Photos: ©2016 Dan Routh Photography. www.danrouth.com.

All of the domestic employees of Klaussner Outdoor fit comfortably in a Chevrolet Corvette.

If the international staff were to ride along, the team would have to move up to something a bit more roomy. A Mini Cooper would suffice, with a seat left over.

That’s right. Klaussner Outdoor, a brand that did not exist two years ago, and that now has more products than can be shown in a 6,000 sq. ft. showroom at Chicago’s Merchandise Mart, has just three full-time employees.

That’s possible because Klaussner Outdoor can draw upon the formidable resources of Klaussner Home Furnishings, a heavyweight among interior furniture manufacturers.

The privately-held company ranks itself among the nation’s Top 10 domestic furniture manufacturers. The company’s upholstered and leather furniture is produced in Asheboro, North Carolina, where skilled craftspeople still know how to tie springs eight ways by hand. The company’s workforce numbers about 1,500.

Klaussner’s headquarters, warehousing and logistics also are there, less than a 30-minute drive from the company’s permanent showrooms in High Point.

Klaussner’s roots date back to 1963; it became German-owned in 1979. The current executive team, led by CEO Bill Wittenberg and CFO Dave Bryant, purchased the company in a management buyout in 2011.

Bill Wittenberg, CEO, Klaussner Home Furnishings.

Although upholstery is its core business, Klaussner Home Furnishings has an extensive casegoods line, all sourced from Asia. Enso Sleep Systems, a memory-foam bedding business, was launched in 2010. The company claims more than 2,500 accounts among independent furniture stores.

Klaussner has all the components expected of a major player in the home furnishings industry – manufacturing expertise, domestic and overseas, plus all the necessary back office systems, including customer service and marketing. It has made a science of warehousing and logistics.

What it didn’t have, before spring 2014, was a role in the outdoor furniture business.

That changed overnight when Klaussner CEO Wittenberg hired Gary McCray, formerly president of Lane Venture, to launch Klaussner Outdoor. McCray soon brought on Teresa Buelin, his longtime associate at Lane Venture, to be manager of Sales and Merchandising.

A little more than 120 days after the launch of Klaussner Outdoor, McCray and Buelin had samples to show at Premarket 2014. The samples were sparse – five chairs with coordinating side tables, representing five collections.

Such a meager offering by a typical newcomer at the Merchandise Mart would have been all but ignored. But this rollout was not typical.

Buyers sought out Klaussner Outdoor’s tiny, curtained area among the Mart’s temporary showrooms. A steady stream of buyers came to greet McCray and Buelin, whose presence gave Klaussner instant credibility.

Most visitors just wanted to say hello and wish them well. All were curious about this upstart, fresh to the outdoor industry. Some who found their way into the modest curtained temp space even placed orders.

One thought prevailed: This newcomer will bear watching.

And that, in a nutshell, is how a fledgling casual furniture brand took off, tires screeching.

“A Great Big Machine”

Teresa Buelin says she did a little bit of everything in her 25 years working alongside Gary McCray at Lane Venture. Her last post there was as vice president of Sales.

At Klaussner Outdoor, she says, she’s had the opportunity to do it all over again with “a blank canvas.

“We have been able to learn from everything,” she says, “all of the mistakes we ever made.” The result, she says, “is a pretty good combination of products and fabrics and marketing.”

The tiny outdoor team felt the support of the entire Klaussner operation from Day One. Instead of having to tackle every chore and tend to every detail themselves, Buelin and McCray were able to draw upon people and departments within Klaussner.

“Klaussner is an amazing company,” Buelin says, with “all kinds of resources that we have been able to use.” She describes the company as “a great big machine, very structured. There are procedures and things we weren’t accustomed to. It’s a process, and once you get into the machine, everything runs very smoothly.

“It’s been a learning experience, but it’s been a good one.”

Klaussner Outdoor’s rapid ascent probably couldn’t have happened without the culture of the parent company. Klaussner’s well-oiled organization embraced and supported Buelin and McCray in their mission.

“Once you get into that machine,” Buelin says, “it’s quick.”

“A Good Fit”

Klaussner CEO Bill Wittenberg had his eye on the casual furniture business for some time. He observed an industry literally expanding its market by inventing new product classifications (fire pits, for instance) and increasingly focused on affluent shoppers. He still expresses amazement that a homeowner will pay more for an outdoor sofa than for an indoor sofa.

The industry trends he charted – demand, shipments, margins, potential – resembled those hockey stick graph lines that executives prize. They all aimed upwards, pointed to growth.

The casual furniture business – innovative, growing and fun – was missing from Klaussner’s portfolio and especially appealed to Wittenberg. Innovation, he says, “is a part of our culture and how we think about all the categories we are in.”

He couldn’t help but like the growth trends. Millions of patios, decks and backyards await transformation to become Outdoor Rooms. That potential, Wittenberg says, makes casual furniture “the darling of the furniture industry.”

Klaussner had been itching to get into the casual business when a mutual friend mentioned to Wittenberg that Gary McCray had parted company with Lane Venture.

“We would have entered (the business) much sooner, but we had to find the right fit for someone to lead the charge in the Klaussner Outdoor category,” Wittenberg says.

McCray grew up in Hickory, the famous furniture town in North Carolina’s foothills. So did Wittenberg. The men didn’t know one another, even though Wittenberg’s older brother had been McCray’s high school football coach.

A deal was struck in March 2014. McCray had the experience, the connections, and the vision that Klaussner had been waiting for.

McCray, Wittenberg says, “was a good fit.” Hiring him “just made sense.”

Casual furniture is “a natural addition to our product line,” he says. Furniture stores nationwide again are warming to the idea of selling outdoor products, a category that many abandoned decades ago as mass merchants moved in with promotionally priced goods.

Klaussner, already supplying several types of product to its furniture store customers, saw the opportunity to add another.

Casual furniture, Wittenberg says, “leveraged our assets – our people assets, our infrastructure – and it could all ride on the same truck, at the same time. It’s just one more product category that we can offer to our retail partners.”

Klaussner serves its customers from a massive warehouse. Row after row of racks filled with bar-coded boxes tower over pristine concrete floors. Boxes with green logos are Klaussner Outdoor.

Cushions, made to order, are matched with frames and packed into the original box for shipment to retailers.

Goods are shuttled to a transportation hub, just a few miles away, for shipment to retailers. The hub has bays for more than 180 semi-trailers. Product, McCray says, is rarely in the hub for more than a few hours.

Wittenberg says Klaussner’s logistical expertise offers a solution for “the two biggest problems in the outdoor category – inventory obsolescence and inventory being out of balance.”

With much outdoor furniture production overseas, the abbreviated casual season (though now extending in many markets) requires stocking retailers to stock warehouses with educated guesses. They risk buying too much, which leads to dumping product at reduced margins, or carrying those same goods into the next year. They also risk running out of product that may be difficult to replace in a timely manner.

“They either have too much or not enough,” Wittenberg says.

He wants Klaussner’s retailers to think of the company’s warehouse as their own. “We ship everything that we make, from a cold order, in 21 days or less,” he says.

Klaussner’s Cut and Sew operation.

Some competitors ship more quickly, he says, but “they do it from a stocking model.” Klaussner Home Furnishings, with more than 500 frames and 800 fabrics and leathers, builds to order. The company meets its 21-day shipping goal with more than 98 percent reliability, Wittenberg says, thanks to forecasting systems that are “very accurate.”

He’s counting on that expertise to translate into the outdoor business. “Therein lies the reason to get into this business,” he says.

Entrepreneurial Spirit

Gary McCray’s office at Klaussner headquarters has room for a couple of visitors and not much else. Sketches of product in development cover part of one wall, along with notes and fabric swatches. With more than 35 years of industry experience, his laptop and a smart phone, he can and does work from just about anywhere.

Launching Klaussner Outdoor required him to tackle again many tasks he had mastered earlier in his career and then left to others.

“Circling back and doing a little bit of everything, it just fits me,” he says. “I’ve always been entrepreneurial at heart.”

McCray spent his first 30 days focused 100 percent on designing Klaussner Outdoor’s first products. He called upon Charlotte-based designer Russ Lawson, with whom he’s had a long association, to flesh out his initial sketches.

McCray wanted the first designs to demonstrate from the outset that Klaussner would not be pigeonholed. He aimed to show that Klaussner could offer something for every retailer and homeowner.

“In the first five collections, we tried to go very different with each one,” he explains.

One collection had a coastal look. One was traditional and brown. Another leaned toward contemporary, while the fourth was “somewhat European contemporary.” The last, which turned out to be one of two bestsellers in the line, “was what I call Grandma’s porch wicker.”

McCray relished the challenge to meet manufacturing price points, styling parameters, and retailer expectations.

“I love product,” he says. “I always have. To be able to get back and focus on that, hands-on, has been a lot of fun.”

He had to balance the fun aspects with “my responsibility for the bottom line,” he says, “so I get to apply everything that I’ve learned over the years in one job.”

There have, of course, been some bumps along the way.

“It hasn’t gone without a few snafus,” McCray admits. One involved managing Klaussner’s first product category that depends on two sources of production, domestic and imported. The company’s other lines are either all domestically produced (upholstery) or all imported (casegoods).

The outdoor line is a hybrid. Metal frames of all types are imported, but cushion foam and fabrics are sourced in the United States. The company’s existing computer system initially wasn’t up to coordinating an order that depended on foreign and domestic sources.

That glitch was soon resolved. “They’ve done a really nice job to make it work together,” McCray says.

A Good Start

Toms-Price, a furniture and design store with five locations in the Chicago market, signed with Klaussner Outdoor at the April 2015 High Point Market.

“When somebody is new, you want to walk before you run,” says president Scott Price. “And they had a couple of hiccups. Some of that product didn’t ship in a timely manner. We did a soft launch in 2015, but it will really be more this year.”

Price says his company opted to go with Klaussner Outdoor based on its experience with Klaussner’s interior product lines. “They really have their act together and go deep on things,” he says. “Their growth in casegoods has been incredible.”

Klaussner Outdoor designed its product lineup with a good-better-best strategy. It was expected that the “good” categories would appeal to furniture stores, while the “better” and “best” products would appeal more to specialty stores. Everything, McCray says, is targeted specifically at the upper-half of the market.

The tiered-approach strategy, McCray explains, is designed “to be attractive to the specialty store, while at the same time we’re going after the furniture base that we have.”

But the tiered approach is not restrictive. “Sometimes furniture stores buy all three, or buy the best,” McCray says, “and sometimes specialty stores buy the good.”

Klaussner Outdoor already has launched a big-league marketing initiative by partnering with a celebrity. The Trisha Yearwood Collection, introduced at the High Point Market in October, piggybacks on the success that Klaussner Home Furnishings experienced with the country music star and cookbook author.

The celebrity pitch primarily is geared to furniture stores, McCray says, and was expanded to the outdoor side six months after the introduction of the Trisha Yearwood Collection in Klaussner’s casegoods business. That line was so well received that the company accelerated its schedule to create a Yearwood line in casual.

McCray says licensing arrangements have a tendency to skew “upmarket” and “become more of a fashion statement. I think we’ve done a good job with the outdoor, keeping it tiered at our good level.”

Styling of the Cerissa collection is traditional, with a slat back and tempered legs. It includes two fire pits – rectangular and hexagonal.

The company’s business now is about evenly divided between traditional furniture stores and specialty retailers. In its first year, the split naturally was more heavily weighted to furniture stores.

Klaussner Outdoor products are available through “major e-commerce sites” such as Wayfair and Hayneedle, which also are vendors for Klaussner’s indoor line.

Klaussner’s independent sales representatives have added the company’s outdoor products, Buelin says. The company also has a small number of independent sales representatives who are casual furniture specialists.

“It’s been very beneficial to have that mix,” she says, “because exclusive outdoor reps are very willing and able to train” the indoor reps. Klaussner was “very picky” in choosing its casual sales reps, she says, noting, “We brought on board the most professional ones we could possibly bring.”

Klaussner Outdoor is staying away from the contract market for the time being. “We don’t have the resources to do that right now,” McCray says. “Our plate is so full with trying to get the residential side up.”

Range of Materials, Showrooms

Klaussner Outdoor’s good-better-best product lineup encompasses a wide range of materials. The base category, McCray says, is “woven resin, because it’s the easiest thing to get started.” The company also offers aluminum casual furniture, cast as well as tubular construction.

In the pipeline from its Chinese manufacturing partners is furniture that McCray describes as “synthetic teak.” The polystyrene material, available in three wood-like finishes, is expected to appear by itself (probably in tables) or in combination with aluminum as a so-called mixed-media offering.

Another existing category is outdoor upholstery. Upholstered outdoor products are constructed in North Carolina using frames of marine-grade plywood covered in performance fabrics.

The company’s fabric suppliers include Sunbrella, Outdura, Sunbury, Abercrombie and Al Fresco.

Klaussner Outdoor offers a modest line of fire pits “as a matter of convenience” to its furniture store retailers. It buys umbrellas from Treasure Garden to offer as accessories in its “good” range of products, McCray says.

Not many traditional furniture stores are familiar with outdoor rugs, a natural add-on accessory. Klaussner Outdoor has a partnership with a rug vendor that supplies rugs for its showrooms. Klaussner recommends that vendor to interested furniture stores.

In addition to a 6,000 sq. ft. Design Center showroom on the Merchandise Mart’s 16th floor, Klaussner Outdoor has showrooms in High Point and Las Vegas.

Zoe Zhou, Klaussner Outdoor’s employee in China, will make her first visit to Casual Market 2016. She is a veteran of furniture manufacturing, McCray says, and was recommended to Klaussner by one of the company’s manufacturing partners.

“She has turned out to be great,” he says. “She’s another part of the puzzle that made it all happen.” Zhou has attended Spoga in Germany several times, he says; the September show will be her first visit to the United States.

Aspen, the most transitional of Klaussner Outdoor’s Slipcovered Outdoor Upholstery collections, is offered in both sofa and sectional configurations.

A Convincing Story

Jennifer Martin, a buyer for Houston’s Star Furniture, knew McCray and Buelin from their days at Lane Venture. The full-line store has offered casual products for about five seasons and is “still finding our niche in the outdoor category,” she says. Star offers three brands of casual furniture.

When she learned that Klaussner was expanding into outdoor, the decision to add the outdoor line was easy. “I have a history with Gary and Teresa,” she says. “Their integrity is a big part of it. We have a strong relationship with Klaussner and that entire organization, so we thought it was a very good pairing.”

Star will display and stock products from Klaussner’s “best” tier and make catalog orders available for shoppers looking for “more price-sensitive items.”

Klaussner Outdoor offers “variety, value, style, quality and reputation,” Martin says.

Klaussner’s deal with Star Furniture, capping off a longtime personal relationship, exemplifies what Wittenberg observed at Premarket 2015. He watched as buyers came to the tiny space that McCray jokingly now calls “the closet,” eager to hear about the new venture.

“They came in and they listened to his story,” Wittenberg says. They wondered, “Is Klaussner committed to the category? And I believe – I know – that we have effectively demonstrated that to the outdoor space.”

Moreover, Wittenberg was struck by the genuine personal interest shown by visitors.

“What was impressive to me was the following that Gary has,” Wittenberg says. “Gary has an outstanding reputation in the outdoor industry.”

Wittenberg says Klaussner Outdoor so far has exceeded his expectations. He projects that the division one day will account for perhaps as much as 20 percent of Klaussner’s sales.

“The first thing you have to prove to the marketplace is that you’re in it to win and for the long haul,” Wittenberg says. “Once people saw our commitment in Chicago, that probably did as much as anything – other than hiring the very talented Teresa Buelin and Gary McCray.

“I am proud of it,” Wittenberg says. “Gary is proud of it, and we have met with success.”