Embattled RTA industry: turns to imports, new designs.
Like their counterparts in traditional wooden residential furniture, North America's top ready-to-assemble furniture Ready-to-assemble (RTA) furniture, also known as "knock-down furniture" or "flat packs", is furniture supplied as a kit of flat parts and fasteners to be assembled, usually by the end user, with simple tools. companies enter 2006 wrestling with how to compete against imports. Their answer seems to be, not only if you can't beat 'em, join 'em, but also go one better in new product development and speed of delivery.
Once thought to be well protected against low-cost goods from Asia because of the RTA RTA
renal tubular acidosis.
RTA Renal tubular acidosis, see there furniture industry's reliance on high technology instead of labor, all four of the biggest North American-based RTA companies--Sauder, Ameriwood division of Dorel, O'Sullivan and Bush--have felt the pinch of competition.
Glass and metal furniture from Asia have become a factor in the primary RTA categories of home office and home entertainment. In addition, imported solid wood and wood-veneered products are being sold at prices that are highly competitive with RTA's traditional laminated-particleboard construction.
"The market has changed dramatically in the last 24 months," said Greg Carlson, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Dorel's Ameriwood Industries.
RTA is probably less exclusively a particleboard par·ti·cle·board or particle board
A structural material made of wood fragments, such as chips or shavings, that are mechanically pressed into sheet form and bonded together with resin. and laminates category than it was four to five years ago, said Kevin Sauder, president and CEO of the RTA industry's sales leader, Sauder Woodworking. "But all markets change. We've adapted."
In 2005, Ameriwood closed one of its four RTA furniture plants, citing overcapacity o·ver·ca·pac·i·ty
Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. . O'Sullivan Industries is reorganizing after declaring Chapter 11 bankruptcy in October. Bush Industries is now a private company, after reorganizing under Chapter 11 in 2004.
Sauder Woodworking, meanwhile, has managed to keep its sales steady, at about $550 million in 2005. The company's annual revenues climb to approximately $750 million when the sales of Progressive, a sister case goods case goods
a. Pieces of furniture, such as bookcases or chests of drawers, that provide interior storage space.
b. Pieces of dining or bedroom furniture sold as sets.
2. company, and contract/church furniture manufacturer Sauder Manufacturing, are taken into account.
"We have held our sales levels near their peak levels as our competition has seen their sales level drop," Sauder said. "I think we have the broadest base of distribution." Although some of Sauder's customers, like Montgomery Ward, have closed and others, including Sears and Kohl's, exited RTA for a time, the company has been able to gain business from Wal-Mart and other retailers. "We have been able to shift our distribution to those that are still growing," Sauder said. He added that Sears is beginning to get back into RTA sales and Kohl's is experimenting with sales of RTA furniture on its Web site.
Both Sauder and Carlson said part of their companies' strategies is to take advantage of global sourcing. Spokespersons for Bush and O'Sullivan could not be reached for comment, but in its strategic turn-around plan adopted after new management came aboard in 2004, O'Sullivan emphasized global sourcing, new product development and focusing on specific market segments. Bush also is expanding its product and market range, including the introduction of fully assembled furniture and sewing as a source of laminated components for store fixture, closet, cabinet and other manufacturers.
Two years ago, Sauder Woodworking bought Studio RTA, primarily an importer of metal and glass RTA furniture. "That became part of our portfolio," Sauder said. "We've been working with them and sister company Progressive, a wood case goods company, to get a better supply for wood and imported RTA furniture.
"We think there's a market for all types of products," Sauder added. "Our basic business on laminated RTA furniture (produced in Archbold, OH) has remained very strong."
Consumers Want Choices
White low prices account for part of imports' popularity, Carlson said the desire for wood, wood veneer In woodworking, Veneer refers to thin slices of wood, usually thinner than 3 millimetres (1/8 inch), that are usually glued and pressed onto core panels (typically, wood, particle board or medium density fiberboard) to produce flat panels such as doors, tops and side panels for and other alternative materials is also a matter of consumer preference. Retailers such as Pottery Barn Pottery Barn is an American-based chain of home furnishing stores with stores in the United States and Canada. It is a wholly owned subsidiary of Williams-Sonoma, Inc. History and Ikea have exposed consumers to new offerings of RTA products, and by doing so have expanded the RTA market, he said.
In the past year, Carlson said Ameriwood has accelerated the development of new domestically produced "hybrid" products and sourced finished goods. Hybrids combine laminates with metal, glass, MDF (1) (Main Distribution Frame) A wiring rack that connects outside lines with internal lines. It is used to connect public or private lines coming into the building to internal networks. , wood and wood veneers; much of the products come from Asia.
Historically, Ameriwood's prime market has been through mass merchants, including Wal-Mart, Kmart and other major retailers. Carlson said the company will continue to develop products for them. "By applying exceptional design and functionality, we're expanding from traditional opening-price-point products to higher-end goods sold through a broadened sates base," he said.
In its efforts to branch out to new customers, Carlson said Ameriwood has co-developed new products with electronics companies like Belkin, Samsung and Akai sold through electronics superstores. He noted that the new Altra brand workstations have built-in Belkin USB USB
in full Universal Serial Bus
Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. devices. Launched in October at Office Depot Office Depot (NYSE: ODP) is one of the world's leading suppliers of office products and services. The Company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, , the workstations incorporate both imported and domestic components and materials and are made in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. to sell at value-added prices. As an example, the Aviator and Empire workstations retail for $209.99 and $259.99, respectively.
Carlson said the workstations' success convinces him that "retailers can offer these well-designed, high-quality, domestically produced value-added products and successfully meet consumer desires."
Success with Store Brands
Sauder has moved heavily into the manufacture of OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and products for some of its customers, including some Home Trends products for Wal-Mart, the Furio brand for Target and all of the Christopher Lowell-licensed RTA furniture for Office Depot.
"A lot of our efforts have been product development, efforts that have been specific to these retailers," Sauder said. "It helps give them the differentiation they're looking for Looking for
In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. ."
In the last year and a half, the Christopher Lowell Christopher Lowell (born Richard Lowell Madden November 6, 1955), is an interior decorator and television personality. He is the host of It's Christopher Lowell! and the Christopher Lowell Show, for which he won a Daytime Emmy Award in 2000. product line has grown to the point that it takes up most of the RTA floor space at Office Depot, Sauder said. The products are Laminate laminate,
n a thin slice of porcelain or plastic fabricated in a dental lab, which is cemented to the front of the teeth to cover gaps, whiten stained teeth, or reshape chipped or broken teeth. , but not at promotional prices. "They're better goods: $399 desks and $599 armoires," Sauder said.
When it comes to competing with imported wood and wood-veneered furniture selling at laminate prices, Sauder said, "There's a tradeoff between shipment time, turnaround time (1) In batch processing, the time it takes to receive finished reports after submission of documents or files for processing. In an online environment, turnaround time is the same as response time. and some of the products' features. You can perhaps get the laminate products delivered in three days, and the risk is low because it's from a great domestic supplier."
Shipments from China take six to eight weeks, Sauder said, and there are bigger risks involved. "You have to compare the actual product ... I think laminate still offers a good value there," Sauder said, citing the success of the Christopher Lowell line. "We really have shown that with great styling and excellent logistics and a good brand push, the product can continue to sell very well."
At Ameriwood, Carlson said, "I think there's going to be ongoing opportunity for a balance of both domestically produced and offshore products. Global competition challenges all of us to continue to develop well-designed products with great value to meet consumers' needs and expectations."