Newport Home Furnishing

Topics: Inventory, Cost of goods sold, Marketing Pages: 19 (2996 words) Published: April 16, 2014
ISSN 1940-204X

Newport Home: Multichannel Merchandising
and Inventory Management
Regina M. Anctil
University of St. Thomas
Opus College of Business

P. Jane Saly
University of St. Thomas
Opus College of Business

Introduction

furniture, are based on classic designs that change somewhat over time. Seasonal products, mainly soft goods, upholstery, and small hard goods, change frequently.
The introduction of seasonal products has become
a year-round job for the company designers and buyers.
Designers continually work with new color schemes,
fabrics, and materials. Buyers arrange one-time purchases
of seasonal and holiday merchandise throughout the year.
The company sources its inventory from domestic and
international manufacturers, and must commit to designs
and purchase contracts up to a year in advance. This places
the company at risk of overestimating or underestimating
demand when predicting the success of a concept. Ideally,
an item of seasonal inventory would sell out completely by
the end of the season. But in practice, merchandise buyers
plan to sell through only a portion of the inventory, replacing unsold inventory with new seasonal items before floor stock
becomes sparse. Buyers keep a close eye on seasonal items,
and will remove an item from the store schematic and
replace it with something else as soon its sales volume starts to decline. Each time a new schematic is issued, stores can
be left with varying amounts of overstock items no longer on the schematic.
Overstock merchandise on closeout is sold in each store’s
“Marketplace.” Mr. Ransom introduced the Marketplace in
his first store to merchandise inventory reaching the end of the season, along with limited special-purchase items. With
markdowns of 10%-50%, the Marketplace has become a
customer favorite. The company usually disposes of unsold

Newport Home, Inc. is a specialty retailer selling home
furnishings, including dining, kitchen, bed and bath soft
goods, glassware, china, and cutlery, and assorted décor
items. The company’s founder, Terrence Ransom, opened
the first store in 1960. The company has grown to 154 retail stores throughout North America. In 1968 the company
launched its direct-to-customer sales channel through a
seasonal mail-order catalogue, and in 2000 direct-to-customer sales were brought online when the company introduced
its e-commerce website, newporthome.com. Currently the
retail and direct-to-customer sales channels are supported
by distribution centers in Portland, Oregon, and Charlotte,
North Carolina, providing 1.8 million square feet, and call
and data processing centers in Syracuse, New York, and
Moorhead, Minnesota. The company’s corporate offices and
design studio are located in Providence, Rhode Island.
Mr. Ransom founded the company with the goal of
providing customers quality, creativity, and style. Product
buyers and designers at Newport Home keep a close eye
on fashion trends worldwide, so the company can respond
to changes in customer preferences quickly. Over the years
management has tried to position the company as a fashion
leader rather than a follower, helping insure the success of its design concepts. Company management believes the key
to success is to carry a mix of signature products and a fresh array of seasonal products throughout the year. Signature
products, consisting mainly of big-ticket hard goods such as IM A EDUCATIONA L C A S E JOURNAL

Michael E. Borneman
Connolly Consulting, Inc.

1

VOL. 2, N O. 4, ART. 2, DECEMBER 2009

Marketplace closeouts after four weeks on the floor through a third-party liquidator. Inventory left to liquidation is almost always sold below original cost, resulting in a reduction in gross profit in the period of the sale.

Recently, in meetings of senior management individuals are
questioning the role of the Marketplace concept in sustaining the company’s goals. Jason Klein directs the retail channel. He...
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