Constantly looking for the next hula hoop–that’s how the president of NOW Products, Kevin Gallagher, describes his purpose in the lifestyle market. And the newest hoop for the manufacturer is wood-frame upholstered products.
NOW is aiming to retain its market position by developing more ready-to-assemble, dual-purpose items, staying within the low- to mid-price range, upgrading its lifestyle items, beefing up the juvenile line and emphasizing futons and frames, according to Gallagher. “We’ll stay with our image, the concept of dual purpose,” he said.
Next month, NOW will begin production on a ready-to-assemble line of sofa sleepers that will be made of form and frame in wood. They will come in four or five silhouettes and present only eight screws, making assembly easy for the consumer. The line is expected to retail for about $249 and give the manufacturer a greater presence in the ready to assemble market, according to Gallagher. NOW will feature the products at the April High Point Furniture market, he said.
At retail, NOW suggests displaying an assembled sofa with a hang tag stating that it is ready to assemble. The sleeper sofas will be shipped in cartons, which will allow more pieces per truckload and provide a savings on freight, Gallagher said.
“We will continue to offer what’s hot at the moment, hence our name,” Gallagher said of his company that began as a maker of beanbag chairs and waterbeds. “It’s our trademark.”
NOW’s lifestyle line includes futons and frames, beanbag furniture and upholstered chairs, as well as foam sofa sleepers and chairbeds for adults and children. The kids’ sofa sleepers start at $59 retail, and the chairbeds, which use Cohama Riverdale fabric designed by Gear, begin at $39.
Gallagher described NOW’s distribution as strong. It sells its foam products to retailers such as Levitz, specialty shops such as The Door Store and retailers such as HomeWorks at Foley’s and Lazarus with lifestyle departments. Beanbag chairs, which sell for $36 at JC Penney, also are distributed through Amway’s mail-order catalog.
“NOW chopped out a little hole in the market by being interested in working with the client, suggesting ways to go, then waiting for the client to accept or reject the idea,” one lifestyle retailer told HFD.
Lifestyle retailers applaud NOW’s flexibility in exploring new niches. They say the manufacturer offers a choice of designs that originates in Europe and fabric that is produced in the Far East. They suggest that NOW’s willingness to improve design and fabric could enhance sales, which are projected to reach $20 million this year.
But some specialty retailers say a downturn in the foam market, caused by higher costs and diminished quality, is forcing NOW toward the wood-frame sofa segment, which they say is more viable.
“The foam market has been tough,” another lifestyle retailer said. “The downturn has made NOW come up with futons and frames, and now a hard upholstered line.”
Gallagher said he does not recognize a downturn, however. NOW is introducing the wood-frame sofa line to provide retailers with a broader product mix, he said. Step-up RTA products that retail from $199 to $299 complement NOW’s promotionally priced foam line, he said.
Some retailers sell roomfuls of ready-to-assemble sofa sleepers because “there’s a symbiosis in the category between upholstery and RTA,” Gallagher said. NOW’s new RTA line, which JC Penney will sell, will offer a choice between contemporary styling with a flared arm and striped fabric, and a country-style, rolled arm featuring printed fabric with ruffled pillows.
NOW’s growth plans center on courting additional accounts and increasing business with existing account structure, which Gallagher said he sees as the most promising growth area.
Futons and frames, another of Gallagher’s hula hoops, are at the same stage as waterbeds seven years ago, the NOW president said. The beds occupy 8 percent of the firm’s business, but that share is said to be growing. “The consumer will see more of them at mass merchants like JC Penney and Levitz, and specialty stores like The Door Store,” Gallagher said. Hardwood futon frames are the only product NOW imports, from Malaysia.
NOW plans to show the futon and chairbed line at the San Francisco Home Furnishings Market that opens on Jan. 25 and expects to offer customers a warehouse program for futons and frames at plants in Fort Smith, Ark.; Compton, Cal.; Berwick, Pa.; and here, he said.
Gallagher said he tested the waters for children’s products at the High Point Furniture Market last October. The result: NOW’s latest kids’ sleeper comes in bright fabrics–one style printed with boats, one with bears. “Grandma would pay $100 for a sofa or $50 for a chair,” he said.
For the April furniture market in High Point, NOW will show juvenile sleepers in contemporary and country fabric that were developed from the adult line.
NOW Products is poised for success, according to Gallagher, because it offers good price, quality foam and fabric, service and a willingness to invest in enough raw materials inventory to give customers 10-day delivery. “The goods don’t sit for more than 24 hours in here,” he said. According to sales director Michelle Wosniak, NOW warehouses at least $1 million worth of fabric inventory.
Another unique aspect of Now is the “dual purpose” of its products, according to Gallagher. “Every item we develop will work twice. If it’s a bicycle, it will double as a bed. We believe in functional, dual purpose.”
One example is NOW’s popular adult chairbed. Gallagher said NOW moves more than one-half million of these products a year. They retail between $39 and $49. The dual-purpose concept especially satisfies the modern consumer, he said, because families are smaller, more mobile and more likely to furnish a second home.
NOW also believes in volume, Gallagher noted. If the company introduces six products at market and takes orders for two, it will drop the other four, he said– and dealers know that. “We have a strong rapport with our dealers. They know the capabilities of our factories.
“Our philosophy is that the (profit) margins aren’t great, so we keep overhead down” and volume up,” Gallagher said. Combined, NOW’s plants produce some 4,000 pieces per day.
“We understand our niche– $299 and below. That’s it,” he added.
NOW has come a long way since it began in 1970 as a beanbag chair manufacturer. Gallagher, then an employee, left but returned in 1978 to purchase the company, which had annual sales of about $400,000. Gallagher bought out his partners two and a half years ago.
Gallagher’s plans for growth are aggressive, calling for NOW’s annual sales to exceed $30 million by 1990.
Loyalty among sales reps is one factor that Gallagher said will help him realize his goal. Twenty-five of NOW’s reps have been with the manufacturer for five to eight years, a fact that Gallagher said makes him proud. “They’re not fly-by-night. They’re maintaining the same accounts,” he said.