On the Outdoor Track
Cinde Ingram -- Casual Living, July 14, 2012
Z-Line designs started nearly 20 years ago when founder and CEO Jim Sexton drew on his design experience to produce sleek home office furniture for the then-fledgling computer industry. The company later tuned into the home entertainment niche by producing stylish TV stands. Last year, Z-Line moved its attention to outdoor furnishings. It recently added leather to the mix.
In each case, Sexton created designs for the next generation, targeting 30-something college educated consumers. "These are younger people and they want it to look cool, they want it to be cool and for people to get excited about it," Sexton said. "They'll spend money on value if you show them a true value. We are doing a best selection at better pricing,"
In each niche Z-Line has entered, sales have grown at record speeds.
"The name Z-Line Designs is branded extremely well through the use of NASCAR and our commercials," Sexton said. "All across the country, Z-Line is such a huge name that people will buy a Z-Line product because they know it's a quality product. Our customers know that and salesmen know that, so they will pitch a Z-Line product over something else because they understand what we do and how we do it."
Sexton also credited the strength and experience of Mark Gorr, senior VP, casual furniture, and his sales team for training salespeople how to merge the outdoor division smoothly onto the sales floors of existing residential furniture dealers and casual retail specialists.
"Full-line furniture and specialty retailers have responded very well to the quality, styling and price points of our new casual furniture," Gorr said. "That response translated to sales that were nearly triple our expectations for this year."
Sexton agreed those were important, but said he thinks the Z-Line Designs name was the deciding factor in its fast break as indoor furniture dealers ventured out. "The whole key to it is they know the Z-Line name so well, they trust us so much and they rely on us so much that Nebraska Furniture Mart bought from us. R.C. Willey, Conn's, Interline in northern California, with like 60 stores (and other major residential customers) were coming back in and saying, ‘Wow, this sits great. This is wonderful. I like it. Let's start doing some business.' So that worked out perfectly."
"What's happening is the indoor world is trying to go outdoors because they need more sales also," he added. "This is all plus business for them. And we're doing well with them."
Sexton expects to see more growth because of the consumer trends he has watched develop. "People are staying at home more, they're not traveling as much," he said. "They are interested in using their backyards and making them look luxurious."
Racing team owner and former NFL coach Joe Gibbs with Joe Gibbs Racing Nationwide sponsor Z-Line Designs CEO Jim Sexton and his wife Monica.
While Z-Line missed last year's Preview Show in Chicago, it will be showing off its new groups and a range of approximately 20 casual furniture collections this month and in September. Some of those styles are modern while others are transitional or more traditional with big rolled arms.
Nearly all of its collections include swivel, glider or other motion functions, in response to requests from many of its dealers. "That's been a big homerun for us," Sexton said. "It seems to be a real hot-selling item at their retail stores, and we followed that up. So far, that's working out well. We're also using different weaves and changing some of the comfort levels, making them thicker."
Sexton's personal comfort level is much higher now compared with last September. When he walked into the Merchandise Mart and saw only five chairs exhibited in a small temporary booth, he thought Z-Line's initial showing in Chicago could have been a mistake. He was surprised any buyers found their off site showroom at the Holiday Inn.
"I thought for sure this was going to be a complete disaster," Sexton said. "Well, I was wrong because they did come in and they did buy. When we did $7 million in 60 days that was amazing."
Combining offerings for both indoors and out is creating more healthy numbers for the company, which employs eight product designers and approximately 250 people at two China factories.
"We just needed to kind of get into the water and find out what we're doing a step at a time," Sexton said. "This year, we're hoping to end up with maybe $10 million over the initial shot. And then next year we'll grow even more because there are still so many people we haven't gotten to yet.
"We didn't go after any Lowe's, Home Depot or Costco type of customers. We wanted to find out first of all how it's going to work if we start with smaller retailers, and smaller can be five or 50 stores. Now we've got that all figured out and we're going to go back after larger chains, like Sam's Club and Costco. The next step will be the contract channel."
Sexton estimated that 70 new customers found their way into the company's High Point showroom in April and were among the first to see its leather launch.
"We're coming up with a bonded leather product that designers are showing nowadays," Sexton said. "You can take the bonded leather on wicker and put it inside with either another leather sofa or a fabric sofa. You can change it from being outdoors. You can have whatever fabric you want and you can take it and use it indoors. That has done extremely well and it's clicking right along so we're pretty happy right now."
AT THE START
Sexton admits he has had to think outside the box and learn the needs of each division as his San Ramon, Calif.-based company worked to create state of-the-art furniture at value pricing.
It all started about 1993 when Sexton and his wife Monica gathered in Silicon Valley with their friends, who were on the forefront of the developing computer world. While the smartest, best and sharpest expressed excitement about emerging technology, Sexton considered what could happen and drew on his lifelong design background to make smaller, sleeker home office furniture that would appeal to consumers hooked on computers.
"I kept thinking if this works - and they were spending billions of dollars to make it work - everybody's going to have a computer," Sexton recalled. So instead of standard office furniture with files, drawers and desks, he set out to create furniture to excite a "younger, hipper generation."
He looked toward the desires of 30-to 35-year-old consumers. "Their apartments are smaller, their houses are smaller," he said. "They need something that looks cool, looks slick so when people come over they say, ‘Wow, look at that! That really looks cool! Look at that glass!' So we started building a company of just exciting furniture that immediately took off . As soon as it hit the floors, people were just blown away; they loved it."
"I think one year, about two years back, we shipped $63 million to Staples by itself," Sexton said. "And of course, we sell Wal-Mart, Target and Office Maxx and Frye's - all across the country. That's just exploded and grown like crazy."
After a few years, Sexton remembers that his son went to Circuit City and asked him why Z-Line Designs didn't make TV stands. Sexton first answered that it couldn't because he didn't know anything about TV stands. "My son said, ‘Look Dad, go to your computer, take one of our desks, turn it on its side and then tell me what you think.' So I did that and I said, ‘That's nothing but one of our desks on its side. I can make files and drawers - I know I can make this metal and glass stuff .' So we went into that and then we changed that entire business. At that point, if you wanted to buy a TV stand and the component racks, you were going to pay $750 for each one of them. So we changed that whole world and took over the entertainment business.
"That business just exploded also because the flat panels were coming out and everything was just right on the money," he said. "It was just clicking like crazy."
Z-Line's movement outdoors had a similar personal start. Sexton's wife threw a party for him, but first went out and bought outdoor furniture. The next day, he asked her casually, "By the way, how much did that sofa over there cost you?" When she answered that the big outdoor sofa cost $3,000, he said, "That doesn't make any sense," and set off to begin visiting different patio stores all around the country.
He recognized the trend of homeowners spending more time in their backyards and traveled to Indonesia and China to figure out what to make. "My designers started cranking out the coolest-looking stuff around and we ended up collaborating with two factories in China," he said.
"First of all, you have to have a design and you have to have it at the right price and you have to show real value to the public," Sexton said. "In the course of the economy today and as bad as commercial airfare is, I think a lot of people would rather be in their backyard. That's why you're seeing grills and firepits selling like crazy. People now are turning the backyard into more of a resort area. Now, you go outside and you sit and relax and it's comfortable outside and it's comfortable inside. So I think we'll see more of that. You can hop on an airplane, go away and spend $2,000 on a trip somewhere and when you get back you've had a fun little experience, but you're also out the $2,000. Or you can spend the $2,000 and buy yourself a loveseat and a chair or a firepit or whatever you want and you're going to be using it for years.
"I think people are just taking that same money and putting it in their backyard, and then they'll have something for it," he said. "We started in the casual business and the casual business is doing great and we're selling a lot of casual furniture. We're taking the price point down and the styles are great, and everybody's happy with it.
"It's been pretty amazing," Sexton said. "We're very thrilled with it and we're hoping that it just continues growing, and I think it will."