Following the money: Where are companies making their biggest investment in the next 12 months?

HIGH POINT — After two years and tremendous upheaval in the economy, furniture retailers and manufacturers are girding for a market share battle. Our exclusive report reveals where they’re investing to position for the coming battle.

Russell Turner, CEO, 1915 South, Thomasville, Ga.

By the end of this year, we’ll finish a new distribution center in Thomasville, Ga. It’s replacing one that’s 60% of its size. That will serve stores in Georgia, Alabama and Florida. We’re closing on land in the Triad (of North Carolina) to build a distribution center in Rock Creek. That will serve North Carolina and Virginia.

Our new store in Valdosta, Ga., should open in mid-November. It will be our 28th store. We’re working on buying land for stores since we acquired the stores in Jacksonville, Fla. We’re looking at land to build a distribution center there as well.

Organically, we’ve got another 10 to 12 stores (Ashley and Ashley Outlet) in our footprint over the next five to seven years.

A couple of years ago, we centralized our support. The next step is getting the distribution centers right. From there, we can plan stores easier.

Christian Rohrbach, president, A-America

We’re being somewhat conservative, as we don’t know what’s going to happen, but we probably getting back into product development and expanding our supply chain. We won’t invest too much until the dust settles.

But once it does, we’ll be investing in new products and new supply chains for 2023 and 2024. Unless there’s a zombie invasion, people are going to want new furniture.

David Koehler, executive vice president, AICO

We plan on making our biggest investment in our people, our domestic and overseas infrastructure, the continued digital transformation necessary to win, and to help our customers be successful in 2023 and beyond.

Veronica L. Schnitzius, president, American Leather

In 2023 and for years to come, American Leather will continue to invest in our biggest asset: our employees. The family culture of American Leather is a company pillar, which is why we prioritize investing in employee training, providing excellent benefits packages, ample tools for engagement and more.

As the industry leader in innovation, each year we look for new ways to improve our factory’s infrastructure in order to continue to grow operational efficiencies to guarantee each product is of the highest quality. We also plan to focus on our website, point of sales tools and technology for seamless user engagement to ensure our customers have the best shopping experience.

Another way we are elevating the user experience in 2023 is our recent investments in the American Leather High Point Market showroom through visual merchandising, entertainment and hospitality.

We all know that the world is ever-changing, which is why American Leather constantly monitors and evaluates these needs based on the landscape and we pivot as needed.

Eugene Alletto, CEO, Bedgear

First, we’re investing in human capital in multiple places. Our retail sales team. Our sleep coach program has been exceptional. There’s an enormous opportunity to increase the professionalism and knowledge of the retail sales professional. This cannot be done with conference calls alone. Also, in our manufacturing jobs. As we continue to increase our domestic production, we continue to add to our factory team.

We are also investing in our infrastructure with the addition of a West Coast factory and distribution center and adding mattress manufacturing into our current production facilities in America, as well as overseas.

These are very interesting times, and each decision is a critical one. If you’re too conservative due to the fear of inflation and a recession, you will miss out on any opportunity now and be the last one to the party when it changes. We’ve worked very hard to make good calculating decisions and delay the ones that we can so that we don’t stop our future opportunities.

Stuart Carlitz, CEO and president, Bedding Inds. of America

We placed a large focus on our niche collections with all-natural products such as Harvest, and our affordable luxury lines in Hemingway, Lifetime and Millbrook during the first half of 2022.

While these will all continue to be focused on, right now we are dedicated to offering more of a variety of products that fit into the moderate luxury category, which are targeted toward middle-class consumers, with a greater focus on our Eclipse brand. With the current state of the economy, consumers are looking to conserve on big ticket products such as mattresses. Therefore, we are developing a greater selection of quality products at moderate price points to help these consumers that have been greatly affected by these inflationary times.

Micah Swick, president and chief operating officer, Bernards Furniture

Our biggest investments will be in product development and in our showroom. We want to make the leap up. We’re investing in designers and how we present our product. We will also increase our marketing spend.

Ben Copeland, director of sales and marketing, Copeland Furniture

We’ll be investing in additional machinery, particularly more advanced CNC routers.

But probably our biggest investment will be hiring. We need to hire more people. We also want a new finishing line in 2023, but I don’t know if we’ll get to it.

Brian Morgan, chief inspiration officer, Couch Potatoes, Austin, Texas
co-owner, Furniture Mall of Kansas, Olathe, Kan.

On the Couch Potatoes brand, we’re a vertical company so investments are going to be in manufacturing stateside and opening a gallery model. I know there are retailers looking for something unique. We’re testing some concepts right now and gearing up to possibly do some wholesale for retailers.

At Furniture Mall, we want to better affect consumers’ lives with fanatical service.

Roy Calcagne, CEO, Craftmaster Furniture

The major investment Craftmaster is making is for the expansion of our own trucking fleet. Last year we were faced with terrible carrier shortages from the LTL freight providers. Due to the significant increase in business, many truckers were overwhelmed and unable to expand their capacity. Because of this, our products were filling up our warehouses and put us in a position where we would have to shut down production due to the lack of space if we didn’t start delivering furniture.

We made the decision to call our dealers that were within six to seven hours of the factory and deliver their freight on our own trucks. We have more than 100 trailers and five trucks, so we loaded them up and made the deliveries ourselves.

We received very positive feedback from our customers due to the fact that, when our truck left Taylorsville, they arrived within hours. Some LTL carriers were taking four to six weeks once the furniture was picked up at our factory.

Some of the other benefits were that the furniture is not being handled multiple times and possibly damaged through other terminals. Also, our drivers act as ambassadors for Craftmaster. They understand how important our customers truly are to the company.

We also could pick up a return piece, if necessary, which usually takes many weeks with some LTL carriers. As a result, we are expanding this service and have added five more trucks, 10 more trailers and four CDL drivers to the team.

We see this as a major competitive advantage by enhancing the service that Craftmaster provides its dealers.

There is a lot going on within the LTL freight industry with Wiseway going out of business a few months ago and others for sale. We do not know where this is heading, but we want to be prepared to take care of customers if something changes that impacts our ability to move freight.

I have always said that I never wanted to be in the freight business, but out of necessity we are in the freight business.

Bob Bruns, CEO, Cozzia USA

Cozzia will not be investing/adding to resources in 2023. Cozzia doubled its warehouse capacity in 2022. Our additional warehouse capacity should serve us for the next two to three years.

Shaun Pennington, CEO, Diamond Mattress

We will invest about $2 million over the next 12 months in people and processes. This includes purchasing equipment for automation to reduce manual labor and increase efficiency, as well as improve quality.

For example, the installation of conveyor belts to move materials and product in our California factory will be an important improvement because production is spread across four separate buildings, which we are also looking to connect.

A big emphasis for us is on people, our most valuable asset, not only when the labor market is tight but for the success and longevity of employees and company. We will invest more in personnel development to better recruit and hire, and it continues with training across all types of roles, leadership development, and employee engagement initiatives. We are adding roles in some key areas of the business as result of our growth to build out stronger teams.

Our investment plan for every period also includes merger and acquisition opportunities as that is a constant and key component of our strategic plan.

Tim Newlin, vice president, product management, Flexsteel Inds.

We are planning to continue to invest in our business and add resources in 2023. We strategically make additions across the areas of the business that drive profitable growth, enhance our customer experience and that help us engage and retain our employees. Some of the areas planned are logistics, supply chain, product development, digital content, omnichannel development and IT systems. We believe that focus and investment in these areas add value for our customers and helps differentiate us as a partner.

We are also spending time and resources on employee engagement and providing better tools and systems to help us grow and provide a good working environment. We all know how important logistics and supply chain have been and will continue to be into the future. Every consumer is conditioned for a faster and better overall experience.

If you stop investing when times get tough, you are destined to move backwards. We are still bullish on growing and taking market share.

Cindy Baker, vice president of merchandising, Furniture Fair, Fairview, Ohio

We’re in the midst of opening a store and remodeling another store. We’ll be working on that through the rest of 2022 and into 2023.

We’re also starting to look at entering another marketplace so we spent money to strengthen our core team up so we can enter that marketplace.

David Gebhart, CEO, Global Views, Studio A Home

Our financial investment in inventory availability will be our focus over the next 12 months and beyond. We ran so low on inventory during 2021 due to circumstances beyond our control. Now in 2022, we are picking up steam on shipments leaving our warehouse as a result of a continued investment in available inventory.

We see this as key to keeping our buyers and interior designers happy with our brand as we move into 2023 and beyond.

Bob Naboicheck, CEO, Gold Bond

We are going to continue investing in our team, machinery and the promise of creating the most durable mattresses. It is incredibly important to us that we continue to invest in the future of our company, ensuring that our employees are working under the best conditions, with the best equipment, all while creating the best products for our customers.

In the past few months, we have invested a considerable amount of money in finding the best leaders for our team.

We hired a new CFO, who is a certified accountant that brings a higher level of accounting, planning and business skills to the company. We also hired a new head of production, who is a well-seasoned bedding veteran that has worked for many notorious bedding companies over his career and has extensive experience overseeing bedding manufacturing plants.

To us, the return on investment for expanding our operations in these ways has been worth it. We want the best of the best to work for us, and we have invested accordingly.

While many companies are taking the time to follow bedding trends, we care about making the world’s most durable products. We are constantly looking to invest in acquiring the highest-quality raw materials that are going to meet our production standards, while ensuring that our products are more comfortable and durable than our competitors. By investing in new machinery and the raw materials we need to make this happen, we’ve seen that we are also lowering our carbon footprint and reducing the amount of waste in our mattress production.

We have been using tried-and-true machinery from 1920 for our garnetting operation, which we are looking into updating. The new machinery will not only assist our ability to produce around 3 million pounds of cotton each year, but in a more efficient and sustainable way, with less waste and energy exerted.

Skipper Holliman, president, Homestretch

We have been and continue to make significant investments in raw material and finished goods inventory. We are doing this to protect us and our customers from ongoing supply chain disruptions.

Brian Berk, president, Howard Elliott Collection

We continue to invest in technology. We must become more efficient and available to meet all our various distribution channels’ demands. Investments in Product Information Management Systems, websites, videos and 3D photography are just a few examples.

David Binke, CEO, King Koil

Since our customers are our top priority, we plan to focus on strengthening our customer relationships and helping them generate more traffic to their stores. We’ve found that marketing really goes a long way in generating business for our brand and customers.

We are already focusing a lot of our efforts on our marketing, and we want to do the same for our customers. As we’ve ventured into the ultra-premium luxury category of mattresses, we’ve found that displaying our products in multi-million-dollar homes with incredible views, some of which could be considered someone’s “dream home,” offers an inspirational aspect to our marketing.

When people are spending anywhere from $3,000 to $6,000 on a product, they want to know that they’re getting the best product, and our marketing is a direct reflection of that. By further investing in the quality of our marketing, as well as our team and infrastructure, it will ultimately drive sales for our customers and contribute to our overall growth in 2023.

Frank Hood, CEO and president, Kingsdown

As the Kingsdown Group positions for the near term of the next 12 months, our largest investments fall into four areas: investing in people with specific sales channel expertise, additional technical and capacity capabilities in operations and product development; advancing our patented sleep diagnostics systems in BedMatch and major expansion of our market showroom.

Our showroom expansion was very strategic because we are now able to add new collections to meet the growing demand for emerging categories such as the Insignia hybrid collection, as well as expand tried-and-true luxury groups like Kingsdown Vintage. We also now have dedicated spaces for international licensing and brand marketing.

Organizational design includes an operational focus in the U.S., Canada and with licensing partners abroad. We will continue to build on these features this year as well.

To maintain a lead position in sleep diagnostics, we will be advancing BedMatch in a way that makes it faster for consumers to select the right mattress for comfort and support across all brands on a retail floor, and more affordable for retailers with a smaller overall footprint that will make it an easy fit on store floors.

David Cybulski, CEO and president, Klaussner Home Furnishings

Over the past 60 days, we started to invest in two key areas that we expect to continue over the next 12 to 15 months:

• Investments in people with a particular focus on the front-end of our business that includes merchandising, sales and marketing. These areas are critical to drive our strategic growth plans. We will also be investing in younger generation talent across the business as we embed an element of succession planning into our strategy.
• Investment in an ERP system with a scheduled go-live date of July 2023. The company has been running on a legacy system for around 30 years that is not sufficient to support our growth expectations. Implementing a new system will enable efficient processes across the organization, provide us with connected data to support better decision making and with the combination of these build further upon our financial strength. The system will also deliver an updated digital platform to improve the exchange of data with our trading partners.

Neill Robinson, CEO, Legacy Classic|Modern

Logistics and warehousing. When we move our warehouse in North Carolina, we want to optimize our new facility. That means more equipment, labor and training, etc. We want to ramp up our logistics. We will make sure our packages are nice and clean and ensure everything is good quality.

Tim Donk, vice president of sales, Legends Furniture

Our biggest investments will be directed toward our manufacturing capabilities. We plan on upgrading a lot of our machinery so we can produce more efficiently.

We will also invest in more Lean manufacturing initiatives. Skyrocketing labor rates and a labor shortage make it much harder to be competitive these days. Especially with material costs going through the roof on top of those labor issues.

Obviously, we can’t control material costs, but we can absolutely control how efficient we are on the factory floor. Our goal is to increase our capacity and to keep our pricing as competitive as possible.

Billy Curtright, national sales manager, Magniflex

We plan on making the biggest investment in the next 12 months in two things: manpower and branding. In order to make high-quality products, we need to invest in high-quality machinery and employees to help us create products that surpass our competitors.

We have already made quite the investment in new, state-of-the-art machinery and acquiring a new foam plant nearby our facility in Italy. We are ready and willing to add more highly qualified, talented individuals to our Miami team, whether it be in a customer service role or for our in-house marketing department.

With the investment in machinery underway, we realize that a lot of our focus remains on ramping up our efforts in overall marketing of the brand. Many companies underestimate the importance of marketing in the success of their company. At Magniflex, we understand that marketing is one of the most influential components in business, and finding a way to tell a story and market our product to consumers is the way we make lasting connections.

We realize the importance of investing in online marketing, especially given that marketing online has almost become more popular than the alternative.

Gabriele Natale, CEO, Manwah USA

Manwah feels very good about the prospect of 2023 and beyond. The upholstery category, especially motion, is still the fastest growing category at retail, and all indications are that this trend will continue beyond 2023.

Manwah is in the middle of building our new manufacturing facility in Mexico. By the end of 2023, Manwah will have 2.5 million square feet of manufacturing there, in addition to our 4.5 million square feet in Vietnam and 3.5 million square feet in China — all dedicated production for the North American market.

So, our investment and expansion will continue throughout 2023 which will fill our customers’ needs in 2023 and beyond.

As investment continues, so will additional resources to support our growth. Manwah is investing heavily in technology to better service our customers with real-time supply chain information. Additionally, we are investing in talent in all areas to ensure we are the “best in class” in all aspects of our operations.

Glenn Kobylarczyk, executive vice president, Mlily USA

Innovation is an area that will receive a great deal of focus and investment in conjunction with and building upon the investment we’ve already made in our exclusive partnership with the International Chiropractors Assn. As we enter the last quarter of the year, we will begin the co-development phase of our partnership to create products that retailers can sell with greater confidence and ease and consumers can get excited about because they can easily understand and experience the benefits.

Our investment in innovation goes beyond materials and components. Our collaboration with the ICA stems from science-based health and wellness. We will work with the ICA’s teams of scientists and clinicians. This process will require significant resources from manpower to materials, and it is essential to drive our business going forward.

We couple the science with Mlily’s expertise in manufacturing and marketing, and the result of our investments is better sleep products at sharp price points because we believe that everyone should be able to afford a quality mattress and quality sleep. We expect to launch the first of these exciting new products in partnership with the ICA in January 2023.

Moe Samieian Jr., co-CEO, Moe’s Home Collection

We have seen double-digit growth this year and are planning for the same next year. We expect to be investing in new warehouse facility, technology (website upgrades, WMS (warehouse management system), further integrations for efficiencies), and we will continue to invest in people by growing the team in certain departments, for example, the product development team.

Jay Carlson, president, Nice Link Home Furnishings

We have expanded finished goods lines in China and our warehousing there. Because leather cut-and-sew kits and finished goods have to be climate controlled, we are expanding another 50,000 to 100,000 square feet in China.

On the U.S. side, we expanded our U.S. warehousing capacity both with partners and on our own. We anticipate further e-commerce growth with both e-commerce retailers and brick-and-mortar retailers. With “endless aisle,” we are upgrading and expanding our EDI. We are also investing in people, technology and photography; our IT budget is increasing for sure.

Richard Fleck, president, Paramount Sleep Co.

Our biggest investment will be in new factory machinery and layout. The reason for the investment in machinery is multi-pronged.

We are trying to invest in machinery that is easier to operate so we can increase our recruiting and retention. Plus, we are obsessive about quality, and the new machinery is allowing us to improve our steady high-quality manufacturing focus. Finally, it will help with efficiencies and capacity solutions.

Jason Phillips, vice president of sales and marketing, Phillips Collection

Our strategy remains consistent in making our biggest investments in inventory and technology. By having product, along with accurate data to help manage inventory and predict sales and customer trends, we feel we can stay ahead of the competition and be a dependable resource for retailers.

Inventory and technology are where we are investing the most heavily over the next 12 months.

Julie Grant, co-owner and creative director, Porter Designs
David Weiss, co-owner and president, Porter Designs

Our entire company’s energy is going toward our sustainable Good Earth furniture and other sustainably produced goods. We want to be able to bring the sustainable premium down. The statistics are there that Millennial buyers care.

We’ve already been converting our entire company to produce goods that are better for the Earth. The furniture industry tends to be late in adapting, so we want to stay head. We believe the industry will eventually be forced into it, and we want to be a case for change.

Bill Hammer, president, Shifman Mattress Co.

Shifman remains committed to investing back into its business and is currently focused on making the largest expenditure over the next 12 months in the Newark, N.J., showroom. It is imperative to us to reinvest into projects that enhance our existing and future customer relationships. Shifman is devoted to delivering an unforgettable brand experience, not only for our partners, but for all those who come in contact with our brand.

The new Newark showroom will be our flagship location, open year-round for retail partner guests to enjoy and serving as a perfect complement to our factory tours. We strongly encourage that all retail store associates, buyers and prospective retailers take a tour to fully experience The Shifman Difference.

While the flagship showroom gets the largest piece of the investment pie, we will continue to make significant investments in our outstanding people across the organization, training programs, product development, manufacturing improvements, social responsibility initiatives and meaningful programs for our valued retailer partners that deliver the finest quality products with real benefits.

The work we do proudly every day at Shifman is a form of investment in our iconic brand story, and we will continue to communicate that to our valued partners and the industry.

Mark Weber, president and CEO, Southern Motion, Fusion Furniture

With the extreme demand for home furnishings driven by the pandemic now returning to more normal levels and our lead times back to three to four weeks, we are investing heavily in new product. While Southern Motion and Fusion Furniture both introduced many new styles and fabrics over the past two years, many retailers were not focused on adding new products to their assortment. As a result, we expect that to be a major focus area for many retailers in High Point next month.

The good news is that Southern Motion, which is known for innovation and special orders, has many new and exclusive offerings that were introduced over the past year currently in production and ready for immediate shipment, and we will be building upon these successes with more innovative products in October.

At Fusion Furniture we will be building upon some of the best-selling frames with new and stylish covers offerings. Our position as a domestic manufacturer allows us to respond quickly to customer needs and new products introductions which we believe will be important to retailers as they look to freshen up their floors this fall.

Nick Bates, president, Spring Air International

As a licensing company with 12 facilities across the country and just three territories left to fill, we stand on the brink of solidifying the final piece of a puzzle that we’ve been carefully assembling for years, and we look forward to achieving the goal of a licensee in every state.

While we’re incredibly close to our goal, the fact is that we still maintain a waitlist of factories that regularly contact us to express interest in joining the Spring Air family. The reason for that is simple: We make a habit of self-investing back into our network of licensees, continually seeking to make our group stronger, to elevate our products and to grow our brands on retail floors.

I’ll be the first to say that creating a successful licensed network is a complex puzzle. What has made us so successful and enables us to remain nimble is that we have honed our sense for the factories and people that are an ideal fit for our group and the way we work.

Over time, we’ve developed a habit of gathering the group together to work, most recently at our manufacturing summit in Fresno, Calif., where we fine-tuned the newly revamped and refined Chattam & Wells line that is currently rolling out in major retailers like Mattress Firm and Metro Mattress across the country.

We have some exciting new developments that we will showcase this November at our end-of-year meeting in Boston. There, we’ll be studying our entire suite of products as a group that we’ve carefully merchandized throughout the past few months as we ready the next round of introductions. Our aim is to create fresh, new products for our retailers in Las Vegas this winter, and beyond that, well into 2023.

The goal, as always, when we invest in our licensees this way and bring everyone together, is to create the United States of Spring Air, to have all of our facilities working seamlessly as one. Simply put, we believe that our culture is our most precious resource and as such our network deserves all the time, attention and, yes, investment that we can provide to support it.

Dorian Stacy Sims, president, Stacy Furniture, Grapevine, Texas

It’s still people and trying to find people who want to help customers and be a part of a business that takes care of them and takes care of their customers. We’re here to be hard working and successful, and we want people who can tell the truth even when that truth isn’t fun.

Doug Bassett, president, Vaughan-Bassett

We plan on investing in equipment. We want to get the latest and best state-of-the-art machinery. We already are advanced, but we want to become more efficient.

Jason Kennedy, North American brand manager, Yatas Bedding

As Yatas Bedding continues to grow, we are strategically developing a regional distribution network that will allow us to service clients better throughout North America.

In addition to our High Point headquarters, our team will be opening distribution centers in the Northeast and Southeast regions within the next 12 months. We believe this will lead to growth of existing business and new client acquisitions.