Furniture firms warned

Press, 17 June 1986, Page 26

Furniture firms warned

Smiths City Market, Ltd, has received as many as a dozen approaches in a month from smaller retailers, Mr Peter Leeming, general manager of the group, told the annual meeting of the Furniture Retailers’ Federation in Christchurch yesterday.

"The big are getting bigger and the small are becoming fewer,” said Mr Leeming.

“Factors such as volumesensitive pricing and easier importing are contributing to this trend.”

The group welcomed approaches by smaller firms,

and some had become members. "This reflects what is happening, and I don’t see it changing, at least in the foreseeable future.” Mr Leeming warned furniture retailers about changing trends, in consumer spending because of changes in wholesale tax with the introduction of the goods and services tax. Ten years ago, the Smiths City Market Group had three shops and an annual turnover of less than $l2 million. It now has 60 shops and a turnover nearing S2OOM. “If we take an item of

furniture and an appliance, each of which costs the same ex-factory, then we find that up until recently the furniture item would have cost the consumer more than 11 per cent less than the appliance. "From next October with GST and associated sales tax adjustments,” using the same profit mark-on percentages, the furniture item will become more than 15 per cent more expensive in total. “That’s a relative change of nearly 25 per cent. That is bound to then influence a further shift in consumer spending patterns.”

:, Mr Leeming said that he e believed there would be a t move towards more "stands alone” retail locations away 3 from suburban shopping r malls, which had high occupancy costs. 1 c Firms would have to match ! increasingly competitive ad- , vertising, and it was very difficult to do both this and to t match high rents for “guaranteed pedestrian traffic.” r ; “The solution will be to 1 rely upon the same advertis- • ing to attract customers to less expensive sites.”