Better goods such as this motion sectional from Nice Link Home Furnishings help justify higher price points at retail.
HIGH POINT — Motion furniture producers at June High Point Market took advantage of yet another opportunity for face time with their retail customers to talk about how they’re dealing with long lead times and priming the pump for ramped up production as supply of inputs stabilizes.
They also talked about sourcing diversification to maintain product flow and expansion of existing manufacturing capacity to get more goods in the pipeline. Even as container pricing and availability restricts flow of finished goods, kits and components, they want to have enough product to meet what vendors believe will remain strong demand at retail.
Some also remained aggressive in terms of introductions. It might be a while before the new goods get to retail floors, but the sense is a lot of retailers are desperate to refresh their presentations and remerchandise their stores by next summer after a couple of years of having to sell whatever they could get their hands on.
Not standing pat
Lane, for example, introduced 38 imported motion groups from Vietnam, part of an aggressive sourcing strategy over the past 12 months to complement a powerful domestic manufacturing infrastructure.
“We’ve gone from zero a year ago to 1,200 to 1,500 cans a month,” Lane Executive Vice President Jay Quimby said of the program. “There are a lot of goods coming out of Asia, not a lot of branded product. We’ve put the same features, benefits and attributes that a consumer would expect from Lane” into some new opening price points.
Quimby said Lane has brought the buying power and scale it developed in its imported leather stationary program to bear with the motion goods in order to help prioritize its shipments with ocean carriers.
Moto Motion is launching new functions to offer additional motion features in order to help justify the higher prices consumers are paying for the product. Examples include Moto’s new zero-gravity and shiatsu air-massage features.
“We’re trying to give retailers reasons for the price increases and increase value,” said Moto Motion Senior Vice President Jack Copley. “These are features that give them something to talk about (to consumers) with these higher price points.”
Working around problems
In addition to remaining aggressive on its product development Jackson Furniture Inds. and others are positioning to ship a lot of goods quickly when foam supplies improve, doing as much work as possible for pieces on order that just need foam for completion.
“We look for our foam allocation to be lifted in the next few weeks,” said Jackson Senior Vice President of Sales and Merchandising Anthony Teague. “Where our warehousing can stand it, we’ve built thousands of pieces without cushions, so when foam allocations lift, we’ll be ready to put those products in finished-goods inventory to ship.”
He added another benefit to that approach was keeping production workers on the job “so when we’re at full speed we’ll have the work force ready to roll.”
Almost every motion showroom indicated that trans-Pacific shipping rates are impacting price. The same holds true at Kuka Home North America, but with demand ongoing, the company’s parent is expanding aggressively in Vietnam and elsewhere.
“One of our customers said a sofa we supply that was $2,300 retail now is $3,450,” said Kuka North America President Matt Harrison, “but we’ve been able to increase our capacity to ship $200 million more (in product) than last year. We have two new facilities in Vietnam, with one on our main manufacturing campus there.”
Shipping lead times are still out to September, “but that still stacks up pretty well relative to some others,” he said, adding Kuka also is doubling capacity at the special-order manufacturing facility in Monterrey, Mexico.
When tariffs on Chinese goods arose, Master Motion Studio 54 stood pat with producing in China versus going to another country. President and CEO Michael A. Nanni said he engineered the product line in 2018 to accommodate a 75% tariff in order to avoid price increases, adding that has provided some wiggle room for dealing with five-figure freight costs.
“The tariff never got that high, and I never increased prices, so now we’re able to accommodate these increases in freight costs with a line item on shipments that the retailer gets back double at retail,” he said. “I have a leather $1,599 retail massage sofa with two patented massage units, two power headrests, two power lumbar, and two power recline that could retail for $1,999 to $2,499. The original product cost stays the same, and the line-item amount going towards the freight, gets doubled at retail.”
The higher retail price, he added, can help the retailer absorb higher ocean-shipping costs, and keep a higher margin once they moderate.
“You want to set up your business now so that when your freight rate does go down, you’ll be at price points for a quality product higher than where you were to start with,” Nanni said. “It’s about having product that can justify higher price points when freight goes down and not just products at high prices.”
Better than expected
It was a given going in that June High Point Market wouldn’t see normal attendance levels given the buying power present at Premarket along with pandemic-driven utilization of showrooms during off-market periods such as First Tuesday.
That said, face time with retailers remains critical for discussing the long lead times and rising costs hitting the industry.
“It’s been really good to have these face-to-face conversations about the challenges facing the industry,” said Lane’s Quimby.
Going in, Teague at Jackson Furniture Inds. wasn’t sure what to anticipate from this edition of High Point, but overall he came away pleased.
“We had more of our larger dealers come back (after Premarket) than we expected,” he said. “We saw about a third of our Top 100 customers, and we’ll have about 60% of what we normally expect from market attendance.”
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June 21, 2021 at 09:26PM
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