U.S. Furniture Manufacturers Face Unstable Future

ByTraci Purdum A lack of brand equity is among several critical factors that have some furniture manufacturers scrambling for a seat at the table of furniture's future, according to Peter Tourtellot, a founding partner of turnaround management company Anderson Bauman Tourtellot Vos & Co. (ABTV), Greensboro, N.C. According to a recent report by ABTV, furniture manufacturers must take action to ensure survival in an industry where $3 billion in retail sales has evaporated since 1999. Indeed, according to the report, furniture manufacturers are facing several critical issues, including:

Building Brand Equity -- Most furniture manufacturers haven't done a good job of developing and promoting their brand names, thereby allowing the product to become commoditized. "If you ask 100 people what is Levi, most will say blue jeans," says Tourtellot, who also is president of the Chicago-based Turnaround Management Assn. "But if you ask those same 100 people what Thomasville is, more than half won't know that it's a furniture manufacturer."

Sourcing Manufacturing Offshore -- Products from countries with cheap labor are having a severe impact on the market.

Improving Quality -- Chargebacks due to poor quality can potentially shave two-and-a-half points off a company's margin.

Shortening Delivery Time -- Companies that can shorten delivery times will have a major competitive advantage. Tourtellot also hints that the furniture industry may meet the same fate as the textile industry -- competition from countries with cheap labor shipping their products to the U.S. "Furniture manufacturers feel their saving grace is the fact that it's harder to ship bulky pieces rather than fabric," says Tourtellot. "But that [theory] is starting to erode. China is starting to ship [furniture] knocked down. The assembly of the items is done once it arrives at its destination."