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Futon makeover WinsLoew aims middle

Jan 19, 2018

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WinsLoew Furniture is restructuring its management and manufacturing operations and embarking on a new marketing strategy to satisfy consumer demand for higher-end futons. Following its commission of a demographic study, WinsLoew found that futons were considered by most people as a longterm piece of furniture rather than as a cheap bedding product. In an effort to produce and market futons whose quality match that consumer perception, WinsLoew affected management changes and streamlined operations at its California and Tennessee production plants.

PELHAM, Ala.-WinsLoew Furniture, a manufacturer of casual furniture, contract seating, ready-to-assemble furniture and futons, is seeking to boost the bottom line by concentrating on the middle to upper end of the futon market.

Said Bobby Tesney, president and chief executive of WinsLoew, "We will accomplish this by our withdrawal from the sale of low-end futons to mass merchant accounts, a new marketing strategy, improved production efficiencies, new designs and new management."

WinsLoew was formed as the result of the merger of two companies in December 1994: Winston Furniture and Loewenstein Furniture. Loewenstein had a division that made promotional futons, which it sold primarily to the mass merchant channel, which typically retailed them for about $99.

However, as Richard Hurwitz, a WinsLoew vice president, observes: "In our estimation, we made a mistake by focusing much of our manufacturing and marketing efforts on low-end futons. In order to produce a futon that could hit a $99 price point for the mass merchant, we had to strip it down, something we won't do again."

The company still offers a model at $99, for customers who insist on it, but Winsloew imports the product, to free its factory to make the more profitable part of its line.

Hurwitz explains how Tesney rebuilt the entire futon segment of the company. "He developed a strategy that called for us to focus on mid and upper-priced futons, which we now offer under our New West label. He also hired new people to run the futon division, and made some operational changes that involved improving production efficiencies by streamlining the Tennessee facility."

WinsLoew, Hurwitz explains, based those actions on more than just a gut feeling. "The prevailing wisdom had been that a futon was primarily a low-end product for someone such as a college student," he notes. "However, our sense was that there was a growing consumer demand from a far more diverse group of end-users, for mid-and higher-end futons."

To confirm its perceptions about opportunities at the high end of the futon market, WinsLoew commissioned a Nashville firm, Prince Marketing Research, to survey a sampling of some 460 end-users and retailers. The retailers surveyed included those who were customers of WinsLoew, as well as those who were not.

"By and large, futons are made by a host of regional makers who tend to sell mostly in their own backyards. Our objective in commissioning this study was to try and identify national demographics. Specifically, we were looking for information about the types of consumers actually buying futons. We also sought to determine retailers' perceptions of the category, including what their plans for the category might be going forward," Hurwitz explains.

The results of that survey provided a number of interesting revelations. "For openers, the study showed that the vast majority of the retailers surveyed perceived futons not as a bedding product, but as a piece of furniture," Hurwitz says.

"The retailers also indicated that they viewed futons as a convertible, lower-priced sofa. Therefore, our conclusion was that if the futon is furniture, it will be a long-term consumer product, not merely a fad item," Hurwitz adds.

Even more important, Hurwitz maintains, was WinsLoew's realization that if the futon was being perceived as another type of convertible sofa, there was little point in selling inexpensive low-end futons. "A consumer can't buy a $99 convertible sofa, so why create $99 futons, which, by extension, creates a market segment that is simply not profitable."

Equally telling was the information about futon consumers. The study also indicated that, as suspected, consumers between the ages of 20 and 40 were the single largest user group. However, the study also suggested that consumers 40 and older also represented a very substantial percentage of futon users.

The study also sought to determine where existing futons are being used. "What we found out was that the futon is not only being used in the bedroom," Hurwitz relates. "Instead, the survey confirmed that consumers use them in guest rooms, in cottages and second homes. They send their kids off to college with futons and many young couples indicated that they use them as living room furniture.

"This diverse array of applications confirmed what we had suspected," Hurwitz notes.

As a result of its findings, WinsLoew revamped its approach to the futon business, initiating changes that affected both management and manufacturing. Early this year, WinsLoew hired Richard W. McLeod as executive vice president for futons to manage the company's futon division.

Prior to joining WinsLoew, McLeod held management positions with GF Furniture, Corry Hiebert and American of Martinsville.

In addition, WinsLoew, which is headquartered here, implemented a new MIS system, and further streamlined manufacturing and operations within its two facilities in Tennessee and one in California. "As just one example, we had an outside warehouse in Tennessee. We now have it within that facility," Hurwitz remarks. "Also, from a domestic orientation, we are using these domestic plants to help us focus on mid- to upper-priced futons. What is now our low-end products are being imported from offshore."

Today, WinsLoew sells futons that range in price from $99 to $999 in a variety of covers, from plain cotton to fully upholstered versions. Retail channels include specialty retailers, department stores, and traditional furniture stores.

Hurwitz acknowledges that while all indications point to this new direction being the right one, it may be premature for WinsLoew to say it's exactly on target. "We probably won't see the full results for a year," he comments.

However, in the meantime, what WinsLoew, which also makes casual furniture, is seeing is a bump in sales by selling coordinated packages that include a futonmattress, end tables and coffee tables, which it also manufactures.

For the year ended Dec. 31, WinsLoew reported net sales of $147.2 million compared to $137.8 million for 1994. Income before non-recurring charges in 1995 was $3.6 million, or 40 cents per share, compared to the $7.6 million, or 79 cents, in 1994. Net loss in 1995, after non-recurring charges, was $4 million, versus net income of $6.4 million, or 66 cents per share, in 1994.

Commenting on the results, Tesney said, "As our restructuring efforts become fully integrated throughout the company in 1996, we expect the combinations of reduced cost and increased sales to provide favorable operating comparisons to the prior year."