Warren Shoulberg Blog: As Easy as 1-2-3?
Posted on April 21, 2010 by
Ashley Furniture is used to breaking the rules and defying the common logic of the business and at this week's High Point Market it did it once again. The company--which is both the biggest supplier and retailer of furniture in the country -- introduced a new retail concept called Furnish 123, basically a turnkey operation designed to create a new class of furniture dealers.
The stores, which will essentially be franchises, feature a one-price merchandising strategy in a tightly packed 4,000 to 8,000-square-foot-space. Sofas, dining set and bedroom sets will be sold at a $399 price point with accessories and other categories, including motion and mattresses, bracketing that price.
Ashley is testing the concept in about 10 stores now and said it could have between 500 and 1,000 such retail locations when the program is at full strength.
The first thing you have to understand about this is that you can never underestimate Ashley. From humble beginnings in the wilds of Wisconsin the family-owned company has grown into a $3 billion a year enterprise, defying the common wisdom that huge furniture suppliers can't exist. It then began opening its own branded stores, Ashley HomeStores, and now has over 400 units, some of which it owns but most of which are owned by independently owned by dealers.
So Ashley has a lot of cred when it trots out numbers about this new business, which it really sees as just an updated version of the old neighborhood furniture store. More than 600 people showed up at an event in High Point to promote the concept.
All of that says it will probably be successful. But successful at what? It will no doubt move a lot of product, all of it from Ashley.
And it will give a lot of visibility to the entire home furnishings category as all of these stores open and start promoting. It will even make low-cost furniture available to people who might not have had reasonable access to such product before.
But is it possible it will add to the commoditization of these products, devaluing the worth and value of furnishings? I don't know.
Many giant companies, from Neiman Marcus to Proctor & Gamble, are offering lower cost versions of their products, trying to compete in market segments where they have not been competitive before. As such, they too are trying to expand their businesses and go after new customers.
The Ashley guys are smart -- their track record proves it. We're going to have to see some of these stores up and running to find out exactly how they will impact the marketplace.
Until then, we will be as curious as everybody else in the business as to whether it really is as simple as one- two,-three.