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Hearth & Home September 2014

L to R: Kimberly Cilio, Daniel Alarcon, Maria Cilio, Joseph Cilio, Joanne Di Pietro, and Stefano Di Pietro. All photos taken in Joseph Cilio’s backyard.

Family, Food & Outdoor Living

By Richard Wright

Alfresco Home has found that selling “a little of this, a little of that” soon results in a lot of products and a lot of customers.

Photos: 2014© Todd Trice Photography. www.toddtrice.com

I have been in the outdoor living business since I was a young child,” says Joseph Cilio, owner and president of Alfresco Home. The company, started in 2004, now offers aluminum, wicker, mosaic, bistro and accent furniture, along with fire pits, the Fornetto pizza oven and the new Fervor barbecue, plus the company’s foundational products of fountains, statuary and pottery.

Joseph Cilio and his wife, Kimberly.

It all started with a guy named Peter. Let’s call him Peter Sr., for he sired a younger Peter. Like countless other immigrants, he came over on a boat in 1947 with five oranges and little else, and entered the U.S. through Ellis Island.

Peter Cilio Sr. was a stone mason by trade and Italian by heritage, which means he was a lover of food and family. He was also a painter, a sculptor and, as it turned out, an entrepreneur with an interest in the outdoors.

In the early ’70s he needed some pots for his yard – say, eight or 10 pots – and decided to import them from Italy. Trouble was, he had to buy a container. When they arrived he took what he needed and sold the rest from a corner lot in Philly.

“That led to the creation of a garden center,” says Cilio. “It’s called Peter’s Home and Garden and is still family-owned. My dad focused on garden art, pottery, fountains and statuary; that was his love, much more than garden plants. In the ’80s, we started a company called Campania International; it’s still in business today.

“We took the handmade terra cotta pottery that we had been importing from Italy and started selling it throughout the Mid-Atlantic states, then up in New England. We did a nice job of developing that product line. I was there during my college years, then full time after that. We were selling to garden centers and some casual stores.

“Through those years we learned the values that are present in today’s Alfresco Home, which is to take care of your customer; give them the best service possible; put out a great product with as fresh a design as possible at a good value. That’s part of the foundation of what we do at Alfresco Home today.”

When The Gardens area opened at the AmericasMart in Atlanta in 1993, Alfresco Home was one of the first 13 companies to display there. That catapulted the company from a regional to a national player, but didn’t change its focus on independent retailers, which continues today.

“Around 1999-2000, my dad saw an opportunity to sell the company (Campania), which he did to an investment firm in Philadelphia. My brother and I worked there for three more years. I left at the end of 2003 and started Alfresco Home in ’04. I had been at Campania for 17 years, but the entrepreneurial spirit was ingrained in me from my younger years.”

Cilio went back to the store, the garden center, and decided to bring furniture into the mix. He quickly ran into manufacturers who wouldn’t sell him (“You can’t buy our products because the territory is locked up by one retailer and he owns a 60-mile radius.”) and those who would but required a minimum order of $20,000.

“I went home from that trip,” says Cilio, “and said to my wife, ‘Kim, I think we’re going to start a company, and it’s going to be in the casual furniture business in some way.’”

Cilio then created a company from whom retailers can buy “a little of this, a little of that,” with an initial concentration on bistro furniture. A decade later Alfresco Home still sells small orders to those who need it, and containers to those who are able to go for the deeper discount.

It manufactures in both China and Vietnam, with a bit in the Philippines. It has also expanded beyond furniture, fountains, statuary and pottery, into fire pits, pizza ovens and, recently, barbecues. Both the Fornetto pizza oven and the Fervor barbecue are manufactured by Garth Living, a family-owned business in Australia, and sold by Alfresco Home throughout the U.S. and Canada.

“We have to continue developing new products,” says Cilio, “which is why I’m in the gourmet business – besides the fact that I love to eat great food. The pizza oven and barbecue are perfect Alfresco Home products from my roots.

“When I returned home from a day on the road selling, the only thing my father cared about before he asked, ‘Did you make any sales today?’ was ‘Joseph, did you eat dinner?’ Once he knew I had eaten, then he could talk business for the next three hours. I come from the roots of eating.”

Alfresco Home presently has 22 employees on staff, and sells throughout the U.S. and Canada, as well as a bit in the Caribbean. Approximately 50 percent of its business is by container, the other half is its warehouse (80,000 sq. ft.) business where customers can buy one or two of any of Alfresco Home’s products.

Now, don’t laugh, but the company is located in Pottstown, Pennsylvania.

L to R: Stefano Di Pietro, Joseph Cilio.

In a few sentences, how would you describe your company?

Cilio: “It’s pretty simple. Alfresco Home is an outdoor living company. We manufacture products in three categories: casual furniture, outdoor gourmet and patio accents. We deliver a very good quality product with an excellent value and tremendous service. Our designs, our products, are really fresh, and we’re a very good company to do business with. That’s it.”

Beyond the specialty channel, my understanding is that you go through online retailers such as Wayfair and Hayneedle.

Cilio: “A little bit.”

Do you go through any catalogs?

Cilio: “We don’t do too much catalog business, although we have done it. For instance, Frontgate has the Fornetto this year. We don’t really push the catalog business. It’s not something we aggressively go after. We do focus some of our business online with a very strict MAP policy and we’ve done that since we started.

“But we’re very careful. Online is actually about 20 percent of our whole business. Brick-and-mortar is 80 percent and the 20 percent that is online is at a MAP price that protects the brick- and-mortar retailers, because that’s really the valuable part of our business.”

Beyond Wayfair and Hayneedle, are you in a lot of other online commercial sites?

Cilio: “No. In the 2004, 2008, 2009 and 2010 period we had a lot of online retailers. Since 2011 we’ve reduced it drastically, maybe six to eight sites carry our products. We want to be with the best retailers online that give the best service. We don’t want to have 50 customers with 45 of them giving bad service for the same product at the same MAP price.”

Particularly when they’re growing at the speed of Wayfair or Hayneedle.

Cilio: “That’s correct. That’s correct. You just need a couple of good ones.”

So, am I correct? Eighty percent of your business right now is through the specialty channel?

Cilio: “I’d go even further, to 90 percent.”

Fornetto Pizza Oven.

When you say specialty channel, do you mean specialty patio stores in particular or do you include garden centers and others?

Cilio: “I include outdoor living independent retailers, casual furniture stores, garden centers, hearth and home dealers. Because of our diversity, we touch each of them in different ways. But they’re strictly independent. We’re not with mass merchants. Of course, we have some designer business, but we don’t really go after designers and contractors.”

How many specialty dealers that you just described do you presently have?

Cilio: “We have about 600 active dealers. Do they all do furniture? No. Do they all do Fornetto? No. Do they all do pottery? No.”

Now, for Wayfair, Hayneedle or any of these online sites, you, like everybody else, must be drop-shipping, correct?

Cilio: “That is correct.”

Do you drop-ship if one of your specialty companies has online business?

Cilio: “Absolutely. They simply follow the MAP pricing program and we’ll do the same for them. We’re an equal opportunity wholesaler!”

I think you’ve got an enormous advantage over some of your competition in your ability to let people buy either by container at nice pricing or also just one, two or three units. Many manufacturers just can’t, or don’t want to, do that. Given the extent of your line, a dealer could just work with you on the outdoor category.

Cilio: “Thank you for saying that. That’s been part of our strategy and it’s not easy to execute. But that’s what we need to be. We want to be special to independent retailers. We need to be special to them and we need to have good products and designs, great service and diversity of product.

“I think we understand the formula for what makes retail successful because of our own roots in retail that are decades long. That helps us and continually reminds us of what we need to provide to our customers. We all have to be in sync, and we all have to work toward the goal of giving the consumer just what I said – the best designs, different designs, the best quality and great service.”

Given the breadth of your offering, you’re bound to be a good gauge of how well the specialty channel is doing. So how is your business so far this year? How far are you up?

Cilio: “Our business is tremendous. Our sales this selling season are up about 25 percent. Our Fornetto business is very strong. Our container sales are way, way up. Our pottery sales are way up. We’re up in all categories. We’ve seen a little slowdown in the special-order furniture business because of the late winter, compared to last year.

“Last year February, March and even April were tremendous. This season, because there was still snow on the ground into early April in most of the country, there was a bit of a slowdown. But it picked up and we were getting a lot of calls in mid-May that customers had sold out their containers or they needed more product.

“I sense that the specialty dealers who are taking care of their business are doing really well right now. I know it. I can see it in the way people are paying their bills. I can hear it from what they say to me or my reps. You’ve got to be a great operator today to succeed. Those who aren’t merchandising and marketing correctly are having retail challenges. But that is probably true through any economic period over the last 40 or 50 years that I’ve been around.

“OveralI, I think the specialty channel is doing well and people have made good adjustments. The economy may not be great, not as good as it was, but it’s there, it’s good, it’s good.”

It certainly is improving, but slowly. Over the past five years we’ve lost a number of very good people and businesses. Anaheim Patio & Fireside, with its three stores in southern California, went out of business just a few weeks ago. Did you know them?

Cilio: “Yes. Very well. We owe a lot of thanks to Mr. and Mrs. Lorig and Bonnie for supporting us in our early years. They came on board and were one of our first container buyers. They gave a nobody-company, let’s call it, a chance with a couple of specific products they really liked; they did really well with our products for a number of years. We wish them the best of luck as they go through this challenging time. It just shows you everyone is susceptible to not having things go the right way for them and having to make changes. Hopefully we’re all watching the right things and making good decisions.”

The Recoleta Collection.

You mentioned custom orders a while back. Do you have your own local cut-and-sew people for your cushions?

Cilio: “We do most of our work with a couple different places in the Southeast. We’re out two to three weeks turnaround time for most of the year, unless it’s May or June, and I think we get a longer lead-time on cushions. Of course, you have to watch the season. Sometimes in-season it gets a little longer than any of us would like.”

Now, if I buy containers, there’s a long lead-time, and I can plan for that. But if I run out mid-season, can you help out?

Cilio: “Well, the first thing is to always check with us; we work very closely with a number of factories in which we have a lot of production. We have some product that we stock over there that we can turn back pretty quickly. However, typically that product is stocked here in the United States and they can buy it out of our warehouse program. Now, it won’t be at the container pricing, but you can get it.”

Given the range of products that you have, trying to stock something of everything in your warehouse has got to be a nightmare.

Cilio: “It’s one of our bigger challenges. We have good historical data and we do some really good forecasting models that allow us to stock the right thing at the right time. It’s not a perfect science, but we do well and we constantly readdress that issue. Should we stock a bit of all 800 items we have or should we stock the core items, about 400 of them, or something else? In our case, for the way we do our business, having some stock is very important.”

What haven’t I asked that you would like to get out?

Cilio: “What’s the future of the industry, I guess, would be something you could ask all of us manufacturers. As long as there are people who want to sit outside and eat some food, there is going to be a big market for furniture, something to look at in a pot and something to eat from, like a Fornetto or a grill. So let’s keep on rolling.”

L to R: Stefano Di Pietro, Joanne Di Pietro, Joseph Cilio and Kimberly Cilio.

Are enough retailers taking advantage of the Outdoor Room trend and stocking all the products that a customer would need to create a nice Outdoor Room?

Cilio: “No. Absolutely not. I think that some retailers have taken it on as a core part of their retail business and are putting all the products in the mix. I think a lot of retailers are probably timid of the inventory required and the management needed for execution. How do you put in a giant island and how do you put in a pergola and how do you do all these things?

“For a lot of retailers it’s just cleaner to focus on selling some furniture and some Fornettos and some grills. Some people choose to take on the Outdoor Room and believe they have the energy to do it, that they have the space to do it and the market is there for it. Other retailers feel very comfortable in the zone they are working in and they are going to stay with that and stay focused. It’s a personal choice.

“I think it’s important if you’re in the outdoor furniture business or the outdoor living business to at least consider how the Outdoor Room can play a role, even if it’s special ordering, letting the consumers know that you have the capability of getting those types of products.”

If they’re not at least considering it, then they are most likely leaving money on the table.

Cilio: “You’ve got it. That’s exactly right.”

That may be the most exciting concept in housing over the past decade and it’s doing nothing but gaining traction. It gained traction right through the recession. When I talk to barbecue manufacturers, they’re saying they can’t keep up with areas such as Texas, where so many people want an Outdoor Room.

Cilio: “I believe it. I believe it. I mean I’ve actually been looking for a new home and I’ve visited lots of different homes and houses. It’s amazing to me how many homes don’t even have the beginnings of an Outdoor Room or the right patio. There’s just so much opportunity to fill peoples’ backyards with great outdoor living spaces. It’s unbelievable.

“This market is so young in many, many respects. It’s a question of the willingness of people to spend the money; if things are tight economically, well they’re going to be tight everywhere. There’s just a lot of opportunity there.”

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