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Mass spurs growth of framed art.

NEW YORK--Picture this: Growth of the framed art and mirror market is being fueled by larger merchandising programs by retailers and new retailers entering the category.

These are just some of the conclusions of a comprehensive market research report by two MBA students at Harvard Business School. The independent study, obtained by HFN, is not endorsed by Harvard. Nonetheless, HFN's interviews with industry executives corroborate the study's conclusions.

During the year-long research period, the authors, Luciano Catoni and Mauro Pretolani, polled manufacturers, retailers and industry observers and compiled their findings for their thesis project.

The industrial framed art market was a $1.04 billion business at retail in 1993, according to the survey. Given the retail margin of 50 percent, the survey concluded that framed art and mirrors accounted for $520 million in wholesale dollars. Of that total, 80 percent, or $416 million, was done in framed art, while 20 percent, or $104 million was in mirrors.

The study finds an acceleration in growth over the past few years and predicts that it will continue. Vendors and retailers surveyed by the authors agreed. The framed art market grew at a rate of approximately 10 percent from 1991 to 1993. From 1993 to 1995, estimated volume grew by more than 40 percent. It is also projected to grow at a rate of 20 percent through 1996 and 1997.

Estimated 1996 wholesale figures are $720 million for framed art and $180 million for mirrors.

The largest share of merchandise is sold by mass retailers, which increased their portion of the business from 30 percent in 1993 to 34 percent in 1995. Department stores, came in second in both years, with 14 percent of the volume in 1993 and 16 percent in 1995. Furniture stores lost share of market, from 22 percent in 1993 to 20 percent in 1995.

According to the study, the rest of the business is done by retailers grouped as "other."

While the others, which include individual stores and specialty chains, dropped to 30 percent share in 1995 from 34 percent in 1993, the authors pointed out that within that group, specialty chains actually picked up share, while independent stores lost. The authors made a note of this point in the text but did not support this conclusion with data.

Growth at mass was fueled by greater shelf space devoted to the category and an increase in periodic promotions, vendors report.

"Two major mass merchants that we deal with have devoted more promotional pallet programs to wall decor," noted the sales manager for one supplier. "We've been working on enhancing the back-to-school and fourth-quarter programs," he reported.

Furthermore, a greater diversity of retailers has entered the category. Office superstore Staples, for instance, runs sporadic promotions on wall decor, with pallet programs from such vendors as Michael Alan Designs among others. Home centers have dabbled in framed art and mirrors on a promotional basis as well, according to suppliers.

The survey attributes the expanded distribution to "the high profitability of the category as well as increased consumer demand."

The authors defined industrial framed art as a poster, canvas, picture, object or mirror that is produced on an industrial scale, sold already framed and ready to hang, and that has a predominant "decorative" value. The definition excludes custom-framed art sold in custom framers' shops, posters or mirrors and frames that are sold separately and unique pieces of original art.
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Title Annotation:part 2
Author:Meyer, Nancy
Publication:HFN The Weekly Newspaper for the Home Furnishing Network
Date:Mar 4, 1996
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