State of the industry: Eric Parsons
Cinde Ingram -- Casual Living, September 13, 2011
Casual Living tapped the brains of the International Casual Furnishings Association's executive committee and director to find out their prognoses on the health of the industry. The three manufacturing veterans and two specialty retailers shared their perspectives on the current season as well as their outlooks for the 2012 season.
As sponsor of the International Casual Furniture & Accessories Market, the Design Excellence Awards and the Apollo Awards recognizing retail excellence, ICFA is recognized as the authoritative voice of the outdoor furnishings industry. Read on as each of these industry leaders share their views, reflecting on the changing economic landscape and looking toward the horizon for full recovery.
Eric Parsons | ICFA vice chairman; president, Gloster Furniture
1. How would you describe the health of the casual industry?
We're living in a very fragile economy. While it's been improving, it can kick off and decline at any time (as we saw with the stock market dip in early August). It's also a time of significant opportunity for the retailers who are focused and proactive with their business, the ones who know how to market their business using social media, public relations or advertising to let the consumer know they are in the business of selling outdoor furniture. Those retailers and manufacturers who try to be all things to all people are the ones who are suffering. There is still some very good health out there among the retailers and manufacturers who have a plan and who are focused, proactive and are using social media, PR and advertising to get their message out.
2. What do you see as the biggest challenge facing the industry now?
It's important that we offer value to the consumer, but the challenge is in how to define value. Consumers define value differently. The retailer, the designer and contract segment and manufacturers all have different views and are deciding on the right mix to create values for their customers. For us at Gloster, we think the consumer should seek those needs through the specialty retail channel. You'll see more weight on the pricing side in the big-box channel, but the other channels still have to focus on bringing consumers design and service to support their purchase.
3. Where do you see opportunity for future growth?
For us, it's really seeking opportunity outside the box. We're asking what it is the consumer wants and how we can deliver that. On the retail side, we've got to deliver that with innovation. Last year, we introduced the outdoor lounge concept with cushions that can be left outside 24/7 so the consumer doesn't have to bother with carrying them indoors and out.
We're also looking at more mixed materials. This year we're offering synthetic wood table tops, which is new for Gloster. We have to listen to what the consumer wants and any hesitation the consumer has with maintenance of teak wood, so we're adding synthetic tabletops with some of our aluminum products to offer something others can't or haven't. We're also mixing woven designs with mahogany arms in our new Pacific Collection, and details and function in our new Cape Collection that will bring it in at a price that is more affordable than other Gloster teak ranges.
4. What strategy did your company use this year that was successful despite (or because of) the challenging economy?
We're looking at younger and more cost-conscious consumers who value design and features - the segment with ages 30, 35 and 40 - and offering more affordable, more flexible furniture with less maintenance and care. We've got to look at the marketplace and at what consumers want.
Many times a designer or their clientele do not want the same things their neighbor has. We offer unique fabrics, finishes and furniture that are only available to the design segment. There is a premium for the consumer in that channel and they're willing to pay the premium to get what they want. We've seen a growth rate of about 25% over the last year in the design channel.
In the contract channel, we increased almost 50% over last year. In the last three or four years, we've been attacking the contract segment with several hundred pieces of lounge furniture, but it's not as profitable going to poolside product in contract because the bigger hotels are oft en going direct to the factory. Still, there is a segment that chooses quality and design over price, and we focus our efforts on that segment of the channel. Teak is a very expensive raw material, which makes up about 50% of the cost of that product. We are continuously working to improve on our delivered cost through value engineering, timber yield, packaging, transportation and the like.
The Plantation Collection, Gloster’s entry into the woven category with teak arms, has become one of its bestsellers.
5. What have you learned that you wish you had known earlier?
I don't know that we've learned any new things, our focus has simply changed. We have to be critical of all aspects of our business. We look at the shift ing of priorities and we know we always have to be focused on the consumer first. Especially today, it's about delivering value.
If the consumer doesn't perceive value, whether it's in the product or how we package, it's more crucial now than it was when business was rocking and growing as it was in the early-and mid-2000s. Gloster has conducted an exercise over the last year and a half where we brought select dealers in to analyze Gloster and the marketplace. It has helped give us a better sense of what the consumer views as value. That's part of the value engineering, which can be product or process. If the consumer doesn't perceive value in an element, then that element and its associated cost is not necessary.
Gloster is stepping up the importance of the brand. Consumers are very brand-savvy, but they don't shop for outdoor furniture very oft en so they're not as aware of outdoor furniture brand names. Our goal is to be the leading international brand of upmarket outdoor furniture. We're increasing our national advertising effort and we have internal PR to be consistent with our message when we are part of articles about outdoor living and gardening. As we are building recognition of who Gloster is, we want to send a conscious or subconscious message that will drive consumers asking for our products into retail stores. Driving and creating business is important because it's not going to increase, but market share can increase. Branding doesn't come inexpensively. For us at Gloster, the brand message has to be consistent globally, so the message is the same in Germany as it is in the United States, as well as national and local markets. Wherever the consumer is exposed to the Gloster brand message, consistency must be present in order for effective recognition to occur. It takes a pretty coordinated effort to do that, but it is a huge benefit for us and our supply chain.
6. & 7. What product has been your bestseller? Why do you think it became a winner?
About half of our product line is teak, about 20% is woven and just under 10% is our Outdoor Lounge product, like the Bloc and Cloud collections, with the remainder of our sales in aluminum and steel. About 20% of our teak sales are in the Ventura Collection, which we introduced 10 years ago, and Plantation, which was our first step into woven with teak arms that differentiates us from the marketplace. Both designs have been updated through the years and are available with sectionals and include function for reclining end units and lounge chairs.
Last year, we introduced Outdoor Lounge and it became almost 10% of our business. In Europe, Outdoor Lounge has become almost 30% of the business. It has to do with what consumers want. We're a society of convenience. People don't want to worry about moving cushions indoors and out.
Gloster’s Ventura Collection accounts for about 20% of its teak sales.
8. What new product or collection do you expect to become a bestseller? Why?
This year we introduced the teak range called Cape, which offers value through function, design and price. It comes in at a price point that is, for Gloster, an introduction price, but it is a substantial group with a lot of teak content and a lot of design appeal. It's traditional in style but has clean lines and the response at premarket showed dealers agree it has good appeal. It brings a price point we've never been at before. It's also designed for movement with a deep-seating swivel rocking chair and a dining swivel rocker. We have brought a lot of elements together with the Cape Collection.
9. If you could send a message to retailers to help them strengthen their business, what would it be?
It would be to focus on brand - their own brand and brands they're representing on the floor. They should look to do business with brands who are out there working on their behalf. Gloster does that with national advertising support and advertising co-op agreements. We provide an e-Blast service for dealers who don't have the ability or know-how to send out electronic messages themselves. We design with them a message for building recognition of product on their sales floor so that the consumer comes in looking for that. More and more consumers are using websites and social media to research products before they shop so an updated online presence will continue to have increasing importance.
Also, retailers should have inventory available when they need it. They should be doing business with manufacturers who can provide support beyond that product that's on their floor. There are varying levels of suppliers who will assist them and have that level of support available.