A Long Shot

Last week Michigan furniture retailer Art Van Furniture announced it was entering the Chicago market. The company will apparently invest about $40 million in real estate and marketing as it opens up five new stores and a new distribution center. Art Van is planning to capture 10% of the Chicago furniture market.

I’ll paste the link to a recent article in the Chicago Tribune below.

Will the company succeed with its Chicago strategy? I suspect not.

Furniture is a tough market for new entrants. It is a mature industry with limited growth. The market isn’t changing much. Customers have many options and little motivation to learn about new alternatives. There are lots of established players who will defend their market share.

Art Van seems to be a very respectable retailer and quite successful in its core market in Michigan.

The problem is that Chicago is full of very respectable furniture stores. Walter E. Smithe is a strong local player. Crate & Barrel has terrific products. IKEA is inexpensive and practical. The list goes on and on.

Art Van will have to spend a ton to build awareness in Chicago; it is a huge city and an expensive media market. Share will build, but slowly. Repeat purchases will come but only with time. The company will lose significant money just getting off the ground.

Even established players have struggled in Chicago. John M. Smyth Homemakers failed, as did Wickes and Plunkett. Just recently Chiasso, a trendy retailer with stylish products, gave up and liquidated its Chicago store.

So why is Art Van making this move?

CEO Kim Yost explained it recently, noting “Our chairman made it clear to the leadership team that we needed to continue to build and grow the brand.”

Entering Chicago is a logical move and I am certain the opportunity looks good on paper. But breaking into an established category with an “attack the core” strategy is always a challenge.

I suspect this won’t end well.

 

http://articles.chicagotribune.com/2013-04-26/business/ct-biz-0426-artvan-furniture-20130426_1_art-van-furniture-outdoor-furniture-distribution-center

*  *  *

This week I’m leading the Kellogg on Branding executive education course in Evanston. The class is an interesting mix of marketers from all around the world: Brazil, Peru, Germany, Belize and Mauritius. It should be a fun week.

One Response to “A Long Shot”

  1. davetuchler Says:

    Challenging indeed. Not only do they have to establish an identity with a name that sounds like a guy I went to college with, they have to establish a positioning along 2 axes: what sort of furniture do they carry (what is the relevant competitive set, price point, etc), and is it a mattress store or a furniture store?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Follow

Get every new post delivered to your Inbox.

Join 1,685 other followers

%d bloggers like this: