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American Furniture Manufacturers Assn.

High Point, NC www.afmahp.org

AFMA has 350 regular members and about 400 supplier members

Industry's Health

"Business is really very good at the moment and it has been for some time," said Doug Brackett, executive vice president of AFMA.

Residential furniture sales in 1998 have outpaced beginning-of-the-year projections and shipments are now projected to reach $23.8 billion, a 12.2 percent increase over 1997 shipments of $21.2 billion. Earlier this year, AFMA had predicted only 3.7 percent growth in 1998 sales.

Shipments of wood household furniture are expected to rise to $11.21 billion in 1998, a 9.4 percent increase over 1997 sales of $10.2 billion.

After several years of lead times being reduced, the positive business news has once again started to expand lead times, Brackett said. As the time it takes from a consumer placing a furniture order to the delivery date has grown, criticism has been leveled against the industry, including a recent front-page story in the Wall Street Journal.

"Even if business were lethargic, we have to be closer to putting that product in the consumer's home than has traditionally been the case," Brackett added. "There is no cute answer to the lament that 'it takes too long to get furniture.'"

To meet the increased demand and reduce lead times, "most of the guys who intend to be in business in the future have invested in technology and are looking to meet consumers' demands better than they do today by producing smaller lots and quicker turn around times in the plant," Brackett said.

"It is impossible for any manufacturer to inventory everything that is made so there will always be some lead-time problems. but the challenge is to convince the consumer that it is worth the wait." Brackett added. "Otherwise we will have to go the way of Henry Ford, who said you can have any color you want as long as it is black.

"At the same time," Brackett added, "we must continue to explore every avenue that deminishes lead times."

1999 Outlook

AFMA predicts that residential furniture shipments in 1999 will be "awfully strong," Brackett said.

AFMA's quarterly economic forecast, released in October, stated that industry shipments will increase by 2.1 percent in 1999, moving up to a total of approximately $24.3 billion. This projection was revised upward from the $22.8 billion projected at the start of 1998.

Wood furniture shipments are projected to reach $11.4 billion, a 1.8 percent increase over projected 1998 shipments of $11.2 billion.

Industry Issues

There are several issues facing the residential furniture industry, according to Brackett, including:

* The decline of disposable income spent on residential furniture;

* manufacturers finding it difficult to get adequate labor in the manufacturing arena;

* regulatory activity at any number of levels in the environmental area, and;

* the continuing fragmentation of the distribution channels.

"It used to be that everything went through traditional retail stores and department stores," Brackett said. "Now there are 100 variations of each of these and now we have the Internet and all of those kind of things"

1998 Accomplishment

"I think without question AFMA's biggest accomplishment this past year was the decision to go forward with a blue ribbon committee to address the declining trend in consumer spending on furniture." said Brackett. (See sidebar on page 66.)

1999 Goal

"Our goal is a follow up on our biggest accomplishment for 1998," Brackett said, referring to the publicity campaign. "We need to formulate the message to be delivered to the consumer and to begin to fully implement this program."

RELATED ARTICLE: Five-Year, $5 Million Marketing Campaign

The residential furniture industry has kicked into high gear a five-year, $5 million public relations campaign designed to convince buyers to buy more furniture.

The campaign is the first such effort undertaken, but "something needs to be done to deliver a customer to the retailer ready to buy," said Douglas Brackett, executive vice president of AFMA. "Our research shows that 35 to 40 percent of consumers that enter a furniture store never buy. Our primary objective is to develop a furniture-friendly consumer."

The multi-media campaign, which was announced at the International Woodworking Machinery & Furniture Supply Fair in August, is hoped to change a negative perception of the industry that was recently documented in the Wall Street Journal. The story criticized furniture manufacturers for excessive lead times and accused the industry of not investing enough money in state-of-the-art, production-enhancing technology. The article also criticized furniture retailers for hyping low prices instead of value in their advertisements.

"Based on the Wall Street Journal story, along with some other assorted indications, we believe that a number of consumers have not had an ideal experience in purchasing furniture," said Jaclyn Hirschhaut, vice president of public relations for AFMA. The association recently hired Hirschhaut and retained Ogilvy Public Relations Worldwide to develop the publicity campaign.

A series of focus groups are planned, perhaps as early as next year, in an attempt to "determine what the trigger is for the consumer. What our message needs to be to motivate someone to get up and shop," Hirschhaut said.

"Our initial goal is to determine ways in which we can inspire consumers to want to improve the quality of their surroundings and ultimately prompt them to visit home furnishings retailers," Hirschhaut said.

The campaign is expected to target women, according to Hirschhaut. "The female consumer in a household is instrumental in initiating and executing the purchase process," she said.
COPYRIGHT 1998 Vance Publishing Corp.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:woodworking industry prospects; State of the Industry
Publication:Wood & Wood Products
Article Type:Industry Overview
Date:Dec 1, 1998
Words:919
Previous Article:Wood furniture trade deficit on record pace.
Next Article:BIFMA International.
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