Low Prices, Big Inventory, IDC Brand Boosts Otsuka’s Sales in Japan

By Hiroko Uchino

Tokyo, Japan — Japanese furniture manufacturer Otsuka’s policy of dealing directly with suppliers helps put furniture directly into the hands and homes of consumers who might not be able to afford it otherwise. The company also keeps a large inventory to minimize customers’ wait for merchandise.

The company began as a manufacturer of Japanese traditional wooden chests in Saitama district, establishing itself as a retailer in 1969. Otsuka reached a milestone in its growth in 1993 when it opened its Hibiya showroom and started a membership system for its customers that guaranteed the lowest possible prices.

“We have three important strategic ideas,” said Rie Okuyama, Otsuka’s Press Director. “One is the good service. At our showroom, customers can stroll escorted by a well-trained adviser. Because we believe that face-to-face interactions between salespeople and cutomers are more effective, we don’t put a lot of emphasis on promoting Internet shopping or catalogue shopping. But through our homepages we like to provide information about our furniture for the customers.

“Next is to keep the low price. The third is that we show, in giant showrooms, a wide range of product lines from very exclusive masterpieces to middle quality furniture. We have 40,000 items purchased from more than 650 mills all over the world.”

The company exhibits furniture styles such as modern, formal, country and tries to coordinate the products. Otsuka also brands original furniture: “Nobless” for formal furniture, and “S-concept” for modern furniture. The company has its own private label, IDC, which means International Design Center. “We want this brand name to symbolize our full product line. In the future, we hope that people remember this brand name rather than Otsuka’s name.”

Otsuka carries American upholstered sofas of which Kingsdown, Thomasvill, Ethan Allen are major suppliers.“More than 10 pieces of Bauhaus sofas, are sold each weekend,” said Tomoyo Kimura, chief of the recently opened Shinjyuku showroom. Some quick math reveals that more than 100 pieces are sold each weekend at all showrooms as well as about $1,900 worth of formal style sofas. “The sofa sales shares one-third of the turnover,” Seijyu Tsuchiya, Merchandising Manager said.

He chooses many fabrics, including Rolf Benz, de Sede, Poltorona Frau for the furniture, and for the curtain fabric, Giber Spa, Laxa, Lanscot Arlen, Edgar Fabrics, to name a few.

The criteria for selecting the suppliers are strict quality control, good design and large capacity to cover Otsuka’s wide range of orders. Rika Nishiki, who is in charge of curtain merchandising, demands the mill to produce both high quality fabrics and middle quality fabrics.

“We are always looking for beautiful weaving patterns, also,” Tsuchiya said. “Maintenance-free, easy clean-up, water protected are important features for Japanese consumers.”

Otsuka’s strategy of opening giant showrooms seems to be going well. Although the income of 1998 decreased 32.6 percent, turnover has been up recently. Ariake Head Office Showroom and Osaka Nanko Showroom, Otsuka’s important key facilities besides Shinjyuku and Kokura in Kyusyu, achieved dramatic revenue increases in the last year.

Now Otsuka has 13 showrooms in Japan. In the future, the company aims to open one or two huge showrooms of larger than 10,000 square meters, and then scrapping its smaller showrooms.

“When someone sees our delivery truck pulling up to someone’s house, we hope he thinks that family inside is a high-class people. I want Otsuka’s furniture to be a symbol of status,” said Nishiki. F&FI



Jordan’s Sells Top Brands

Boston MA, (USA) — Jordan’s recently announced making a definitive agreement for the merger of Jordan’s Furniture with a Berkshire Hathaway Inc. subsidiary. Barry Tatelman, who co-owns Jordan’s with his brother Eliot, said that with the financial support of Berkshire Hathaway, Jordan’s growth potential is “huge.”

Jordan’s Furniture was incorporated in 1928 by Samuel Tatelman in Waltham, Mass. In the early ‘70s, brothers Barry and Eliot took over the business, bringing it from a company of 8 employees to now over 1200. The company Website puts Jordan’s sales at nearly a quarter of a billion dollars. Jordan’s has three Massachusetts stores: Avon, Waltham and Natick; and one in Nashua, N.H. According to Merchandise Operations Manager, Rick Johnson, the company hopes to open a fifth store in the North Shore area of Massachusetts in the future.

Johnson said that Jordan’s tries to capitalize on brand recognition among customers. “We look for manufacturers that meet our quality and expectations of product and price,” he said. The company carries lines by Alan White, Bauhaus, Benchcraft (seasonal), Berkline, Bernhardt, Mitchell Gold, Barcalounger, Hickory Hill, Leathertrends, Sealy Upholstery. Highland House, International (Schnadig), La-Z-Boy, Palliser Leather, Rowe Furniture, Viewpoint Leather and Sealy Upholstery.

Johnson said that there is a trend in upholstery fabrics towards those with more depth, texture and more color with fewer creams and beiges than in the past. “Chenille is still big and growing,” he said.

Jordan’s sofas range from $499 to $1,099. Leather sofas sell for between $898 and $2,998. The company abides by manufacturers warranties and provides service from its own service technicians who make calls to customers’ homes. The company also provides in-home service for rips and seam splits.

Jordan’s also does charity work within the community with outreach with organizations. F&FI



Moon Values Hard Work, Top Quality

Moscow, Russia — With a turnover of over $1 million per month Moon is one of the largest manufacturers of upholstered furniture in Russia.

Today, Moon has seven shops and its own design center, but this large company ventured into business somewhat whimsically. Five years ago Yevgeniy Shamanskiy, who is a major stockholder of Moon today, did not have enough money to buy a sofa for his home. At his wife’s behest, Shamanskiy singlehandedly manufactured a set of furniture for his home.

The resulting products convinced Shamanskiy to enlist Konstantin Kotsev as co-founder and go into business. He rented a small space in suburban Moscow, where commercial rent was relatively low. Soon the company moved manufacturing operations to a larger space because the volumes were increasing daily.

The company has since expanded: With diversified and flexible production capabilities, Moon no longer limits itself to upholstered furniture manufacturing.

This success story, one which is eye-catching by virtue of its taking place in the Russian Market, has one thing in common with most success stories: its founders worked hard and were well-motivated, according to Kotsev. An additional component of their success is their firm commitment to the quality of their products. Russian consumers, said Kotsev, continue to think highly of the company’s upholstered furniture as well as the company’s advanced and innovative design.

Moon’s quest for excellence initially puzzled both consumers and competitors. A year and a half ago when Moon spun off its design center nobody could understand it, but just a few months later many similar companies also started to put together such divisions. Moon sets high standards for its suppliers, too: product quality, competitive pricing and commitment. “Without these we would not be able to provide the necessary level of service to our customers nor could we provide any warranties,” said Kotsev, also Moon’s Commercial Director.

Moon did not allow itself to become a part of the constant cut-throat pricing chase when the economy centered on lower price. The company kept its commitment to high quality furniture components and continued working with established suppliers and distributors.

More than 25 percent of all upholstered furniture is made using Microfibres® fabric. Many new models are introduced new for Russian market with fabric known as Jaguar. “The buyers did not understand all the advantages of this fabric, but I think they will understand it soon. It is impossible to work with cheap fabrics and to guarantee quality desired by the customers,” said Kotsev. “In addition to it we are committed to keeping up with the latest innovations in our industry and that has always been and will remain part of our overall leadership, which we are trying not to lose.”

Nevertheless, the employees of Moon acknowledge that Jaguar and other high technology fabrics are the most popular in today’s market. As far as the looks and patterns are concerned, the current Russian market prefers plain fabrics.

The company strives to provide excellent customer service and absolute satisfaction. Moon would not put up with a slow or minimal and fair level of work in retail shops. Moon has carefully assembled a network of seven shops, placing them in Russia’s largest cities. “And this is only beginning,” said Shamanskiy. F&FI



You Can Sell Any Brand, So Long as It’s Piet Klerkx

By Robert O’Connor

Waalwijk, Netherlands — “Our brand name, Piet Klerkx, is the major brand which we try to promote and sell,” said company spokeswoman Jeanine Jansen.

As one of Europe’s best known names in furniture, The Dutch retailer is keenly aware of the value of its own brand. “When our customers buy a sofa at Piet Klerkx,” said Jansen,“ they have the idea that they are buying a Piet Klerkx, sofa not a Broyhill or a Natuzzi.

Piet Klerkx also has several house brands, which carry their own identities. These include Enzo Luca and the prestigious, classical-line Capitol collections.

Fabrics currently popular among Piet Klerkx’s upholstered furniture customers are “comfort/living” materials that are easy to keep clean. Although the most popular materials are synthetic, Jansen said, “they have the look and feel of natural fabrics such as brushed cotton and nubuck suede.” Very soft (genuine) leathers such as saddle leathers are also in demand. Bright colors have given way to a variety of shades of grey, white and cream, and brown.

The local market is a diverse one, because, according to Senior Buyer Frans Herman, the Dutch travel frequently, and many people from abroad live in Holland. As a result, he said that parts of several traditions “are now in a lot of living rooms in Holland.”

Piet Klerkx tries to plan its lines at least a year ahead. The company assiduously collects information from customers, other markets and trade publications, because an item’s sales in a given territory can offer valuable insights into the lifestyle of those customers. The challenge, Herman said, is to channel this dynamic into Piet Klerkx’s home market.

Piet Klerkx targets the middle class, mass market. “We offer a variable price range with several different pricing points in order to encompass our extremely broad market group,” Jansen explained. “An average upholstered sofa and loveseat set is approximately $1,500.” She said that the Enzo Luca and Capitol lines as exclusive collections are generally higher priced.

The company regards itself as strongly customer-focused, and it strives to accommodate patrons who may feel dissatisfied. It is a member of the prestigious Centraal Bureau Woning, (Center for Home Furnishings), which observes standards for service. Piet Klerkx also has an 8-member service and repair department, which repairs merchandise in customers’ homes or bring the goods back in for closer attention.

Named after its founder, the company was established in 1929, as a family business, with one store in the center of Waalwijk. Today, with the owner’s son at the helm, Piet Klerkx has two locations in the Netherlands, in Waalwijk, in the mid-south of the country, and in Amersfoort, in the northwest. The Waawlijk site includes the company’s headquarters and a 40,000 square meter store (the larger of the two stores). The company plans to expand the Amersfoort store.

In the mid-70s, Piet Klerkx responded to market changes by opening a mega-store in Waalwijk. “This would become the very first furniture boulevard in the Netherlands,” Jansen said. “It started a trend, because there are many of them now.”

The Waalwijk superstore drew on lessons learned by company executives who had toured Europe and the United States in search of ideas. The store sells home furnishing products as well as kitchen and bathroom products.

Piet Klerkx was the first Dutch furniture retailer to offer online commerce. The company reports that it is one of only 19 virtual retailers in the Netherlands to have won a seal of approval from the country’s Internet Traders/Retailers Consumers Union. F&FI



Brazil’s M-³veis Corazza Sells Better Market

By Natalie Rideg

Piracicaba, Sao Paulo, Brazil - M-³veis Corazza is considered one of Brazil’s leading retailers and manufacturers of upholstered residential and office furniture. The company has one factory, 10 stores, throughout the country and 30 representatives and retailers all over the country.

''We are leaders in the market we aim for,” said Alexandre Corazza, Super-intendent Director and son of the founder and President Antonio Corazza. The medium-sized company sells middle to high-end products directly to the final consumer.

All Corazza furniture and products have a one-year guarantee. “Corazza uses the best materials and buys the best fabrics and leather for its upholstery,” said Corazza. “If the fabric rips, we would evaluate how or why it happened. But this is very rare. We have had no complaints, so far.”

Residential furniture is responsible for about 75 percent of the Corazza’s production; office furniture makes up the remainder. The company hopes to expand on its sales of office furniture. “We have contracts with companies starting and building in Brazil as well as with other institutions that need office furniture,” Corazza said.

Three years ago, Corazza boosted its sales significantly by acquiring Hobjeto, one of Brazil’s most prominent names in office furniture. “The two marks we carry, Corazza and Hobjeto, are the best. People look for this furniture even though the prices are a little higher.

M-³veis Corazza was founded in 1962 as a manufacturer of upholstered furniture. Corazza also sold accessories, office complements and fabric (both imported and national) for upholstery.

Last year Alexandre Corazza, along with two partners, founded a company parallel to M-³veis Corazza called Camartex, one of the country’s few textile wholesalers, which distributes and imports textiles for upholstery. The company still sells fabric by the meter, while Camartex sells fabric by roll.

Corazza also imports sofa beds and other reclinable upholstered furniture, especially from the United States. One of its main suppliers is Action Lane. Imports account for about 10 percent of M-³veis Corazza sales. Much of the upholstery that M-³veis Corazza uses for the manufacturing of its furniture is imported, because it does not manufacture its own upholstery. Camartex, with its main activity being the commercialization of fabrics, imports approximately 65 percent, and also sells to M-³veis Corazza. F&FI



U.K.’s Uno Offers Ten-Year Warranty, Lowest Prices

By Carole Bull

Widnes, Cheshire (UK) —Upholstered furniture retailer Uno has become “a major and rising force in upholstery retailing” with the lowest priced three-piece suites in Great Britain, according to Buying Director, Elvin Isaacs.

Uno was founded in 1992 by Paul Rosenblatt, the present Chairman and CEO, and his father Louis Rosenblatt, now retired. The first store opened in Blackburn in the same year. Uno became a public company just five years later in 1997.

Now, there are twenty stores in locations as far apart as Cardiff, Croydon and Hamilton near Glasgow - the most recently opened store. Products sold come from top quality suppliers which include members of the Christie-Tyler Group such as Contour, Lebus, Ultra, Walker and Homer and independents including Sovereign, Frayling and Yeoman. European suppliers include Natuzzi and Niere from Italy and Confortlux from Belgium. Uno will quote and supply any make requested by a customer, provided they can source it.

EXTENSIVE RANGE
Uno’s product range includes complete three-piece suites in a wide range of fabrics including chenilles, velvets, brocades and Dralon® as well as those with removable covers. Two or three seater settees are offered with matching chairs complemented by footstools. Sofa-beds are also available and leather upholstery is also offered in Uno stores. Prices range from around $960 - $2,700 for a settee and two chairs with fabric finishes and from $1,600 to $4,800 for leather coverings.

To broaden its customer’s choices and its own position in the upholstery marketplace, Uno acquired the furniture outlets known as The World of Leather in 1997.

Isaacs views the settee as a fashion item with Uno supplying a range of styles to suit individual customer’s require-ments. “Homes are generally getting smaller,” he said “So single items, either two-seaters or individual chairs, are the order of the day rather than say, corner groups which are popular in North American and larger British homes.” Uno stores will sell an individual piece of furniture. Purchase of a complete traditional three-piece suite is not necessary.

10-YEAR GUARANTEE
All Uno products carry a 10-year guarantee on the furniture’s internals: springs and frame. However, if a warranty to protect an item’s fabric from stains, burns or rips is required, it is available as an extra. Another feature of Uno’s retail policy is the company’s “Price Promise.” Under this policy Uno guarantees that if, during the lifetime of the product, you find another similar product cheaper it will refund the difference plus an additional 10 percent.

The company promotes its products and services with a national TV campaign, magazine, local and national newspaper advertising and a Website, which can be found at www.uno.co.uk. Isaacs is realistic about the state of the retail market and says Uno, like all stores, has had a tough year and the difficult times could continue through 2000. However, Uno, has a published turnover of $160 million and a 1.2 percent share of the market. Isaacs said the company is confident that itdpolicies of quality at the lowest cost to the consumer will make Uno ‘numero uno’ in the U.K. marketplace. F&FI



Australia’s Freedom on Fast Track

By Peter Kerville

Sydney, Australia — Freedom Furniture, a pace-setter in Australia’s furniture market for the past two decades, plans to intensify its already strong penetration of the Australian and New Zealand markets. The publicly listed company acquired the 18-store Guests and Andersons chain of brand-name stores in July 1999 and intends to focus its efforts on rolling out more of these stores in major population centers during the early years of the new decade.

“We’ve opened nine stores in the past twelve months, including three in New Zealand,” said Geoff McIntosh, Freedom Brand Director. “Apart from natural growth — Australia’s GDP is growing faster than most developed countries, with minimal inflation — we feel we have the casual lifestyle sector pretty well covered with our 60 stores in these two countries. In seeking further expansion, it was a choice between going offshore or penetrating other sectors of our home market. But at this stage we want to stay focused on the markets we know well.”

Guests and Andersons, well established in Melbourne, offered that opportunity. It carries high-quality national brands and services a different clientele than Freedom. Freedom expects that its merchandising and management skills will result in substantial growth of their recent acquisitions as new Guests and Andersons stores are opened across the country.

The Sydney market is the initial focus of Freedom’s expansion effort, as neither brand is represented there. New stores are also in development for Perth and Brisbane where Guests already has a presence. The original Freedom concept involves a comprehensive range of furniture for home and office, together with homewares, presented in carefully themed settings. Of its US$200 million turnover, 70 percent is furniture and 25 percent of total sales is upholstered furniture. Subsidiary Freedom Manufacturing turns out over 1,000 sofas per week and the group works with a handful of major local upholstery manufacturers, producing chiefly its own in-house designs.

Samantha Harris, Freedom’s Upholstered Furniture Buyer, spends a large part of each year overseas. “We make careful interpretations of overseas trends and work closely with our suppliers, aiming to change 30 percent of our designs in each of our March and August catalogs,” she said.

McIntosh said he believes that Freedom’s core competencies are its expertise at reading emerging trends, focusing upon them before others do, and the company’s ability to translate these trends into good quality affordable designs.

Seventeen of the 60 stores are franchises and the company sees this as a strength. “Franchise operators are very quick to tell us exactly how it is in the marketplace,” said McIntosh. “They help to keep us focused on our strategies and the profitability of our lines.

Thus far, Freedom’s domination of the lifestyle sector of the market “down under” has been based upon offering merchandise under its own brand. Its entry into the market in the early ‘80s coincided with a trend towards casual living in Australia. Consumers turned away towards family rooms, ‘rumpus rooms,’ and outdoor living better suited to the climate. This trend fueled exceptional growth of Freedom’s ‘lifestyle’ merchandising. F&FI



Mexico’s Muebles Dico Adds Four Retail Outlets

By Beatriz Rojas Diaz

Mexico City — The Mexican furniture retailer Muebles Dico has announced plans to open four new stores by April 2000, adding to its existing 16 outlets.

Muebles Dico Assistant Director Alias Amkie said that the 29-year-old company is geared to the lower middle segment of the market. “We found our niche and have been very strong in the distribution of furniture. We are known for delivering quality goods and up-to-date designs at very competitive prices.'' Our sister company, Casa de las Lomas, has three outlets that serve the more demanding consumer.” These stores are located in Mexico City’s exclusive neighborhoods.

Both Dico and Casa de las Lomas offer a wide selection of Mexican-made, and some imported furniture, mainly in classic style. “We have a great variety of products for all budgets and taste,” said Amkie. “It is the only way to succeed in our economic environment, although Mexico is becoming more stable and we can not complain about the healthy growth of our company in recent years.”

Amkie said that people in Mexico tend to buy conservative furniture upholstered in beige and pastel fabrics, although the number of consumers interested in more contemporary styles is growing.

Muebles Dico offers the consumer a retail space where he can search for the right piece at a reasonable price. Meanwhile, Casa de las Lomas focuses more on merchandising. The furniture is displayed in vignettes simulating the mood of an interior, including accessories. “We sell a large amount of accessories that complement our furniture selection,” Amkie said.

While Sears Mexico buyer Norma Trevino said that consumers are very inclined to purchase brand name merchandise, Amkie said that his clients are less brand-conscious. “People do not care much for the brand in furniture. They only want to know that we will respond if there is any imperfection or problem, in which case we usually replace the piece or repair it to ensure their satisfaction.” F&FI



Saudi Almutlaq Builds New Outlets, Own Brand

By Eric Schneider

Riyadh, Saudi Arabia — Almutlaq Furniture is considered the largest and leading furniture retailer in the Middle East. The success of the company is due in large part to a strategy of opening new showrooms, accompanied by a policy of offering exciting new products with “excellent value for money,” the company said.

“We’ve become a [market] leader through continuous presence, hard work and the ability to offer the market what it wants,” said Mutlaq Almutlaq, who co-founded the company with his brother, Abdulmohsen. The Almutlaqs opened their first showroom in 1954 and today, they have four outlets in Riyadh, Mecca, Alkhobar and Jubail.

“We are building a fifth showroom in Jeddah which should be open by June, 2000, and another is planned for Medina by June, 2001,” said Naaman Chebli, General Manager.

“We look to our suppliers as partners. We expect them to keep us informed about their stock availability and their intentions to either introduce new products or drop existing ones,” Abdulmohsen said. “We also look for flexibility when it comes to adapting the products to the local taste.” About 85 percent of Almutlaq’s customers are Saudi nationals and the balance are Arab or Western expatriates.

“Brand names are getting more important than in the past. However, we still rely mainly on our name. Our own image has evolved to a quality home furnishings supplier to upper middle class. This suits the quality of our products and the distinctive look of our showrooms.

“When we sell a piece of furniture, delivery and installation at the customer’s location are included in the price. Any defects are usually detected and fixed at the time of installation. In addition, Almutlaq passes on the manufacturer’s guarantee which varies from one to three years,” said Chebli.

“We carry Bassett upholstery and casegoods from America as well as Action Lane sectionals, La-Z-Boy recliners and sofa sets.” While Almutlaq features a broad range of styles, few customers adopt a single style and scrupulously follow it through. “What we see most in Saudi Arabia are eclectic mixes of periods living side by side,” Chebli said.

“The range of style is extensive, though we’re proud of our reputation for introducing the latest in contemporary design in Saudi Arabia,” he said. While Almutlaq buys furniture from America and Europe, its sister company Almutlaq Furniture Manufacturing Company handcrafts contemporary collections in its Dammam factory.

In the early days of the oil boom, what mattered most was availability of the goods. Almutlaq kept huge stocks on hand but as the market matured, it upgraded showrooms and stressed high quality, service and reliability.

Most of Almutlaq’s customers know what they want but they rely on in-store design help to realize their wishes. Almutlaq’s atrium designer showcase can oversee the entire interiors project.

“Every new salesman goes through a formal two-week training period when hired. We complete this with continuous on-the-floor training. After one year, we take the salesman with us to one of the international shows we attend in order to widen his horizons,” Chebli said. F&FI



Yatas Opens One New Store Per Month

By Alex Krebser

Ankara, Turkey — 1996 was a big year for Yatas, the leading home textile company in the Turkish market. In that year, the company launched factories for towels and sofabeds, and it went public, selling 18 percent of its shares. The once family-owned business has been growing steadily, now rapidly, since its establishment in 1975. Yatas’ production mills are in Kayseri and the company has opened sales branches in Ankara and Istanbul.

“Yatas manufactures furniture that is unique and original in terms of design, function and quality. We became the leader of the market with our innovations, and we maintain the leadership role by keeping the quality stable.” said Solen Altop, International Marketing Director.

Yatas distributes its products via a rapidly growing franchise system. It has 1,000 franchised stores in Turkey. Every month a new retail shop is opened in new cities. Yatas hopes to maintain its rate of growth. “Expanding our retail chain will create a demand in production capacity and product variety.” he said.

Each year Yatas adds a new product to its product line. The line consists of mattresses, comforters, bed-sets, towels, tablecloths and sofa beds.

“We are successful because we provide durable quality products at an affordable price,” Altop said. “The quality of the product is guaranteed, we provide a different warranty period for each product line. The delivery time of a product is also extremely important to us. Communication is always friendly and our work is customer-oriented.”

Because the Yatas brand is widely known in the market, Altop said that product presentation is essential. Ergo, the company offers a specialized training program for its sales team. During training, employees learn detailed product information, store product display techniques and window display information, all a part of making them appear and act as professional as possible.

“Yatas’ manufacturing and marketing philosophy has always been to provide durable quality, and contemporary looks at affordable prices to its consumers,” Altop said. The company offers a versatile product line in hopes of attracting all manner of customers. According to a company press release Yatas is equipped with products to attract everyone from teen-agers to newly married couples who want to decorate their home or their baby’s nursery. The collection is updated twice a year according to the seasonal fashion colors and trends. Yatas’ collections are composed of trendy colors and original designs. F&FI