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Bill Hewitt's furniture isn't finished, but his business is.

The owner of Bare Woods is closing his Santa Rosa furniture store after 31 years, citing the sluggish housing market, cheap competition from Asia and changing tastes.

"We haven't been profitable in three years," said Hewitt recently from his quiet, cavernous warehouse and showroom on Piner Road. "I want to go out with my head held high."

Less than a mile away, Nita Wright and two partners have recently opened Home Inspirations Interior Design Center in the space vacated by another longtime furniture retailer, Santa Rosa Bedding & Furniture.

Wright is betting that even as some furniture retailers suffer through a painful slump in sales, her new company's mix of fine furniture and interior design services will thrive while serving the needs of well-heeled clientele.

"I think the market for high-end furniture is doing well," Wright said. "It's a small piece of the pie, but it's still a piece that needs attention."

Sonoma County's furniture industry is in turmoil, with several major retailers forced out of business even as new entrants arrive to take advantage of emerging opportunities.

The housing downturn and subprime mortgage meltdown are delivering a one-two punch to many furniture retailers already reeling from competition from cheaper imports that are improving in quality.

Fewer home sales mean fewer people are looking to decorate new spaces. Many of those who are staying put are facing a credit crunch as either their mortgage payments increase or sliding home values make it more difficult for them to tap evaporating equity.

The slump that last year sank R.S. Basso in Sebastopol, and Colburn's Wood Furniture and Greenwood Home Furnishings in Santa Rosa has deepened, as home sales have dropped to their lowest level since 1991.

In addition to Bare Woods and Santa Rosa Bedding & Furniture, stores that have closed or are planning to close include Furniture 101, Black Sea Gallery and Red Tag Furniture in Santa Rosa, Furniture Solutions in Rohnert Park and Couches, Etc. in Petaluma.

Many that haven't closed are struggling desperately.

"Business is very, very slow right now. I don't know what's going on," said Ben Nejad, owner of Piner Furniture.

Nejad stood in the middle of the northwest Santa Rosa store he has owned for 10 years, and over the course of an hour one recent afternoon not a single customer entered his shop.

Banners all around the colorfully painted store attest to Nejad's efforts to drum up business any way he can: Remodeling Sale, No Tax Sale, Storewide Clearance Sale, Wells Fargo Financing Available.

He has cut costs to the bone, scaling back the hours of his employees and eliminating a warehouse that was costing him $3,500 per month. Instead, he converted several thousand square feet that once held children's furniture into storage space.

As much as he hated reducing the size of his showroom, Nejad didn't have any choice.

He needs at least $80,000 a month in revenue to break even, but he barely has made that in the past four months, he said. He has maxed out his business and personal credit cards to pay the bills, and has gone $180,000 into debt trying to keep the business afloat, he said.

"We have to survive until January," Nejad said. "The only other option I have is to get rid of the inventory and go to the landlord and say 'goodbye.' "

While Nejad hopes things will turn around in 2008, economists aren't so sure. Chris Thornberg, an economist with Beacon Economics, thinks the housing market is going to get worse before it gets better, with a recovery next year unlikely.

But not everything is doom-and-gloom.

U.S. consumer spending on furniture and bedding, the broadest measure of industry activity, is expected to rise 1.5 percent this year and 2.2 percent next year, according to a consensus industry forecast compiled by trade journal Furniture Today.

And some local retailers are reporting strong sales.

"We're having a good year," said Paul Pedersen, co-owner of Drexel Heritage by Pedersen's in downtown Santa Rosa.

By focusing on high-end furniture and interior design, carefully selecting manufacturers with popular styles and being cautious about furniture made overseas, the 116-year-old company is well positioned to weather the market fluctuations, Pedersen said.

Sales were down slightly in 2006 but are on pace for "double-digit" growth this year, he said.

The Stickley furniture company of New York is an example of a U.S. manufacturer that has moved some production overseas -- to Vietnam -- but remains respected because it has kept tight quality controls in place, Pedersen said.

Old Town Furniture in Railroad Square is another company that saw a drop in 2006 -- about 12 percent -- but is having a better 2007, manager Anthony Quattrocchi said.

Over the years, the company diversified its products by offering more home furnishings and has diversified geographically as well, opening stores in Vacaville and Rocklin.

"We've tried to follow the growth," Quattrocchi said.

And, unlike many of the furniture stores in northwest Santa Rosa, Pedersen's and Old Town have benefited from being located in busy downtown areas.

The low rents along Piner Road were what attracted Hewitt to the area in 1976, when he started in a 3,000-square-foot space. Unfinished furniture was all the rage then, and two other such stores opened in the area around the same time, he said.

But Bare Woods thrived, growing rapidly as it fed a growing demand for inexpensive wood furniture that many people enjoyed finishing themselves.

"I got on the right float in the right parade. We were profitable from the very beginning," Hewitt said.

The Santa Rosa location eventually grew to nearly 30,000 square feet, adding finished furniture and custom finishing services along the way. But the price difference between finished and unfinished furniture narrowed over the years, especially when furniture made in China and other Asian nations began to flood the U.S. market.

Big-box retailers such as Costco, Target and Wal--Mart have all begun carrying imported furniture as well, making competition for the low end of the market fierce.

The high cost of workers compensation insurance in California hasn't helped, either, and in 2004, Hewitt sold the Napa store to its employees.

When he realized earlier this year that the housing slump was only getting worse, the 59-year-old Hewitt realized he had to take action. He initially planned to close the Petaluma location, but that store has two more years on its lease, so he decided to close Santa Rosa instead.

While he's not sure what will ultimately happen to the Petaluma store, Hewitt doesn't have high hopes for his business model.

In the future, the lower end of the furniture market will be dominated by manufacturer-retailer hybrids such as IKEA and Ashley Furniture, which opened a superstore in Rohnert Park last year, Hewitt said.

Meanwhile, niche markets for high-end, customized furniture will thrive because wealthy people will always seek unique pieces, he said.

This will leave many retailers in the middle squeezed.

In a way, Hewitt says it's a relief. He has had five days off a year as long as he can remember, and now he's looking forward to just kicking back and watching some football for a change.

"I had a great run," Hewitt said. "I'm tired."

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.


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