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An early season and improved resource regulation jump-start wood sales

Kristine Ellis -- Casual Living, May 15, 2006

Just three months into 2006, Laura Hopkins was finding it difficult to keep Gloster's Ventura reclining armchair in stock.

"I've reordered it three times already and the season hasn't even started," said the owner of Seasons Four in Lexington, Mass.

 Kingsley-Bate

 New River Casual Furniture

Hopkins' experience bodes well for other teak dealers, while the wood category as a whole looks just as bright thanks to deep seating, an early spring and diminishing numbers of low-end teak vendors.

"If there were 100 teak vendors three years ago, there are maybe 20 today now that Indonesia has tightened up on illegal deforestation," said Ed Sena, director of marketing, Three Birds Casual. "We are seeing more and more regulation, and for those of us that do it right, that's good news."

Rock Wood Casual Furniture's Jennifer Mulholland concurs.

"Teak is a limited resource and it's a valuable resource," she said. "You can't just churn out a million more pieces to meet demand, so when you lose traders, it means that the strong players in the market are going to get stronger, which is really good news for the retailer."

Also factoring into the teak industry's healthy glow is a return to the fold of some perhaps sheepish specialty dealers who learned the hard way that you get what you pay for. As Hopkins points out, it isn't just about how the wood was sourced.

"We need consistent good-quality workmanship," Hopkins said, adding that she's never had a problem with her current teak vendors, Gloster, Kingsley-Bate and Rock Wood. "We've been here for 36 years. If something doesn't last, our customers are going to come back and tell us about it. So it's always been important to us not to buy something that might be more affordable but that isn't going to hold up."

While Mulholland is optimistic the season will continue on a high note, she acknowledges it is still early. Poor weather and other uncontrollable factors might level out the initial spike. That said, deep seating is still driving up volumes. Orders of Rock Wood's Mendicino are four times ahead of last year.

Three Birds also reports nearly four times the orders in the first three months of 2006. Sena projects this year will be the company's best yet. So far, significant commercial interest in deep seating and the patented Tucson fireplace have bolstered overall growth while specialty dealer orders also remain strong.

Kingsley-Bate's new mixed media collections, Ibiza and Tiburon, are helping the company have what Michelle Crowley, operations manager, is calling an outstanding start to the season. Ibiza in particular is getting great response on the East and West Coasts. While the mix of stainless steel and teak is a big draw for contract, specialty dealers are also seeking it out.

"We've been advertising it in Architectural Digest and other publications, and the response has been very, very positive," Crowley said.

Jensen Jarrah is also seeing benefits from its new advertising campaign with spots in Veranda, Coastal Living and Garden Design.

"This is the first time we've done a national ad campaign in the decor magazines, and the response has been just amazing," said Janet Winsor, vice president of sales and marketing, Jensen Jarrah. "I'm excited because there is a lot of wood out there and the consumer is getting smarter and asking the right questions."


Kingsley-Bate

 Kingsley-Bate

Among their inquiries are questions about the source and sustainability of the resource, government regulations and even labor practices. Given the ad campaign's success in generating leads for specialty dealers, the company plans to continue with it.

"The primary reason Max [Jensen, president of Jensen Jarrah] decided to do the advertising was to support our specialty dealers, which is where the heart of the company is," Winsor said.

In addition to the advertising campaign, Jensen Jarrah also is moving into the pool and spa market this season as well as focusing on getting in front of designers. For example, the company is in the Boston Design Center now.

Groovystuff's Roots collection is opening new doors for that vendor. Gallery stores such as La-Z-Boy and Ashley Furniture like the organic look as do specialty dealers and Groovystuff's established Western furniture customers. Also hot right now are the new Wagon Wheel rocking chair and Adirondack chair.

In addition to new products, Groovy-stuff's growth strategy includes a new warehouse.

"We're moving into a new 25,000-sq.-ft. space. We've been in 12,000 square feet and we have been floor-to-ceiling, wall-to-wall packed," said Chris Bruning, co-owner of the company. "It's been so constricting to pack and pull orders with all of this product in the way, so I think the move will grow our business."

New River Casual Furniture is another wood manufacturer in the growth mode. Founded in January 2005, the company is now running on all cylinders.

"It's been going very well. We had a very good first year and we are trying to build on that," said Michael Mettendorf, vice president of sales and marketing.

The company has about 75 products available for the season, with plans for expansion into mixed media combining the Brazilian cherry with woven material and perhaps cast aluminum at some point in the future.

 Gloster

 Gloster's Ventura Collection includes a reclining armchair that has proven popular this year.

Dabol, New River's parent company in Brazil, meets all required environmental standards for Brazilian cherry, which is regulated by the government. While those standards are significant to meet the ethical guidelines of such customers as L.L. Bean, New River has lost out on some business because the wood used by Dabol doesn't carry Forest Stewardship Certification. According to Mettendorf, should Dabol want to purchase FSC wood, its costs would increase significantly.

"It would mostly likely have to come from Bolivia, and we would probably have to pay another 25 percent," he said.

To control the resource, which is classified as agricultural, the Brazilian government limits harvesting to six months of the year. Mettendorf compares the availability of Brazilian cherry to American oak and said Dabol has three to four years of lumber stockpiled.

In establishing its business model, New River defined a three-tiered supply chain strategy. Its U.S. distribution center stocks twice the amount of what it forecasts will be its most demanded products. It also has a limited stock of secondary items and a special order program.

"We knew that to be competitive we needed a supply chain that would give retailers what they wanted, even it if meant additional storage costs," Mettendorf said. "Our business model is that we will absolutely not be out of inventory."

Growth can also result in delivery challenges for small manufacturers, but so far Archie's Island Furniture seems to be finding the right balance.

"We want to continue growing but to develop a happy medium — volume that is sustainable from both a production and income standpoint, so there is a nice flow of work throughout the year," founder Archie McIntyre said.

The company, which uses environmentally certified mahogany, is introducing a new line of benches this year while transitioning from selling direct to a retail strategy. So far, its small but growing list of specialty dealers are content with the pace of the transition.

"My product is unique enough that it isn't readily available elsewhere, and also it isn't their core business," McIntyre said. "It's more of an added highlight to the showroom."

Seasons Four has been carrying Archie's Island products for four years and has some of the new benches on order.

"For a long time, I didn't do much in painted wood because I wasn't confident that it would last," Hopkins said. "But he does a great job, and his shapes and colors make it fun."

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