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Retail Is King!

The retail market is back on top. Top U.S. Furniture stores posted a 9.9% increase in furniture, bedding and accessories sales last year as the big guys beat up on the little guys . Combined sales jumped to $31.4 billion from $28.6 billion for the same companies in 2011. They also saw their first healthy gain in overall store count in years, up 7.3%, or 650, stores for a total of 9,200.

That means the Top 100 took a bigger share of the overall furniture store market — 69% this past year, up from a 67% share for the previous year’s list. Whether three positive sales years in a row turns out to be something or not, the nation’s largest furniture chains appear to have washed out their weakest performers and are benefiting from the rebound in the housing market and other turns in their favor.

We received this question recently and turned it into this article.

"If I am new to the furniture industry and want to make an investment and start a company, what kind of furnishings business do you see doing well in this market?"

Our answer is to take a look at Retail and Wholesale and see how much capital you have. If you have deep pockets, then Retail is a good bet. But be careful. Now is not the roaring 1990s or millenium.

Don't try to do better than the big retailers do; go after things they don’t do. Don’t carry the same things they do and expect to be able to sell it cheaper. That’s not going to happen. A growing number of the top companies on the list that are enjoying sales increases.

What you have to do is distinguish yourself with great customer service and offerings that are closer to the High End. Also, if you are able to, create diversity by selling furniture, lighting, upholstered goods and even textiles if at all possible. Many companies went down in the last downturn because they didn't have enough offerings. Can you manufacture glass furniture as well as metal? Can you build in stone and shaped concrete? Magazines like Veranda are barren wastelands of ads now for companies in the small to middle size range. say 2-10 million dollar companies. You don't see ads for Woodland Furniture any more. Only now are ads from Chaddock starting to creep back into the magazines. If you are starting a company, can you run part of it from a cheap country like Mexico and then the final half of it from the USA?

And it is always better to own your building than rent!!

Best wishes,

Peter Welsh

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