Expanding beyond making furniture for McMansions

Ashley Furniture has its sights on global markets as it moves past McMansion furniture:

His son, Todd Wanek, the company’s chief executive, says simply: “We want to grow in the 7% to 10% range every single year”—or more than twice the rate of U.S. furniture-industry sales growth in recent years.

Those ambitions are taking the Waneks outside their comfort zone of making furniture styled for American McMansions. Ashley is now trying to sell furniture in Asia, where it is making a much bigger bet than its U.S.-based rivals.

For example, a local partner of Ethan Allen has opened 75 retail outlets in China to showcase upscale products. Ashley is aiming for 1,000 stores in Asia in 10 years, up from its current total of 35. The company also is opening stores in the Middle East and Central America, among other places, partly to reduce its reliance on any one market.

No other U.S. furniture maker has tried to expand internationally on the scale planned by Ashley, and it hasn’t been easy. On a recent Sunday, only a couple dozen customers were browsing at Ashley’s 35,000-square-foot store on four levels in Shanghai’s Zhong Shan Park neighborhood.

Two thoughts:

1. This hints at the larger economic impact of McMansions. While people may focus on the real estate and development aspects (land, constructing homes), there are numerous other goods associated with McMansions from certain kinds of vehicles (the ubiquitous SUVs) to furniture to fill all of those rooms. If real estate has slowed down in the United States in recent years, then such companies will need to change their strategies.

2. This also highlights globalization in one particular industry. Ashley first had to figure out in the 1980s how to compete against global manufacturers and now is looking to capitalize on growing markets elsewhere (even as the American market shows its limits). But, it isn’t just about selling furniture; such furniture requires higher incomes, more middle-class tastes in other countries, and homes where this furniture will fit right in. In other words, this furniture is just a part of exporting the American middle-class dream where one can walk among rows and rows of furniture and easily plunk down some money (or access credit) or update one’s home furnishings.

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