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Another nail in the coffin of NC furniture selling

19 years ago

...unless your local dealer gets a bad case of greedy stubborness ;-)

I got notices of MRP policy from two name brand lines last week alone. Finally factories are realizing they have to support the dealers that make the investment in displaying product, advertising, paying rents and real estate taxes.

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Lexington adds minimum price policy

Heath E. Combs -- Furniture Today, 3/13/2007 6:15:00 AM

Goes into effect nationwide June 1

Thomasville, N.C. Â In an effort to stem declines in retail profitability, Lexington Home Brands has announced a new Suggested Minimum Retail Price policy.

The SMRP policy applies to the entire Lexington line of bedroom, dining, home office, home entertainment and occasional furniture, including branded products such as Tommy Bahama. The new SMRP policy goes into effect nationwide on June 1.

"Lexington is taking the initiative to ensure that we empower our dealer partners to achieve better profitability," said Lexington President and CEO Phil Haney in a statement.

"With many manufacturers and retailers fighting their way to the bottom, we at Lexington wanted to take the aggressive and positive move of adding an SMRP policy. It provides retailers with the incentive to make a competitive return on their investment in the display and promotion of Lexington Home Brands Products."

Haney was unavailable to provide details about how the policy will be enforced.

In the past, other companies with set pricing policies have pulled major collections  but not entire product lines -- off the floors of stores that go below the SMRP level.

These types of policies are more common for high-end product lines. LexingtonÂs line ranges from medium to high end.

Comments (10)

  • 19 years ago

    This is too little, too late. Retail stores are closing left and right because of the North Carolina lowball pricing, and other 'internet' sellers, plus the invasion of cheap imports.

    What's happening to the furniture industry is the same thing that happened to the wallpaper business in the 90's. The discounters ran the retailers out of business, and then soon the consumer had no where to shop the papers (and then call the 800 line discounter). The entire domestic wallpaper market collapsed.

    North Carolina discounters can sell for less mainly because commercial property is cheap in North Carolina, and they freight from the plants with their own trucks. Their overhead is lower, so they can sell lower - counting on the consumer to use their local neighborhood stores to make their selections.

    Some will say that's fair competition, and they would be right. However, your local guy can't stay in business if he's used as showroom just so folks to shop in North Carolina Remember that your local guy pays a lot of taxes in your community, supports your schools, and spends HIS money in your area. When you lose a retailer, it affects your community more that you might think.

    Just yesterday I spent 2 hours with a customer on a bedding set. She decides what she wants, then goes home and gets on the internet. Calls me up later and tells me I have a very good price but there's a place in North Carolina that will do it for the same price but she doesn't have to pay sales tax from them. So either I eat another 5%, or she buys from them. Well, I can't cheat on sales tax, so I have to agree to do that to keep the sale. One more margin in the toilet.

    I personally am fed up with the furniture business. Seems the pressure on price from the customer is greater now than it has ever been, yet my county and state taxes increase every year, as does my rent and insurance. Trying to raise a family and put two kids through school is very, very hard on what one can make in this business. Last year I cut my prices to the bone to try to meet discounter's and wound up with so little profit that I can make a higher wage driving a UPS truck.

    I'm all for Minimum Selling Prices. That at least allows us in the business to maintain an average standard of living in a very tight, very competitive market.

  • 19 years ago

    I've bought twice from NC, and both times I made my selections at NC showrooms. I'm not sure their overhead is all that low, FLS and Boyles have huge showrooms and lots of very knowledgeable staff. That is why I went there: I couldn't find the products or service I wanted locally, and the local prices (I checked after shopping in NC) would have been 50% to 100% higher.

    I don't blame you for being fed up, the customer who made you eat the sales tax is unethical. But I visited local retailers who had uneducated and/or snooty salespeople and poor selection. They didn't earn my business.

    I tried again today, calling a local office furniture place with my request for a pottery-barn style work table/partner's desk. I was referred to a website that didn't have what I had asked for, when I called back the salesperson reluctantly took my email address and said she'd let me know if she found anything. I emailed FLS, and will call another local place tomorrow. I'm betting that FLS will give me superior service, better selection AND better pricing. I'd like to be wrong and spend my money in-state.

  • 19 years ago

    I'd been buying from a local retailer till I found out that a High Point store, 100 miles away would save me 29% on a suite. Both are ordering from the furniture maker. The High Point store with the lower price had 2 sets in the showroom (and a much larger showroom). The one with the higher price does not usually carry showroom samples in this line, although they had one at the time we were looking. I don't know if the High Point store would be classified as a discounter but he is certainly not trading overhead for margin.

  • 19 years ago

    This is a new world.

    The internet has changed the manner in how people shop for merchandise of alll kinds. Companies must adapt or suffer the consequences. There is no going back.

    Lexington and the like can institute all of the SMRPs that they like. In 2007, that business model is doomed.

  • 19 years ago

    MRP's are only useful if there is demand for the product itself before thinking of the price. If you have a product people want, then MRP's will not deter sales very much.

    Cases in point:

    iPod
    Tempur-Pedic
    All-Clad

    These are neither doomed products nor doomed companies nor doomed business models. In 2007, this is the way companies are doing business. The internet just means that people can shop naked in bed.

  • 19 years ago

    I went to Greenfront Furniture in Farmville, Va last week. It is where all the locals head to buy NC furniture instead of driving down to NC to get it. This was my first trip down in over 5 years. Greenfront furniture has about 14 locations in the town of Farmville all dedicated to selling furniture, accesories, carpet, Leather, Lexington, Harden, Hooker, & others too. This year I noticed a big sign in the ceiling about IMPORTED FURNITURE. How they would only give a 30 day warranty on the stuff. I was looking for Bathroom vanities... every bathroom vanity I saw was made either in China, Vietnam or Indonesia. Nothing made in the US. Even the one from Hooker was stampped on the back as made in Vietnam.

    Get online & look at EBAY..type in bathroom vanity 99% of the stuff is stained birch wood that has been imported and they think it will last in a humid environment like a bathroom. Costco _Sam's Club and others selling imports too,anything with a marble top on it priced way below what NC priced vanities would be.

    Called a local Cabinetmaker; going to get my cabinets made to order. I may pay more, but I will be satisfied that I bought American made.

  • 18 years ago

    I live in the NE where the prices are inflated beyond belief. That is why I will check with NC furniture.
    Yesterday, I got a quote form a local furniture store on a THREE piece sectional...
    I had a problem with the fact that the same sectional (SIX pieces!) in another color was being sold "on sale" for $300 less than the 3 pieces I wanted. What gives?
    I feel ripped off. I feel that it shouldn't cost me more than twice the amount that they are charging for the displayed sofa. Secondly, they must still be making money on the sale sofa. I got a bad taste in my mouth & I am not buying my sofa there. Yup, NC will get my business. It's all because of local greed.

  • 18 years ago

    For a moment I'm going to give the dealer the benefit of the doubt. Two things may be going on here:

    1) The fabric you wanted was more expensive than the fabric that was on display.

    - or -

    2) The dealer wanted to get rid of his floor sample, and discounted it below normal selling price. And you don't know that he's making money on it, for all we know he could be selling it for $100 above cost, or even $100 below. Dealers will sometimes sell an item below cost if its a very poor performer. We've done it too.

    The NE is a terribly expensive place to live and do business. I wouldn't want to be him.

  • 18 years ago

    They are way way overpriced here in the North East. I'm in New York. Went to a store in Westchester yesterday. First of all they (at that store) put their own codes on the furniture so you can't tell the manufacturer. I had been researching on line so I recognized the very chair that I wanted. Sale price $899 for a dining side chair - NC price $399. Just based on principle alone, I won't buy from the local store. That is so sad because I am the kind of person who feels obligated to buy from people if I take their time to ask any questions or if they help me in anyway. I politely declined their help and looked on my own because I know I am not buying from them. That is just sheer greed as far as I am concerned.

  • 18 years ago

    Who is the store, and who is the maker of the chair?