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Gaming Guru

Chris Jones
 

Furniture Showdown: Ready to Rumble

16 May 2005

The battle royal of the Barcalounger soon will be under way in Las Vegas, engulfing this community and others on both the East and West coasts in a multibillion-dollar showdown for recognition as the nation's top furniture showcase.

But before the proverbial cannon shots roar, locals caught in the crossfire should strap on their helmets with a firm understanding of one key fact: You can't buy your new sofa, bedroom or dining room set at World Market Center.

Since construction crews broke ground in March 2003, countless locals and visitors alike have driven past World Market Center's initial building, a globe-adorned, 10-story box located southeast of downtown Las Vegas' Interstate 15-U.S. Highway 95 interchange.

The $200 million, 1.3 million-square-foot structure is the first of eight buildings planned for the site, just one small step in what will ultimately become a $2 billion, 12 million-square-foot campus of showrooms for furniture, accessories and other goods in the all-things-home category.

Despite the project's high-profile location and scale, those behind World Market Center remain convinced few locals understand what's in store there.

"Most people in Las Vegas don't know what it is," General Manager Dave Palmer said. "But I don't think there's a furniture developer anywhere who isn't aware of us."

Indeed, since Los Angeles businessmen Jack Kashani and Shawn Samson in fall 2000 first touted plans to bring a world-class furniture showcase to downtown Las Vegas, industry watchers have paid close attention to their progress while struggling to agree on what World Market Center would ultimately become.

Some initially dismissed the concept, with one prominent outsider calling it a "dust-up in the desert" that would never get off the ground. Others continue to question World Market Center's potential impact, wondering if enough manufacturers and buyers will veer away from established markets in San Francisco and High Point, N.C., in favor of a newcomer located in a place often described, or derided, as "Sin City."

But local proponents claim the furniture industry has long awaited a new showcase. Not surprisingly, they also contend this city's abundance of hotel rooms, convention-hosting expertise and low-cost airfare options make Las Vegas an obvious host of choice.

With World Market Center's debut market nearly two months away, arguments on both sides of this civil war soon will be put to a real-world test. For the time being, however, many who'll determine the eventual victor seem as adept at whistling "Dixie" as the "Battle Hymn of the Republic."

"I think they're complementary, at least at this stage," Liliana Chacon-Menay, spokeswoman for Kathy Ireland Home by Standard, said of the competing markets. "Time will tell which ones move ahead."

Chacon-Menay's Bay Minette, Ala.-based company has left San Francisco for good, though it's still committed to High Point, and a smaller regional showcase held twice each year in Tupelo, Miss.

Kathy Ireland Home also has a 19,000-square-foot showroom in World Market Center's first phase and plans to have 60 salespeople working there during its first market, which will run July 25-29.

"Las Vegas, with a new building, hotel accommodations and entertainment, was definitely a draw for our West Coast business and the rest of the nation," she said of World Market Center's merits.

The $2 billion gamble

Work on World Market Center has progressed rapidly over the past few years as laborers prepared for this city's first furniture market, which will not be open to the public.

Rather, the Las Vegas market will bring together manufacturers and other exhibitors to showcase new products before buyers, who will select which goods to sell to consumers in retail stores such as Walker Furniture, Levitz or R.C. Willey Home Furnishings.

World Market Center at this time plans no retail sales even though a 2002 deal with the city of Las Vegas that was negotiated as part of the tax incentives offered to the developers allows exhibitors to sell leftover goods directly to the public at two-day-long sidewalk sales.

This summer World Market Center expects to host more than 800 temporary and permanent exhibitors and 70,000 attendees. To accommodate so many, its 10-story downtown showroom will be supplemented with 345,000 square feet of temporary space in tentlike structures erected north of the building. In addition, about 830,000 square feet will be leased at the Las Vegas Convention Center, raising the first market's size to approximately 2.5 million square feet.

"They're coming from all over," Gerry Sawyer, World Market Center's chief operating officer said, noting attendees are expected to purchase up to 400,000 room nights at local hotels and motels for July's show alone. "And our registration records show people are coming a bit early to enjoy a taste of Las Vegas before they go to work" at the market.

Next year, Las Vegas will begin a twice-yearly market schedule with shows beginning in late January and July.

World Market Center's owners -- Kashani and Samson, as well as The Related Cos., a New York-based development firm with heavy ties to Southern Nevada -- prefer to downplay any conflicts with competing markets. Instead, they like to discuss how their center can capitalize on Las Vegas' popularity and convention infrastructure to create the nation's first major international furniture showcase.

Still, it's impossible to ignore the fact that a new Las Vegas market would draw business away from other cities; exactly how much of that business will shift here is all that's left to determine.

"We've done surveys that show 70 percent of those in our industry plan to visit us," said Palmer, who added many manufacturers who initially booked smaller space at World Market Center have since returned seeking more based on buyer interest. Some will get a chance to book space within the center's second phase, a 1.6 million-square-foot, 15-story building scheduled to break ground in July.

Anne Fortini, who owns a small furniture and design store in San Luis Obispo, Calif., is among those in Las Vegas' corner. She's particularly excited about World Market Center's first two floors, which will be open to professionals year-round.

"It takes an hour for me to get there, and since I could bring clients, I'll go there throughout the year," Fortini said of Las Vegas.

And as Las Vegas' critical mass grows, World Market Center hopes some manufacturers and distributors will bring new factories and warehouses here, thereby creating a new niche industry that would supplement tourism rather than compete against it, Palmer said.

A handful of furniture-related companies, including credit reporting agency Lyon Mercantile Group and manufacturer Encore! Home Entertainment, a division of APA Marketing, already have set up shop in the valley to do more business with World Market Center.

Sawyer said the center will bring "tens of millions of dollars" in tax revenue to Southern Nevada each year, though he was reluctant to attach an overall dollar value to the center's impact on the local economy.

San Francisco shake-up

While many areas of downtown Las Vegas have a seedy, if not dangerous edge, World Market Center is located on what was previously a vacant 57-acre desert lot. That pristine setting -- and its proximity to the adjacent 61-acre Union Park parcel, where Las Vegas city leaders anticipate public-private redevelopment soon will change the look and feel of the area -- should allow local furniture markets to occur in a relatively new and attractive atmosphere for years to come, supporters say.

Contrast that with the San Francisco Mart, a long-standing furniture showcase that's already suffering because of its newest competitor. Though its pre-World War II midrise tower is still in good condition, the building stands in a depressed area near that city's Civic Center. Most patrons stay about 10 blocks away in hotels near Union Square, and with downtown parking at a premium, getting to and from the market requires a bus ride or short walk past countless panhandlers and run-down pornography boutiques.

Signs of trouble already have appeared by the bay. San Francisco's next market, scheduled for the first week of August, will for the first time occur in conjunction with the San Francisco International Gift Fair and its accompanying JewelryMart. The shift away from furniture-only exhibitions marks a major change in strategy for the 90-year-old venture, as do new show dates organizers admit were designed in part to avoid a conflict with the World Market Center's scheduled debut.

Those changes may be too little and too late. Exhibitors and attendees at San Francisco's most-recent market, which took place in late January, repeatedly said that city's pricey hotels, airfares and other expenses have made Las Vegas a more-appealing West Coast option.

"San Francisco is a great place, a beautiful city. But it's become inconvenient and expensive," said Greg Roy, a vice president with Lane Home Furnishings. "Attendance (at the market) has declined, and we're not getting a return on our investment to keep (exhibiting) here."

Tupelo, Miss.-based Lane closed its 14,000-square-foot San Francisco showroom following January's semiannual market. It soon will move into a 20,000-square-foot space at World Market Center, and Roy said advance interest has been so strong the company wants to further expand in Las Vegas as future phases come online.

"We'd like to have a little more, maybe 35,000 to 40,000 square feet," he said, adding Lane's primary showplace will remain in High Point, where it has approximately 100,000 square feet of exhibit space.

The Powell Co., a 36-year-old furniture importer based in Culver City, Calif., is so confident of Las Vegas' drawing power it plans to debut its first-ever line of bedroom and dining room products this summer at World Market Center. Tom Liddell, vice president of national sales, said high prices and diminishing returns also led his company to move its West Coast showcase here from San Francisco.

"We hate to abandon a market that's been very good to us for many years, but the lion's share of buyers have told us they plan to switch" to Las Vegas, Liddell said.

As a result of that buyer interest, Powell's sales force at World Market Center's inaugural showcase will include about 60 people. In San Francisco in January, it was 16, while the company brings about 75 sales representatives to High Point, Liddell said.

"Las Vegas will be an easy and inexpensive market to attend," said Liddell, who added World Market Center's opening has created much anticipation within furniture circles.

Whither High Point?

Outside of furniture, High Point's greatest -- or perhaps just its latest -- claim to fame is the success of hometown singer Fantasia Barrino, last year's winner of the Fox television network's "American Idol" competition.

Within local circles, Las Vegas' effort to home in on an industry that's supported the area for nearly 100 years was welcomed like a scolding review from the cantankerous "American Idol" judge, Simon Cowell.

Still, High Point Mayor Becky Smothers said the developments in Las Vegas are taken seriously in her area.

"When you look at the high value of this market, not just for High Point but for the Peidmont Triad and state of North Carolina, any threat is certainly treated with respect and concern," said Smothers, the city's mayor since 1992. "Las Vegas is such an exciting town; it's created a reputation that few others have with glitz and glamour that's attractive to many people."

High Point's furniture industry dates back to 1889 when the High Point Furniture Manufacturing Co. shipped its first piece, an office desk. Its success inspired others to get into the business, and the local furniture industry quickly blossomed thanks to a ready supply of inexpensive lumber and regional demand for cheap furniture.

Today that tradition continues thanks to active factories operated by Bassett Furniture, Lexington Home Brands and Thomasville Furniture Industries, among others. High Point is also home to 11.5 million square feet of exhibition space divided among nearly 190 buildings.

The town itself is pleasant, an old-style Southern development with a Main Street USA feel. Its 93,000 residents dine in family-owned barbecue shops with murals of Jesus painted on the walls. Some send their children to High Point University, and many follow college basketball with near religious devotion, locals told the Review-Journal during a recent visit.

But unlike other communities, the city's economy is intrinsically linked to the furniture industry that over time developed in and around the town. High Point residents grow up realizing they'll be displaced each spring and fall, with many renting out their homes to market attendees who eventually become family friends, Smothers said.

"The whole downtown dynamic changes during the furniture market, and that's generally accepted by the public," Smothers said.

In many ways, High Point resembles Southern Nevada's Boulder City, itself a small settlement that evolved from a nearby industrial opportunity, the construction of Hoover Dam. But unlike High Point, Boulder City doesn't try to host 70,000 to 80,000 visitors over 10-day spans twice each year.

Though the High Point market has thrived for years, some question how it will fare when faced with a newer competitor that handles 80,000-visitor showcases on a regular basis.

Last year, a Furniture Today newspaper columnist published a list that offered 25 reader suggestions for improving the High Point market; 18 called for better parking; eliminating price gouging for rooms, rental cars and restaurants; or coordinating the confusion that stems from so many different buildings with different registration processes. Convention infrastructure now in place clearly favors Las Vegas.

High Point's market attendees must compete for one of the town's 1,100 guest rooms, or trek in from hotels and motels in nearby communities such as Greensboro and Winston-Salem. Parking and restaurant space are hard to come by, and even workers at the local convention and visitors bureau advise travelers to avoid the city during market periods.

"The logistics of the High Point market are getting difficult: hotel accommodations, parking for customers, that kind of thing," Chacon-Menay said. "In Las Vegas we see that as less of a problem."

But High Point leaders hope Las Vegas' myriad entertainment options will work against its furniture market. Specifically, Smothers said her city's market has thrived thanks to a "business first" approach that's favored by manufacturers who "are serious about people coming to buy their product, not being wowed with a vacation opportunity."

Smothers added: "The showrooms generally open at 7 or 8 o'clock in the morning and stay open until 8 or 9 at night. The people who are here to host the dealers, by the end of a 14-hour hour day, they're pretty well wrapped up. While there's a considerable amount of entertaining that goes on, a great deal takes place in the showroom itself."

High Point leaders are keenly aware of their market's other perceived shortcomings. For the past two years, the North Carolina Department of Transportation has given the market $900,000 in tax-funded money to operate a shuttle bus system during the furniture markets in April and October.

High Point's Home Furnishings Market Authority also is seeking another $1.3 million for transportation and an additional $1.2 million for upcoming marketing programs.

"I think everybody realizes it's a new day and we do have some areas that need to be promoted," Smothers said.

That outside help is vital to maintaining High Point's economy, sources said. In an April open letter to his organization's members, Phil Kirk Jr., president and secretary of the North Carolina Citizens for Business and Industry trade group, cited a 2004 report produced by the University of North Carolina at Greensboro that said High Point's markets produce an annual economic impact of $1.14 billion for the state while supporting more than 13,500 jobs.

"Until recent years, financial assistance from the General Assembly and the U.S. Congress had not been sought, but the threat from Las Vegas and possibly from other locations in the future led to a more aggressive approach," Kirk said. "High Point officials are wise not to take for granted that the Market will always be the gem that it is today in our changing global economy and in the ways business is done."

Outside of its notable property tax breaks worth up to $40 million, Las Vegas is not looking for similar government assistance. The city now has more than 131,000 guest rooms within a few miles of downtown, and Palmer said World Market Center will pay to operate 75 to 80 buses to shuttle attendees between the mart and 18 hotel pick-up points.

"Buyers and exhibitors want the market here," he said. "They know they can get a hotel room without having to drive for 90 minutes; they know they can get a rental car at a reasonable rate and can fly here from an international (city)."

World Market Center's biggest drawback, Chacon-Menay said, is its penchant for charging tenants for services that are given away at other markets. But Sawyer said those costs balance out versus other markets because Las Vegas has cheaper hotels and transportation options.

"We're offering a brand-new facility, Wi-Fi access, plasma screen televisions and lots of other things that will make for a more-productive market," Sawyer said. "We think that more than makes up for any extra expenses."

Sawyer declined to say exactly how much more expensive World Market Center's fees are when compared with other markets.

Getting there

While on-ground transportation will certainly play a role in determining the success of Las Vegas' and High Point's furniture markets, air service is of equal importance.

In the 1840s and 1850s, workers in North Carolina began building a 130-mile plank road to link the towns of Fayetteville and Salem. A settlement soon developed where the road intersected with the North Carolina Railroad, and in 1855 residents branded the town "High Point" because it sits on the geographic high point between Goldsboro and Charlotte.

That central location soon attracted industry and commerce, though the days when High Point functioned as a major crossroads have long since concluded.

These days, the High Point area is served by Piedmont Triad International Airport, a small regional airport that last year handled just 1.36 million enplaned passengers, or about one-fifteenth the 20.7 million reported in 2004 at Las Vegas' McCarran International.

As of April, Piedmont Triad International offered 106 direct daily departures to 21 U.S. airports, though none west of Dallas-Forth Worth International in Texas. Those visiting from overseas must connect through another city, most likely the New York metropolitan area (19 daily flights via LaGuardia, Kennedy International or Newark International) or Atlanta (11 departures per day).

McCarran, by comparison, as of March offered approximately 526 daily departures to 116 airports in the United States, Europe, Asia and Central America, including direct flights from London, Tokyo and Mexico City.

Despite its advantages at the airport, The Powell Co.'s Liddell does not believe Las Vegas will supplant High Point as the so-called "furniture capital of the world." Rather, he subscribes to a popular theory that both cities will house successful markets for years to come.

"High Point will never go away," Liddell said. "There's enough business around for both to be successful for many, many years to come."