Get real P&L data for your plan!

We have complete profit and loss financial data from companies like Poppi Designs.

SIC 5021 Wholesale Trade - Durable Goods - Furniture

*Reports start as low as $89

 

Furniture Import Business Plan

Poppi Designs

This sample business plan can be edited directly in Business Plan Pro software.

Page 1   2   3   4   5   6   7   8  

Market Analysis Summary

Poppi Designs has learned by experience that it needs to target several market niches to be successful. Poppi has identified three promising areas: Specialty Retail, Designers, and Unfinished Furniture Retailers. The first group accounts for nearly 80% of present sales. Reliance on this group will decrease somewhat as a result of increased efforts in marketing the other two customer groups.

4.1 Market Segmentation

According to U.S. government statistics there are over 17,000 outlets selling furniture nation-wide. Briefly stated, these outlets fall into the following categories:

1. High-end. High-end furniture outlets carry furniture produced by the top manufacturers home-based either in High Point, North Carolina or elsewhere in the South. These companies have a network of dealers throughout the country who are chosen based on the high image of the outlet. Some outlets represent the manufacturer exclusively. It is not unusual to find a dining chair in these outlets priced to sell at $1,200.
2. Middle Range. A step down from the first category are furniture outlets, such as Veralum's Furniture, that sell furniture which is targeted to up-market buyers, but not the top rung. A dining chair from one of these outlets might cost between $600-$800.
3. Mass Merchandisers such as ** or ** must carry lines with broad appeal, and high volume. This furniture is still sourced from large factories mostly in the South, but quality is lower and so are the prices. A dining chair from one of these outlets would sell in the $300 range.
4. Low-end. Chairs sold from these outlets would have virtually no hand work. The chairs are likely to need re-gluing a few years later, and much of the furniture requires some assembly on the part of the purchaser. A chair from these outlets would sell for under $200.
5. Unfinished Furniture Outlets. These are varied: many are manufacturers who only sell their own products, others take on items from other manufacturers to round out the line, and others only sell unfinished furniture but offer the option to have the finishing done by them. Quality can vary. Some are very low end, others like to have a better price variety.
6. Specialty Retailers. These include certain specialty retailers who combine antiques and reproductions to obtain an unusual offering which cannot be price-shopped. These retail outlets are small and must have healthy mark-ups to survive. They would avoid items that could be readily found at larger retailers who work on thinner margins. This market sector represents Poppi's biggest volume.
7. Designer Market. Designers have difficulty making money on furniture. Taking clients to pick out chairs from retailers at the design center or elsewhere does not result in big commissions for the designer. What some designers do is to buy unfinished chairs (often via the major New York import houses) and then have a refinisher and an upholsterer complete the work. In this manner the designer can insure a larger profit for himself and the customer gets a quality chair which cannot be price-shopped easily.

The last three mentioned market sectors - Unfinished Furniture Outlets, Specialty Retailers, and Designers - are the ones most attractive to Poppi's products. Each of these market segments are expected to grow at a steady rate of 2% per year. The table below summarizes the total market potential for Poppi for the years 1998-2001.

** Deleted for confidentiality.

4.2 Target Market Segment Strategy

Due to the limited resources available to Poppi Designs, the company will avoid the middle- and high-end furniture segments that it cannot profitably reach. By specifically focusing its marketing efforts on the underserved segments of Designer and Unfinished Furniture markets, Poppi will diversify its customer base. This will help the company to reduce its current sole reliance on the Specialty Retail segment. Established connections with the Italian manufacturers of high quality furniture will help the company to source rarely available products, which are in strong demand by the sought customer segments.

4.2.1 Market Needs

Customer needs across the three segments described in Target Market Segment Strategy are similar in the sense that each customer segment seeks high quality furniture supply sources that will help add value to the retail consumers. Unfinished furniture outlets require furniture that may be either finished by the 'do-it-yourselfers' or by the store's on-site finishers. In both cases, the furniture will help sell such retailers other high-margin products and services. Designer stores require quality unfinished furniture that can easily be finished by the outsourced finishers or upholsterers. Like with many other products, designer stores can then add hefty premiums to leverage their brand identity through perceived product uniqueness. Finally, the Specialty Retailers that are currently the core customer segment for Poppi, have shown the need for antique-looking furniture that appeals for their clientele. This need can be met by applying special finishes to the Poppi's products.

4.3 Industry Analysis

As mentioned in the Market Segmentation section, the market areas most attractive to Poppi Designs are:

1. Unfinished Furniture Outlets
   The outlets listed below are all located within an hour or so drive from Poppi's offices. Poppi's chairs are normally imported from Italy in unfinished form. This is because it is too cumbersome to maintain a stock of all the possible finishes that might be desired. Also, shipping is complicated if the chairs are shipped finished, as packaging to protect the finish would be needed and that reduces the quantity that can be placed into the container. Since the landed products are unfinished, marketing certain select sellers of unfinished furniture makes sense:
   ** Specific company names have been deleted for confidentiality purposes.
   
2. Specialty Retailers
   These retailers usually do not have very large showrooms. They usually combine an assortment of antiques bought at auctions or estate sales which include cupboards, corner cabinets, farm house tables, hope chests, etc., as well as some reproductions. Unlike many brand names these items can not be price shopped easily. Below is a listing of this type of outlet located within an hour's drive of Boston:
   ** Specific company names have been deleted for confidentiality purposes.

4.3.1 Industry Participants

The major players in the furniture business are the large manufacturers headquartered in High Point, North Carolina and elsewhere, primarily in the South. There are also many local manufacturers that are much smaller and usually specialize in a particular wood or a particular style. The more important outlets for Poppi's products do not usually carry the domestic products coming out of the South. This is because these outlets need to have larger margins to survive and thus need to avoid products that are found everywhere. For these specialty outlets, smaller importers are often preferred who can offer a more unique line. Chapman, for example, is a maker of furniture in Italy. Katrina's Heritage is another supplier that targets this same specialty retail segment. Some of these retailers do their own importing and make frequent buying trips to Europe or rely on buyers located there. Poppi's products are solid pieces, heavier than most, with more hand carving work.

4.3.2 Distribution Patterns

For the vast majority of furniture outlets, furniture is not supplied off the showroom floor, but instead must be ordered. The customer will be shown a chart of standard finishes, make his choice, as well as his choice of fabric, make a down-payment and then wait at least eight weeks to receive the ordered furniture. Large institutional buyers such as hotels would negotiate directly with the furniture manufacturer. The larger manufacturers have regional representatives who will call on major outlets and large direct buyers.

Poppi Designs' distribution plan is to sell directly to the design trade , who pay list price, as well as offer two tiers of discounts when selling to small and large retailers. Arranging the sale of full container loads directly to big buyers is also considered.

4.3.3 Competition and Buying Patterns

Brand names are of little, if any, importance. The key to the buying decision on the part of the consumer is the salesman and the chair being in front of the buyer. As has been pointed out in the Competitive Analysis section there are other chairs with similar appearance as those supplied by Poppi which are less expensive. It is essential that the salesman point out the salient features and selling points favoring Poppi's chairs (weight--i.e. stability, strength, etc.). The re-gluing of a chair several years down the road can be a very costly exercise. Unless a salesman mentions the likelihood of this happening in the case of a lighter chair, the consumer is not apt to consider it. Most importantly, Poppi's chairs must be available in the retail outlet. Whatever chairs the outlet carries are going to be sold. Many of the specialty outlets targeted in the Market Strategy section carry chairs from only one supplier.

4.3.4 Main Competitors

The most frequently seen competitor selling to Poppi Designs' prime targeted outlets is Chapman. As was pointed out elsewhere in the business plan, Chapman products are produced in Italy, which has a better reputation for delivery reliability. The chairs (unlike Poppi's chairs) come from one factory. These products are imported by a firm in Delaware which enjoys a full-color catalog of excellent quality published by Chapman. More importantly the importer carries every catalog item in stock. The Chapman chairs are, however, inferior in quality to those of Poppi's suppliers in terms of weight, strength of construction, as well as the degree of hand-carving detail.