Real Estate

The furniture business weathers the housing storm

Local furniture stores are feeling the pinch of a softening economy. Business is down for most dealers--some, like Levitz  in Modesto, are going out of business. Photographed on Thursday, January 24, 2008. Ted Benson/The Modesto Bee
Local furniture stores are feeling the pinch of a softening economy. Business is down for most dealers--some, like Levitz in Modesto, are going out of business. Photographed on Thursday, January 24, 2008. Ted Benson/The Modesto Bee Modesto Bee

T he prices are dropping, there's plenty of inventory and sellers are more willing to make a deal.

Houses? Nope. Try furniture.

The meltdown in real estate means that fewer people buy houses and new furniture to go with them, or use home equity to get a new couch or recliner. As a result, furniture stores are plagued by the same problems as real estate: too much supply, not enough demand.

To cope, dealers try to keep their own businesses afloat with a variety of strategies, such as focusing on a specific niche or scaling back.

Sue Fenton, a co-owner of At Home furniture store on Dale Road in Modesto, said that three years ago, when housing was red hot in the Northern San Joaquin Valley, Modesto had 21 stores.

"Now it's half that," she said.

Nationwide, the furniture business

was down about 8 percent last year, the steepest decline since 1982, said Jerry Epperson, an industry analyst with the Richmond, Va.-based investment firm Mann, Armistead & Epperson.

"Business was pretty tough in '07," he said. "When people don't move into new houses, they don't replace furniture, they don't add more bedroom furniture." Hardest hit were California, Florida, Ohio and Michigan.

Fenton said she's stayed alive by carrying a wide array of home accessories and emphasizing friendly service.

Store to change its emphasis

Still, business at furniture stores is down by about one-third, said Fran O'Brien, an At Home co-owner.

And Fenton said the slowdown brings a new form of competition from stores that are having bargain-basement closing sales.

In the past six months, three stores near Fenton's business have had closing or moving sales, and many of them advertise with human sign wavers and other tough-to-miss tactics, she said.

"But it's part of the game," she added.

One of those nearby stores, Classic Home Furnishings on Sisk Road, closed late last year because of the slowdown.

The store will reopen next month as Classic Home in McHenry Village, with an emphasis on décor rather than furniture as a way to draw new business and stay alive, said manager Joann Lohman.

The new store will be 5,100 square feet, down from 17,000 on Sisk, Lohman said. And she'll have five to six employees, or about 10 fewer than during the old store's peak, she added.

"We're trying to create the environment we had at Sisk, but cozy it up," she said. "We want to give people what they want."

Lohman said Modesto may have had too many stores when real estate was hot, so it's natural to expect a drop-off now.

The list of casualties includes both local stores, such as Villagio Furniture Gallery in Salida and California Living Furniture in Modesto, and national chains such as Levitz, which is closing its Modesto store after several bouts with bankruptcy.

Independent furniture stores are especially vulnerable in a downturn, said Mary Frye, president of the Dallas-based Home Furnishings Independents Association.

"Anytime there's bad economic news, it makes us all anxious," Frye said. "If something is a postponable purchase, you'll probably postpone it. And when you're a small business, you might be offering the best service possible, but every sale counts. And when things get slow, it's pretty challenging."

Other store owners and managers said customers should be wary of closing stores that advertise low prices.

Going-out-of-business sales

Rick Walker, owner of Al's Furniture in Modesto, said some store owners will raise prices on items just before big closing sales and then mark them down to create the impression of huge reductions.

"But it's the same or even more than the item would normally be priced," he said. "People get caught up in the hype."

Such tactics flout state law and the Better Business Bureau's advisory for stores that have going-out-of-business sales, said Frank Whitney, chief executive officer of the MidCal BBB chapter.

Whitney said the advisory also cautions stores not to advertise a going-out-of-business sale without a fixed closure date.

"At a certain point, if the sale has gone on for 12 months, you wonder what the point is," Whitney said.

The sales also should clearly display what's for sale, Whitney said. Bringing in merchandise from other stores, which sometimes happens when liquidators take over, is somewhat deceptive, he said.

But prosecutions under state law are rare, Whitney said. "Usually, it's enforced only if someone brings it to attention in civil court," he said.

For stores that survive, operators say their strategies are to be more conservative and find a niche customers wanted filled.

David Woods, a third-generation co-owner of Woods Furniture in Turlock, said his store's strategy is to focus on customers who want to refurbish their homes by selling individual pieces rather than room sets.

"That's the customer we target anyhow," said Woods, who operates three stores with his brother Randy Woods. "And that's what's kept us alive."

Shoppers more cost conscious

Woods and other owners said that they can bemoan a lack of customers, competition from closing stores and other woes of their industry, but doing so doesn't help.

Fenton and her daughter and co-owner Pam O'Brien added that furniture stores have to adjust to a changing market and more savvy, cost-conscious shoppers.

Denise Duncan of Riverbank said she filled her new house with items from At Home after a fire destroyed the old one. She said many shoppers approach furniture buying just as she does.

"People are not as willing to throw money around on just whatever's out there," Duncan said, as she browsed at At Home. "I see similar pieces to these at other stores for far more money."

The stores also keep going, their owners said, on the idea that when housing recovers, people will begin filling their homes with couches, tables and decorative pieces again.

"You have to buy smarter, advertise smarter and sharpen every tool in the box," said Walker, of Al's Furniture. "You have to dodge and weave, and stay with it, and be consistent."

The New York Times contributed to this report.

Bee staff writer Ben van der Meer can be reached at bvandermeer@modbee.com or 578-2331.

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