Despite stagnant business and rising costs, wood vendors focus on improving variables

HIGH POINT — Business overall remains more-or-less the same for most case goods manufacturers from last quarter, which saw reduced buying activity from both retailers and consumers. Suppliers are reporting similar sales numbers from last year, with some being up or down slightly. A few report being up in the lower double digits.

As it has been, low consumer —caused by inflation and a weak and expensive housing market — is at the crux of the issue. There simply seems to be little consumer interest in buying furniture, particularly on the case goods side.

Several suppliers are also reporting rising freight costs, driven by rapidly increasing ocean container rates.

As was the case last quarter, there is still optimism, but it’s mainly for an expected uptick toward the end of the year after the election. Others are taking solace in this being a correctional period and a time for companies to improve all the variables that they can control.

“Business is challenging according to nearly all dealers I visit and speak with,” said Scott Hill, president of sales at the lower-end New Classic Furniture. “Our team is making a concerted effort to be in front of retailers on a daily basis offering best sellers, new introductions and specials.

“Advertising and events are helping, but it appears the consumer is waiting for events to shop, and you must be promoting value or financing and, in most cases, both,” he continued.

Dealing with freight

Hill, Scott 3-2022
Scott Hill

For New Classic, Hill said business is up double digits, but challenges are growing in freight.

“Getting shipments recently is more of a challenge with an increase in cost of overseas freight and a slowdown in production at factories overseas, so we are trying our best to have our best-sellers in stock and on water, albeit having to pay more in some cases to get the goods we need,” he said.

“Container customers without contracts are seeing dramatic price increases in freight causing a pushback or delays when we can’t help them with freight.”

Fellow importer American Woodcrafters cited similar challenges in demand and freight. There’s optimism, too, though, and it comes from a continued interest in new product.

rusty morris
Rusty Morris

“Foot traffic in retail is really down,” said Rusty Morris, vice president of sales. “It’s especially bad where we are strongest in the Southeast. We feel that it’s probably worse there. Florida might be a little bit better, but it has stabilized from the strength it used to have.

“We’ve hit the road really hard since market,” he continued. “There have been some successes with new orders and product. There’s just not been a lot of reordering in placements already out there.

“The one positive thing I’ve seen more than before is that people are trying to find something new,” Morris continued. “I think retailers are under more pressure to update their floors. A lot more people do shopping online first before getting to stores. They see and research the trends. Then if they arrive at the stores and don’t see those trends, that could be bad for the store.”

Morris also cited an increase in container costs. Containers remain more expensive to the East Coast, which the company uses.

“They haven’t doubled, but we’ve probably seen a 20% to 25% increase,” he said. “The bigger issue for us though is availability. We haven’t had to change our strategy or anything yet but we’re keeping an eye on it.”

Refresh ready

Marcus Bontrager, president of the Amish Fusion Designs in Indiana, also noticed a need for retailers to update their floors more regularly.

“People aren’t buying a whole lot,” he said. “They’re looking for new items, but maybe buying less than usual. It’s more important for them than in the past to refresh their floors regularly, though. Styles change quickly.

“They also have had a lot of old, bad inventory that’s left over from COVID. I think that’s going to last and carry over this whole year. COVID really turned everything upside down. A lot of people filled their floors with whatever they could get.

“On top of that, when things are slow, people look at every detail in their store to improve,” Bontrager continued. “The pressure is high for everyone to improve whatever they can. Everyone is tweaking and looking at all aspects. Retailers and manufacturers alike. It’s time for people to innovate again. It’s a correctional period.”

Mavin entered the home office category at the April market, marking its second new category in a year.
Mavin entered the home office category at the April market, marking its second new category in a year.

For domestic case good specialist Mavin, all hands are on deck to increase market share.

Kyle Schlabach
Kyle Schlabach

“It’s tough out there,” said Kyle Schlabach, vice president of sales and marketing. “We feel that we’ve pulled all the levers and done as much as possible related to designs and releasing new categories. We’re trying to get reps into every nook and cranny of the U.S.

“Depending on category, we’re still up 5% to 10%,” he added. “Our goal now would be to hold those numbers, but we had much loftier targets initially. We think with market conditions that we’ll have plenty of work cut out to hold the increase.”

Other options

Legends Home, which offers most home furniture categories, is optimistic but not in case goods.

Tim Donk
Tim Donk

“Mattresses are doing very well for us,” said Tim Donk, vice president of product. “We’re moving into mattress season, and we had our official launch of our Good Vibes sleep. Mattresses do well in tough times because everyone still needs to sleep, and to sleep well. Upholstery is still stronger, too, although the rising freight costs are hurting us because we do lots of mixed container and container direct.

“Everything else takes a hit: bedroom, dining, etc.,” he continued. “Unless you moved houses or do a full home remodel, a lot of times you’re not buying this kind of furniture. We are still seeing an uptick in fireplaces, which has continued from High Point Market. We did see some increased orders over Memorial Day, and a lot of that was in fireplaces.”

Legends Home operates a domestic manufacturing plant in Arizona in addition to importing from overseas. It supplies furniture for nearly all rooms of the home.
Legends Home operates a domestic manufacturing plant in Arizona in addition to importing from overseas. It supplies furniture for nearly all rooms of the home.

Donk was less optimistic about the notion that retailers are under more pressure than before to update their floors.

“Yes, social media and online shopping gives customers a better idea of the trends, but I don’t think it’s that big of a deal,” he said. “If a customer can notice you’re out of date, you’re in bad shape anyway.

“A lot of that updating of floors happens naturally because items end up getting discontinued,” Don said. “If a manufacturer stops making something because it fell out of favor, a retailer can’t get it anyway.”

What is trending?

Just as manufacturers were saying at the April market, there aren’t specific trends within case goods that seem to be dominating, although perhaps natural looks and finishes are exceptions.

“I’ve been crunching numbers and trying to identify trends,” said Schlabach at Mavin. “Nothing is jumping off the pages right now. Dining vs. bedroom isn’t really a thing. Home office is too new for us to say. Occasional is doing great, but we don’t have a great data set for that either as it’s still pretty new. What has done well are our gallery partners.”

Gat Caperton

Gat Caperton, president of high-end domestic manufacturer Gat Creek, was more specific.

“Cool (as in not reddish) finishes, open grain woods, natural elements continue to be strong,” he said. “I think some of the red toned finishes will make a small comeback soon.  So much stuff is cool these days, so a few warm tones are again being appreciated.”

Morris at American Woodcrafters said that colors are more important than specific styles.

“I’ve noticed a big shift in color tone desires,” he said. “We’ve had huge success with white furniture for a long time, but now there’s a definite trend to get away from that. People want new ideas that are not white. The battle between transitional and traditional is still close.

Outlook for ‘24

Jim O'Keefe
Jim O’Keefe

“April was up for us from last year, but market was later in the month last time, which may have contributed,” said Jim O’Keefe, vice president of sales at the high-end Hekman and Howard Miller. “May is now aligning with what I predicted.

“I see brick-and-mortar possibly starting to come back, but I think it’s going to be bouncy for a while,” he added. “Some months will be up, and others will be down. We’re buckled up for some turbulence.”

“I think most of us are in the same boat in expectations for the rest of the year,” said Hill at New Classic. “We are locked in and pushing just like everyone else to take market share. Discounts are being offered out there, but if there isn’t a need, the dealers aren’t as eager to take on more inventory in these times.

“I think we will go through a typical slow down this summer and wait and see what happens with the election,” he concluded. “We are preaching positivity to our reps and not succumbing to the doom and gloom that can take over in challenging conditions like these.”

See also:

  • Case goods companies are ‘adding value,’ but what exactly does that mean?
  • Hidden strengths: As a category, how does bedroom perform in a tough business climate?

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