Reference no: EM132358257

I admire Bobs Furniture for its low-cost leadership strategy. Bobs Furniture was originally an East Coast brand that has now expanded to the west coast. Bobs was able to offer lower prices than competitors by cutting out the distribution companies and going straight to manufactures. Almost all furniture companies use a wholesale company to acquire a product. By having the niche of controlling the product, Bobs has been able to control everything from setup times to pieces per container. The niche allows for higher margins, which lends the company to a higher growth rate. In California, when a big furniture name like Mors or Jerome's opens a store, it's a big deal. For comparison, Bobs opened five on day one. The strategy works for Bobs due to Furniture being a discretionary product. Consumers on the lower and middle-end are price-conscious. The average consumer cannot tell the difference in quality or even don't care. Therefore, consumers are quick to go with the cheaper option. Based on experience, nine out of ten shoppers never even touch or examine the furniture. The purchase is almost always made when looking at the price tag.