Business - Business News

POSTED: Sunday, Nov. 02, 2008

Tough times force home furnishings store to close

Others retailers look for ways to make it through the slow times

David Egli didn't want to get beaten by the economy, so he decided he would close down his furniture store on his terms.

Last week, Egli began a going-out-of-business sale for his Furniture Now! store at 1021 N. State St. He opened the store more than a year ago, and the business had been growing up until June, when sales suddenly dropped off and haven't returned.

"I've never seen anything like this, where business is this bad," said Egli, who has more than 12 years experience in furniture retail and design. "I couldn't trust that the economy was going to bounce back anytime soon, so rather than hang around and let the economy close me down, I set a deadline to see if there were any signs things would turn around, and they haven't."

Local retailers in the home décor and furniture industry have been hit with a double-whammy in recent months: First, the real estate market slowed significantly, with home sales dropping around 30 percent year-over-year. Then came the meltdown in the stock market, which has made consumers much more cautious about spending money. Last week a national report found that Americans cut spending by the biggest amount in 28 years as the U.S. economy shrank 0.3 percent in the third quarter.

The result has been closures of local businesses in the industry, particularly the boutique stores. Last month My Northwest Home on Kellogg Road closed. National retailer Linens-N-Things began a liquidation sale of its Bellingham store last month; 30 employees will lose their jobs when it closes in December. Earlier this year in Bellingham, Left Coast Furniture and Lowery Furniture shut down, while Elements Design Center sold its facility to Walkers Carpet One.

For the businesses that are surviving, they are finding ways to adjust and are finding some silver linings. Chris Foss, co-owner of Greenhouse in downtown Bellingham, said building her store around several departments has helped.

"It is challenging right now, particularly in furniture, but we are seeing some strength in other departments," Foss said. "Right now our traffic numbers are good; people are just not buying as much."

The departments at the Greenhouse that are doing relatively well these days are housewares and gourmet kitchen products.

"People are choosing to spend more time cooking at home, so they will come in looking to replace something," Foss said.

SALES START TO DROP IN 2ND QUARTER

Whatcom County sales numbers indicate the slowdown in the furniture and home furnishings industry began in the second quarter. There were also more businesses splitting the revenue pie.

According to Washington state Department of Revenue, Whatcom County had 96 such businesses generating $14.4 million for the second quarter of 2008. During the same period last year, 85 businesses generated $14.8 million in sales.

While the third quarter numbers haven't been released, many business owners in the industry say they really started feeling the slowdown at the beginning of June and throughout the summer.

"On June 1, it felt like the lights were turned out on the economy, then it felt like the doors were locked on Oct. 1," said Nancy Taylor, owner of Dream On Futon.

Taylor, who has owned the company for 26 years, said she has dealt with a couple of business contractions, but said this one was more dramatic. In June, it seemed as though it was tied to the home sales slowdown down, but in October it was more tied to what was happening to the national economy.

"People are very concerned about their retirement savings. Overall there are just less people coming into the store; the ones that do are ones who need something," Taylor said.

During this slowdown, Taylor has been making adjustments, such as not filling positions left open when employees leave the company and reducing inventory. They've also been working on projects that they could just never get to when business was more brisk.

"Right now, I feel the attitude of the owner is important. Instead of constantly worrying about the economy, we've been working on running this business better," Taylor said.

As for what to do while the economy is in a slumber, the Greenhouse's Foss said she's making sure the basics are being addressed, particularly in customer service.

"Whether it's making sure the windows are clean or greeting every customer that comes in, it's important for us. Customers are doing more shopping than buying right now, but we want to make sure they are enjoying the experience. They'll be buying again soon."

For Egli, he plans on having the Furniture Now! going-out-of-business sale until the end of November. Then he'll try to figure out what his next career path will be.

"It's actually not that hard right now, because I'm feeling like I have control in deciding this. I've been detached emotionally; this is not my baby, and there is nothing that's stopping me from starting this again in three years," Egli said. "I do feel bad for my customers, who really did make this a great business. But I didn't want to create a situation where it would just get worse and worse before I would be forced to close."