Discomfort in furniture industry

By Don Dodson

URBANA – The furniture business isn’t an easy business to be in these days.

Consumers aren’t willing to pay more for home furnishings, but retailers still face rising costs for utilities, health insurance and employee benefits.
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“A lot of retailers are going out of business with the industry struggling the way it is,” said Allen Carter Jr., the president of Carter’s Furniture, with stores in Urbana and Champaign.


Carter, whose business has been around for 54 years, said his company had a “good 2017.” But several other area furniture stores are on their way out or already gone.

Last fall, Danville furniture retailer Rhodes-Burford announced it would close its doors after 121 years in business. Leiper Furniture closed in Monticello a few years ago, as did Ford-Baier Furniture in Paxton after a 130-year run.

Large furniture chains have gone out of business too. Among the casualties that once had stores in East Central Illinois: Heilig-Meyers, Rhodes and Leath.

One reason it’s tougher to stay in business is the price consciousness of customers. In recent years, furniture production has moved offshore to China, Malaysia and Vietnam, Carter said.

The result: Many types of furniture “have deflated over the last three to four years pricewise,” Carter said.

At the same time, younger customers are opting for more casual, less formal styles, such as those carried by Crate & Barrel and Ikea, he said, and fewer stores seem to carry better-end merchandise.

Carter said consumers these days appear to be less informed about brand names of furniture, but are inclined to “buy from someone they know and trust.”

The National Home Furnishings Association based in High Point, N.C., doesn’t keep track of how many furniture stores open and close each year. But its director of communications, Mike Pierce, identified several reasons stores have gone out of business. Among them:

– Location. The demographics of some communities have changed, and stores may no longer be in the right spot.

– Lower margins. “Almost all wood furniture is imported from Asia, primarily China,” Pierce said, and that has sharply narrowed retailers’ gross margins. The size of the margin depends on whether they order directly from China or go through major furniture manufacturers – who are now largely importer-distributors.

– Competition from suppliers. Many furniture manufacturers, such as Thomasville, now have their own retail operations in addition to supplying independents.

“It’s expensive to run a first-class business,” Pierce said. “You have to have excellent back-end operations, a warehouse that functions properly and meets all kinds of health and safety codes.”

Quick customer service is a necessity, he added. Customers no longer are willing to wait six months for furniture.

“If they buy it at 4, they want it in their home by 8,” Pierce said. “The only way to do that is if you have an expensive customer service program and delivery service, and that all adds immensely to the cost of doing business.”

In many cases, stores need to offer design services as well, Pierce added.

“If you’re an upscale, really good residential store, you have to have an interior design specialist on hand to help,” he said.

Another piece of the puzzle, according to Pierce: “You’ve got to have a strong online presence. You don’t have to sell online … (but) you have to have a good online Web site where people can go for information to make a determination about where they’ll go.”

Carter said he has found that home pages are a good way for customers to research furniture, in terms of familiarizing themselves with different looks and zeroing in on things that are attractive. But he said those who browse online often end up buying in a store, perhaps because they have specific questions on financing or want to make sure the furniture is undamaged.

In the past, new home sales often spurred the purchase of home furnishings, Pierce said. But the real estate boom of the past few years has yet to translate into a shopping spree for furniture.

“The large growth people anticipated just hasn’t been happening,” he said.

“What’s scary from the point of view of the home furnishings retailer is, disposable income has stayed fairly static. There has been no jump in terms of what people are able to spend out there,” he said.

It’s conceivable people will use their tax rebate to buy furniture, but Pierce said “a lot of folks will take it and apply it to debts.”

“Home furnishings retailing is an $85 billion industry,” he said. “We want it to grow, but it’s tough right now.”