Publisher's Forum VOL 8 NO2

We're Alive, We're Growing:

Analyzing the Futon Curve

by Joe Tatulli

In a rapidly growing futon category, speculation and opinions about the future of the industry's growth curve are as abundant as the new players entering the market. Over the past few years, many have anticipated the entry of the more established futon dealers, large nationals and smaller locals alike, into the marketplace. This is now happening. Premier department stores like Sears, Penny's, and Montgomery Ward, as well as mass merchants (MM) like Wal Mart, Sam's, Price Club, BJ's, and Costco are entering the market. They are being joined by furniture retailers like Ikea, Haverty's, Levitz, and Art Van, in addition to many smaller regional dealers. Each of these dealers has a slightly different customer demographic and a different marketing strategy to bring new futon traffic into their store. Obviously, several scenarios could develop, but the question remains to be addressed: how do you analyze the current market and come up with an accurate forecast for the curve, not to mention a marketing strategy that intercepts it? Following are a few rules I've come up with, as well as my forecast for what might happen.

Stay Away From Extremes.

I spoke to a well known futon industry innovator at the Tempo showroom in High Point this past spring. He stated flatly that, "When Rosalco and Powell get out of the futon business, there will no longer be a futon business." Now, you can count on this person to be an outspoken, pioneer type; but, in this instance, I have to say he's been spending too much time with his head in the "mass merchant" clouds and not enough time with his feet on the ground. The first rule of thumb, when making an educated guess, is to stay away from extremes. Things never move as fast as you think they will. Trends take years to develop before they break onto the scene. Only then does the casual observer conclude that the trend happened "all of a sudden."

Like most new trends, the futon furniture category is being tried by many types of retailers. The core of the business, however, is still the specialty futon store. The mass merchants are in it for the money and as long as the price is right. When the margins on the commodity become more lean, the MM's will drop futons. If you look at this market with the eyes of a MM, that is all you see. The reality, though, is that futon furniture is not just a commodity or novelty product. It is, at any price point, a comfortable, dual-purpose bedding alternative and, thus, a direct competitor to the conventional sofa beds. The better specialty futon stores will have to survive the current flux and remain true to the advantages they offer. Selection, quality assurance, customer service, and real value will always be the hallmark of the specialty futon stores. The basic integrity of the futon furniture will always preserve its presence, no matter how the curve tracks.

Look at the waterbed industry. It fell from the mountain top to the deepest valley in seven short years. But now the category has stabilized, after a major shakeout, and is actually showing signs of growth again. You can attribute its recovery to intrinsic product value and futon furniture has it, too.