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News and Press Releases
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Casual Classics: Creativity and Clout
Casual Classics, a member-owned retailer buying collective, has impacted the casual industry's balance of power and become a force to be reckoned with. Created by Buzz Homsy of California Backyard, David Ghiz of Paddock Pools, and the late Jim Bowen of Lighthouse pools, this group has shifted the balance of power in the industry a bit. (Bowen died in an auto accident in February 2002.)
Started in September 2001 by the three founders, who owned a total of 40 stores, Casual Classics now has 33 members -- some of the industry's largest and most successful casual specialists -- who own a total of 208 stores.
Its launch began as a result of conversations between longtime friends, Homsy, Bowen, and Ghiz -- frequently about the growing challenge of the Big Boxes. As these solid pros watched retail behemoths begin to offer attractive casual goods at prices well nigh impossible for specialty retailers to match, their concern grew. It was clear that the major mass merchants had taken increased aim at good-looking opening price point casual merchandise. The three became convinced that if they did not take action, the Big Boxes would snatch this segment of the business from them -- a segment that they were loath to give up.
Despite great individual business success and their best negotiating efforts, none of these industry stalwarts on their own had been able to get vendor pricing on opening goods that would permit them to compete effectively with the major mass merchants. "We realized that we needed to have a defense mechanism to compete," noted Homsy. So, the three decided to work together and see if their combined clout of 40 stores would be more appealing to manufacturers. Their goal was to get opening price point merchandise made just for them in special designs that no competitor would have. And, they believed, they knew just which company to approach first.
Because Homsy, Ghiz, and Bowen had been long-time Hardware Show attendees, keeping their eyes on the mass merchant level goods shown, they had come to know Bob Gaylord, Oliver Wang, and John Oppenheimer from Shianco. The three had a game plan. Homsy approached Oppenheimer and demonstrated to him that Shianco was missing out on an important segment of the casual business -- the entire specialty segment. "Specialty doesn't want to buy your product right now," Homsy explained, "because your product is in all the discount places. Here is a group of stores that we have put together. We would like to talk to you about making better quality furniture for us."
Shianco immediately liked the idea. Homsy's timing had been perfect. "What do you have up your sleeve?" asked Oppenheim. "We'll cooperate with the group." And, they did.
The initial approach was for Shianco to use existing tooling to create looks that would be produced uniquely for the "triumvirate." Mike Collins, Shianco designer, provided the necessary drawings to the factory and, after much consultation and trips by Homsy to the Shianco factory, the result was four new collections -- one each in sling, strap, cushion, and cast.
With great anticipation, the three retailers floored the specially designed merchandise in the 2002 season. "We priced it reasonably, noted Homsy. "The quality was excellent and the presentation was better than anything we were competing with at the mass merchant. We did great!"
Word of their success with the special groups quickly became public. This is a small industry. Other dealers were clearly interested in this approach. According to Homsy, the three old friends talked and became convinced that "this strategy would certainly work with other folks like us." The result was that they decided to launch a member-owned buying group that is territorially driven by exclusive representation and they developed and trademarked the name Casual Classics.
Their initial strategy was to establish Casual Classics as a full brand -- complete with hang tag, warranty, and maintenance instructions -- i.e., the whole shebang. The only difference is that this brand would be seen only on the showroom floors of its members. It could not be shopped by price-comparing consumers. "Our sales people would present it like any other quality brand," said Homsy. "They could say, 'We represent Tropitone. We represent Brown Jordan. We represent Casual Classics." "The difference is that Casual Classic would be ours alone."
Structurally, the founders decided that the group would be member-owned with full and complete equality, meaning identical deals and pricing for each. A key element was the decision to limit membership to one owner per trading area. That way, no member would ever compete with another. Each would be the sole source for Casual Classics goods in his or her market.
It was agreed that membership should be open only to multi-store owners -- ordinarily, with a minimum of four stores each and sufficient warehouse capacity for multiple containers. Single stores, the three believed, were unlikely to have sufficient storage space for containers or the financial capacity to wire large sums of money to factories. Another requirement, they set, was that each member had to commit to a minimum amount of orders for Casual Classics goods on a per store basis.
The first person called regarding membership was Dino Luckino, reported Homsy. "I said, 'what if?... would you be..?' And, he immediately said, 'yes.' Then, Leaders in Florida joined, then American Sales, and it just went on from there."
As Casual Classics began to build membership, the founders felt that it was important to have owners with harmonious business philosophies and personal styles that would enable them to work well together in a group. And, they certainly have. "Luckily," said Homsy, "the image of our people seem to mirror one another." Not every dealer who has wanted to join has been accepted. Decisions about membership are made by Casual Classics' Board of Directors, which includes Ghiz, Homsy, Luckino, Alfredo Alverez of Ambiente Moderno, and Jim Van Norman of Rich's for the Home. Ghiz serves as the group's President while Homsy is the Managing Director. Though the group has strong members in most important markets, they are still looking for appropriate dealers in Minnesota, Texas, Tennesee, Kentucky, and New Mexico.
A shift in strategy.
In 2003, the group went into the design business. They no longer wanted to just tweak existing stylings. They decided that their needs would be best served if they created furniture to meet specific needs expressed by their customers -- needs that were not being addressed by current designs.
For example, according to Homsy, "Casual Classics was the first to recognize consumer desire for larger and more comfortable dining and lounge chairs." He asserts that the group is "responsible for the current big chair phenomenon. When we began," he explained, "the standard inside of a chair was routinely eighteen inches wide by nineteen inches deep. That year, we had chairs made for our members that were twenty-one-and-a-quarter inches by nineteen-and-a-half inches deep. We also worked on the cant of the chair backs to make that more comfortable, as well." The "bigger is better" design philosophy has certainly made an impact throughout the industry.
The Casual Classics collections owe much to their core design team, comprised of Debbie Stegman of Patio & Hearth Shoppes, Petey Fleischut of Casual Marketplace, Jim Sica of Jimmies Rustics, and Homsy. These pros constantly search magazines, indoor furniture, and the entire home furnishings marketplace for ideas. They find an appealing arm here, an interesting curve of a back somewhere else, which they combine and modify to create something special for their members.
"We don't just design to design," said Homsy. Each design team members asks themselves, "Can I sell this on my floor? Will it look better than what I already have? What will I have to sell it for? What pieces do I need to make this collection complete?" The group's design philosophy reflects the belief that traditionally, at specialty dealers, selection and comfort are everything. Color and price are secondary. The design team continuously works to create a price ladder with extraordinary value and so far, they seem to have done an excellent job.
"Group members exchange information frequently to stay on top of trends and understand consumer needs and preferences in depth. "Through our mutual research and consultation," commented Homsy, "we know there is a need for a particular kind of product and that it will sell, before we even build it. That's been the fun of it all."
But, as the group grew, with members operating in very diverse markets with distinctive demographics, every style that the group produced wasn't being purchased by every member. So, in Fall 2006, they tweaked their strategy again. They "grandfathered in" the successful designs they already had -- members can still get them -- and decided to create only two or three new collections a year. The organization was then transformed into a collective bargaining group.
To make this work, Casual Classics created partnerships with a number of domestic and offshore manufacturers, based on volume. The group then uses the existing total volume of business from their members with a particular manufacturer as the negotiating base. "We will increase business for you," says the group, "if you will partner with us. All we ask in return is a discount for all our members."
The impact of the group has been significant. Since its launch, the annual volume of business generated by Casual Classics members for manufacturers has grown by three thousand percent. And, it started at a very healthy level, just from the volume of the founders. In addition, they have created some very successful proprietary collections, which continue to sell.
On most member floors, Casual Classics' wares take up twenty percent of the real estate -- and, that is because they sell and provide additional value to customers who select Casual Classics furniture designs.
So far, the Casual Classics' strategy seems to have been win-win. Partner manufacturers get significant amounts of increased business from strong dealers with excellent credit. As long as the business of Casual Classics' members continues to grow, many end users will benefit from uniquely designed Casual Classics furniture that is truly value priced in the competitive market place.
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