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Where is all the good affordable furniture?

In the Ikea era, makers and buyers face a disconnect

John Humphrey’s family is in the millwork business, assembling cabinets, stairs, and doors—and over every summer growing up in Rhode Island, Humphrey worked with them. That experience led Humphrey to found Greycork, a furniture startup, in 2013. Like so many others his age, Humphrey’s main experience with furniture shopping was at Ikea: walking the showroom floors, finding the specific piece he wanted in a corresponding flat-packed box, and taking it home for assembly. With Greycork, he wanted to provide similar furniture at even lower prices, but shift the shopping entirely to the web, part of a strategy to court the city-dwelling 20- to 30-year-old in the market for a piece of distinctive furniture that wouldn’t break the bank.

Greycork started off with a line of solid-wood folding tables in 2014, but the furniture for which the company is known is its living room collection: coffee table, side table, sofa, and a separate chaise lounge sofa addition. In 2015, the startup raised more than $270,000 through an Indiegogo campaign to begin production. It initially had success with a sofa it could market for $450 that shipped in flat packs and required no tools for at-home assembly.

“All in all, for the target market, it was something they would consider to be decent quality and the price was lower than Ikea,” Humphrey, now 29, says. “That was a big deal.”

Wanting to live up to its sales pitch of quality furniture, however, Greycork began swapping materials in its sofa after the IndieGogo campaign ended. Just before it went operational, Humphrey’s company changed out fabrics sourced from China for ones sourced from the U.S., and a wood frame made from medium-density fiberboard for one made from Baltic birch. Greycork also added a layer of memory foam to the sofa’s cushions. The changes sent the price of its sofa to $700. Eventually, Humphrey realized that material costs are everything, and when it comes to competing with large furniture retailers like Ikea, scale is king. In March of this year, Greycork announced it was “winding down operations.”

“There’s not a ton of margin padding in the furniture industry, so you don’t have the ability to come up with the quality of a $3,000 couch and offer it at $600,” says Humphrey.

One month before Greycork announced it was closing shop, The Awl published a story that could be considered a case study for consumers on the hunt for new furniture. After moving in with her partner, writer Anna Hezel decided to go halfsies on the Peggy, a $1,200 sofa made by West Elm. “It was more than we were used to paying for a piece of furniture, but the price seemed to be proof of enduring quality,” she wrote. The sofa was in that sweet “affordable-but-adult” price range, as friends of hers who also owned a Peggy described it.

Soon Hezel’s dream of sophisticated sofa stewardship broke down, literally. Her sofa, which by the end of 2016 had already lost a number of buttons, collapsed after a leg snapped off. What she and others found was that their $1,200 sofa was flimsier than balsa wood in a stiff wind. Less than a week after Hezel published her account of Peggy ownership, West Elm announced it would offer a full refund for all Peggy sofas purchased in the U.S. and Canada since July 2014. (West Elm declined to comment for this story.)

What these tales illustrate are two truths at the heart of today’s furniture business. For many independent and smaller manufacturers, it’s difficult to create quality furniture at middle-of-the-road prices, something in between the Ikea items beloved by 20-somethings and the furniture on display in a store like Crate and Barrel. And consumers, who don’t always know that they have plenty of purchasing options beyond the flat-packed box, often have incorrect expectations of what it costs to make good furniture and what they should have to pay for it.

“The middle price point is very, very difficult,” says Edgar Blazona, owner of San Francisco-based BenchMade Modern, a custom-furniture store that sells directly to consumers over the internet. “You get what you pay for. That’s really what it comes down to.”

Like Humphrey, my first real experience buying furniture came with a visit to Ikea.

Just before college graduation, my roommate and I scored a deal: a third-floor apartment in a Baltimore rowhouse that came fully furnished. The next year, looking for a change of neighborhood, we moved into a two-story townhouse, but this rental was barren inside. Almost by default, we made a trek southbound on I-95 to Ikea shortly after we moved in. We didn’t know where else to look for furniture in our limited price range.

The Swedish global furniture behemoth opened its first store in the U.S. in Pennsylvania in 1985. Since then it has expanded to 40 retail locations, and while Europe continues to be its biggest retail market, Ikea has grown in popularity in the U.S. One reason for Ikea’s success is its concept of “democratic design,” a five-part design process that ultimately stresses products that are high in quality and low in cost, arguably the holy grail of furniture design.

“To do that we have a team of experts in terms of material knowledge, quality, and design. Normally we also say that we design the price tag first,” says Henrik Elm, Ikea’s global purchasing and logistics manager.

What that means in practice is that Ikea consistently looks to its library of approved construction materials when designing a new piece of furniture. So, for example: According to Elm, Ikea knows where to source wood, such as pine, birch, and beech, and knows when to use, or not use, solid wood—which is traditionally more expensive than engineered wood—in its furniture. Along the way, Ikea is also able to leverage its massive global distribution channel to know what it would cost to ship furniture to any of its locations, and what the outcome on the item’s final price would be. Finally, in every market it enters, the company tries to set what it calls a price house, from low to high, and Elm says it strives to get 50 percent of its furniture within a low price bracket of $50 to $300.

But in the world of furniture, price is dependent not only on materials, but also on a company’s manufacturing scale, which puts Ikea at a major advantage.

“You need big volumes to really drive down costs,” Elm says. “And already at the design table a lot of the costs are defined from the start. That includes the choice of material, how well you construct it in order to be efficient for logistics. It’s constructed so it’s a fit for automation, with very high yield and low waste.”

Ikea furniture is at a price point most people can manage. That day in 2012, my roommate and I walked out with the Ektorp, a three-seat sectional sofa with a chaise lounge in Vittaryd white, for $599. At the end of that year, when I moved out, I paid my roommate for the other half of the couch, and have since moved four times in the last five years with that sofa. My wife and I still own it, but only because we’re still renters. In the not-too-distant future, when we buy a house, we’ll also need a new sofa: Our Ektorp has broken springs in the frame and saggy cushions, and the rich white color of the fabric is faded and dull, no matter how many times we blast the thing in the washer with OxiClean.

In other words, soon we’ll join furniture manufacturers and consumers in grappling with these questions: What does it take to successfully produce decent, affordable furniture, and is it difficult to find? The answers, well—they vary.

The average sofa in the U.S. sells for around $1,000. Most sofa manufacturers can estimate how long a sofa will last based solely on the price.

“When I talk to people I constantly tell them you get what you pay for in furniture. When you see a $400 sofa, it’s got $200 worth of materials in it. When you see a $1,000 sofa, it’s got $500 worth of materials in it,” says BenchMade Modern’s Blazona. “I would say a $1,000 sofa is probably a three- to five-year sofa.”

What drives the cost of any sofa is the cost of the raw materials that make up its main components—wood for the frame, foam for the cushions, and the fabric the cushions are draped in—and the labor to build it. Play with any of those factors, and you’ll drive up or down the price of any one sofa. So a sofa in the $599 to $999 range is likely to have a 1.8-density foam cushion, according to Jeff Frank, president of North Carolina-based Simplicity Sofas. That’ll last two to three years before it needs to be replaced, and it’s the cushion that always breaks down first, he says. The thicker the cushion, the more costly it is for the manufacturer to produce it.

The same concept applies to the fabrics (velvet and leather are more expensive than cotton) and the frames: Solid oak frames, like the ones Frank uses in his Simplicity Sofas products, cost more than $100, whereas plywood frames cost anywhere between $35 and $50, depending on the size of the manufacturer. The Baltic birch Greycork eventually chose for its frames cost $80 for a 4-foot-by-8-foot sheet.

“That’s when our costs really got out of hand,” Humphrey says.

For small manufacturers, this is where the squeeze of furniture manufacturing becomes real. It’s easy to assume that they can just switch to a cheaper material and improve their bottom line, but that thinking betrays one of the quandaries of the furniture business. The margins in the business are relatively low—Blazona says a profit of 20 percent is considered good—which enables large companies to make money by cranking out a high volume of pieces. More often than not, it’s the large companies that sell their pieces of furniture to traditional retailers, who then mark them up to make money off of sales.

“We wanted to be able to offer high-quality, low-price furniture,” says Humphrey. “The reality is, that furniture already exists and there are options out there.”

In fact, says Bill McLoughlin, editor-in-chief of industry trade magazine Furniture Today, the average price of furniture has dropped 42 percent since 2000, but not at the expense of quality.

“Furniture is probably the best value that your generation doesn’t know about,” he says. “What I think people misunderstand about price in the furniture industry is that price is hit through efficiency, not a decline in quality.”

The real problem, he says, is that consumers don’t know where to look. For the price of an iPhone 8, a person could walk into Ashley Furniture—No. 1 among U.S.-based companies in residential furniture sales—and leave with a new couch. But the furniture industry as a whole is still a highly fragmented business, and big retail furniture stores—Ashley, Raymour & Flanigan, Havertys, the places that have sofas for $1,000 or less—traditionally reached people by putting ads on TV and in the local newspaper.

“That’s a challenge the furniture store’s having right now,” McLoughlin says. “For a whole generation of consumers under 35, you’re not there. There’s this kind of disconnect between a generation of consumers who are in the market for less-expensive furniture and retailers who could offer those prices.”

City-dwelling 20-somethings, the ones more likely to still be renters, are less likely to take a walk-through of a large furniture retailer and place an order, even if, when it comes to furniture, consumers still want to “see it and touch it and feel it,” says Pat Bowling, VP of communications for the American Home Furnishings Alliance.

“It is a conundrum within our industry,” she says. “We have figured out how to offer moderately priced furniture, but they love to shop online. How do we take a product line of efficiently priced stuff and ship it so Wayfair or Amazon can carry it?”

Shipping costs are a killer. Blazona says it costs him anywhere between $250 and $800 just to ship one of Benchmade’s sofas to customers in the U.S.

“Shipping is a whole other ballgame,” says Hayes Shanesy, co-founder of the Brush Factory, an Ohio-based shop that manufactures custom solid hardwood furniture. “Shipping a glued finished table is much more difficult than a ready-to-assemble table that gets shipped flat.”

For small manufacturers, that’s an opportunity. They rarely have the ability to leverage economies of scale, so they play a different game by taking advantage of a young demographic’s greater propensity to shop online. Let’s stick with the sofa example. Greycork, Burrow, and Campaign have tried disrupting Ikea by adopting of some of its tricks—in this case, flat-pack shipping, which is demonstrably cheaper than shipping an assembled sofa, and positioning their brands as middle-price furniture upgrades for the customer who feels the need to graduate from Ikea showrooms. Now even Amazon is getting into the game.

In the case of Campaign, the comparisons to Ikea are even more noticeable, a byproduct of founder Brad Sewell’s previous stints as a vehicle research engineer for Honda and a supply base engineer for Apple. While Campaign's furniture is manufactured in the southern U.S., the startup also has "outposts," stores that display the company's furniture so customers can see it up-close before deciding to buy online. Additionally, the frames of Campaign’s sofas are made from steel, a direct result of Sewell drawing inspiration from other high-volume industries like the automotive industry. Finally, all of Campaign’s sofas are “designed for manufacturing,” using laser cutting and robotic welding, to make the cost of manufacturing as inexpensive as possible.

“Many times more than half the cost of manufacturing an item is what it costs to ship it to your door. So we actually design our product for that problem,” Sewell says. “Our shipping expenses are less than half of what two men in a truck would cost. So we are the factory, like Ikea is the factory.”

If flat-pack shipping isn’t an option, small manufacturers can try disrupting the traditional manufacturing process, which is something Simplicity Sofas, BenchMade Modern, and California-headquartered furniture upstart Joybird all do. Instead of creating many versions of one type of sofa, they buy the raw materials to create a multitude of custom sofas, eschew selling to retailers, and instead offer online ordering and direct-to-consumer shipping.

“For a small manufacturer to compete nowadays, they have to do things that the big guys can’t do,” Frank says. “They have to be flexible so their customers can order multiple versions of something. It has to be customized. They can’t afford to make a $599 sofa, but they shouldn’t be trying. They should be making a higher-design product.”

There are hang-ups in this model as well. As Joybird’s Josh Stellin points out, just because online furniture retailers don’t have showrooms to stock or retailers to sell inventory to doesn’t mean they drastically reduce overall costs, even if there is one less overhead expense to worry about.

“There’s still a marketing and sales cost that’s associated with people getting to buy,” he says, plus the costs of shipping.

Hiding within this model is another conundrum of the furniture business: Now, people buying a sofa are more focused on what it looks like and what it costs, often with little regard for the materials with which it’s made. Ask someone in the suburbs what an expensive sofa costs, and the answer might be $1,000; ask someone in the city, and the answer might be $3,000. But both are just as likely to break down in a few short years if the materials in them are subpar.

“The problem is, where do you put your value?” says Greg Pilotti, an old high school buddy of mine who now owns and operates an eponymous furniture company in Pennsylvania. “People see the Ikea price and the pretty picture. But everybody wants custom; everybody wants changes. What they don’t understand is, if you come to somewhere else for a custom sofa, it has to be re-engineered every single time. … And then people expect the price they always see.”

Just recently, a potential customer called asking for two custom upholstered benches that resembled a pair he spotted at a local furniture retailer selling for $600. This customer also wanted the color of the benches matched to the color of the wood of his kitchen cabinets. The problem was the price. This customer expected that Pilotti could build two benches—with custom upholstery, better-quality wood, and a quick turnaround—for just $400.

“For some reason, people just think custom means quick and custom means cheap, and I don’t know why they think that,” Pilotti says.

By far, this question of value is the biggest disconnect between furniture-maker and furniture-buyer in the industry today. Most of today’s buyers are price-sensitive in a way they weren’t in previous decades. Furniture has become something we’re more likely to dispose of than hold on to. In another time, sofas were investment pieces, bought for more money but taken care of over the years, and probably reupholstered several times before going to someone else as either a hand-me-down or a purchase in a second-hand furniture store.

“Our parents paid $5,000 for a sofa and you reupholstered it and it lasted forever,” Blazona says. “But now we are a fashion-forward world, so we want goods that are going to change quicker.”

For that reason, Greycork could sell a sofa for $450, but struggled once it upgraded its materials and the price increased several hundred dollars.

“If you’re going to start a furniture brand these days, it needs to be profitable and you can grow from there,” says Humphrey. “Furniture is a long, slow, and steady game, I think.”

It’s something that many smaller manufacturers know all too well—and something consumers would do well to learn.

Editor: Sara Polsky


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