Accent furniture niche stays strong despite challenges
By Cinde W. Ingram -- Home Accents Today, 2/1/2007
Accent furniture remains a shining star in the home furnishings industry and manufacturers expect the category's sales to grow slightly this year or at least stay level with 2006 sales despite dwindling numbers of retailers and a slower housing market.
"The home furnishings industry in general is not as strong as it was four or five years ago," said Bill Cain, president, Chelsea House. "The decorative accessory and accent furniture segment, however, seem to remain strong within this environment."
Dan Sumner, vice president of sales and marketing of Chicago-based Butler Specialty, said the accent furniture category is as healthy as any other home furnishings niche right now. "Retailers are still struggling," he said. "Things are better than they were a year ago, but they're still not wonderful. One positive thing about accent furniture is we can actually show a dealer how we can improve his business by having more of the product than he might normally have, because it's pure plus business."
Brett Hatton, CEO of Four Hands, said its accent furniture business is up about 35% although slightly off the Austin, Texas-based company's overall growth rate of 44%. "We are strong believers in this segment as a simple way for designers and end-users to freshen up a room set, providing spark and attitude without overpowering the entire room," Hatton said.
Habersham's 2006 accent furniture sales were slightly above its 2005 sales, said Tom Skipper, vice president of sales and marketing. The Toccoa, Ga.-based manufacturer's January 2007 numbers were up significantly over a year earlier."From our perspective, the health of the accent furniture category remains strong," Skipper said. "We consider every piece in our line — from grand scale entertainment centers to tables and chests — as accents that can complete or define a room. So, from my view, the better we do our job with design, the stronger the category becomes."
Keeping design at the forefront was a concept manufacturers repeated as they reflected over sales reports or projected what the months ahead will bring.
"Our sales are up, but we take nothing for granted," said Sean McFadden, vice president of sales, Interlude Home. "We continue to invest in new talent to keep us energized, and on the minds of design-driven customers."
McFadden evaluated various price segments within the category and gave different predictions for each. "There is a lot of competition and downward price pressure in the lower to moderate end of the business," he said. "Dealers and manufacturers who chase the commodity end may be marginally increasing their unit sales, but are reducing their margin dollars on each transaction. I don't think that you can characterize this as particularly healthy. In the better moderate to premium end of the business, the merchandising is still driven largely by quality and design relevance. This segment is much healthier and poised for growth with a little general economic up-tick."
John-Richard CEO Alan Galbraith agrees on the health of the category. "We have not only opened our own factory in Vietnam to support this growing area of our business but indeed we have doubled the size of this facility within 3 months of its opening. The trend is being driven by consumers' desire to personalize their environment to reflect their likes and their experiences. Accent furniture, because of the variety of style, scale and application lends itself to decorating in today's environment."
Such an up-tick would bode well for the niche, although accent furniture continues to sell during tough economic times.
Facing challenges aheadThe list of challenges to the accent furniture segment also was broad, ranging from economic ones to the need to help independent retailers. Again, the push to stay ahead of design trends repeated.
"The biggest challenges at the high end are to continually develop product that is fresh and relevant to today's environments," Gailbraith said. "whether that be in contemporary or more traditional styles. Even traditional furniture cannot be 'your grandmother's traditional'."
Although vendors find it tempting to follow the path of least resistance and engineer in cost savings first, McFadden said they can't lose sight of the design elements that make each piece attractive and meaningful to retail customers. "I think the value of creativity will prevail," he said. "Items that are the result of strong design work at good value will be successful. Commodity products struggle.
"We are seeing pressure from interest rates," he added. "Customers experienced a real wealth effect refinancing homes over the last several years, and a lot of the equity that they took out in refinance went back into the home in furnishings. That binge is over. Fuel prices are also a worry. Another spike in crude could take dollars out of our customers' pocketbooks and add transfer costs to our products. We can't control these things, so we can only prepare by designing better products."
Skipper agreed. "I believe Habersham's sales have continued to trend upward as a direct result of fresh new designs and willingness to think outside of the box," he said. "Looking ahead, I see accent furniture becoming increasingly price competitive and margin restrictive at the medium- to low-end of the category. I believe the upper-end of the category will see the strongest growth as more unique designs and styles are introduced."
Cain views the niche's biggest challenge as staying abreast of the needs of its retail customers. "We are opening another showroom to better reach our customers, and, at the same time, we are stepping up in our efforts to travel to meet with them," he said. "Our focus remains where it has always been — to provide high design items with the highest quality. The price point pressure is always there and we continue to try to obtain the best prices possible while never sacrificing our primary focuses."
Meeting the needs of retailer customers was also foremost in Sumner's mind. "Retailers are going to be healthier in the third and fourth quarter than they are right now," he said. They'll have less inventory, less stress on them and be able to be in a stronger position to buy. I would expect just a slight increase (say 5–6%) in overall in sales in 2007 over 2006."
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