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Cinde W. Ingram

Vendors see opportunity at the higher end

The majority of manufacturers who forecast the future of independent specialty retailers expressed elation about high-end opportunities but were more dubious about retail specialists' future at middle and low-end price points.

They mostly have conceded the low end to big box discounters, which are looking better for the dollar and pushing up their price points. They noted fresh bites at the middle being taken by retailers like Crate & Barrel or Restoration Hardware and catalogers like Frontgate.

In addition to their forecasts, here are some of their reflections on what successful specialty retailers are doing differently and what manufacturers are doing to help them succeed as the balance changes between promotional and high-end merchandise while the middle is squeezed tighter. Also, here are some suggestions key manufacturers made about what specialty retailers can do to set themselves on higher ground.

Cast Classics

Al Arad, Vice President

For years, the bottom's been squeezed by mass retail, the Wal-Marts, the Kmarts, Lowe's and Home Depots. And now, the medium (price point) is getting squeezed by the Restoration Hardwares of the world. Their presentation is impressive, they're doing beautiful furniture and they're at specialty retail price points so the specialty retailer is getting less people through the door. They're getting skimmed by these catalog companies, even Home Depot, which has tabletops at $2,500 and $2,500 wicker chairs in their catalog. So the specialty retailers are trying to go higher and sell more expensive things.

My opinion is when consumers look at Home Depot and they see a stone top for $2,500, then they go to a specialty retailer for it and their top price is $3,000, they are not so shocked. It's a double-edge sword. You could buy a diamond or a cubic zirconium; it looks the same. At the end of the day, if you're a specialist for our customer, it's about quality, finish, texture, scale, exclusivity, color and comfort. You don't get all of that together in cheap product.

Our customers are having good seasons; we're having good increases in southern California, Florida and the Northeast. But we're probably not a good parameter to go by because two years ago, we moved our production from Mexico to China. We were really more of a trading company than we were a manufacturer. We designed the product and brought it to market, but other people made it for us. Now this is our own factory (it's a 1 million-sq.-ft. facility) so there's no middle person and that allows us to be more efficient. We've taken a different approach to China. Most people go to China for price and promotional goods, the low to mid. We're doing high-end in China; we're making labor-intensive items there. We were the first company to come out with wood finishes, now everybody has them. We do a lot of innovations; we were the first to come out with tile top tables or those antique finishes a few years ago. You have to keep pushing the envelope. We were able to go to China, raise the quality of what we're doing and lower our prices 30%–40%. I tell people, 'You could go to Old Navy and buy a cable knit sweater for $50 or go to Ralph Lauren and buy a cashmere sweater for $700. There's a customer for both.' We're going after the Ralph Lauren customer.

Agio

Bob Gaylord, President

I think the future of the independent specialty retailer can be very, very strong if they take advantage of the values that importing can bring them. Importing is a part of the business; the mass guys have been doing it for 20 years. It has changed the face of patio furniture in this country. If people think they can sit back and not take imported products seriously, they're probably going to be out of business.

Quite frankly, I think the importers including ourselves made a mistake for a long time because we were happy at one time to just be on people's floors at the opening price points. They were getting our warmed-over mass products. But these last two years, we have dedicated ourselves to giving them product the mass guys don't have. They're all still chairs with four legs, cushions or slings or whatever, but there is a difference. We compromise almost all the product that goes to mass in some shape or form, whether for cube efficiency or stackability. Also, they have to stay extremely mainstream in their offerings because they have to appeal to so many people in three sets, four sets or six sets.

This, for us, is really our second year to go upscale to specialty and reemphasize this company's dedication to the specialty part of the industry, whether it's the 60 or 70 sets of eclectic furniture here in our 24,000-sq.-ft. showroom space, our increased advertising budget and everything else we're doing.

We're sitting here with $5,000, $6,000, $7,000 and $8,000 sets of furniture. We're probably the best-known import company in the industry. Yes, we sell on direct import, and we do that because that absolutely gives the retailer the best value. If we brought it in and we warehoused it and we threw away what didn't sell, it would no longer be that value advantage and we'd just be another domestic guy who makes offshore and brings it in. I think retailers have got to look at their whole import philosophy in a little more sophisticated way than they are now. The fact is, if there's value in the opening price points, there's more value as you move up the price points.

The biggest thing we're doing is bringing them good, high-end furniture that can look like a value against the mass. It takes innovations. For example, we've developed in the last 12 months 100 new wicker extrusions. In 2006, we did $75 million in all-weather wicker and it's growing by leaps and bounds.

We tell customers exactly what the mass is buying so they can avoid it and go around it. I happen to be one of the manufacturers who does a huge amount of business with the mass, but I'm also the messenger — don't shoot the messenger. The higher you go in price, the better value you can offer on import — it's as simple as that. The best way for specialty retailers to be appealing to consumers, which the mass will never be able to do, is to turn their stores into showplaces. It's the same thing we do with showrooms. If you do that kind of thing in a retail location, how can the people not stop in? They may not buy, but at least they're going to look. If you bring a consumer in and show them a set of furniture sitting underneath a pergola and it's all dressed up, it's 10 times more appealing than one sitting next to an above ground pool -— that's just Merchandising 101. The problem is, the ones who are suffering right now don't have the money to do those types of things and they're probably going to go out of business.

The demographics that have made this business grow have not changed. This focus on the outdoor room has just begun; we're in our infancy. And the really smart retailers are the guys who will become the outdoor decorators.

Ancient Mosaic Studio

Tim Capron, Co-President

I think the outlook is very good for the specialty retailers who truly remain special and differentiate themselves from the mass merchants with unique products, a nice shopping experience and deep product knowledge that they can use to educate their customers.

The specialty retailers who differentiate themselves from mass merchants are the ones that will continue to flourish. These retailers offer higher-end products and deep knowledge about those products together with a shopping experience that is pleasant and unique. Retailers that have nothing to offer but price will ultimately lose out to the mass merchants.

We manufacture the finest all-weather stone tabletop on the market. We stay ahead of the competition by offering new designs each season that push the envelope in our category. As a result, our dealers can offer an extremely unique product will only be found in the specialty retail or design showroom environment.

Carter Grandle

Webb Carter, Chairman & CEO

Courtland Carter, President

Ruth G. Carter, Public relations

We see the specialty retailers moving up to the upper end.

The more successful specialty stores are merchandising well. We're trying to come out with better, more cutting edge design so it's not the same product consumers see down the street and we're not selling to the mass.

Design is going to be extremely important. I think this cannot all be about price, it has to be about quality, uniqueness and allowing the consumer to decide. Design is going to be very, very important.

The successful ones have really learned how to market. They realize no matter how low they go in price, it's never going to be low enough. They tend to separate themselves from the crowd and they know how to coordinate and literally how to stylize their stores. They stylize their venues so people can walk in and visualize it at their house. Retailers can't just throw it all in there and expect the consumer to know what to do.

I think they need to keep abreast of the competition out there, that's being delivered to the doorstep everyday by Design Restoration, Williams-Sonoma. Attention needs to be paid to fabric, to quality fabrics with cleanability and durability, not just polyester prints. Consumers have become extremely sophisticated and I think we need to play to that, we need to know what they know. I think we have a lot of dealers in our industry who have gotten that.

We've definitely come out with three new wicker design groups and three new aluminum/cast combination design groups. They're upper end. We believe the way to go is up, not down.

Barlow Tyrie

Charles Hessler, Vice President

Specialty retailers are going to be there, I don't think they're going to disappear. It's all about service. With Barlow Tyrie, it's all about the product and delivering on the promise. People will look for the retailer who will deliver on the promise and they're not going to find it at the mass level or with the retired man at the hardware stiore.

Successful specialty retailers constantly have to be aware of what's new in the marketplace — trends before they become trends. It's too late once something is so popular that knockoffs are out there everywhere. People want to go to a store where they are going to be surprised by something special.

Barlow Tyrie has moved in a little more contemporary and modern way as the sons of Mr. Tyrie have moved into the business. They are in their 30s and bringing fresh ideas so the company is giving the marketplace a little higher design, more elegant product. We haven't changed our direction, it's still reaching the high-end, demanding customer.

TUUCI

Ward Usmar, Vice President Sales & Marketing

I don't see the specialty retailers going away; I think they're going to be offering added value, more service, additional product knowledge and continuation on certain lines you can't get at the mass merchant level. We see more of an emphasis on unique products and being able to specialize it and customize it more to their specific needs rather than just having the same old stuff that's available at a mass merchant.

One of our introductions is a point-of-purchase material point-of-sale, which is really a silent salesman. It also gives an opportunity for the dealers' salespeople who may not come to the show or have the same learning experience as the buyers be able to take a customer to that point of sale material and explain why they would buy Tuuci and spend $1,000 vs. $300 or $400. It has marine grade aluminum parts, modular design, customizable fabrics, reinforced pockets, you can change the profile — so that's one thing we're doing to help specialty retailers. And all our dealers have access to our whole line throughout the season to be able to order one at a time.

Anacara

Sal Carrara, Owner

Things are changing rapidly. The independent dealer needs to look outside his sphere, shop the market more thoroughly and put more value on his floor. It's all about product. The independent specialty dealer needs to start thinking it's all about product, not about the price point. China is not a negative word but some of the independent dealers are buying the same products that the mass market is buying; the ones who have done that are the ones who have been unsuccessful. Some have failed because they weren't willing to change or try new sources. They need to be putting product on their floor that will bring excitement to the consumer. This is a perfect opportunity for the independent retailer to take a flyer and try something new.

The successful guy doesn't buy off the shelf. We have people who come in our showroom and get excited about our fresh new stuff on the floor then there are some who glaze right by it. The independent guy has got to realize he's not in the outdoor furniture business; he's in the lifestyle business.

We have created viable product designs that are totally focused for the independent dealer at affordable prices. That's what my mission was over three years ago and that's what we've done. We worked to create designs that wouldn't look like mass market products.

North Cape International

Tom Murray, President

The future is bright, especially if they're responding to looks that are regional. If they're not changing with the times and want to do things the old way, they are going to have a tough time. If they protect the high-end brand only and never consider there are a lot of people who are walking out without buying, those retailers aren't thinking about the younger buyer who just bought a new house. They are missing customers in the 35 to 45 age range. At least show customers they have an option, so they are getting a sale that could turn into a better sale down the road.

The folks who are listening to their customers, adjusting their lines on the floor and being proactive are doing well. Their niche is choice and if they're offering a lot of choices they will succeed. People are not getting less picky, they are getting more picky. They want to have products in the mix that a mass merchant wouldn't run. And they have to run the full range. Presentation does mean something. Successful retailers dress up the product.

We don't sell to the mass. All our product development ideas come from our customers. We also have created a multifaceted delivery system and introduced a quick-ship program for specialty stores. They can have product shipped from our warehouse or theirs.

Groovystuff

Chris Bruning, Vice President

Because I deal with the specialty retail market, I see the numbers, and the guys that are doing well are increasing orders in a drop ship program. Everybody's got their Web sites and they have to keep them looking good. That is their storefront, too. We're getting more of it across the board. Consumers are trained to shop electronically and retailers have to address that, too.

The specialty retailers who are doing good are going to markets. They continue to come back to see the new styles, colors and they're going to learn something, even in elevator talk. They diversify and they're able to adapt and see the trends. People like La-Z-Boy and Ashley Furniture are buying accessories from us because they want their consumers to have an experience like they do at specialty stores.

In a nutshell, because my product line has a story behind it, we supply a story for them to talk about with customers. Some things we do are bread-and-butter, like we do product training and we have product literature we give them. We have a unique specialty product and we're not servicing the low end so if specialty retailers don't survive, we don't survive.

Grosfillex

Jerry Glasser, Director of Sales, Specialty Retailers

You have to be optimistic that it's got to be going up. The way they can do that is by introducing new and innovative products and by working with loyal manufacturers, I think manufacturers are getting smarter and introducing more products so the specialty retailers can stay competitive. That's going to be key to it; there needs to be a good partnership between the two. It isn't just the responsibility of retailers, but as manufacturers we need to help them do that — it's not a one-way street.

At the show, you see a lot of the same materials and colors that look alike in aluminum and cast and wicker. What we offer is a resin product that looks totally different from anything else they sell on the floor. We're a domestic manufacturer that's been around a long time, and our product is innovative, comfortable and doesn't look like anything else they're selling. And it's priced very competitively, offers a nice value and meets a certain price point.

To me, the ones who are successful are the ones who will take chances with different materials, different products and manufacturers. Sometimes they get pigeonholed with certain manufacturers and they don't open the door to other opportunities. It isn't always the cheapest price or the most expensive price, but it's the value they can offer their customers.

Fire Stone

Dan Shimek, President

For those who are investing in their business, reinventing it and doing the things to differentiate it, the future should be strong. Those who insist on doing business the same old way will struggle to be successful or even survive. Consumers are changing rapidly and if the retailers are not they will be left behind.

Successful specialty retailers are thinking more strategically and they are committed to change. Their goal is not just to survive, but to thrive. They are benchmarking successful retailers (including the big retailers) and partnering with the leading suppliers.

They are seeking out products with stories that need to be told and sales people that can tell and sell them. They are making sure they are properly connected with technology and costs. They are closely tracking the Internet and determining how they can fit into this part of the future and making sure their suppliers understand this as well. They have an understanding they are not merely selling individual products in their showroom but they are selling the "outdoor experience." Their goals are more aggressive. They're not interested in being a good retailer — they want to be great retailer.

We are offering customers new products and designs that are not available elsewhere and can help them stand apart from the competition. In some cases, we are taking a commodity item (like grills) and making it unique through design and performance (Cook Number Grills — both gas and electric). We are also providing packages that, when properly displayed in a showroom. help create the "outdoor experience." In short, we try to provide products and packages that go for the "wow" factor. Our products attract attention for us and our dealers. They're designed to help differentiate and help make sales. We like to work with our retailers and collectively "Think Outside..."

Gensun

Jan Trinkley, Vice President

Lisa Zhou, President

I feel the independent retailer has an excellent future given two things: 1) They work with manufacturers that are dedicated to and capable of satisfying their needs, and 2) They dedicate their business to satisfying the consumer with products that differentiate themselves from the big boxes and allow the consumer to decorate their outdoor room with the same choices they can decorate their indoor room.

Those retailers that are not concentrating on price but on providing and helping the consumer with choice or custom decorating will be more successful.

Gensun Casual Living does not sell to the big box retailers. We dedicate our people and factory to the specialty retailer with one high level of quality, timely delivery and excellent service.

Gloster

Charles Vernon, President

Very strong for those of us who are "getting it" as we say. Any retailer who is trying to compete with the sheds, in the middle market and lower, is going to have an increasingly difficult time. They are going to slowly bring their offering up for the mid-market so the specialty retailers' opportunity is to move up. We're seeing a generation of retailers who are a mixture of casual furniture retailer and a designer showroom. More and more people I talk to are aiming at the wealthy, educated and quality-conscious consumer.

Strong high-end retailers are displaying their product in a way that when the consumer comes in the store, he's excited. His ideas are expanded by what the retailer is doing, rather than the guy coming in and saying 'I want this,' they see things displayed and presented in a certain way and that's what they want. That's our partnership and we have to do that in our literature.

We spend more time and money on location photography than we have ever done before. This year, we have spent four full weeks on location photography in Barcelona, South Africa and Belgium. All that imagery is available to distributors and customers so they can actually use it in their advertising. It's creating the dream and selling the dream!

Gloster's new teak collection, Anassa, takes its name from the Swahili word for luxurious comfort. We wanted to take colonial style furniture and modernize it. The colonial style is very important in America, but they don't want antiques. We've used traditional methods of making furniture mixed with modern materials, using all-weather wicker, the right metals and we burnished the teak so it's hand-rubbed to release its natural oil. The Mercedes and the Porsche driver is going to have this furniture. We're finding our retailers engage at an emotional level with this product.

Emu

Benigno Fronsaglia, President

Kathleen Ferry, Retail sales and marketing manager

I think specialty retailers' success is going to be based more on geo-graphic region than anything else. We're looking to bring a new dimension to the casual furniture industry by bringing in designers who have worked in the indoor furniture market.

We're working on design trends toward the modern end to give us stronger brand recognition and differentiate ourselves. This year, I've seen the level of quality decrease for outdoor at the mass market merchandisers. And there's never been anyone doing service there.

Successful specialty retailers are paying more attention to color and fabric — making it a little more upscale, which you really don't have in those other places. The fabric choices offered from us now have grown from basically two in the beginning up to 79 fabric choices for '07.

We offer signature series from Laurie Bell fabrics, nicer Sunbrella fabrics and we're looking into outdoor leather. The color splashes we did last year attracted people and got some attention. Definitely design is on the way.

Hanamint

Russ Sorenson, Vice President

I think the future will be good for independent specialty retailers as long as they're focusing on what they do best — service and selection at the higher end of the market.

The more successful specialty retailers make themselves different by product selection, customer service and special ordering — which makes their customers able to mix and match colors. That's different from the mass, where it's this fabric and this frame color for this set. That's all you can get.

Hanamint has raised the bar with its product and we continue to develop full collections for the higher end. The marble finish tabletop in the Windsor Collection is an example of us pushing the bar higher.

We did a big revamp of our stock warehouse program this year in support of specialty dealers. We eliminated some of the lower end products we used to stock in our warehouses in Greensboro (N.C.) and Las Vegas. We also expanded our fabric choices so we now have 18 fabrics in our stock warehouse program. We try to run two to three finishes and are able to react and deliver in a short lead time.

Laneventure

Art Thompson, President

Gary McCray, Vice President Sales & Marketing

We're seeing the realization that trading up is where it's at for most retailers' survival. By trading up, we mean specialty retailers must offer different looks and better products.

They have to offer more things like Georgia Backyard and Sunnyland do in partnerships with contractors for outdoor rooms, whether it's water features or the courtyard — the more they can partner, the better off they're going to be. I think there is a realization with the dealers that that's the case. The competition has gotten better and better and they've gotten more attuned to that.

We're trying hard to give them design and marketing ideas that they can incorporate into their business. From a display standpoint, all these gardening structures are geared not only to sell but to help create excitement and make their stores more dramatic.

We're working with a lot of retailers, both large and small, and using our inside designers to develop better-looking retail floors. From a marketing standpoint, we're doing more national advertising to drive that customer in and make them aware of what's available in the specialty stores. We're offering more programs for the stores to do their own advertising that ties them with us, whether it's doing the creative for their magazine ads or direct mail pieces

One of the main things we do is try to just give them ideas of ways to do things differently. Our showroom is the corner-piece of everything we do.

This year, Laneventure responded to its national research that showed comfort was consumers' top criteria when furnishing outdoor rooms by adding options such as spring rockers to its Tuscany group plus swivel and rock motion to its woven products.

We're also introducing more modular collections because people are looking to adapt their outdoor spaces.

Pride Family Brands

Jamie Lowsky, President

Specialty retailers are still the leaders of the industry and will continue to be that way. Of course, changes have to be made in the way they do business. They have to continue to innovate and adapt. They have got to take their focus off pricing and focus on being the destination store for consumers.

The dealers who are succeeding are setting the romance of the scene, like selling the cruise experience where people arrive with high anticipations. I think patio people who set that tone will have the easiest time. They've got to pre-sell the product through the atmosphere of their store, then explain the features and quality to the consumer. That takes having salespeople in the store who have a keen awareness of the industry as well as the features and benefits of the products. If they can't explain it, they lose the customer.

We're providing all the tools they need from deluxe, handmade and hand-finished product with luxurious upholstery and fine design to full collections with 36 pieces. If the retailer does it right and displays the whole ensemble, they can sell not $2,000 but $12,000 to $15,000 and set themselves apart from everybody else.

Casa Casual

Bill Kennedy, President

I think the independent specialty retailer certainly has a place in the marketplace. Given the strength of the last season and the bullishness we saw at the premarket, we expect growth from those specialty retailers who can manage their business.

Key to their success is cash flow management and having a keen eye for the kinds of products that distinguish themselves in the marketplace from the big box. They have got to give the consumer a reason to buy — through better design and service. Specialty retailers have to offer more stylish products, more complete collections and service.

At Casa Casual, we have broadened our lines in terms of numbers as well as in terms of depths of collections. We have listened carefully to our customers and are responding to what they say they need for us to provide them in style, product depth and price points.

Kettler

Ludger Busche, Vice President

Mike Sosnowski, National Sales Manager

One thing is timely orders, being able to get orders fast to specialty retailers. We just had an 80,000-sq.-ft. warehouse expansion because we want to meet that demand more and ship within our usual window, typically we guarantee to ship within three to five days.

We try to offer a unique product that is very much different from what the mass retailers are carrying. For instance, we're offering a wood that requires no maintenance that will retain its natural color and not fade. Where can you go to a mass merchant to get that? We also have a five-year anti-rust guarantee on wrought iron.

Another huge thing is long dating. A customer buys it now and in many cases they don't have to pay for it until next June. That allows them to sell through the product before the invoice is due.

Alfresco Home

Joseph Cilio, President

We need to continue to develop unique design and products and bring them to the market at the right price point so we can be competitive yet different. If we can do that, our independents — which are the only ones I deal with — should be really in good shape.

(Successful specialty retailers) have a wonderful selection of product from a lot of different, quality vendors. They're sharp with their price points but at the same time they're looking at design. I suspect they are strongly marketing their company as a specialty retailer who can bring extra added value to the consumer. They're creating the experience that our consumers want to be involved with.

Personally, I'm very conscious of making sure I bring products to the market at the right value. That doesn't mean it's always inexpensive, but it means we put thought into how we can bring it to the retailer at the best price point so they can do whatever they need to do to be competitive and successful in the marketplace.

Lloyd Flanders

Dudley Flanders, President

They've got to create a unique look for themselves and a unique look for each of their customers so specialty retailers have got to go the customization route. Because the mass merchants are continuing to go up in terms of quality and look and price point, the specialty store is going to have to do it on service and customization.

The No. 1 difference is training their floor salespeople. It's not just product knowledge, but in knowing how to sell, how to fill a need and knowing what their role in the whole thing is.

We're concentrating on making sure our reps recognize the importance of that floor salesperson and, if the retailer isn't helping to train them we're asking our guys to help train them. We're providing more product knowledge and more information about our product, but we're also encouraging our salespeople to help train the floor sales people in selling not just our product line but with selling in general.

Dave Campbell,Vice President

I think there's a ton of room for growth. We haven't even scratched the surface. When you consider most average people, if you walk down any street here in Chicago and ask where they buy outdoor furniture, they don't even know a specialty retailer exists and they don't have a clue about a name brand for outdoor furniture. The opportunity is tremendous. We think we're doing a great job with the advertising and what we talk about, trying to reach the consumer. We haven't even nicked the surface. There's just a ton of opportunity but it's only going to grow if people take advantage and push the awareness to the consumer. I guarantee you 80% of the public doesn't know.

There are so many things that ought to be done to capture that. It's a combination of training the salespeople and longer store hours. The consumer's the one who has to understand there are those types of products and those types of opportunities out there for them to create a new lifestyle for themselves.

Homecrest

John Sundet, President

The outdoor living market has grown in both sophistication and size, expanding to a broader audience and more mainstream clientele. So it is more important than ever to stand out from the big box retailers — and this is a real opportunity for specialty retailers to set themselves apart from others in the market. It is a terrific time for specialty retailers to take stock of their offerings, reshape their services and reposition their stores as truly distinctive.

Retailers that continue to sell on standard materials, price and "safe" color choices alone are going to have a very tough time growing. There are just too many other retail options that sell lifestyle, design and fashion at good margins and know how to create an emotional connection with customers in their store environments. Now is the time for specialty retailers to stand out from the crowd and offer truly distinctive products and services.

Homecrest is rolling out a promotional program that can be customized to a specialty retailer's needs. We want to partner with our retailers to help them better promote our products and to enhance their unique position in the competitive outdoor living marketplace. Key members of our management team are heading out on the road soon with our sales representatives to meet one-on-one with key retailers to discuss their promotional plans early in the season.

Meadowcraft

Rory Rehmert, Vice President Sales & Marketing

I think there's opportunity for growth providing our specialty retail base is willing to change to cater to who our true consumer is.

There are still retailers out there who sell a table and four chairs and think the consumer will be back next year for the chaise.

The successful retailers are the ones who carry full collections and can dress it up to truly make the set look like it would in a back yard — and some of these decks being built in the back yard are 20×30 or 30×40. They know your best shot at that consumer is the first time around. Our goal and what we're able to do is to offer full collections to give a retailer plenty of ammunition to throw at that consumer, our true consumer. I think the economy will continue to squeeze the middle and the low end. In a true specialty store, the vast percentage of their showroom floor is upper middle to the top end.

Outdoor Lifestyle

Fred Ilse, President

One big trend has been toward deep seating. We've taken one of our lines and expanded the deep seating for that. And we've gone a little further with deep seating, we put in the Ultra Flex sling to the bottom to really add to the comfort.

Because colors are playing more of a role, now we are offering up to 260 colors.

What I'm hearing from specialty dealers this year is so many of their suppliers' lead times have been so long and manufacturers had trouble delivering. As a result, we had a tremendous amount of specialty orders in May, June and July. What we've done this year is diversified with five or six different fabric suppliers. You've got to be cautious.

We're trying to find products that are totally unique. And we're using different natural materials, such as granite from South Africa.

O.W. Lee

Terri Lee Rogers, Vice President, Sales & Marketing

From the manufacturer end of things, we have had to work a lot harder for the same market share over the past few years because of increased competition. Specialty retailers are going to have to do the same thing. The good thing about increased Outdoor Living awareness is that it drives business for everyone but the bad thing is if you don't have something special or different or better, there's no reason anyone would buy at a higher price. So many retailers are telling me they are acting as design consultants now by going out to their customers' homes and giving advice. Specialty retailers who are willing to work harder and give the service customers expect are going to do fine. But if they don't want to change their products or their stores to make them more special, they're going to suffer.

The ones that are successful are treating their customers as a client versus a consumer. They not only visit homes and give design advice, they make themselves available to take an 8 o'clock phone call if the customer needs help or meet with a customer on a Sunday afternoon when they are available. Obviously they have to make the showroom look like a designer with different colors, fabrics and textures. They have to make it look like a stage set, to make it look special — like a million bucks. The ones who just throw the furniture in there, I don't think they're going to make it. And the ones who have outdoor displays need to make sure they keep them dusted and landscape the place.

Specialty retailers — that's our bread and butter — and our business model is set up to serve their needs. We offer more choices and we've done more with fabrics. We've taken fabrics and grouped them into collections on fabric storyboards, which allows specialty retailers to have something to show their customers and explain how the fabrics can fit together.

We know who we are and we don't want to be all things to all people. We try to offer excellent service to our retailers and we have some support available over the weekend if they need it. We also try to come out with items or styles that are outside the box — that look different from what you're going to find at Lowe's.

Woodard

Dean Engelage, President

I see a very solid future for the independent specialty retailer, given the combination of demographics, the fact that people want to spend time outside and the trend in home construction adding outdoor rooms and living areas. My brother is building custom homes in the Dallas area and he made the comment, something I already knew, that he couldn't believe how much time and money people spend designing outside areas of the home. When they spend that much, that lends to them wanting to furnish it with the kind of high-style, high quality furniture they can find at a specialty dealer — the kind of product they're not going to find at discounters.

The successful retailers are not chasing the price points the mass or big boxes are focused on. They are service-minded; that's one of the key differences. And many are taking it up a notch as it relates to scale and style, which further differentiates them from the mass. There is a market for several-thousand-dollar sets of furniture. It's a market that isn't as worried about the price of gas going from $3 to $3.30 a gallon. These are people who may have historically bought through a designer, but now can find what they want at a specialty store.

The key for us is just product. We go to great lengths to be reliable and dependable with our deliveries to dealers. We work hard to develop unique products that represent a good value.

Suncoast

Paul Varshney, President

The future for the specialty retailer will be OK as long as they keep merchandise which is different from the mass merchants. They don't have to compete at the same price point. A car is a car, but people buy Corolla from Toyota and people buy Lexus from Toyota. From specialty retailers, they can get more color, fabric and design selections for a little more.

We have provided merchandise, which looks different and is more durable. This year, Suncoast is introducing eight different tabletops, some look like real marble and some look like mosaic tabletops but are made of cast aluminum. We introduced two full collections, Rendezvous and Devereaux, with sling, cushion and deep seating. We got excellent response from retailers at the premarket.

Also this year, we started a new company, Suncoast International, and added six groups of outdoor wicker.

We're buying component parts in China but having five cast groups finished in Fort Myers so we offer 10 different finishes and can deliver within a four-week lead time, where it's usually been eight to 10 weeks. I believe those are some things we do to help specialty retailers.

Summer Classics

Bew White, President

For the future, I think they're going to have to accept change. What we have here is a dealer base that's been used to domestic product and that's been selling five-piece and seven-piece sets for so long. Now we're in a fashion business and they've got to be able to recognize fashion, to know color trends and make their stores look better.

The successful ones are spending a lot of money on leasehold improvements. They are spending more on accessories. They are hiring visual merchandisers that either work in their store or come and help them set up their store displays. They are buying fancy lamps and Sunbrella lamp covers.

To help them, we have a super Shops program. We spend money on them if they are willing to spend $10,000 with us. We have a decorator to fly into their location and improve it. We're in the decorative throw pillow business now with fringe and tassels. We're also making lamp shade covers to match or complement fabrics. We offer 110 fabrics now and over 70 are our own exclusive fabrics, three or four we actually designed ourselves. We also are doing stores if they want us to — then we do everything.

Tropitone

Mike Echolds, CEO

To the extent the focus is on the outdoor room, I think they have a tremendous future because the consumer is so interested in entertaining outdoors. That's not just in the Southern market, but even in the Northern market. And the way they're doing it is with chat sets around fire pits. The way they express the outdoor room is a little different because the season is shorter. The specialty store can do things for the outdoor room that the mass merchant just can't do. If they focus on that, offer unique product and service, they've got a good future — though it will be tougher in the northern, colder climates.

We're trying to give them product that works in these large outdoor spaces, like this chair-and-a-half and all of our deep seating. We're really focused on comfort.

Also we are very focused on our Tropitone University because we believe the dealer needs help training their salespeople to tell the dealer's story. If the dealer's story gets told, consumers will buy this but they have to be told about the service and all the options available. Our Tropitone University is a training program geared to teach their salespeople the fundamentals of selling, it's not about product.

Veneman

Bill Markowitz President

They need to focus on the "outdoor room" as a place to drive their business. They must think about pieces designed to fit exact spaces.

Successful retailers are focusing on the complete outdoor room. They place value in being able to offer custom features that the consumers are imagining.

What Veneman is doing to help the specialty retailer survive? Offering complete custom applications by making specific sizes, finishes, fabric and cushions. Custom design at Veneman is driven by the customer's imagination.

Mallin

Brenda Pereyda, Vice President

Merv Conn, President

We are predicting small but steady growth. The retailers should know their customer in their area to ensure future growth and longevity.

The successful specialty retailers are differentiating themselves by giving superior service along with offering quality lines (color and design) that are not available in the mass merchant.

Mallin helps the specialty retailer by giving better information and training services to ensure the dealer has abundant information abou the product along with a wider display of goods not available to the mass merchant.

Telescope Casual

Henry Vanderminden IV, President

There is a definite market in place for the specialty retailers, but they need to be practicing the Top 10 things — from their storefront to their displays to their purchasing and merchandising.

First, they need to have a good-looking store. It doesn't have to be Taj Mahal, but it can't be a strip mall.

They need to have an effective, fun Web site — that is part of their storefront. How many times do consumers go in the store, but (first) they want to check out things and see what's available? Our busy consumer may be shopping at night or they want to be able to view all the products that the dealer has access to before they make the purchase. So I think the Web site is real important.

Once they get the consumer in the store, I think it's all about display. I know here in our showroom, we're doing a lot more and we have plans to do even more as far as creating vignettes or a package for our dealers. We're using more sources for our product materials and alternative tabletops, for fringe and fabrics. We've got some good design people internally, but for this market we hired a designer to accessorize our showroom and we've done all the tabletop and wall display through a designer. And that's what retailers have to do; they need to find a good local designer.

Then there's merchandising and purchasing. The mistakes I see some retailers who are going out of business making are in trying to compete with the big box. They are buying some of the same brands, the same container import products and it's not working for them. They don't have the volume and they're not going to buy or sell at the same price; it's a different cost structure.

Certainly every store, every region and market is different, but you can only go so high end. They don't have to go high end with every product; they can diversify with their look, their brand and by accessorizing their product to make them truly a specialty, special order shop. That's where they need to stay focused.

Some other ideas: They need to market their store and work hard to cater to the design trade within a 25- to 30-mile driving area. Find out who all the ASID designers are or even non-ASID members, people who are doing the work but don't have that certification. Get a list of those people and invite them to your store, which you close on a Thursday night for a wine and cheese party. Say 'we want to show you our product, show you our store and our source availability, where you can send your customers.' They will buy through you and we will give you a designer/decorator discount. There's the design trade and there's also contract/commercial. Are they doing anything with selling to bed & breakfasts? Granted, they have to be concerned about manufacturers competing or selling direct, but there's a certain amount of contract business retailers can do and be very effective at. They're not buying a ton of it, but you can get top dollar for it and it can be good business.

Have good people who are knowledgeable, understand the product, understand how to treat a consumer and enjoy what they do. America is all about service. We have more services in our country than any other country.

In a nutshell, over the last years we've had good double-digit sales increases post 9/11. We also have brought in nine retailers to advise us. As a result, Telescope expanded its alternative tabletop, wicker/woven and deep seating products.

Windham Castings

Debbie Young, President

I think the future is excellent for the independent specialty retailers as long as they stay in that niche market. I think the key to success lies in their name. They should really be independent or unique and be special — offer products that are different.

The retailers I see having the most success are those who are catering to the higher end consumer. They are relying heavily on special orders since that customer wants to customize their products and still get them quickly enough to enjoy the season. They have designers on staff who can assist in the design of outdoor living spaces.

Also, the successful specialty retailer is not trying to be all things to all people. They seem to have found their niche and they stay there and do what they do very well.

Our goal is to be a special order cast company that can ship any product in any finish with any fabric in three to four weeks in season. We don't require large inventory commitments, which tie up retailers' dollars. We want a nice floor display where a consumer can see and feel the quality of Windham and have confidence when they place an order.

Brown Jordan

Gene Moriarty, President/CEO

I'm encouraged because if the manufacturer puts its focus on design and has the right value equation with products aimed at the right audience that brand is representing, then that destination is where the consumer is going to go to find that quality of product. This company is geared, through Winston and Brown Jordan, to really drive premium design and product development specifically at that customer base. We're not interested in bringing design down to compete with the mass channel. We're really focused on designing up to compete for the customer who goes for service and selection, all of the things this channel of distribution provides.

We're still focused on four key things, which is being the lowest cost producer, improving our new product development, our design capacities and our service levels in shipping on-time and finally getting to the level of being able to brand-build in a consistent manner in everything we do from catalog, swatch books right up to print advertising. It was what I started when I came here and what is going to be the driver of our business model.

I can't stress how important the service level is from us. We've simplified our supply chain, simplified our product line and that's helped us improve our efficiencies and our service levels to our customers. We can help each other. I think we're listening to the dealer a lot more than we have in the past in determining what they need and what our product lines need.

Bill Brown, President, Specialty Retail

Although our dealers have been through some difficult seasons in recent years, there continues to be tremendous optimism among the strong specialty dealers we do business with. The common thread among those dealers is changing with the shifts in the market. Almost all successful dealers have seen consumer interest move toward more upscale products, better designs and colors shown in a more appealing environment. Dealers working with more affluent customers have found a definite advantage in upgrading the store presentation, creating fresh displays, painting walls, adding accessories, creating a wow factor to impress that level of consumer. As the middle market has slowed dramatically, the upper market has made up for that with larger purchases, better product and more of it.

Successful dealers are taking a selective approach to merchandising of the floor display. Most have found creative displays showing full collections, tastefully accessorized, have more impact than showing more table and chair sets. Many dealers have cut the number of styles and increased the number of pieces shown per style, which has visual impact and creates larger ticket sales. Romancing the display has become a critical part of appealing to this more upscale clientele purchasing premium outdoor products. Consumers are better informed today and know a well-designed and durable product for outdoor exposure will cost more. Due to the very positive exposure in the media of outdoor living trends, consumers with disposable income are willing to step up the budget for this purchase. Proper merchandising and creative display are critical to success. Our approach for each of our brands is simple. Our Winston dealers have always counted on our company for reliability, delivering a quality product on time. Our focus is to stay true to this successful formula, while upgrading the designs, finishes, fabrics, tabletop choices and expanding the variety of pieces available within the collections. Offering customization is a huge part of the success of the specialty dealer, being able to tailor the products to each customer's unique needs.

Brown Jordan is unique in having brand recognition among consumers. Our dealers constantly remark at how amazing it is the number of customers that walk in and ask for the brand. For 60 years, Brown Jordan has enjoyed a reputation for offering the best in design, material and craftsmanship. This past year we invested in product development, in expanded fabric selections, new finishes, a fresh presentation in all of our dealer materials to show the offering in the best way, all of which were well received in our July introduction. At the same time, we are constantly measuring and improving the way we do business, from manufacturing lead times, to quality, to customer service.

Erwin & Sons

Jim Erwin, President

I think they have to separate themselves totally from the big boxes, which we try to do with our line by giving exclusive areas so they don't have to worry about competition from the Internet or big boxes. One of things we're doing is bringing in a lot of Sunbrella and other higher end fabrics now vs. the lower end, which helps them separate themselves. And we have a lot more coordinating pillows with fringe and stripes.

Customer service, working harder and offering special orders are what make a difference for successful specialty retailers.

We're now an official licensee for Tommy Bahama doing cast, loom and resin furniture. It's all oversize merchandise; we have fabrics that run up to $40 a yard. It's a whole lifestyle look so we'll sell a concept vs. just a chair.

New River

Michael Mettendorf, Vice President, Sales & Marketing

I come from the side of the mass market so I understand that side of the business. I think the difference has to be selection, effective merchandising and being able to forge partnerships with their end-consumer. Obviously the partnerships forged between the retailer and manufacturer are equally important.

The specialty dealer is our main focus as it relates to this particular product line; we're never interested in going after the mass market. The tools we provide are all in mind in providing the best possible presentation that's available. We're going to take effective lifestyle photography that helps them market our products and share those images with them in light of their advertising campaigns.

From a price point perspective, Brazilian cherry is similar to teak but at a reduction of the cost. We also provide in-store POP that allows them to utilize our photography, features, benefits and sales materials.

The mass market, while the product seemingly is getting better and that hurts the specialty dealer, they're certainly not as deep, not as sophisticated, not as focused nor do they have the ability to offer the selection that specialty can offer. You can't compete on price, you have to compete on selection and service, that's an important facet.

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