By Lisa Johnston
New products on display at the American International Toy Fair, held in N
CE and furniture dealers are rediscovering what hybrid retailers like Nebraska Furniture Mart and R.C. Willey figured out long ago: that when it comes to electronics and home furnishings, one plus one equals three.
“There is synergy between electronics and furniture,” said R.C. Willey merchandising VP Lorne Schmunk, who cited sales of flat-panel furniture for family and great rooms, as well as recliners and bedroom sets with armoires, when TV purchases are made.
Industry veteran Tom Campbell, who sits on the board of the 10-store Linder's Furniture chain in Garden Grove, Calif., concurred. “Integrating electronics into furniture displays creates a tremendous impulse opportunity,” he said. “A consumer comes in for furniture, sees the big-screen TV and says, 'Boy, I want that.' So he buys it all — the sofa, the credenza and the 60-inch TV. The attachment rate and sell-through are phenomenal.”
The confluence of consumer electronics and home furnishings goes back to the early days of TV, when sets were packaged with monaural phonograph players within hardwood consoles. Department stores and furniture showrooms were once major proponents of cross-merchandising the categories, but they later abandoned electronics when the proliferation of specialty chains pressured CE margins and presented unwelcome competition.
The decision proved disastrous for many stores, observed Schmunk, which saw their traffic and cash flow crater as a result.
More recently, several big-box CE chains, like Conn's in Texas and Bernie's in Massachusetts, have added furniture and bedding to their assortments, while smaller A/V dealers, like Paul's TV and Video & Audio Center in Southern California, are leasing space in furniture showrooms (see sidebar).
Conversely, some furniture retailers, such as Linder's, are replacing cardboard TV cutouts with live models in their showroom vignettes and are developing comprehensive CE programs.
“We replaced our plastic TVs with Mitsubishi units at the suggestion of a rep, and almost immediately a customer asked if he could buy the TV,” recounted Mark Kantor, Linder's senior electronics buyer and operations director.
Kantor, like corporate director Campbell, was brought in several years ago by Linder's chairman Phil Linder and president Eric Foucrier to increase the company's CE profile.
“Linder's had always dabbled in CE,” said Kantor, a veteran of Fretter, Harvey Electronics and Sears Brand Central. But after bringing in such lines as Mitsubishi and LG in video, Yamaha in audio, and leveraging the buying power of the Home Entertainment Source buying group, the company saw its CE side grow from less than 2 percent of the mix to more than 10 percent of sales — and all of it incremental business.
“CE has had a huge impact,” Kantor said. “It has energized sales of home entertainment seating, wall units and TV stands,” and has compensated for its traditionally slim margins by generating tremendous cash flow, noted Campbell.
In contrast, R.C. Willey began more than 77 years ago as a Utah appliance and electronics dealer, and later added furniture at the behest of Bill Child, son-in-law of founder Rufus Call Willey.
Today, furniture represents about half of total sales and dominates the sales floors of the company's 11 stores, which average more than 100,000 square feet. The business is led by CEO Scott Hymas and Bill's son, president Jeff Child, and, like fellow NATM buying group member Nebraska Furniture Mart, is owned by billionaire investor Warren Buffet.
As the company notes in NATM's latest member directory, “The home furnishings and home entertainment systems we sell are displayed in fully accessorized 'lifestyle' settings,” attracting a customer base that's heavily skewed toward women and families.
“This unique retail format exposes our vendors' products to customers that would not normally be attracted to a traditional TV and appliance superstore.”
CE also gives R.C. Willey an advantage over traditional furniture stores, said Schmunk, and carrying both categories has helped balance their respective ebbs and flows during growth and recessionary cycles.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.