countries, outdoor furniture is a seasonal product, he added.
Overseas, like in Japan, New Zealand and Australia, the option is also open to resellers and distributors who have a keen understanding of uniquely local logistical problems. “They must be an established company dealing in high quality products with the ability to develop sales of such a prestigious international brand. They also need to be committed long term to developing a strong local Laura Ashley Outdoor Living brand identity,” Bloohn said.
He continued, “All products are branded under Laura Ashley. We won’t sell without the brand name. What’s the point of selling 20 percent cheaper without the brand? The marketing loses all impact. The public will believe in the brand name. My buyers in Dubai and Saudi Arabia don’t even ask the price before placing orders. Moreover, trade partners usually get suspicious or concerned with a few dollars’ difference”.
Bloohn is keen to grow his market shares in Asia as well, even though he finds Asians “very strange because a lot of them don’t want to sit in the sun”. He plans to mitigate this by offering outdoor furniture with shades. After all, he believes that new markets like India and China are looking for top quality, internationally known branded goods.
EOL was in Singapore in March 2008 for the International Furniture Fair Singapore (IFFS), which Bloohn viewed as a platform to extend Laura Ashley Outdoor Living’s Asian presence. “We went to Singapore because IFFS has a very good visitor profile from key buyers in the Pacific Rim. We are after all an international brand and company looking for international markets,” Bloohn said.
In terms of services, EOL offers in-store sales and promotional aids such as graphic changing panels, sales merchandising and packaging. It may also provide assistance with advertising and promotion, which can come in the form of shop-within-shop design concepts.
China: Changing Climate
Furniture & Furnishings Export, International speaks to industry heavyweights and a respected scholar on the evolving face of the China furniture industry. As the country develops and its people get increasingly affl uent, furniture exporters and retailers have had to adjust their strategies to tackle this emerging generation of furniture buyers.
By Ong Hong Tat
China’s furniture industry has been transitioning since the 1980s. The country has grown phenomenally. What industrialised nations took 100 years to achieve, China took only 20. In the country’s 10th fi veyear plan (2000-2005), the industry achieved a yearly growth rate of 23 percent. From 2006-2007, a new high was recorded at 27 percent. Export-wise, revenue stood at US$17.47 billion in 2006 and US$22.1 billion in 2007, which was an increase of 29.3 percent. Growth surges began to slow down in the second half of 2007 as a result of international market changes and macro-economic controls within China. Coupled with price hikes in raw materials and energy, several factories have either shut down or shifted away. Some believe that China’s furniture industry has come to a major turning point.
China’s furniture industry was able to grow so quickly in the 1990s because of
favourable conditions in the international market on the whole, and especially thanks to the influx of Taiwanese firms into the mainland. The latter saw strengths in China’s manufacturing advantages, i.e., low labour costs in relation to good workmanships. At the same time, a rosy real estate industry in the country also propelled domestic market growth and expansion.
China is a prolific producer of furniture, even by recent standards. It made some 217.5 million pieces in the fi ve-month period from January to May 2008. Zhejiang is the top furniture production source in China, accounting for 66 million pieces, or 30 percent, in the same period.
Guangdong comes in second, manufacturing 65.66 million pieces of furniture. This accounts for 30.2 percent of China’s furniture output in the earlier half of the year. Together, Zhejiang and Guangdong make 60.5 percent of all furniture originating from the country.
The third largest producing area is Fujian, making some 32.84 million pieces of furniture. The top three furniture-producing regions make 75.3 percent of the nation’s furniture.
The data suggests that furniture manufacturing in China is a centralised affair. Major centres of production are located in the Southwest areas of the country. Especially close to the port cities in west China as the area provides close support for furniture exporters. Vital sea and road links are all fundamental to the furniture trade in the world’s most populous nation. In addition, Guangdong has traditionally been the top furniture producing base. Its slide to the second position is a clear indication of the impact of the exodus of factories especially in Dongguan city.
Of the 217.5 million pieces of furniture produced by China, 117.36 million of them were metal furniture. It constitutes just under 54 percent of all furniture produced. Coming in second, 72.49 million pieces (34.3 percent) of wooden furniture was produced in the January to May 2008 period.
Although these two furniture types dominate production, statistics show that metal furniture manufacturing is in a decline. China produced 0.83 percent less of this furniture type as compared to the same period last year. Wooden furniture holds more promise, growing 8.04 percent from the same period last year.
The largest growth was registered by makers of soft furniture, up 14 percent by quantity as compared to the same period in 2007. The entire Chinese furniture production quantity has also risen modestly by 3.09 percent as compared to the same period last year.
Problems Faced By The Chinese Furniture Industry
An Analysis By Professor Xu Meiqi
Since the sub-prime crisis, the American market began to slide. This has upset the consistency of exports from China. Beijing’s new labour laws will push per capita wage to rates higher than those in Vietnam, Thailand and even Malaysia. This further aggravated the current uncertainties. The steadily strengthening Chinese Renminbi against the US dollar places additional pressure on exporters. Coupled with rising internal costs, export growth can be expected to slow.
Under these unfavourable conditions, Chinese exporters of furniture must be braced for change and expect more challenges ahead. All is not lost, however, as the furniture industry is a primary and evergreen industry, satisfying basic human needs. Economic growth is a cyclical curve, with its ups and downs. The same can be expected of the furniture industry. Stagnation and decline is a common and normal phenomenon and should be viewed as such.
Given the size of China, it is characteristic that its economy will focus heavily on its domestic market as its base source of revenue. Foreign markets will feature in the economy only as secondary income sources. As furniture is a consumer good, its main market will be within the country. As the pie is shrinking, manufacturers must make developing local demand an imperative.
The higher-end of the China furniture market is comparatively saturated now, where competition is based on branding and hairline differentials. The low- and mid- end markets have plenty of room to grow, thanks to urbanisation. Suppliers to this segment of the market will find more demand in small towns. They will however need to put in more effort to develop the right style and price points that most suit these consumers. One who grasps these elements well will emerge the winner.
Apart from developing demand, manufacturers must work towards better design and value. It is necessary to note and educate consumers that low-end and lowly priced furniture does not naturally translate into low quality products. The price may refl ect relatively simpler construction and processing but this may not necessarily compromise stability, strength and environmental friendliness.
Furniture is a product that relates directly to the enduser. It is also a vehicle of culture. To a certain extent, the choice of furniture speaks of a person’s lifestyle and demands. Furniture is closely linked to consumers’ values, artistic tastes and living habits. And because of this, furniture marketing depends on the entire value chain from design, raw materials, manufacturing and retail.
In post-industrial countries like the US, the furniture industry has gone through stages of manufacturing, retailing, marketing and building relations.
Manufacturing stage: Focuses on customers’ demands of volume.
Retailing stage: Made up of retail groups or consortiums. Buyer-seller relationships are connected by a mere shop space.
Marketing stage: Companies begin to focus on customers’ needs which dictate what is manufactured.
Relation-Building stage: Since the 1990s, manufacturers and retailers have begun to build longterm working relations. ‘Customer is king’ has become the mantra for companies’ corporate cultures.
Furniture malls and even larger furniture cities have become the mainstream modes of distribution since China opened its doors to the world. This mode has now taken on forms such as the Jisheng Wellborn’s (JSWB) Global Home Furnishings Centre. China is now in transition between the stages of retailing and marketing as most Chinese fi rms are still fl ooding the local market with lowly priced products, via price wars, with little care for consumer demands.
China’s biggest challenge today is to carve out innovative business models. Rather than a homogeneous, singular one-for-all standard, there should be variations tailored for different levels of consumer spending, characteristics and markets within the country.
If China’s enterprises are willing to engage themselves with consumer demands, they will try ways and means to satisfy the latter’s needs through furniture designs and innovation. These commercial and business aspects should lead manufacturing towards a better future.
A Case Study: Landbond
Established in 1984, Landbond Furniture Co is one of China’s larger furniture producers. It's products run the entire gamut from solid wood furniture and sofas to offi ce chairs, hotel furniture and mattresses. Manufacturing out of Guangdong with factories totalling a fl oor area of 250,000 sq m, Landbond produces RMB 1 billion (US$146.32 million) worth of furniture annually, outputting more
than 1,000 containers a month.
The Landbond group and its products have been granted numerous awards by the Government of China and Guangdong province including the 'Top 100 Enterprises', 'Trustworthy Quality Enterprise' and 'The Best Credit Enterprise.". The Landbond group may be considered as a successful model for the development of Chinese furniture enterprises.
Manufacturing their own brand generates over 70 percent of the company’s turnover, with the rest as a result of contract manufacturing activities.
Exporting to all continents, Landbond’s dominant destinations include the Americas, Europe, Australia and Africa. Firmly in its relation-building stages of development, Landbond has retail operations in China. To date, Landbond has over 1,000 retail locations in China. In 2000, Landbond started retail operations using a network of overseas partners. In turn, Landbond supports them with merchandising, store displays and marketing materials.
Understanding consumer and competitor sentiments has gone a long way in ensuring Landbond’s success. Sandy Li, Director of International Relations at Landbond, said, “Every market is different in the product style, purchasing habits and players. In China we have built a solid reputation for quality and reliability over 20 years. Therefore, we can create new trends and influence the market a little. However, in overseas markets, we aim to enter a niche market where consumers are attracted to our innovations and unique features.”
Placing emphasis on design and innovation is another pillar of success for Landbond. Recognising the importance of new ideas, Landbond has a R&D base in Foshan and a constantly evolving, ad-hoc team of designers working with the company on a project basis. To create a marketable cosmopolitan style, Landbond also works with Australian and French designers, in addition to their Chinese counterparts.
According to Li, budgeting for research costs the company RMB 2-3 million per project. Typically the company spends approximately RMB 20 million in R&D annually, or about three percent of product sales.
With fresh ideas, Landbond capitalises on its R&D strengths with a calculated marketing programme. Max Ortolan, who is in charge of product development and exports at Landbond Furniture, said: “Landbond is a manufacturer in a very competitive market. Many of our competitors have similar products with the exception of a few of Landbond’s special pieces. What really differentiates a Landbond product is the service and level of trust that the consumer has for the company.”
“The main channel used for marketing products is exhibitions. Landbond attends fairs in Guangzhou and Shanghai and also the Cologne fair. Landbond, like any other company, needs to have different strategies in different markets,” Ortolan said.
For smaller markets or key customers worldwide, Landbond engages in direct sales. In main markets where added service and presence is required, Landbond works with agents/distributors, establishing a local offi ce to add value to retailers. Lastly, for OEM customers, Landbond practices a direct sales policy after which the local brand owner takes charge of sales and marketing internally.
VIVID 2008: Clean And Green
The entries in this year’s VIVID – Vibrant Visions In Design furniture competition – at Furnitex saw over 90 products from emerging designers across Australia. The VIVID awards were announced and presented by the Victorian Premier, John Brumby, on July 17 at the official opening of Furnitex in the categories of Concept, Commercial and Student. This year also saw the introduction of a new award – the VIVID Green Award. VIVID curator, Uli Hasel praised the big and bold entries this year with many designs dominated by clean lines and beautiful workmanship. In particular she was pleased with the fact that nearly half of all the products entered were ecologically sustainable.
WINNERJudges comments: A visually very exciting piece that has the WOW factor and great potential for further development.
SHORTLISTED
SHORTLISTED
WINNERJudges comments: Here is a product where nothing is compromised – a functional, mainstream design, made from one of the most sustainable materials available, making it highly commercially viable.
WINNERJudges comments: Everything you would want in a product: simplicity, comfort, multipurpose, visual appeal and perfectly suited for our Australian lifestyle.
SHORTLISTED
WINNERJudges comments: This piece has beautiful form from all directions, is highly commercially viable and very well made.
SHORTLISTED
SHORTLISTED
As a continuation of our feature on SaloneSatellite in the July 2008 issue, we bring you the second and last instalment. While the theme of viva il verde! Go Green! was a participation requirement, no points were lost on aestheticism and technicality.
PavePave is a jewel and a fashion collectible. It is also a chair that can be adjusted and revolved. Designed by Enzi Palmisciano, aesthetics is highly exemplified here.
Ch.airThis chair is made utilising an innovative manufacturing process involving hollow moulded carbon fibre elements connected by aluminium lugs. This combination of materials not only offers a higher degree of manufacturing fl exibility than one-piece designs, but also results in a visual contrast which is distinctive and references the unique technology. Ch.air will be produced in limited quantities. According to the designer, Carbon fi bre has many advantages, like being extremely lightweight, possessing excellent strength and malleability.
Roll UpWith an aim to rethink the uses of functional materials, the designer reuses PVC pipes to bring brand new meanings to waste. The corrugated pipes roll up into a steel structure to become an armchair, a table or stool and the possibilities are endless.
Afro ChairTo change a new hairstyle, first change your chair. And that is the one and only philosophy behind this whimsical and cheeky design.
Less Is MoreBoth the base and foothold are made of black painted iron sheet that are 4mm thick. They are symmetrical and bespeak uniformity. The table’s monocolour gives it a simple yet firm and strong originality, said designers Massimo Castiglione and Giorgia Gambino.
VoidWith four legs that are bent from a single piece of polished aluminium, the low table Void has a truly solid construction, designed by Fabian Baumann and Sönke Hoof.
Stool PoufffThis stool is both an element for seating and decorative lighting. At a corner is a large embroidered pattern embedded with LED lights. It is upholstered in silver-shined leather. The design-duo is made up of Eva Broekhuijse and Iris Hiddink.
Corky LipsThe designer calls his design inspiration a “sensual-ecofriendly” conscience. He meant to focus on sensuality and pleasing shapes with the use of organic and recyclable materials, which nowadays is so important. The materials chosen to produce the composition were based of recyclable foam covered with cork leather.
Crossing RibbonCrossing Ribbon is a chair which consists of two folded steel ribbons. It is a new and poetic approach for the structure of chair designed by Mile members Bandai Matsuo (acoustic engineer), Kentaro Kai (software engineer) and Kozo Shimoyama (interior designer).
Sedia MTwo panels are joined using high frequency formation. Wood and metal goes into this chair. The upside and the underside parts are connected using a green coupling device. Through the ergonomic approach, this shape is comfortable for long time use. It is produced by Bentek Furniture.
zitOThis multifunctional armchair is filled with Styrofoam, consisting of a central body with two arms that offer different seating opportunities depending on their setting: they can be tied together with snap-hooks, can be left open or can be zipped up to the body. It is made in Italy by Benvignati+Quagliola, Rome.
The Lifestyle Concept
Explore new markets; create new markets; think out of the box. These, coupled with optimism, still form a valuable commodity in diffi cult times. Selling a ‘lifestyle concept’, Star Furniture, Erpo International and Lorenzo continue to expand although most markets record lacklustre performance. The key to success? Quality, Customer Service, Branding.
By Azrina Abdul Karim
Opportunity exists in the most unlikely places. For Scandinavian furniture giant Ikea, the global credit crunch has forced the furniture retailer to focus on emerging markets such as Croatia, Slovenia and Ukraine. Speaking at the World Retail Congress held in Barcelona earlier this year, Ikea’s President Anders Dahlvig said, “Our growth is going down slightly in the US, the UK and Germany.” A British Retail Consortium report published mid-August found that weakness in the property market was affecting demand for household goods, while sales of furniture and furnishings were well below their levels of a year earlier for the sixth consecutive month.
Also speaking at the World Retail Congress, Mohammed Alshaya – Executive Chairman of Kuwaiti-based retailer MH Alshaya Co – projected a fundamental change in the world economic order resulting from “the current low confi dence in western economies and a high confi dence in the emerging markets”. In reference to the retail brand saturation in western markets, he said retailers would seek expansion opportunities in the east.
Alshaya listed fi ve challenges that a brand would have to face when entering an emerging market: geography, brand replication, consistency (in approach to people and training), logistics and trust. He also proposed three distinct forces impacting on these markets: desire, opportunity and entrepreneurialism. In emerging markets, a sizable segment of the population with high disposable incomes desire to own high-end branded goods to affi rm their fi nancial and social status. They also look to the west for suggestions on style and the latest trends.
Preferring to furnish their offi ces with international high-end brands, multi-national companies entering emerging markets brought their own suppliers and designers into the scene; thereby, infl uencing local companies who seek to emulate a similar corporate image. In May last year, Romania’s Business Review quoted Iulia Stanciu, architect and partner of exclusive Knoll dealer, EN Studio Systems, who said, “In the last period we noticed that Romanian companies have started looking towards high-end offi ce furniture as well. They are interested in higher quality solutions than the traditional offer of the local market and producers. We were approached by new Romanian clients beside the traditional international clients that we usually have.” Apartment dwellers in the former Communist country have also moved from “standard black chipboard desks” to “designer-made furniture and open space concepts”.
Judging from this, furniture manufacturers and retailers should do well to concentrate on quality and building up a ‘lifestyle’ brand. In the current economic climate, brandconscious high-income consumers are less hesitant to spend on their ‘wants’ compared with those in the mid-to lower income bracket. Price is no object.
In Southeast Asia, the outlook is positive. With the recent rise in petrol prices, many Malaysians are reassessing their spending habits; but it has not stopped them from making investments in the property market. In an online poll conducted by real estate website iproperty.com from November to December last year, 88 percent of Malaysians said they would acquire a property within the next 12 months.
Malaysia’s robust property market in this case refl ects very little of the negative market sentiments. For example, branded furniture retailer Lorenzo International said their sales in Malaysia have been quite consistent. James Goh, Lorenzo’s Executive Chairman, explained, “During this uncertain economic period, our marketing strategies would be focusing on strengthening our branding, striving for innovations and improvements on our product developments.”
The Lorenzo group, involved in the design, manufacture, assembly, wholesale and retail of conceptualised lifestyle furniture, was established in Singapore more than two decades ago. Widely distributed in 37 wholly-owned stores and 39 Licensed Retailing Systems (LRS) stores in eight countries, Lorenzo will be opening more retail outlets in other states of Malaysia in the near future. According to Goh, three factors govern the suitability of retail locations: standalone store/mall, human traffi c and rental.
Designed in a contemporary style, Lorenzo’s line of furniture is famed for luxurious comfort and quality workmanship. Most of its products are sold under its Lorenzo brand in two collections: Dante –classic leather collection; and Enzo – wood- based collections. The group also exports its products under the same brand to more than 50 countries around the world.
Erpo International, the German furniture manufacturer and retailer, has also chosen Malaysia as its main base in Southeast Asia. In 1993, it ventured into the international market and four years later, set up base in Singapore. The island state, however, proved to be too small and the rentals were too expensive; hence, their decision to move to Malaysia. Erpo’s President and CEO Thomas Jungjohann said, “If everything works out, we will have a ‘window showcase’ in Singapore in the next two years on a smaller scale. For now, will concentrate on Malaysia.” Erpo recently opened its new 6,500 sq ft showroom – two levels plus a mezzanine – on Jalan Tun Razak, not far from Kuala Lumpur’s Embassy Row. Jungjohann said, “The highest end brand will be on the ground floor and the common brands will be housed above.”
With 125 years of experience in manufacturing high-quality, high-end furniture, Germany-based Erpo offers “comfort, quality, design”. Jungjohann explained, “These three must be matched and in the right way. Our sales people must know this as well. It is never just a sofa or a chair but these three elements made in Germany.” Erpo exports four 40-ft containers of sofas and chairs every month. A luxury sofa, he believes, is a worthy investment. “There are now more people who are more [than] willing to spend their money. Even if people spend a lot of time outside, sitting on a sofa occasionally is a more enjoyable experience. I would compare it to a car. Most people only drive their luxury cars once a week but they still invested in them.”
Erpo also carry the Dreipunkt collection, which has a carpet range to match its sofas and chairs, as well as coffee tables and everything for the living room. One of their marketing strategies, he said is to “cooperate with other German brands”. He explained, “For example, Mont Blanc launched their new jewellery collection in our Dreipunkt showroom for two weeks. We partner with companies and brands that share the same vision in positioning. Those who spend on a Mont Blanc are the same customers who like Erpo/Dreipunkt, who drive a Mercedez E Class. For the latter, our sofas and chairs will be for them, an investment in a seating comfort at home.”
On its expansion plans, Jungjohann said, “Now, Erpo/Dreipunkt is present in Japan, Korea, Taiwan (Kaoshiung and Taipei) and Malaysia. In the coming years, we will try to focus on Thailand and the Philippines. But we will take our time. All Asian expansions will depend on the facilities and performance in Kuala Lumpur.” He added that China is a market that cannot be ignored. Erpo is currently in talks for a possible partnership in the region.
In its March bulletin, the Malaysian Furniture Promotion Council (MFPC) cited a MATRADE (Malaysia External Trade Development Corporation) report on France’s furniture retail market which recorded a remarkable growth of seven percent in 2007, “an increase that has not been seen over the last three decades”. France’s success was due to the re-engineering and modernisation of its marketing programme for furniture, as well as a re-organisation of its distribution system, “allowing for faster delivery of orders”. Also, rather than just selling furniture, retailers should be selling ‘lifestyle’. The MATRADE reports that a lifestyle environment “provides more value to shoppers and creates a tendency for spur/spontaneous purchasing”.
The demand for high-end furniture in Singapore in recent years can be attributed to the bullish property market and a rise in affluence. Star Furniture Group, an integrated manufacturer and retailer, which introduced its Lucano brand to the Singaporean market early this year, believes “customers are willing to pay the price for products that match their lifestyle and aspirations”. The Lucano collection, with its Italian-inspired design, is aimed at consumers who “seek the fi ner things in life”; but at an affordable price.
Apart from Lucano, Star Furniture offers the Mondi Lifestyle and Zen Tradition series, which also target discerning consumers who “seek an inspirational lifestyle in their homes”. The group’s retail outlets comprise six Star Furniture outlets, eight Mondi Lifestyle Gallery outlers, fi ve Zen Tradition outlets and two Lucano Living Inspiration studio. Star Furniture also operates ‘The Furniture Warehouse’, a one-stop retail concept store that houses all four brands under one roof.
Star Furniture started its manufacturing business in 1981 an opened its fi rst retail store four years later. Kenny Koh, managing director for the group said, “Since then, we have nurtured a closeness to our customers, which has given us a competitive advantage in our understanding of consumer needs. This direct feedback from the market enabled us to scale the learning curve and help us develop three product brands (Lucano, Zen Tradition and Mondi Lifestyle) to cater to the diverse needs and wants of consumers in different market segments.” Introducing new products about every half year, Star Furniture, conducts regular promotional events, especially during the festive season, “to inspire buying sentiment in their customers”.
Apart from the quality of their products, it is their “complete customer care package”, rather than intermittent promotional exercises, that keeps their customers loyal. Koh explained, “All our store managers and assistants are well-trained to understand customer needs. In recommending appropriate products, our staff draw on their understanding of the design elements, features and functionality of our pieces.” He added, “Our logistics teams are experienced in transporting and assembling furniture. However in the unlikely event of any damage or defect to the goods, we provide complete replacements within 48 hours. We have a customer response system in place at all our stores, where customers fill in a feedback form. This feedback is then analysed by our retail marketing department and incorporated into our servicing standards.”
Developing a strong brand with international appeal is important to survive in the retail furniture market. In any economic condition, integrated furniture manufacturers and retailers will continue to expand and capture new markets, as long as they stay true to their objectives of providing consumers with products of high quality and value for money, good workmanship and most importantly, excellent customer service.
Lorenzo’s Goh, who believes customers look for brand image, design and price (in that order) said, “The furniture industry outlook is good. “We will continue to strive for innovations and improvement in our R&D, we believe in providing the best design, best quality, value for money products to our customers.” In short, he added with optimistism: “We are ready for the challenges ahead.”
US Consumer Spending:
Working Together (Part III of III)
In this third instalment, President of the High Point Market Authority Brian D Casey speaks on enhancing cooperation between manufacturers and retailers as a way to improve the industry.
By Brian D Casey
With retailer and manufacturer goals so closely aligned, doesn’t it make sense that both sides of the industry should resolve to improve relations and cooperate more in the coming year?” Mary Frye, president of the Home Furnishings Independents.
Association thinks so. “We do not value the different roles that each segment of the industry plays,” said Frye, whose organization represents single-store operations and any company involved in furnishing the home, anywhere in the
country, in any segment of the industry. “Manufacturers don’t overly value their reps or their retailer partners. Retailers don’t do the best that they can for their manufacturers. We have unease with one another.”
To be sure, that uneasiness and mistrust is reflected in the customer experience. Throughout the last decade, the industry has made tremendous strides in improving the furniture shopping and buying experience. Manufacturers and retailers have gotten much better at predicting when a customer’s order will be available and delivering on that promise. But as imports become a bigger share of the market, some manufacturers are running thin on inventories, and some retailers don’t manage their container purchases very well, resulting in shortages in their stores. When problems arise, both sides try to shift the blame, leaving consumers with a bad impression of the industry.
That’s a terrible position to be in during a down economy because consumers will spend their money on other goods and services, such as automobiles, electronics and vacations. “Our competition is not each other,” contends Carrie Craymer of OurHouse Designs. “Our competition is all the other things people are putting their disposable income into. You’ll see people buying a new car every two years or every three years and they may not even have any living room furniture.” Part of the reason might be that furniture isn’t viewed as a status symbol in the way that cars and big-screen plasma televisions are. Yet many in the industry believe that it should be an emblem of something even more important than status and money.
“As an industry, we’ve never been able to build the ‘snob’ appeal when it comes to fine furniture,” Craymer said. “We need to emphasize what home really means and can mean. I think a piece of furniture is so much more than just a piece of furniture.”
Adds Doerr Furniture’s Julian Mutter: “I don’t think we’re doing a very good job of inculcating the importance of one’s home and surroundings and the furnishings and conveying how important that is to one’s overall well being.”
Mary Frye of the HFIA says there are ways that manufacturers and retailers can emphasize the importance of furniture while also addressing consumer fears about the economy. It’s as simple as turning all the negatives into positives with new furniture as the centrepiece.
Reality: People can’t afford to move into new, bigger homes because house values are dropping and real estate is languishing on the market.
Opportunity: Communicate to homeowners that buying a room full of new furniture-or even just a signature piece-can help an old home feel new again.
Reality: Rising oil prices may prevent some people from travelling and taking expensive vacations. Opportunity: Convince women that they can create their own paradise at home with carefully chosen furniture and accessories.
Reality: Some buyers are purchasing electronics equipment instead of home furnishings.
Opportunity: Educate potential customers about how the right case good can showcase that new big-screen TV can and a comfortable new sofa will enhance the family’s enjoyment of it.
More consumers than we might imagine are open to spending money on furniture, even in the current climate, but few companies are taking the time to listen to customers’ wants and needs and to seduce them with incredible products and presentation
