Berkline Puts Its Plan Into Motion
March 8, 2010,
By Warren Shoulberg
Rob Burch probably isn't quite ready to sit in one of his Berkline recliners, put his feet up and relax: There's still a lot to be done.
And in perhaps the worse environment for the furniture industry in several generations, he is projecting a 5 percent increase in sales this year by just re-affirming the company's strengths and taking new product development in a more technological direction.
"Our strategy is based around innovation, fashion and value," he told HFN in an interview with High Point Market approaching. "And we're very happy with the progress we are making."
Burch joined Berkline, which is owned by a Sun Capital unit, last spring, coming over from Simmons where he had been executive vice president of operations. Prior to that he held a senior position at Steelcase, one of the leading office and contract furniture suppliers.
When he arrived, he found a company that had passed from one private equity firm to another two years earlier and that by most measures was falling behind its two main competitors, La-Z-Boy and Lane.
Burch said by focusing on those three initiatives--value, fashion and innovation--the company is rebounding.
"We were most excited about getting back into price points we had vacated a year earlier, $699, $799 and $899," he said. "We believe the market went down at least one price point last year" and Berkline didn't have the products to match.
Last market it introduced a new line of motion chairs to hit those price points, and Burch said they did their job of getting Berkline back in the value business.
Part of that strategy was the introduction of a new program called International Blend that featured a combination of domestic and sourced product, allowing the company to quick-ship some goods, yet still offer special-order upholstery and motion products. The company called it a "first-of-its-kind program" for that segment of the marketplace.
International Blend is being expanded this market with additional frames and styles, and there will also be an emphasis on chairs at the $799 price point throughout the Berkline offering.
On the fashion front, Berkline introduced a program called the Modern Comforts Collection featuring better materials and more contemporary designs, all in a scale more suited for condos and smaller homes.
This season Berkline will show new covers and fabrics, pushing it into more fashion-forward looks and colors.
The third leg of the strategy was innovation and here, Burch may have used his experiences at Simmons and Steelcase--two suppliers known for product development--to push Berkline to be more creative in using new technologies. Two new lines, one with shiatsu massage units and the other featuring built-in MP3 capabilities, were introduced last fall and Burch hinted there is more to come.
"We're going to have a strong focus on innovation going forward."
The efforts are paying off, he said. "In the fourth quarter our domestic plant run rates were up 20 percent from the summer," before these introductions. "About 90 percent of our new and remerchandised products are on the floors now and we are getting good traction."
That projected 5 percent increase in sales will largely come from gaining market share, he said. "We don't see the market growing this year." It will be opening-price-point goods that will drive that business, although he did add he expects to see "migration back up as the year ends."
The mix of domestic and sourced production is a key balancing act for Berkline. Right now imports are about 50 percent of sales, but Burch said, "I expect the percentage of domestic product will grow in 2010," eventually taking the company to a 60/40 domestic/import ratio.
"As the business comes back, we feel having motion and special-order upholstery capabilities here will be a significant aspect of our business."
There's still plenty to be done, Burch says, but things are headed in the right direction with both the marketplace and the company itself.
"People want comfort and the ability to relax at home," he said, noting the movement for people to stay at home more these days. "That plays well for upholstery goods, especially motion.
"Berkline continues to evolve and change, but we've got a number of things that have come back together for us already."