This year continues to bring negative economic news and the fallout of all the troubles is making its way directly into the home accents business.

But wall decor producers interviewed this month said they are confronting the issues, making changes where necessary, and most of all, aggressively working on product development to stay ahead of the competition.

Jonathan Bass of PTM Images said his sales are up so far in 2008, and he expects that to continue through the year, despite the downturn in the economy.

“There is a market for our niche of product and consumers are going to continue to buy to accessorize,” Bass said. “There are new buyers now, and it's not going to be the velocity of the years before, but she's still shopping. She's looking for better quality, more unique products to replace, but it's not as easy to win her over and give her something worth buying.”

According to Harry Ambler, president of W. King Ambler, 2008 business has come in fits and starts, with overall sales flat so far, but “we are starting to see signs of things picking up and we still see the signs of good things happening.” W. King Amber is a 60-year-old producer of medium to high end wall decor -- a third generation company founded by Ambler's grandfather.

At Gallery Gallery, Fred Kentop, head designer, said that though times are tough, business has remained steady. “We've been consistent,” Kentop said, “and despite the fact that we are in less than a desirable period as far as buyers go, we are getting e-mails and faxes (orders) every day.”

Mac Cooper, president of Uttermost, is predicting a flat 2008. Even though the spring High Point Market was better for him than either of the markets in 2007, 2008 is requiring a lot more work to stay flat, he said.

Cooper is seeing more challenges come from the mirror side of the business because there are more and more small players, as well as furniture producers, aggressively targeting the category. On the upside, Uttermost has experienced strength in the form of alternative wall decor. “Alternative wall decor is growing for us,” Cooper said. “That is an area where the perceived value is greater.” He said 3-D pieces that are decorative and not functional are working because they help consumers express their individual personalities.

Bass said his own market research has shown that 78% of the wall decor business is under glass, so that's where PTM is focused.

W. King Ambler's products are almost exclusively under-glass designs, though Ambler said there is a distinct trend toward more casual looks now. “The things that are selling more are more casual,” he said. “Even traditional subject matter is being framed more casually. There is more emphasis on wood tones in frames and not nearly as much gold – more silver and wood.”

The push to create new products and stay ahead of the competition is fierce, the vendors said.

Cooper said Uttermost is “more aggressive with product development than ever before to keep unique and fresh, and we feel like the key to expanding is blowing away our customer with tremendous, great new items.”

Bass agreed that product development is key right now. “Imagery has to come at a faster clip,” he said. “Our goal is to deliver newness on a continuing basis,” noting that PTM introduces 150 to 200 new items every six weeks.

PTM has doubled the size of its product development team this year, Bass said, to keep the new products flowing.

Nearly all of PTM's products are made in the U.S.A., a factor Bass said is growing in importance as more consumers consider the “green-ness” of a product, as well as the safety, the human rights and the pollution standards of imports.

As far as “made in the USA goes, “I think it's important,” Ambler said. “We do promote the fact that we are – people look at that and appreciate it. It means they are getting better quality and more attention to detail.”

Kentop agreed. “What you see is what gets delivered,” he said. “Everything is done by my hand, by myself, in New York.”

Uttermost imports from China, Vietnam, Indonesia and India. Cooper said having other countries on board has helped maintain the company's cost and pricing structures, even in the face of steadily rising costs out of China, due to a variety of factors such as the pricing of raw materials, the Chinese tax structure, the exchange rate and fuel costs.

“So far that has helped to insulate us,” he said. “Vietnam and Indonesia have not had as much increase as China.”

Uttermost raised prices 4% in January, but Cooper said the company is working hard to keep its increases nominal. “We are eating all we can and passing on what we must,” he said, noting that he thought the worst of the price increases would level out by late summer or early fall.

“One thing that helps us is having strength across product lines,” he said, adding that retailers can mix and match products to create a container-load and save on shipping expenses. The higher the freight costs, the more it makes sense to do business with a company that has strength across product categories,” Cooper said.

The vendors are taking different approaches to keeping their businesses healthy.

“Our strategy has been to take the wall decor business and give it the velocity of new products that's expected,” Bass said. “It's a fashion business that has to be run like a fashion accessory business.

Cooper said Uttermost is making some aggressive moves like showroom expansions, a new full-line catalog, investment in the company's Web site and advertising in consumer and trade magazines.

For W. King Ambler, the key to success this year lies with interior designers. Half of its business is with furniture stores, half with interior designers.

“We made a decision to cater to the designers – we allow customization to any framing options – and we have got a very loyal designer base,” Ambler said. “That's where all the business is coming from. The furniture stores we work with all have (in-house) design departments, so though we do sell a lot for stock, a lot of business comes from those too.”

Gallery Gallery has moved to CD versions of its catalog, a move that Kentop said has helped drive business this year and is limiting its special orders. It is also maintaining its pricing structure as much as possible.

“So far, we have not had to raise our prices in general – those that we have been 3% to 5% to adjust for the cost of materials that we need to purchase,” he said. “We have really tried to hold that line.”

One challenge to independent retailers right now, Bass said, is that people are not shopping as much because of the price of gas.

“Shopping used to be a pastime,” he said. “But as traveling to the stores becomes more costly, they are making a conscious decision not to shop because of the cost of shopping.”

So, retailers have to have a reason to come to your store, he said.

“Say your customer shops your store six times a year. If visits one and two offer the same products, she's not going to make visit three,” Bass said, noting that it's not always about new products, but sometimes simple remerchandising, rearranging and freshening up so the store looks new.

“There's always a place for a retailer that offers more options,” Bass said. “But they have to be more agile, more aggressive and more service-oriented. Price isn't always a determining factor. If it were, no one would eat at Spago and everyone would eat at McDonald's. The same issues are involved in the consumers' mindset in our business too. But you can't serve McDonald's food at Spago prices.”