Ashley Plans RTA Furniture Expansion

LAS VEGAS— Ashley Furniture Industries intends to become a significant, even dominant presence in the ready-to-assemble furniture market leveraging not only its retail and online market presence but its design, manufacturing and distribution capabilities as well.

Michael Pitman, Ashley svp/sales, told HOMEWORLD BUSINESS® during a showroom tour at the Summer Las Vegas Market that Ashley is readying the newly conceived ready-to-assemble program, which will expand into a comprehensive market presence across all the major RTA furniture segments, with product specifically designated for the initiative getting its debut at the Vegas market.

“We believe we can win in this space, because of who we are and what we’re capable of doing,” he said.

Ashley, which started out many years ago with RTA-type furniture and already stocks a limited number of flat-pack items, has set its plan for a full-bore ready-to-assemble furniture business, Pitman said, one that will roll out in a graduated manner, with the first area of concentration being bedroom.

Ashley has some recent experience with establishing itself in a new home furnishings space. Early in the decade, it introduced mattresses and, just a few years ago, rolled out and shifted emphasis to compressed boxed mattresses. After that, the company rolled out a decorative accessories program that Pitman said continues to gain traction in the marketplace. If its RTA introduction may not follow exactly the same track, Ashley certainly is entering the segment with the same attitude.

“We went into the category of décor hard probably three years ago or so, and we came to really win in the space,” he said.

Ashley will leverage its strength in specific core functions to make the RTA program launch work, Pitman asserted.

“You will see what we’re doing with our introductions in terms of do-it-yourself RTA,” he said. “We see a market share that can be expanded based on where consumers are, how they’re shopping, where they’re shopping, the speed and expectations they have in terms of delivery and all the different methods of delivery that are out there. We see this as a space we can address across a wide spectrum of consumers that just really aren’t being addressed.”

He emphasized the do-it-yourself aspect of Ashley RTA to underscore the simplicity that the company intends to engineer into the product line. Products will be easy to set up, but the company is making sure assembly is as pain free as possible by supporting the task with online media.

Bedroom may take the stage initially, but Ashley already produces flat-pack products in other furniture segments such as casual dining and home office, which gives it the means to ramp up the RTA program quickly.

As it initiates the program, the company will introduce consumers to its RTA items both online and in stores. Ashley has been developing merchandising programs that cover cash and carry operations for brick-and-mortar locations, Pitman said. Of course, the company has a broad array of options for how it distributes products in physical locations. The company’s retail base— Ashley Furniture Industries affiliated store network totals 945 locations— includes Ashley HomeStores, Ashley HomeStore Outlets and outside retailers that feature Ashley products.

“Flat pack is tailor made for e-com and direct to consumer, but it’s also a good cash and carry,” Pitman said. “You look today when you go into some of the top 100 retail stores, they will have areas of their stores that will focus on flat-pack RTA. What we’re going to do is just expand that opportunity with more product categories.”

Across retail distribution, Ashley plans to go big at a time when consumers are surer of their own tastes in home furnishings, enlarging the scope of its own RTA operation to give shoppers more and better choices. In part, it will do so by developing RTA product that draws from looks that have proven successful in Ashley’s case goods lineup. In that way, the company will generate product suitable to furniture retailers beyond the main mass-market channels where RTA has been thriving.

“What we’re going to do is we’re going to take it and broaden the range of assortment, broaden some of the lifestyle attitude in terms of what we know from set-up furniture, and bring that into this type of construction. We’re not going to give up on quality, we’re not going to give anything up to get there. There are conventional streams of store distribution that have not carried much of this product. We believe we can open that up. The brand will help, but it also comes back to the style and what we can do with the design,” he said.

Pitman emphasized that Ashley has a young, qualified and experienced group of designers it can tap to infuse style into the program as it advances.

“They travel the world and look at relevant fashions, what’s relevant today,” Pitman said. “They go to shows, whether it’s Guadalajara, Cologne, Milan. We look to see what are those emerging fashions, those emerging styles that may not be prevalent in North America. We’re in 54 countries. We have global presence. We look at that and say, what are we going to do to put affordable product into homes for the people. One of the things that’s really good about us is affordable fashion. We want to have high-standard product in comparison to the marketplace, but we should be more affordable. We’re taking that aspirational level and looking at where are the inspirational influences.”

The new RTA program will initially focus on bedroom furniture, including beds, nightstands, dressers and chests, a segment in which Ashley can bring specific capabilities to bear.

“We’re the largest bedroom furniture manufacturer in existence,” Pitman said. “Out of Arcadia, WI, we have a long history and experience and understanding of laminated products. What we’re doing is bringing experience and knowledge over to this category.”

Although the company recognizes that younger consumers are trying to furnish living quarters on a budget, the demographic will be a prime RTA customer base. Naturally, Millennials who are setting up mature households and just passing Baby Boomers as the largest population demographic represent an important opportunity. Still, Pitman said Ashley isn’t limiting its RTA initiative to a distinct demographic. Because most consumers today are thoroughly familiar with ready-to-assemble furniture, success will more likely arise from addressing the range of considerations consumers have when they’re shopping for home furnishings.

“It really is coming down to looking at the expectation of speed of delivery and the acceptance of construction methods and materials today,” Pitman said. “You’ve got that mind shift going on with the consumer. And it doesn’t matter if it’s a Millennial, a Generation Xer or a Baby Boomer. We like to say, everybody, we’re going after that demographic. The reality is that there are demographics that are larger, like the Millennials are the largest now, but they also have the highest constraint in terms of affordability. So what we want to do is bring affordable fashion, speed of delivery and give people an opportunity to have nice furniture.”

Still, Ashley recognizes that consumers think about furniture in different ways than they might have in the past. As a consequence, factors such as scale have been part of the design equation for the company’s RTA products. Pitman pointed out that scale is another of those factors that are not necessarily generational, even if it is sometimes associated with apartment-dwelling Millennials.

Younger consumers, now including Gen Z members, may be shopping for furniture as they move into their first apartments, but, on the other side of the age scale, empty nesters may be looking for furnishings as they downsize or reconfigure existing living spaces for post-parenting lives. Even those in the middle may fall into the RTA wheelhouse as they furnish vacation or other secondary homes where space might not be abundant and available budgets limited enough to make case goods cost prohibitive.

“We look at this as there is a progression of consumers through their path of purchase,” Pitman said. “We’re looking at scale. This will be scaled differently than our set-up full-line furniture.”

As consumers have tried to do more in smaller spaces, function has become a bigger issue in home furnishings. Pitman said developing products that suit current and emerging consumer needs is part of what Ashley intends as it develops RTA products. Ashley already offers items such as end tables with USB ports, and, given the emphasis on integrating technology into home spaces today, the company is looking at doing more across various product segments down the line such as, potentially, gaming desks.

“Innovation is something we’ll bring to whatever furniture categories we’re in,” he said. “Functionality will continue to play a role.”

As product rolls out, Ashley has various product development, distribution and other resources it can bring to bear in building a substantial RTA business, he pointed out. The company will back up its RTA product range with convenient delivery, building off its existing distribution system while tapping FedEx and UPS. As such, Ashley will ensure that consumers have choices about how to receive their purchases and that they get what they ordered quickly. Pitman said one to two day delivery is becoming a standard for RTA furniture delivery, and Ashley recognizes it has to keep pace.

“If you look at the titans of e-com, one of their promises to the consumer is going to be speed of delivery. They believe that’s a separation point. So it’s changing the dynamics of the industry, that expectation of speed,” he said.

In terms of manufacturing, production will occur in southern Asia and the U.S. Ashley will use its six, soon-to-be seven distribution centers to support the RTA operation whether sales occur online or in stores.

“We’ll have all of this product staged in all of our seven distribution centers for quick delivery,” he noted. “We’re up against the titans. We know that. So that means one to two days. We’re not there yet, per se, but we know where the world is going. And we know that’s going to be the expectation. If I say to a dealer, this is going to be in all of our warehouses, I don’t know how they buy us and what they want, like we have dealers that pull truck loads. Okay, we’ll fill those trucks, and we might go to them three or four times a week with a full truck. It just depends. It will be inventoried.”

Ashley will integrate its new RTA operations into the company’s larger business in a manner that is complementary to all of its facets. As such, the company will work with licensed dealers so they enjoy the benefits of the program, although Pitman didn’t provide details. He did say that the company wanted to expand RTA opportunities broadly and as they’re appreciated, so Ashley will recommend to its independent dealers how they might integrate the RTA program but without the dealers being required to carry it.

He emphasized, though, that Ashley has big plans and the intention is to create a new dynamic in the RTA furniture business.

“We want to expand: There is a narrow source base in this product category. What we want to do is bring what we do extremely well, which goes to the design, the engineering, the quality, the shipping methodologies, the whole supply chain, so it becomes much more accessible,” Pitman said. “When you start looking at the market and the market share opportunity, we just believe it’s time for us to step into this area, this category of product. It comes back to satisfying consumers and giving retailers, whether through e-com or stores, the opportunity to get those consumers.”