Sagging Times at Furniture Showrooms

Bill Diffee Jr., owner of Colony House in Arlington, recently closed a second store in Centreville. (By Rich Lipski -- The Washington Post)

In fact, June retail sales data from the Commerce Department showed furniture and home decor up 9.3 percent over the previous year. Peter Greene, president of the Houseworld division of NPD Group Inc., a retail consulting firm, said sales of appliances and housewares have also been up -- a sign, he said, that people are remodeling their current abodes.

"I can't tell you a bad category," he said.

George Stanis, owner of Stanis Furniture, said the housing slowdown has little to do with his troubles. Furniture sales generally lag six to nine months behind the housing market because buyers need time to settle in and save up before decorating, he said. By that logic, his business should be booming. But it's not.

He is clearing out his Chantilly inventory and plans to turn over ownership to several employees. The Fairfax store will remain open and under his management.

Stanis pointed to cheap, imported furniture from Asia carried by national retailers as his biggest challenge. Much of his merchandise is manufactured domestically at higher costs, so he hasn't been able to lower his prices much without eating into profit, he said.

"The market has been turned upside down to a large extent by the import situation," he said.

Falling furniture prices have also changed home decorating. Furnishings are becoming more like fashion, with shoppers opting for cheap and chic pieces that they can change with each trend, rather than investment-grade furniture designed to last a lifetime.

Mastercraft has cited such shifts in tastes for its demise: Modern furniture with clean lines and friendly price tags is in; ornate and expensive 18th-century reproductions are out.

Colony House, which carries the same styles of furniture as Mastercraft, has diversified its merchandise to help it stay current. Diffee said he has expanded his assortment of "transitional" furniture at slightly lower prices over the past few years. The main floor of his Arlington showroom features a showstopping dining room table, part of the Althorp line, that costs more than $8,000 and is modeled after a table in Princess Diana's family castle. But upstairs, a svelte cream-colored sofa by Precedent Furniture costs less than $1,400.

"Lifestyles are changing," Diffee said. Customers "don't know what they're going to want in five or 10 years."

At the same time, the home furnishings industry has become increasingly crowded. Williams-Sonoma Inc., which owns Pottery Barn, has launched three new brands in recent years -- Williams-Sonoma Home, West Elm and PB Teen. Crate and Barrel has also spun off a lower-priced line called CB2. Even discounters such as Target Corp. and Wal-Mart Stores Inc. have focused on boosting their home furnishings divisions.

"It gets harder and harder for a retailer to differentiate and find that niche that works for them," said Nick McCoy, a senior consultant at Retail Forward Inc.

Performance among national home furnishings retailers has been spotty. Sales at Bed, Bath & Beyond Inc. were up in the first quarter. Restoration Hardware Inc. also saw sales growth, though analysts remained cautious about the future. Pier 1 Imports Inc. is changing its merchandise from wicker and papasans to urban contemporary pieces dubbed Loft 21.

For Williams-Sonoma Inc., sales growth at Pottery Barn slowed during the first quarter to 1.1 percent at stores open at least one year. And at Richmond-based Rowe Cos., which owns Storehouse Inc., shipments were down 15.2 percent during its second quarter -- an improvement over the previous year but still troubling for the company, which has struggled with internal issues.

"Everybody's hoping for a better environment, number one," said Laura Richardson, an analyst with BB&T Capital Markets. "This is definitely an environment where the best performers start to get hurt."

Colony House owner Diffee lumps all these factors together as "the quadruple whammy." But he remains optimistic about the future. The Arlington store is still successful, he said, especially in design consultation.

He has learned a lesson: Bigger isn't always better. Now Diffee is trying to target his customers better. He knows they're still out there.

"I'm happy about where we are in the marketplace," he said. "We're a destination."