Net doesn't sit well with furniture stores
By Lorrie Grant, USA TODAY
Nov.23, 1999
HIGH POINT, N.C. -- When furniture makers and others converge on this tiny town for the biannual showing of new collections, the shop talk is usually about style, construction, function, fabric and color.
But when the International Home Furnishings Market opened here last month, the subject
that reached a near brawl was the Internet. Online furniture selling is an issue that pits
manufacturer against retailer like no other.
"(Manufacturers) are in a painful evaluation of the desire to sell
online vs. the practical wisdom of maintaining their existing channel
of distribution (through traditional retailers)," says Ivan Saul
Cutler of accounting and consulting firm BDO Seidman.
Indeed, some furniture executives dismiss virtual retail, citing delivery concerns,
service demands and the high risk of alienating retailers.
Others believe it is here to stay because consumers have shown a strong
willingness to shop online.
Manufacturer Mitchell Gold is in that camp.
"The next wave of furniture buyers are those already on the Net,"
says Gold, during a break from showing his New Cottage collection.
He is overhauling his site so consumers can purchase his trademark slipcover
and leather-upholstered chairs. But the sale will be transferred to his
nearest dealer.
Restoration Hardware and Pottery Barn are among the top dealers now selling
goods from The Mitchell Gold Co. in stores, catalogs and on the Web. Gold
profits indirectly from the sale by helping the dealer do more business.
"I'm going to make money from the dealer buying more product from
me," he says.
Slow to buy online
Furniture is the latest product to hit the Internet, a retail channel
that gained immediate clout with such industries as books, music, clothes,
even art. But with furniture, the impact has yet to match the hype.
"About 20% of consumers have purchased something (online),"
says Britt Beemer of America's Research Group. "Of them, only 6%
are furniture buyers. So there isn't a cry for online furniture buying."
Still, Internet-only sellers such as Furniture.com,
Living.com, FurnitureFind.com
and Goodhome.com
are emerging almost daily.
The influx comes amid forecasts of increased consumer demand for furniture.
Sales are pegged to rise 6 % this year to $61 billion and 5 % next year
to $64 billion, according to the American Furniture Manufacturers Association.
Just how much of that will stem from electronic commerce is unclear. The
online companies are not public and do not disclose sales, although Forrester
Research forecasts $268 million this year.
Online furniture retailers' sites are slick and categorized for easy room-by-room
shopping. They show fabric samples, and, while textures may be hard to
grasp, many will mail samples. There is also information about construction,
delivery and return policies.
Online room planners and vast selection are among their strengths. An
entire collection can be viewed over the Web while bricks-and-mortar showrooms
have limited space.
But enlisting major furniture makers is a weakness. Baker, Century, Henredon,
Lexington, Thomasville and other top brands are not for sale online at
Internet-only sites.
"If you're a quality manufacturer, you want to be serviced by a quality
dealer. If that's not happening, then you lose your name," says Randolph
Chrisley, senior salesman at Pulaski, Va.-based Pulaski Furniture, known
for grandfather clocks and curio cabinets.
Furniture.com, which had 722,000 visitors in September, boasts more than
50,000 pieces in its e-showroom. CEO Andrew Brooks asserts that customers'
needs are met.
Adria Silverman is one of them. She could not find the pieces she needed
for a master bedroom shopping around Miami and had reservations going
online.
But Furniture.com answered her questions about the thickness of the wood
and quality of construction in such detail that she and her husband, Scott,
bought an armoire and two nine-drawer chests for $2,000.
"They were so helpful on the telephone that that pushed us to make
the decision," says Silverman, 48.
Furniture.com's discounts relative to retail range from 15 % to 25 %,
Brooks says.
Retailer backlash
Retailers have responded to such price reductions by leveraging their
buying power against suppliers.
"Merchants are telling manufacturers that servicing the renegade
'furniture-something-dot-commies' constitutes mercantile treason,"
Cutler says. "The sentence is immediate death in the form of dissolving
their relationships."
Stanley Furniture in Stanleytown, Va., found out retailers were serious.
Their executives ran a test on Living.com in July.
"We did it for two weeks but received a real negative response from
retailers. They thought we were bypassing them," senior sales rep
Bill Sibbick says. "From there we said, 'Don't disturb the nucleus
of our retailers for a really small part of the market.' "
Jim Kittle Jr., CEO of Kittle's Furniture, an Indianapolis-based, family-owned
chain of 16 stores in Indiana and Ohio, is more direct: "I would
not carry the product of a vendor who opened a store across the street
from me. Why would I want to compete with my own vendor?"
As a result, manufacturers still move products largely through dealer
networks and factory outlet stores. Those with Web sites use them to drive
shoppers to the retail outlets like Kittle's.