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Increasing freight charges pose biggest challenge for vendors

By Kara Cox -- Home Accents Today, 9/1/2005

The combination of the devastating hurricane in the Gulf states and elevated oil prices mean accent furniture vendors won't find relief from rising freight costs, but many say the strength of their products will keep their business healthy.

The national average gas price is hurtling toward $4 per gallon. With trickle down economics, it's only a matter of time before these costs hit the shipping industry for accent furniture manufacturers.

"Gas prices are affecting our freight charges and our customers are always concerned about freight so any kind of increase affects business, " said Sara Samieian, assistant manager for Moe's Home Collection.

Renee Fanjon, vice president of Padma's Plantation, echoed Samieian saying, "The biggest challenge facing the accent furniture industry is probably rising freight costs for importers. The customers who are buying containers direct are dealing with that but they're not complaining about it as much as the main importers. We're avoiding raising prices, we're just absorbing the costs and we'll do that as long as we can but I think some manufacturers will have to look at increasing prices sooner or later."

Even with difficulties plaguing the national economy, manufacturers across the board say sales are good and numbers are up. Several vendors attribute this growth to the new customers they gained at this summer's Las Vegas Market; others say good design keeps the customers returning and sales rising.

"Business is increasing very nicely for us right now," said John McKearn, president and CEO of J.D. Chamberlain. "We're projecting growth, I don't think the economy will be particularly strong in the next year, but our sales will be growing. The difference is where our company is in our development, we are getting in with strategic retailers who we see as exemplary in their regions and we're taking care of them."

Randy Bourne, executive vice president of brand development for Interlude Home, said he sees no problem with the economy plodding along at a slow growth rate. "Our business is increasing significantly," he said. "We're very lucky to have some great capabilities from artisans around the world and I think people are responding to that and we're getting it at great prices. Consumers respond when there's something neat, so it puts the ball back in our court to provide that."

Mike Ragan, owner of Rags, a custom upholstered accent furniture manufacturer, said he believes instead of worrying about how manufacturing can compete with overseas prices, vendors should focus on what they can contribute to the marketplace. "Focus on your niche and use creativity, you just have to give everything you can give and focus on that. We're getting great embroidery and embellishment out of China, use their sources for neat new textures and treatment and combine it with our resources to create something really unique."

Good design remains the focus of manufacturers both small and large as customers continue to want it all.

"I put a lot of energy on effectively managing the fact that customers are hard pressed to tell you what they want but whatever it is, they want it right away," McKearn said. "You either whine about it, or you get enthused about how to get it to them. We think the more truly special the piece is, the more advanced the aesthetic, the better. Average stuff people can get a lot of places cheaply; it's about something that's special with interesting material combinations and textures, eclecticism that works."

"We try to stay one step ahead of what everyone else is doing," Samieian said. "We don't keep things in our line for years and years, we always try to offer something unique in our market, this year it's leather in combination with other materials."

"A lot of our sales are coming from the fact that there is a broader acceptance for natural fibers inside the home," Fanjon said. "We're offering new lines like our urban cottage look that appeals to more people. There's a lot of interest in modular type pieces, as Americans we tend to move a lot and people like to have extra flexibility."

Ragan is seeing a lot of smaller, armless chairs, as well as traditional wingbacks that have been modernized in an overscale form. "People are using smaller occasional pieces to provide a little flair to a room like big, oversized ottomans in a zebra hide with nailhead trim," he said.

"I just think if you build it they will come," Bourne said. "We look to areas where our business is strong. In the fall we're launching Interlude Beach, an area where there's tremendous growth and home building, look at where people want to live. Both classic, antique designs as well as our more contemporary Studio Collection have done well."

Bourne justifies the fact that both ends of the style spectrum are selling well by explaining that with "all the talk about segmentation that you hear about, maybe we're all just finding those individual niches."

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