Decorative accessory vendors fight tough economy

Perhaps 2007 will be best remembered in the home accents industry as the year everyone ran twice as hard to stay in the same place. In the decorative accessories category, several manufacturers say rallying their teams — from designers to producers to retailers — is a top challenge as this year climbs into bed and prepares to turn out the light.

“The thing that really fuels a downturn is when everybody starts pulling back,” said Sean McFadden, vice president of sales for Interlude Home in Alpharetta, Ga.

Andrew Cymrot, senior vice president of Long Island-based Austin, calls it fatigue – and it comes in two sizes: “Retailers are somewhat fatigued by the product assortments they're provided,” he said. “So many manufacturers are manufacturing from the same trough, so to speak.” And retailers and consumers are also wearied by “bad news that seems to be constant.”

From energy costs to subprime mortgages' potential effect on the stock market, there's a noticeable chill in the air. “There's a lot of uncertainty for 2008,” McFadden said. “This is no time for the faint of heart to be in this business.”

Yet for those who can weather the ups and downs, decorative accessories comprise the largest slice of the home accents pie. In Home Accents Today's exclusive 2006 Universe Study, decorative accessories commanded 31% of market share. Projected sales for 2007 were $23.5 billion, up 4.1% from 2006. Most every store carries accessories, which include everything from bookends to candles to garden items. For many independent home accent and gift stores, this category is the foundation of their store offerings.

Several decorative accessories manufacturers say they are hoping to warm things up for their retailers through exceptional customer service — and the promise of new products popping up at winter markets.

“We write thank you notes for all new customers who write orders in our showrooms. I sign all those notes personally,” said John Scott, president of Sterling Industries in Norcross, Ga.

Michael Yip, vice president of Oriental Accent in Dallas, Texas, would like to visit more key account retailers himself to hear firsthand what they need to do business better. “I believe visiting the stores, talking to the customers on their turf is how to get true feedback and improve our product offering,” he said.

Nancy Frehling, vice president and part owner of Miami's Oggetti, said her company is reaching out to retailers with a liberal exchange policy, timely go-between communications that help retailers feel in the loop on their orders, and quick turnaround. “We will walk an order out to the warehouse if we have to,” she said.

“You need to be in front of your customer,” Cymrot said, noting that slower economies spur a surprising number of sales reps to stay in the office, finding the cost of road travel intimidating. But the down times are when retailers most need to see supportive faces — and those are the ones they are most likely to turn to when it is time to order. E-mail campaigns and promotions, he said “while somewhat effective, don't take the place of being in the customer's business.”

Vendors will have a turn in front of customers at the winter markets, and new products, they hope, will be reinvigorating.

“Even in today's more cautious environment, retailers want and need well-designed, well-priced, on-trend products to offer their customers and set their stores apart from the big box stores,” said John Amiri, vice president of sales and marketing for Zodax in Panorama City, Calif. “Big box retailers are expanding their presence and their categories, and this is putting unprecedented pressure on smaller specialty retailers.”

Yip said Oriental Accent will roll out 27 new collections for the markets, primarily in its Mark Abrams and Williamsburg licensed lines. At Austin, 50 to 60 new decorative pieces and sculptures are in the works, Cymrot said.

Interlude will introduce between 750 and 1,000 SKUs next year in the categories that are currently their best-sellers, including lodge, beach, transitional and studio contemporary, McFadden said. Also at the forefront is building Interlude Custom Upholstery, which was launched earlier this year. Manufacturing rather than sourcing fabric has raised the level of creativity at the company, he said, adding that giving customers options is what “makes you more important in this industry than any other company.”

Frehling said that she expects to see an upswing in glass accessories in coming years. “We've gone through a period where glass has lost a little of its luster,” she said. “Glass will be coming back because everything cycles.” Oggetti, known for high-end Italian glass creations, plans to introduce new vases, as well as frog and lizard figurines created by Eastern European artists.

Sterling Industries is planning to launch a new product category for summer 2008 in response to customer requests for options to enhance living space in new areas of the home, Scott said, while declining to offer more details. The company also will add more than 300 products during the winter markets, with an eye especially toward tabletop accessories and lighting.

Introducing new products is only part of the equation, though, Scott said. One of the biggest challenges, he said, is “motivating buyers to broaden their horizons — bring in something new, take a chance. The hardest challenge to overcome as a buyer is only buying what you like.”

Another challenge, Frehling said, is buying for the thrifty smart shopper. “We have a very savvy consumer today,” Frehling said. “The Internet definitely contributes to that. They know so much more than the buyer did 15 years ago.”

And they are parting with fewer dollars, too, Amiri said. “Let's face it, if you're not buying a home, or if you're not optimistic about your financial situation, you're not going to be looking to purchase new home furnishings right now. The steps we are taking in light of these conditions include better inventory control, better targeted new product introductions and more emphasis on value pricing.”

Value pricing is getting trickier with the dollar's decline overseas, where most accessories production is done. For example, Yip said, metals are becoming expensive, and gold, used in their trademark porcelains, “is getting very precious” at nearly $800 per ounce.

Shant Anan, president of Three Hands in Sylmar, Calif., which works primarily with large chain and mid-size retailers, said the company pushes value with several strategies. “Because of lower overhead, long-term relationships in Asia, and volume buying, Three Hands is able to be competitive with many of the large retailers' own direct buying programs,” he said. “Many customers use Three Hands as a backup to their direct import programs and, in many cases, as their only direct source to Asia.”

CBK in Franklin, Tenn., has introduced a direct importing program to allow customers to buy at lower prices points and have greater control over finishes among many of the 800 items offered.

While pricing remains an important consideration, McFadden said a new focus is needed on the message reaching consumers. “The industry has really pushed price and credit as the sales tools,” McFadden said. “It's very polarizing.” Quality and value, he said, have been downplayed for too long, and education is sorely needed for sales reps and retailers. “The toughest thing is translating it down to the consumer. The brands have to present themselves as they are and lead from a design standpoint.”

Frehling said Oggetti offers educational resources on its Web site about glass and glassmaking that retailers and their customers can access. The company also creates videos about its artists and their work.

Cymrot said in his 20 years in the business, the past few have brought the greatest changes with the advent of e-commerce, overseas manufacturing and big box stores' push into new product categories. Consumers are “bombarded with choices,” he said, and the result has been a “trickle up effect” that is shaking up the way retailers and manufacturers must do business.

“Working harder to get the same rewards is what this economy is dictating,” McFadden said.

And while all this may be enough to make some in the industry feel a little blue, Cymrot adds something worth wrapping up and putting under the tree this season: “Times such as they are going to make companies stronger,” he said. “I don't know of any companies resting on their laurels. It's put everyone in the position to really look at their own business and business plan – and look at how they want to proceed and move forward.”

Andrew Cymrot

John Scott

Nancy Frehling

Sean McFadden

Michael Yip