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The top home furnishings retail store list: Where can you really make a Profit?
19/01/2009
By: Seth Berman

Every year, suppliers around the world love to look who is the biggest.  Sometimes dreaming of landing the big customer, who will buy thousands of a single item, at a decent margin.  Lets just start out, and say, this is NOT that list.  Those lists are easy to find, and to keep people from reading through a highly opinionated article, the links to the top lists are here.

Home Furnishing News does a top 100 Home Furnishings Report.  The top stores include the mass merchants, such as Walmart, Sears, and Target because HFN covers all home furnishings categories, including Housewares, Bedding, Lighting, and Appliances.

HFNmag.com:  Top 100 Home Furnishings Retailers
http://hfnmag.com/fileadmin/template/main/images/resources/2008Top100retailers.pdf

The Furniture Today Top 100 U.S. Furniture Stores is a bit different.  All stores on this list are 100% dedicated to selling furniture and home accents, and starts out with Ashley Furniture, Ikea, and Rooms To Go. This list is available to non-subscribers at a fee of $60.00. Most of the top 40 companies in the Furniture Today report are in the HFN, but after the top 40, Furniture Today has a lot of good information on larger furniture stores.  (attached link is a report which contains the top 100 furniture retail, and more reports)

Furniture Today: The List
http://furnituretodaystore.stores.yahoo.net/furlis.html

Now to the real point of this article: which accounts allow a supplier to make some money?  This has always been a core issue for anyone in trading or manufacturing.  Working on such tight margins, that a single chargeback causes a complete loss of profit is not smart or safe.  Thus, businesses should encourage retailers and suppliers to be realistic and understand the value of the product offered and the risk of working to close.

Walmart:  Over the last 5 years, Wal-Mart has shifted from being the lowest price retail store.  A few years back, they realized that there is no point in reducing a $9.99 product to $6.99.  They did not sell any more of that specific item, so the end result was a loss in profit for the store, the supplier, and the factory.  Walmart studies their price points very hard, and like to offer great value, but these days, the dollar stores are where a consumer will find the lowest prices, and factories will find their lowest bidders.  A typical Walmart item should have at least 25% total profit margins or higher depending on how many are involved in the supply chain.  For entrenched Walmart suppliers, their margins are pretty high, but this is offset by the cost of needing to stock, predict sales, and ship the goods.

Rooms to Go: The third largest US furniture store also seems to be going more direct.  Over the years, middlemen have been supplying them from China, and over the years, they have been growing.  Moving full containers direct to their warehouse is pretty much the only way they do business.  Now, it seems they are finding the good factories themselves.  The products they sell are larger size furniture store goods and the volume from Rooms to Go is very large, so if you can get business with this retail store, you should have a nice stable account.

Ikea, Lowes, and Target:  All three of these retail stores have Asian purchasing departments.  The teams will source projects or products for the retail buyers, who may then start doing large amounts of businesses depending on how things go.
Hobby Lobby:  Primarily a home accents retail store and a hobby store, they are known for their Asian purchasing trips.  Expect to see them at sourcing fairs, and visiting factories a few times a year.  Margins should be 25% and higher for direct business.  The only issue with Hobby Lobby, is that they will order an item one time.  Most of the other stores mentioned will reorder multiple times.

Sams Club and Costco:  The impression consumers have of these stores is they buy really cheap products, but this is off base.  Both stores work on a really low retail markup, of around 15%, that enables them to sell better goods at much lower costs.  (Avg retail markup is 40-50%).  They also, order huge quanties, so if your lucky enough to get the buyers interested in your products, you may expect to sell a huge amount of higher value goods!  Again, this is often a one time order, so plan for a steep sales drop, after the shipment is gone.

American Signature:  This company manufacturers sofas in the USA, but they also do outsource sofas and most of the other products they sell.  The stores are full set furniture stores, so accent tables, decorative accents, and all types of furniture are available to consumers.   They are the 6th largest furniture store, and less established overseas than Ashely furniture.
These are so many retail stores, that to make a whole list would take days.  The key to finding your best match, is to review the stores purchasing pattern.  Do they purchase mostly overseas via direct containers, or do they require a stocking partner?  Also, establishing their order pattern.  Is this just a one-time order, or will they reorder the item.

GoodFactories is working on our own list of the top 100 retails, which will be available to our star members.  We will include an overall rank, purchasing amounts, which types of products, and an overview of the countries they buy from.

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