Watching TV tonight and saw another advert for a Furniture Store that is “Closing their doors forever!” They let me know that “Everything Must Go!” and didn’t want me to “Miss your last chance for great savings!”. This commercial made me think–it seems that the worst business venture must furniture stores because it seems like they all start going out of business as soon as their doors open. So truly, are the owners of these stores just unfortunate entreprenuers? Or is this some brilliant sales ploy of furniture masterminds?
Going out of business…was this the plan all along?
Furniture is a difficult business – small markups, lots of competition, expensive products that people buy very rarely (I’ll bet you’ve replaced your computer or car more times than you replaced your couch).
Well, I remeber in Cleveland there used to be a furniture store that seemed to always go out of business every 3 to 6 months, have a bankruptcy sale, close down and open up again a few months later under a slightly different name. Don’t know if the owner was doing it as a sales gimmick or just stupid.
Chuck. Care to share the percent markup on the average sofa. I highly doubt the small markup. While I have no firsthand knowledge, I would guess the markup is extremely high.
A couple of years ago the WSJ did a profile on the travails of the furniture industry; although theoretically the markups are huge, rampant discounting, ancient manufacturing methods and rapidly changing consumer tastes have made it exceedingly difficult to make a buck. People have become accustomed to getting What They Want Now and are no longer willing to wait 12 weeks to get the sofa in just the right fabric - and they don’t have to. A significant number will go to IKEA and find something basic they can live with and either take home that day or have delivered in a week. But furniture manufacturing in this country hasn’t changed much in the last hundred years: manufacturers offer thousands of options, most of which never sell, and doing that means long lead times. So there’s been a big shakeout, especially on the retail side.
Nope. Furniture has a very high markup. I used to be a salesperson at Mathis Brothers Furniture in Oklahoma City [$6-$8 million per month]. They beat pretty much everyones prices in the Midwest. People come from all over the country to shop there. But I still believe their markup was around 35-40%, The other one I worked at in OKC had a 47% markup.
Generally furniture stores are started by furniture salespeople. Being good at sales doesn’t make one good at managing. That’s pretty much the main reason. We could get into the high competitive nature of the business, but that’s not really a great excuse. If you ever go to OKC check out the sheer number of furniture stores in one area (West Reno & Portland) Many do very well and have for years-even though they are packed in that area like sardines.
Or they are just lying. Anyone who has grown up in Arkansas in the past 20 years or so can attest that Schusters Home Furnishings has been going out of business for years.
I am now a car saleperson and our dealership, like the two others I’ve worked for, use very misleading ads. A few months ago we ran a radio remote that required the DJ to say something like “we need to sell 125 cars by next Saturday to liquidate our excess inventory”-but we only have around 110 cars. Listen closely to the ads of furniture stores and car dealerships. Some would say that they are simply misleading-but it would be just as accurate to call them liars.
RANT
Going out or busuness/prices slashed - My ass!
I paid $3,200 for a complete living room set at Sears Homelife. Did a lot of shopping and found that price to be reasonable.
Then, at their going out of business sale, they had the same set slashed and ready to go out the door for $3,400. What?
So I went inside and started asking around. I ran into an equally confused patron so we traded rants about the prices untill a salesperson finally showed up. We were told that some auction type clearance people had taken over the inventory. It appeared as though they just made up their own prices for the stuff. Things were marked way up and then slashed to make it look like they were on sale.
I started a thread on this in the pit a few weeks ago. My point was, “How stupid do you have to be to run a furniture store?” Judging from their ads, they are overstocked at least 9 times a year. Do they have no sense of market conditions or inventory control? Or are they…lying? :eek:
PS - The thread went nowhere. I wasn’t angry enough, also didn’t say “fuck” or “donkey dick.”
I spent almost 40 years in the furniture industry and my dad was in it for many years before me. We made items that go into furniture and sold to upholstered furniture manufacturers. In the industry it is assumed that furniture stores are marking items up 100%. This doesn’t mean that some discounters don’t have smaller markups. However, if you find what appears to be similar items at different prices, the first thing to check is the construction (not easy) and probably the best thing is to check on the reputation of the manufacturer.
It used to be that there were hundreds of manufacturers and it seemed like they were sprouting up every day. This was because starting an upholstered furniture plant required a comparitively small capital expenditure. caracal said that furniture stores were usually started by salesmen. Furniture manufacturers were the same, except the more successful were started by a salesman and someone in production. For this reason Futorian in Mississippi was jokingly referred to as “the university”, since so many people left them and started their own businesses.
Garments and shoes are very similar industries and both have moved out of the country. The reason that upholstered furniture hasn’t is the cost of shipping and the tremendous possibilities of combining style and cover material. OxyMoron pointed out that people are now more interested in getting something right away, so that takes away one problem. Recently, the idea of bolting upholstered furniture together so it can be assembled has become more acceptable (the idea is not new). This has become a big thing in case goods (all wood furniture) and will get big soon in upholstered furniture (look for made in China).
The furniture business has been lousy for at least three years. Action Furniture reportedly has sold to furniture stores on the terms of not having to pay until some time in the future. This seems terribly risky to me unless they have some means of making sure a furniture store can’t declare bankrupcy. Which brings me directly back to the OP. When a store or manufacturer goes bankrupt it means that they owe more than they have in assets. This often is because someone has been spending money like crazy, but the losers are the ones that are owed the money. There are people that have gone through the cycle many times and there is almost always someone willing to sell to them each time they start a company. Oh, and the risk of fire is also high in the furniture business. The term “fire sale” has a special meaning to those in the furniture industry.
NO. Markups are not good enough for a furniture store to survive unless they are big, but a mom and pop gets screwed because the manufacturers do NOT care about the store, they will sell to the competition in a heart beat. They are terrible partners in business unless you are the only store in the area… its is a total fallacy and you are being cruel when you think “we” are just raking it in. Why do you think they are going out of business all the time? If they were making good money they would stay open for Christs sake… your comments make me mad actually. I have owned a store now for 2 years where I have worked for almost 30 years and now I am going out soon because people are nickel and diming you and assume you are cheating them… horrible business to be in because people are abusive… and so are vendors.
I would add that all low-end furniture is made in China now-and a lot of it is crap. It will last 4-5 years at most, so people throw it out and replace it. American-made, high quality furniture (or european imports) is very high priced (3-4 times the price of the chinese-made stuff), but lasts forever-so a ma and pop store cannot sell it profitably.
For myself, i prefer to buy second-hand (but high quality)-it is better and looks better.
Yeah, for some furniture stores this is the business model. There was one in my hometown which was opened by the owner of a furniture factory when the factory went out of business, then he restocked from other closing factories. Eventually he opened another store where he (well, now it’s his son) sells furniture at normal prices; years later they closed the “out of business” store - after a twelve-year run.
There is certainly a lot of margin to play with… we have a leather sofa which is made in Denmark, purchased in the Czech Republic for about $6,000 (about $5,000 without VAT).
The exact same sofa purchased in Reno, Nevada (remember this is made in Denmark) is $3200 before tax.
Sure the US has higher volume… but you can drive from Prague to Denmark in one day.
About 15 years ago, in Central NJ, there used to be a furniture store (actually small chain of 2 or 3) that would hold a “Going Out of Business” sale every other month or so. You’d always hear about it on the radio - same commercial over and over again, for months on end. I remember thinking at the time how awful this place was doing until I saw one of their signs one day and read it a lot more closely than ever before:
Even in furniture city the unthinkable has happened,Kindel, and Klingmans and Israelswah wah wa wa wa But it was Bob Is who mismanaged his overextended loans -
No matter 28th st needs more than big box retailers
When I worked at a major Midwestern department store chain (since swallowed up by an even bigger chain) the markup on upholstered furniture and rugs was a modest 20%. The markup on mattresses was somewhat higher, with the markup on accessories and “casual furniture” running at 100%. Of course, people replaced the less-expensive stuff far more frequently than a top-line living room sofa or a formal dining room set, so the department as a whole had a decent profit margin. But in general, the better and more expensive a piece was, the lower the markup.
OTOH, the high-end manufacturers were much more generous with advertising allowances and promotions, so the buyers could price a sofa with, say a 25% markdown and still get a decent profit, particularly when the customer also bought a couple of lamps, end tables, etc.