U.S. furniture industry must innovate

Furniture manufacturers should concentrate their energies on their most successful SKUs and best customers, borrow other industries' innovative methods and not be afraid to think unconventionally, according to consultant Art Raymond, Raymond made his remarks at the Aug. 24 meeting of the American

Furniture Manufacturer Assn.'s Suppliers Division in Hilton Head, SC.

"Furniture has become a commodity we sell only on price," Raymond, principal of A.G. Raymond of Raleigh, NC, said. In the process, the furniture industry has transferred control to the consumer and robbed itself of capital that could be spent on improvements, Raymond said.

There are plants all over the world that can copy U.S. products, Raymond said, but looking to China is not the only answer. "You can bet all we're going to be doing is lowering the price of furniture again."

Furniture makers must put people in their plants who "can wring out profits," he added, whether the products are manufactured solely in the United States or imported. Raymond urged furniture companies to take greater pains in analyzing their sales and inventory data.

It's insanity to keep building products that don't sell more than one a week." Manufacturers should check the sales history by SKU, he said. "Who's buying those SKUs?" Bar code technology makes it easier to monitor and analyze inventory in great detail, he added.

Raymond further suggested that furniture makers look at early sales data on a product and compare it with other products' sales at that stage. He suggested this information be entered into a computer spreadsheet program so that a manufacturer can easily look back and see how a product did when a retailer featured it in advertising. "Knowledge is what we're after."

Furniture manufacturers should also look for ways to simplify what are often highly complex product designs and manufacturing processes, Raymond said. He recommended that furniture makers pay close attention to how unrelated product makers have streamlined their operations. "Take the plant tours. Take a look at what's going on in other industries."

TV Trends Bode Well for Furniture Makers

James Meyer, CEO of Thomson Consumer Electronics, formerly RCA, told furniture makers and suppliers that the industry has an opportunity to profit from home entertainment trends.

Meyer said improvements in technology have produced a profusion of home entertainment electronics, which in turn have created "an absolute nightmare of wires." There are 250 million TV sets in U.S. homes, he said. "Nearly every one has a VCR. Most have a cable or satellite box."

As a result, Meyer said the furniture industry is once again being asked to provide storage of unsightly parts and to figure out how the entertainment pieces should be organized and fit into a room's decor. That part of the entertainment equation, he told furniture makers, "is back in your hands."

Evolving Screen Technologies

More and more consumers in higher income brackets will be watching TV on plasma screens, Meyer said. As the screens come down in price to $5,000 in the next two years, Meyer predicted the 50,000 units that Thomson sells yearly will likely quintuple to 250,000 before leveling off.

Plasma screens could present "a tremendous opportunity" for furniture makers, Meyer said. Storage is needed for tuners and speakers. Anybody spending that kind of money is not likely to balk at spending another $1,000 or more for a nice cabinet, he added.

The majority of viewers, he said, will continue to turn toward developments

in digital technology. They want bigger, better, brighter entertainment, at lower cost, Meyer said. Seventeen million Americans have digital satellite, he said. The number of cable subscribers is expected to grow to 30 million in the next five years, he added.