HIGH POINT — Furniture industry buying groups are becoming increasingly vital to independent retailers, although the reasons for this have been changing.
Years ago, it was the pooled buying power and rebates and sometimes exclusive product getting most of the attention. That’s still important. But the reason these groups are so much more important today than, says five years ago, has more to do with everything they’re doing to help stores compete digitally, said industry analyst Jerry Epperson.
“I honestly think the money they’re putting into technology is something none of (the member retailers) could do by themselves,” said Epperson, managing director of Richmond, Va.-based Mann, Armistead & Epperson. “To compete in this digital age, independent stores — none of them — have the ability to do this in house. All of them need assistance.”
Epperson, who is most familiar with the workings of Winston-Salem-N.C.-based Nationwide Marketing Group, pointed to several recent acquisitions and investments the group has made in the past year, all designed to strengthen its digital footprint. They include Nationwide’s acquisition of custom website design firm Site On Time last year, as well as its investment in another partner, website provider Retailer Web Services, which led to the launch of digital marketing platform AdRocket.
On top of this, when Nationwide and Mega Group USA announced they were merging last year, one of the main reasons for coming together, they said, was to provide more firepower and better tools to compete against both the brick-and-mortar giants and the growing online threat from the likes of Amazon, Wayfair and others.
Two years have passed since Furniture Today updated its listing of the major buying groups in the United States and Canada, and during that time a lot has changed, reflecting the pressures facing and opportunities opening up to the home furnishings industry during a period of continuing consolidation and improving economic conditions.
There were 16 major buying groups listed back in 2016, including the Home Furnishings Assn.’s just-launched HFA Buying Source administered by the BrandSource buying group. With the merger of Nationwide and Mega Group USA and the folding of Style Trend Furniture Group in 2016, the count is down to 14 groups. Eight of them have experienced either increases in member count, member stores or both. Some grew by triple digits, including the HFA program, which started at zero and grew participation to some 900 retailers with an estimated 1,500 stores.
While digital assets have become crucial, Epperson noted that there is much more bringing store operators under buying group umbrellas. Just as the partner programs enable retailers to buy better, other services — including consumer finance programs — are often offered at better terms than some would expect.
“I don’t care who you are, I think Nationwide probably has a better interest rate with Wells Fargo and Synchrony than some of these big boys get,” he said. At least that’s what he remembers from two years ago, when Epperson was serving on Art Van Furniture’s board. “Art Van is a pretty impressive company, and Nationwide had negotiated a better rate with Synchrony,” he recalled.
Epperson has long preached the importance of niche merchandising and a distinct product offering as a way for smaller independents to differentiate from the Rooms To Gos and Ashley HomeStores of the world. Several groups, including Nationwide, Furniture First, Casual Classics, BrandSource and Contemporary Design Group, are making this possible, with exclusive product from key supplier partners and private-label mattress collection, upholstery and other product category labels.
If there’s one downside to buying groups, it might be more for the vendor partners than the retailer members, Epperson said: the proliferation of often twice-a-year shows on top of the main furniture markets.
“They’re glad to be there. They just wish they didn’t have to go to so many of them,” he said.
In some cases, the vendors are attending one group’s buying show only to have to “sit around and tap their toes” for a few days before hauling the same merchandise across the street to another hotel in the same city for the next buying group show.
Maybe mergers like the one between Nationwide and Mega Group USA offer a solution to that problem, but either way, Epperson doesn’t think it’s a big enough concern to change attendance patterns for either retailer or suppliers.
“When I ask them why they are a member (or a vendor partner, for that matter), they say, ‘I can’t afford not to be,’” he said.
For more on each buying group: