In late 2022, Mississippi-based manufacturer United Furniture Industries abruptly shuttered, terminating 2,700 jobs and leaving a sizable hole in the market for budget-friendly furniture.
For American Freight, a chain of warehouse stores selling discount furniture, mattresses, and open-box appliances, the sudden loss of a major supplier marked a turning point. No longer would it rely exclusively on domestic middle-men to bring in its products. Going forward, it would source from a much wider pool of suppliers, including from outside the United States.
“We knew that they were sourcing a lot of those goods overseas,” Alissa Ahlman, chief merchandising officer in the home furnishing division at Franchise Group, the parent company of American Freight, told Retail Brew. “And so we kind of embarked on this, ‘Well if they can do it, we can do it.’”
These efforts culminated last month with the announcement that American Freight had expanded into new international sourcing territories with the goal of expanding its assortment of affordable offerings, and that Vietnam and Malaysia were the focus.
The move places American Freight alongside a number of US retailers, including Amazon and Walmart, and fellow discounters, such as Big Lots, which are increasing their imports from Southeast Asian countries, as higher costs and geopolitical tensions make China a less attractive exporter.
But setting up shop on the other side of the world is no easy task. Ahlman said the expansion required the company to rapidly stand up a sourcing division and develop partnerships with a mix of local sourcing agents and manufacturers.
Straight to the source: The process started with American Freight getting its boots on the ground, Ahlman said, with company executives “traveling a couple times a year to see the factories with our own two eyes, to meet the people, to touch and feel the product, to make alterations on the spot.”
It also entailed bringing in some new expertise. The company last year hired Stephanie Koda as its new divisional VP of sourcing for furniture and mattress products. Koda has three decades of experience in international sourcing for retailers such as At Home Group, JCPenney, Gap, Pottery Barn, and Bloomingdale’s.
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Now the company employs three different methods for sourcing products: working with sourcing agents to find factories and products; working directly with manufacturers, typically those with US representatives; and continuing to work with domestic partners who import on its behalf.
To accommodate the increase in imports, American Freight needed to upgrade its supply chain as well. Previously, much of the retailer’s inventory was shipped directly from domestic suppliers to stores or nearby warehouses. These shipments were often a mix of different open-box products, so this required flexible storage spaces. With more uniform, high-volume products coming in, the company needed more shelving in its warehouses. It also started working with more third-party logistic (3PL) providers.
Now roughly 20% of the company’s inventory is imported—with upholstery and mattress lines remaining largely domestic—and Ahlman said there are plans to expand.
More control: The upside of this new sourcing strategy is that the company has more control over the flow of products and over the products themselves.
“I think No. 1 always is cost,” Ahlman said on what motivated the expansion, noting later that American Freight’s customers have been hit “extra hard” by inflation and high gas prices. “No. 2 is complete control over the quality.”
American Freight is now developing its own unique products rather than just buying up a line that some other retailer or wholesaler was carrying, Ahlman said, and this is helping it appeal to customers who, despite being more cost-conscious, are also seeking “extra functionality” in their products, such as nightstands with USB ports or sofas with extra drink holders.
“We’re able to develop our own unique products that speak to our individual customers a little better,” she said