Youth furniture: vendors cautious; styles sedated

Lisa Casinger -- Kids Today, 3/16/2009 12:00:00 AM

Flat seems to be the new “good” as far as sales are concerned in youth furniture. Vendors are looking closely at the bottom line, editing their number of skus and looking for ways to help their customers drive traffic.

Earl Wang, vice president of product development for Lea Ind., said that though the company did see sales “getting a little bit better” in the last month and a half, it is “concerning if you do a straight comparison to this time last year.”

Dutailier’s David Fontaine, marketing manager for furniture, said their adult furniture business is soft but youth is doing well and “about the same as last year.” Fontaine said the company’s distribution has shifted some from independent retailers to big boxes.

Keith Covey, vice president of sales & marketing for Furniture Basics said, “We were seeing triple digit growth before the economic crisis. We’re technically up a little bit, not by what I would call a significant amount though. Flat is the new good. If we can have the same year as last year, we’ll be up.”

Stefan Brugger, CEO of Gautier USA, says thanks to their Gautier store, which opened in Paramus, N.J. in November, they didn’t lose money in 2008. Thirty percent of Gautier’s business is derived from youth furniture sales.

All of the vendors said the top concern on their customers’ minds is driving traffic to their stores.

“Consumers are sitting back on any significant purchases,” Wang said. “There are some great buys out there for consumers who have cash.”

And, while youth and infant furniture, like cribs, are not as postponable as other furniture purchases, Wang says there are multiple channels in which to buy them and consumers are not buying as much of the extraneous pieces like desks, media centers, etc.

“If Mom and Dad can’t pay the electric bill or the mortgage they aren’t going to be buying more than the core needs for their children’s rooms,” he said.

Covey concurs that store traffic is a major concern, but he says the economy isn’t the only factor.

“It’s not that people don’t have money or that they aren’t spending it, they’re just spending it cautiously,” he said. “We’re seeing a generation that doesn’t have a problem buying everything on the Web; I think that has the potential to hurt the brick-and-mortar retailers more than anything else. People aren’t out there shopping the same way they used to.”

Brugger says the concerns they’re hearing from retailers is about the drop in traffic but also a trend toward lower priced items and the purchase of more indispensable replacements rather than emotional purchases.

Expectations
“I am by no means an economic mastermind, but everything is so tied up with credit and none of the experts or pundits can really foresee when that is going to loosen up. I think until we see improvement there, it’s hard to gauge what we’re looking at for the rest of the year,” Wang said.

Lea is taking a hard look at its existing inventories and its collections going forward.

“We’re pairing back on the number of skus we’re introducing,” Wang said. “We’ll of course have the core skus of twin, full beds, underbed storage, dressers, etc. but maybe you don’t need two styles of nightstands or mirrors. We’re trying to get more creative with our offerings while still addressing the basic consumer needs.”

Fontaine sees business remaining basically the same this year.

“It is slow but babies are still being born and people still need furniture,” he said. “Dutailier is a high-end manufacturer and people who have money will still buy.”

Fontaine said the company is weeding out its “duds” or slow movers, but that is a normal process, not something that’s changed because of the economy. Dutailier is investing more in product development however, gearing up for when consumers get back to spending.

“We invested a lot and focused heavily on the glider side of our business for the last 18 months,” Fontaine said. “Now that we are satisfied with that we are working on our case goods.”

Furniture Basics plans to add about a dozen new skus to its line, according to Covey, including sleigh beds and lofts, storage and maybe even cribs.

Covey says one of the things that’s helped sustain their business is they’ve made sure they’re in stock “100% of the time” and they’ve brought overhead down considerably.

Gautier plans to open two or three U.S. stores this year and Brugger expects sales to increase by about 20%. The company hasn’t changed its number of introductions or skus and in fact it debuted two juvenile collections in January at the Maison&Objet show in Paris.
 
Style
When times are tough buyers (both retailers and consumers) become skittish about going out on the style limb. Contemporary made a big splash in youth a few years ago, but now things are swinging back to a safe, more traditional look.

Wang says Lea is going with darker finishes and trying a girl’s youth group in chocolates and merlots, a finish that’s somewhat gender neutral and has a metropolitan look and one of the boy groups they’re working on has a bit of an American country style.

“When times are tough people look for safe looks, more generic looks and they rely on the bedding and accessories to be the style,” Wang said. “From a fashion standpoint I don’t see a lot of chances being taken right now.”

Fontaine agrees.

“Three years ago style was easy, contemporary was standing out,” he said. “But now, with the recession, we aren’t sure where to go style wise. We have to try to not be too outside the box because consumers are shy. Colors are kind of boring right now, lots of neutrals. We show fun and funky colors and patterns in the showroom but we end up selling the neutrals. Earth tones are everywhere.”

Dutailier has revamped its Great Value collection, a line designed at a lower price point than Dutailier’s higher-end product. They also are reworking their casegoods to produce them more efficiently and adding and changing features to add value to the product but keep the prices competitive.

When it comes to style, Brugger says Gautier sets its own trend.

“One collection is more romantic, for “young ladies” and the other is very flashy/metallic, for boys. Our trends include functionality with features to implement iPods, game consoles, etc.” he said.

Safety first
All of the vendors say they are compliant with the latest U.S. Consumer Product Safety Commission legislation, the Consumer Product Safety Commission Improvement Act of 2008; the ruling that has many infant and youth product manufacturers scratching their heads in confusion.

The act regulates the lead and phthalate content in products intended for use by children 12 and younger. As of Feb. 10, 2009 it became illegal to sell products if they contain more than 600 parts per million total lead. Certain children’s products manufactured on or after Feb. 10 cannot be sold if they contain more than 0.1% of certain specific phthalates or if they fail to meet new mandatory standards for toys. Under the new law, children’s products with more than 600 ppm total lead cannot lawfully be sold in the United States on or after February 10 even if they were manufactured before that date. The total lead limit drops to 300 ppm on August 14, 2009.

On Feb. 2 the CPSC unanimously voted a stay on the requirement for the third party testing and certification for manufacturers until Feb. 10, 2010.

“We’re committed to providing a safe product,” Wang said. “However, the interpretation and implementation, testing and record keeping are becoming a bit of a challenge. All of this has affected the flow of our introductions, it’s slowed them down, so we can make sure we are compliant.”

Brugger says Gautier products meet the “severe European standards” and the company actually is developing a furniture board which will “set new standards” in safety.

While flat may be the new “good,” the latest report from the U.S. Commerce Dept. shows that sales at furniture and home furnishings stores grew .7% seasonally adjusted from January, but decreased 14.8% unadjusted over last year. Maybe things are starting to look up.