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The following article was written by Helen Chernikoff and published by Reuters, the global news and information company, on June 11, 2007:
CHICAGO, June 11Long known for cubicles, Knoll Inc.
(NYSE: KNL) is using the office furniture industry's trade show to draw attention to its diversification into chairs for children and desks for top-level managers.
The ubiquitous interconnected desk combinations known in the industry as systems furniture have been the company's core business for years, accounting in 2006 for 56.5 percent of its $982.2 million in revenue.
But five years from now, Chief Executive Andrew Cogan sees an even split between systems and other product categories such as retail and executive offices, he told Reuters on Monday.
"Our goal is to get to 50 percent, not by shrinking systems, but by growing all the complementary categories," he said at the NeoCon trade show in Chicago.
The launching of "small-but-profitable" product lines is central to that strategy, Cogan said.
Knoll launched retail-targeted offerings like child-sized versions of two of its classic chairs, including one which has a permanent place in New York's Museum of Modern Art.
Three years ago, Knoll made at most $5 million in retail sales annually; now it does $20 million and in four years Cogan sees it as a $50 million business.
Retail products such as the chairs, which cost at least $2,267, boast high margins, he said, because target customers are willing to pay a premium for an iconic piece of furniture.
Cogan would not give a sales target for the child-sized chairs, but said they have branding value, too.
"If we could have sold them out the front door here today I could have sold 100 of them," he said. "It's another way for people to connect with our brand."
Targeting a decidedly adult market segment, Knoll is also launching products for top-level managers, such as law firm partners and executives, who want impressive private offices.
The company has done private offices before but has not had a product line upscale enough to tempt top managers.
"We generally had to walk away from that partner level, that senior level," Cogan said.
He puts the market segment at $150 million and sees Knoll earning $20 million to $30 million of revenue in it in three to five years.
"For us, it's all a bunch of incremental hits," Cogan said. "We'll just keep working all these different growth strategies." |