According to a Credit Suisse report, ALL retailers are failing in record numbers. It is projected that 8,640 will close. This is up 40% from its peak in 2008. We will leave this discussion for the October issue on State of the Industry, but will say that ecommerce alone is not causing this Armageddon.
The internet can be the solution to survival for the independent furniture retailer. The major concern today is the absence of traffic that is coming through the door. Instead of defining this as a problem, the retailer needs to embrace the fact that the consumer coming through the door is more informed about what they want and have selected your store as one of the two they have chosen to provide a home furnishing solution. Without a doubt the traffic is down. Statistically, the close rate should be 50% if your performance is average. This is adjusted down for consumers that do not purchase anywhere. It should be in the high 30%. However, the traffic that arrives at your door is ready for you to provide that home furnishings solution.
For retailers their website is the first touch point for the consumer and their store. Even if your store is not first shopped (49%), ultimately it is an influencer on 72% of all consumers that buy. Your website cannot be one and done, but a continuous process of improvement.
As a retailer does with the brick and mortar store when walking the floor critically assessing how to make the merchandise more appealing, questioning retail sales associates’ product knowledge, and evaluating their readiness to assist the consumer, all of these must also be done on the retailer’s website.
Today, the retailer embraces digital. However, is it merely lip service and dollars spent for results? There are many digital vendors willing to provide the magic solution to drive traffic to your store and entice them while they are visiting. The retailer must take a critical look at what is being communicated to prospective consumers via email blasts and presentation on the site. What happens in the digital world should match what happens in the store. Let’s go forward and understand the buying process as it relates to the internet and how to measure digital success.
From a consumer’s perspective, computers and their hand maiden, the internet, have moved beyond business applications and become essential to daily existence. With the coming of voice commands integrated with artificial intelligence (AI), the prospect of “pepper,” the human-shaped robot designed to be the humanoid companion is not beyond belief.
We are still years away from the time when all of our needs will be dutifully performed by a machine that understands our every taste level. For now let’s understand the consumer’s perception of shopping for furniture on the internet.
In terms of marketing, the first promise of the digital evolution was that the consumer could pursue product information on his or her schedule and not be the target of mass marketing’s continuous bombardment with enticements to purchase. While there is now an abundance of information on the internet for any product, the consumer is still targeted constantly with an estimated 360 impressions daily. With all of this noise it is understandable how one could conclude that the demise of brick-and-mortar retail is inevitable.
While it is painfully obvious that retail stores ARE closing (think HH Gregg and Sports Authority, for example), only a portion of that lost volume can be attributed to the explosion of e-commerce. The truth is that the overzealous opening of new stores was beyond the justifiable increase in demand. Fortunately, furniture retailers, either because of prudence or the lack of capital, did not enter this frenzy of store count expansion. Just as the dotcom bubble tried to translate “eyeballs” to revenue, the concept of more locations in a single market did not directly translate to increased revenue. Now the piper must be paid.
What about the impact of the internet on the furniture consumer? Let’s follow this step by step through the buying process. For a brick-and-mortar store the fear is that the consumer will go on the internet to research furniture and will purchase from someone else. The internet is a given for the consumer to accomplish the research, and consumers simply do not have the time to visit the five to six stores that they did a decade ago.
No matter where the consumer ultimately purchases, the first step (54%) for the majority is to visit the internet before visiting the stores. Graphic A illustrates the sequence steps for the consumer in his or her buying process.
Steps In Buying Process – A
It should be noted that for a significant percentage of consumers (40%) the initial step is still to visit a store before going to the internet for research.
Let’s put a perspective on the fear of e-commerce for the brick-and-mortar retailer. Currently only 11.65% of purchases (not dollars) is made on the internet. Table B breaks down purchases by retail channel.
Type of Retailer Purchased From – B
Let’s understand the buying process beginning with the impact that internet advertising has on the furniture consumer. The internet and, specifically the web presence and e-mail, are indicated by 37.5% of the consumers as the most influential advertising media on the intention to purchase furniture. This percentage is more than double that of other advertising media as seen in Graphic C.
Media - Pie Chart – C
This influence is not to be confused with social networks such as Facebook, Pinterest, etc., which have a number one position for only 8.5% of consumers who purchased furniture. The challenge for retailers is to translate that consumer traffic to the website into traffic into the store.
Furniture is not a commodity product, at least not yet. Less than 30% of consumers consider their furniture purchase as “a practical purchase that meets my basic needs.” The majority of consumers believe their home furnishings must communicate “who I am” and reflect a sense of current style.
Table D illustrates the consumer’s attitude toward decorating and home furnishings.
Significantly, the number of consumers who ultimately purchased on the internet exceeds the number who purchased in other distribution channels in both the “practical” and “style” attitudes, and only scored less with the consumer who was interested in projecting the image of success.
Today’s consumer is very interested in buying furniture, with over 68% either thinking about a purchase or has already begun the shopping process. The remaining consumers are actively shopping or have purchased. As can be seen in Table E, those who are actively shopping are predominately online purchasers or those who have purchased from brick-and-mortar retailers.
Stage of Shopping – Table E
As would be expected, the female most frequently initiates the first mention of the need or desire for new furniture. No matter if it is an individual or a partnership, with 49% being female or 21% with spousal partners, the ratio is 3 to 1 female. However, when compared to historical research, it represents a significant change from the 8 to 1 female-to-male radio in the 80’s. The information is presented in Graphic F.
However, as seen in Graphic F, the ratio for the internet purchaser increases to 3 to 1 for the female furniture consumers. Unlike other consumer online purchasers, the female has embraced the e-commerce distribution channel.
It is interesting to note that, on average, the internet purchasers shopped more retailers than the brick-and-mortar purchasers. Additional research will be required to understand better the reason for this. Was it to confirm both price and quality before making the leap to purchase online?
A common belief is that the internet purchaser does so because he or she doesn’t want to drive to a distant store. However, the research shows that the consumer who purchases on the internet is as willing to drive to shop for furniture.
Graphic I How Long Did You Shop Before Making a Purchase?
The major perception is that the internet purchaser comes to a decision faster than the brick and mortar consumer. The fact is that 29% of internet purchasers shop longer than one month as compared to 21% for the brick-and-mortar customers. We believe this is connected to the internet purchaser that is driven by selection.
Graphic J How Was Your Last Furniture Buying Experience?
Fortunately for brick-and-mortar retailers, the internet purchase rated their experience 6 or 7, with 7 being rated excellent only 53% of the time as compared to 58% of the time for the brick-and-mortar retailer. As can be seen from the graphic, the internet tended to be more exuberant with 40% being excellent. Are they trying to convince themselves of their decision?
Graphic K Specifically, Experience by Area
As seen from the graphic, brick-and-mortar consumers give the highest ranking (7) for courtesy of store personnel (41.6 %), product knowledge, (33.8 %) and product display (33.9%), but rank almost evenly with ease of shopping and product selection. There is still an advantage to being able to talk with knowledgeable sales associates and to experience a great visual display.
In summary, the Internet purchaser is a fact of life. The challenge for brick-and-mortar retailers is to make their advantages known to the consumer. Today’s drive in ecommerce is virtual reality to assist the consumer in making product decisions. Will it ever replace a competent retail sales associate?
Without a doubt, the internet has brought about a change much like that of the Industrial Revolution, which moved our society from agrarian to urban in the span of two generations. But what has the internet done to our focus – furniture retailing?
During the past decade, furniture retailers have developed an Alternative Universe. Do not panic! We are not spinning off into science fiction and losing our touch on reality. The advent of the internet forced the furniture retailer to create a virtual store where 72% of all furniture purchasers visit before making a purchase. The furniture retailer had little choice but to establish a web presence. In the early days, some were no more than an expanded “yellow pages,” which were produced by the retailer’s high school-age nephew.
Now, retail sites have expanded from placeholders with the address, brands carried, and store hours to expansive catalogs of every product made by every supplier carried in the retailer’s store. The concept of “the endless aisle,” while important in other industries, lacks importance in the furniture industry. For the furniture retailer, the average time on a site is less than five minutes (for non-ecommerce sites).
The website was envisioned by the early adopters as a way to reduce the cost of advertising. The idea of having consumers visit a website to preview the merchandise when they are ready to purchase furniture, which cost the retailer a fraction of what newsprint and television cost was exciting.
What has transpired is internet research has reduced the number of stores shopped, which has resulted in the industry standard of measure cost per up to increase. Currently, the cost per up average for all retailers is about $14, but can range from $12 to $40 depending upon the size of the retailer. The accompanying graphic illustrates.
In truth, more retailers have not totally embraced the digital advertising strategy and still spend less than one-half percent of sales on internet advertising. The subsequent table presents the expenditure by type of advertising currently.
The question is why continue the older medium and not entirely embrace digital? The fact is, with the current furniture buying consumer, digital has not been as effective as the more established television/print.
For sure, the future, with the approaching millennials, digital will be more effective. Television viewing and newspaper readership are declining. Direct mail, especially targeted demographically/psychographically, with content tailored to the recipient, holds great promise.
A great question for furniture retailers is what is the purpose of their site? If not for e-commerce, what is its objective? For this discussion, let’s put e-commerce to the side.
Most sites today have emerged as super catalogs, which present all products merchandised by the retailer, along with all products sold by their vendors. While this addresses the much touted “endless aisle” that many experts believe the consumer wants, it also challenges the fact that consumers spend less than three minutes on a non-e-commerce site. The graphic illustrates.
It is frustrating for a retailer to create a virtual store in which 72% of his customers may visit, but leave for the most part anonymous. Is this different from most advertising, either by direct mail or television? We should take as a positive the consumer spent more than three minutes previewing your store, the merchandise you carry, and the services you provide.
When designing your website, it is helpful to conceptualize it as a store. Your store design has been perfected over many years and has been effective in guiding your customer through the process of creating a beautiful room. The table presents areas of comparison.
There is nothing like the first impression, whether it be in your store or on your website. The first twenty feet of the store, often referred to as the Landing Zone, sets the expectation for the consumer as to what awaits them. Outstanding visual display of new products, service commitments, and special sales usually greet the consumer at the door. The Home Page of the website is the comparable element. The typical furniture retailer’s website has incorporated slides to present new product – a good solution to establish the style/quality of the merchandise you carry.
Unfortunately, this first impression can deteriorate over time into a haphazard collection of messages and promotions all screaming for attention. Would you let your vendors plaster signs over the windows of your store? Who is the editor of first impressions?
In your store, the important first step is to engage. Tailored to the vision of the store, whether a receptionist or the next salesperson in a rotation, it should be welcoming. The measure of your success on your website is the bounce rate at the home page. Best practices in the industry is an 18%-20% bounce rate for the home page and 20%-40% for the overall website.
There are many variables that impact these statistics, such as the percentage of mobile traffic, Facebook traffic, etc. The key is to measure your site continuously and understand the reason for any changes. The graphic illustrates the weekly monitoring.
Recently, the industry has seen heavy use of a “Pristil,” which is a fancy word for the intrusion of the consumers visit, enticing them to enter a drawing or to provide an email address for future mailings. While this service results in 3% to 5% of consumers doing so, the impact on bounce rate and the quality of the lead has not been accessed.
The next element in the store is for the retail sales associate to establish rapport with the consumer and to better understand what they are looking to purchase – needs assessment. This is a major challenge for the virtual store. While the search engine has been perfected over the past decade, the consumer has a difficult time in communicating what they have in mind. In fact, in our on-going research, when we ask a consumer why they did not purchase from a retailer, a typical response is “could not find what they were looking for” (30%-40%). This is for well-managed retailers. How would internet consumers respond?
The next step is the product presentation. The typical interaction with the retail sales associate and the consumer on the floor is 35-45 minutes. Of that time, about half is involved with the product presentation. A seasoned salesperson would have narrowed the choices for the consumer to 3 or 4 of the most probable selections, along with a step up and step down in price. With each of these choices, there’s a features and benefits story, as well. While a product spec sheet has the same information, it can’t be presented in such a way as to narrow down to a decision.
The final steps of handling objections and closing the sale are best done in person. While “chat” provides an alternative, with over 50% of all e-commerce involved in “chats,” it is difficult to engage the non-ecommerce consumer on-line. The application is inexpensive, but requires a dedicated person to handle all chats.
Obviously, all sites have an “inquiry” function that generates about 1% of unique traffic. The inquiries must be handled within an hour to produce results.
The key to success is to monitor your site and to investigate any changes. While Google Analytics provides a mountain of statistics, focusing on the important ones and relating them to your operation is essential.
We believe the following are important.
Tracking your unique visitors against the purchasers in your price point will provided a perspective of the effectiveness of your advertising, both print and digital. Comparing your visitors to the “ups” in your store is critical. The difference between the traffic to your site compared to your store is the most revealing. While the consumer only “shops” two stores, they visit five to six on average on the internet. If a retailer can achieve a 1:3 ratio, it is outstanding.
The goal is to minimize the clicks for the consumer from the home page to the product in which he or she shows interest. The industry average is 4-5 pages. Understanding how your web design impacts your pages visited is critical.
The industry average of 3-4 minutes on the site confirms the consumer is just previewing your store and not seriously making a decision.
Understanding the different sources of traffic to your site will better allow the retailer to incorporate his website into his overall marketing plan.
Most sites today have been designed for mobile devices. Obviously, the percentage of mobile usage impacts other statistics.
While research shows social media is not very effective in influencing the consumer’s intent to purchase home furnishings, it is very effective in building brand.
The website is an important part of a furniture retailer’s marketing strategy. Creating a positive experience on the website will influence the percentage of time the consumer visits the store to consider a purchase.
For Wichita Furniture founder Jay Storey, the choice was clear. In fact, there really was no choice.
Traffic at his 59,000-square-foot store in Wichita, Kan., was falling fast with no bottom in sight. If he didn’t make a radical change soon, the business he started in 1989 with $5,000 in borrowed money wouldn’t be around much longer.
The only choice was to swallow hard and go digital. That meant replacing a website that contained barely more than the store hours and directions with a full-fledged transactional e-commerce website. And never looking back.
“The revolution is over and the customer has won,” he said, borrowing a quote from a retail pundit whose name has been forgotten. “They are going digital. It’s done. It’s over. We can either get on board with it or we’re done.”
And since he took that leap of faith a little more than two years ago – with a lot of encouragement from his Millennial son, Jordan, the company’s marketing and e-commerce director – the hyper-growth in sales generated by the website has more than offset the decline in store traffic.
Website traffic, in fact, increased more than 50% in 2016, and the company now routinely delivers more than 3,000 pieces of furniture a week.
“Our brick-and-mortar traffic has continued to decrease, but our web traffic has exponentially picked up where the brick-and-mortar traffic has left off,” said Jordan.
Jay Storey said driving that website traffic meant taking another leap of faith by moving a sizeable chunk of marketing and advertising dollars away from traditional broadcast and print ads and into digital marketing.
Today, about 30% of the marketing budget is set aside for digital, and he said the company has been especially successful using Google AdWords, which allows a company to “buy” specific search words. In turn, that gives the user the ability to know who is using Google to search for, say, a recliner, or is visiting websites that include information about recliners.
“One of the beauties of Google is that we’re now able to have that rifle approach where we can target our audience way more than we can from a traditional media standpoint,” said Jordan Storey. “With Google analytics, you can really go into one-on-one marketing.”
And that one-on-one marketing, for example, can result in a Wichita Furniture ad appearing on a non-furniture website when that consumer who was searching for information on recliners moves onto something else on the Web.
“It would probably scare you to know how far Google can take you into their audience,” quipped Jordan Storey. “The truth of the matter is we know who is looking at what, when they’re looking, and where they’re at. And therefore, you have the opportunity to reach them.”
Or as his father puts it, “With Google, you have the ability to find the person with a need, versus spraying (your advertising message) out there and praying that it works.”
Jordan said he especially likes the ability to target specific age groups or other demographic profiles. He said such targeting is typically not possible with traditional media because demographic data is often outdated.
“But digital data is real time. And you can change it immediately if you need to,” he said.
And while Wichita Furniture does ship furniture nationwide – usually smaller parcels that are sent via UPS or FedEx – the Storeys said the biggest benefit of the robust e-commerce platform is the product knowledge it provides consumers, noting the clear majority of them do extensive online research before deciding what store to visit.
“It’s the online education that gets them to transact in your store,” said Jay Storey. “They’re not going to transact as much online because they want to come in and touch it and feel it. But when they walk through the door, they will hold their phone up and say, ‘I want to see this item’.”
Although he wouldn’t disclose specific numbers, Jordan Storey said the improved website has significantly boosted close rates even as traffic has fallen. That has kept retail sales associates fully engaged, knowing that many customers walk through the door ready to buy – and they may walk in with as much product knowledge as the staff.
“It has helped our metrics across the board … close ratios, average tickets, sales per guest, and so on,” Jordan said of the website. “We clearly have a more educated consumer.”
And his once old-school, furniture industry-veteran father knows there is no turning back. He says there is no question that going digital is a huge leap of faith that requires a large investment of time and money, but it’s a necessity rather than a luxury.
“You never will fully grasp the digital world because it changes to fast,” Jay Storey said. “You have to pick and choose where you’re going to go and be the best and what you do. You cannot just be OK at everything.”
Despite the dramatic decline in the percent of Americans moving and changing residences over the last 60+ years, the patterns of mobility have shifted much less than might be expected. Once a country on the move, mobility reached a historical low from 2015 to 2016 with only 11.2 percent of the population moving to a different home or apartment. This compares to a 1948 peak of 20.3 percent.
After detailing the “who” and “why” in two previous articles on Mobility in America, the current issue explores “where” people are moving. Are more movers simply relocating to a nearby apartment or home? Is there migration into the cities from the suburbs? Are some more people moving to sunshine states? (Sources: U.S. Census Bureau, Current Population Survey: (1) 2016 Annual Social and Economic Supplement and (2) Annual Geographical Mobility Rates 1948 to 2016)
Mobility by Year
While the percent of Americans moving has changed overtime, how far away they tend to move has not. Looking at the last 28 years, in 1987, 17.8 percent of the population moved compared the 11.2 percent from 2015 to 2016. Since that time, a slightly higher percentage of movers are moving to a different county within the same state – an increase from 18.3 percent (1987) to 21.3 percent (2016). Meanwhile, while fewer movers are relocating to a different state – down from 16.7 percent to 13.6 percent. (Table A)
Both long distance and shorter nearby moves have fallen by similar rates over the past 60+ years. Between 2015 and 2016, 61.6 percent of all movers relocated within the same county compared to 67 percent in 1948. As shown in Table B, as a percent of the total population, just 6.9 percent of Americans made shorter moves last year within the same county, down from 13.6 percent in 1948. Different county and out of state moves dropped to just 3.9 percent of the total population in 2016.
As expected, metro areas have the most movers by far, with 64 percent of movers electing to stay within the same metropolitan area (Table D). At 16.7 percent, the next highest group of movers traded one metro area for another metro area between 2015 and 2016, while 9.3 percent of movers continued to reside in a nonmetro location.
Despite the perception that inner cities are increasing in desirability the data reflects differently (Table E). Actually a yearly average of 1.5 million movers have left Principal Metropolitan cities (urban areas) since 1985 while Metropolitan suburbs keep growing – increasing by an average of 2.9 million movers a year.
When it comes to the distance a homeowner moves versus a renter, what might be surprising to some is that the geographical mobility patterns among both renters and owners are very similar as depicted in Table F. At 60.7 percent owner-occupied units and 61.7 percent renter-occupied, the vast majority of movers in both housing types moved within the same county from 2015 to 2016. A higher percentage of homeowners moved to a different county within the same state (25.2 percent) versus 19.7 percent of movers that rented in the same year. Not surprisingly, movers from abroad account for a higher percentage of renter-occupied units (4.9 percent) rather than owner-occupied units (1.9 percent).
Overall the sunshine states in the South and West had the most movers from 2015 to 2016. The South had the highest flow of people in and out of the region with Inmigrants and Outmigrants both over 900,000 people. (See definitions below.) At 247,000 persons, the West had the most Net Internal Migration, with the South leading the way in total Net Migration (including movers from abroad) (Table G).
Table H shows the Net Internal Migration of movers (current residents moving within the country) over the last five years. Between 2012 and 2015, the South had on average the greatest net increase in population from movers each year. However in 2015-2016, the West took over adding 247,000 additional people compared to 39,000 for the South. The Net Internal Migration in the Northeast and Midwest has been either null or negative for many years with more people leaving than moving in.
Movers from abroad relocate into all regions of the country (Table I). However, the South has been the greatest beneficiary over the last five years but with 497,000 movers from 2015 to 2016.
Although Net Internal Migration in the Northeast and Midwest has been null or negative over the last few years, the influx of movers from abroad over the last three years has increased their populations. Meanwhile, the South and West are still holding the most appeal for mobility.
No, we’re not talking about indoor upholstered furniture – although we could be. Those same ingredients are also the keys to selling outdoor furniture – a category that’s embarking on another selling season poised for growth amid expanding distribution channels and continuing product innovation.
After all, what’s not to like about a relaxing summer evening enjoying steaks hot off the grill and your favorite beverages with family and friends? And what better place to do it than the outdoor space at your own home?
“If you care about how your house looks on the inside, it’s natural to care about the outside,” said Lyle Ecoff, director of outdoor products at Emerald Home Furnishings. “It’s the place where relaxation and memories occur.”
And in the view of Ecoff and other executives in the category, those things can’t be fully achieved without comfortable outdoor seating, a dining table or two, and perhaps an umbrella or fire pit.
“It’s great to be comfortable in cool outdoor furniture. It’s what drives out business,” Ecoff said. “The consumer is lucky because there is more great product out there than ever before.”
Ecoff might have added that retailers also are fortunate because there are more outdoor furniture resources than ever before. Well-established indoor furniture vendors such as Lexington, Klaussner, Century, Emerald, A.R.T., Zuo Modern, and most recently Ashley, have added outdoor furniture in recent years, and that list is likely to grow.
Not surprisingly, those well-established indoor vendors have had their greatest success selling outdoor furniture through furniture stores – a distribution channel many casual furniture specialists have had difficulty penetrating. The indoor vendors have a built-in advantage because they’ve already established relationships with key furniture stores around the country, and they often use the same sales force as their indoor line.
“If nothing else, it raises the profile of the category,” said Gary McCray, president of Klaussner Outdoor. “And the business doesn’t have to be as complicated as it was in years past. It’s becoming an easier business for retailers.”
McCray was one of several executives who said Ashley’s recent entry would raise the profile even more because of the company’s extensive retail distribution network.
“They’re going to drive furniture stores into the category – and not just theirs,” McCray said. “Stores that aren’t in the category now will have to consider it.”
A survey by Impact Consulting Services, parent company of Home Furnishings Business, showed that a plurality of consumers who recently purchased outdoor furniture (30.8%) said it was purchased at a mass merchant such as Wal-Mart or Target. Another 23.1% said they used a home improvement store such as Lowe’s or Home Depot, and 18% said the purchase was made at an outdoor furniture specialty store.
Traditional furniture stores were mentioned the least (10.3%) of the five available options, even losing out to the internet, which is where 18% of respondents made their purchase.
To outdoor furniture veterans such as McCray and Ecoff, that relatively poor showing by furniture stores screams opportunity – primarily by selling outdoor to their existing customers
“If you’re not in the category, it’s certainly something you need to look at,” said Ecoff. “How do you not leverage your current customer base? You spent a lot of time and effort converting an indoor sale, so you now have a customer that trusts you and wants to do business with you.”
The survey indicated plenty of purchase opportunities are available, especially for consumers willing to spend $1,000 or more for an outdoor furniture purchase. It showed that a whopping 71.8% spent $999 or less, but just 20.5% spent $2,000 or more. And less than 10% were between $1,000 and $1,999.
Reflecting the concentration of purchases below $1,000, some 41% said the furniture they purchased was metal, while 35.9% said it was wicker, 12.8% said wood, and 10.3% bought plastic.
Among other survey findings, nearly two-thirds (61.5%) said they bought outdoor furniture because they were replacing or adding to existing outdoor furniture, while 18% said they had recently moved to a new house with a deck or patio, and 23.1% said they had recently added a deck or patio.
Plastic, which manufacturers prefer to call resin or polymer, appears to be one of the faster-growing outdoor furniture materials, thanks to the recent popularity of synthetic wood and wicker products that require far less maintenance than traditional wood or wicker.
McCray noted that a collection of synthetic teak products rolled out last year by Klaussner was one of the stars of the just-concluded 2017 selling season.
“It did really well this year, and based on the initial orders we’re getting for placement next year, it looks like it’s going to grow dramatically as we go forward,” McCray said.
At high-end producer Century, the star of the most recent season was a lineup of outdoor upholstery pieces that mirrored some of the company’s best-selling indoor seating. Haynes King, director of outdoor products, said the company re-engineered the indoor pieces by, among other things, switching to marine grade frames, using stainless steel staples (which don’t rust), and using plastic to reinforce the corners of the frame. That’s in addition to switching to outdoor performance fabrics designed to withstand just about any type of weather.
“People are starting to treat and decorate the outdoor space more like an indoor room,” King said. “So we created a collection of outdoor upholstery using popular styles from indoor upholstery. We’ve been pleasantly surprised just how quickly it has ramped up.”
The company was so pleased that an extensive collection by designer Thomas O’Brien being introduced in October will include the designer’s first-ever outdoor pieces.
King said the ability to blend indoor and outdoor is one of the many innovations that are driving the category – an observation echoed by McCray, who has been merchandising and selling outdoor furniture for more than three decades.
“Unlike the indoor side, there is just so much push to do new and innovative things (in outdoor),” said McCray, noting that innovations in fabric and cushion construction head the list.
However, McCray may be most excited about an innovation Klaussner quietly introduced at the most recent Las Vegas Market – power motion.
He says the lineup currently includes the industry’s first power lounge chair and power chaise, and based on the success of power motion in indoor furniture, he’s looking for big things from power outdoor motion.
“It’s a natural for outdoor. It turns a chair into a chaise,” McCray said.
He said all the chair’s electrical components are sealed and the mechanism is powder coated. The unit is powered by a lithium ion battery that can easily be removed and taken indoors for recharging, but a full charge should last 200 to 300 cycles. (A cycle is opening and closing the mechanism one time.)
“We’re pretty excited about this,” he said. “For us, it’s all about comfort and innovation. You’ve got to be able to do that.”
The goal is to make our readers aware of what is available, so they will be better able to make educated decisions about what new technology, systems and processes they may want to buy, upgrade to or adopt. However, as we all know, change can be expensive, scary and disruptive. As a result, many people and companies resist it as long as they can, putting off the pain, so to speak.
Our industry has traditionally been somewhat slow to adopt new ideas and technologies. I remember how revolutionary the fax machine was when it first came out. The first ones were clunky, messy and did not always work properly, but eventually they became must have tools in all businesses. It took many of the furniture stores I knew a few years to install their first one. It was often the manufacturers that forced them to do it so they could get orders entered and communicate about service issues.
Things are a bit different for us today. The industry has embraced many new tools and ways to do things, with the internet being the major game changer over the past decade or so. It now seems that we are not replacing as much as we are upgrading or enhancing. Every week there are upgrades on my PC, iPhone and iPad. Systems, processes, apps and devices are no longer completely “new” they just continue to evolve. How we use the internet has been a key factor in that evolution, indeed it has changed how we must do business.
Unlike much of the last century though, it is not the manufacturers and suppliers pushing retailers to change. Today it is the need to better serve the customer that drives innovation and thus change for all consumer product industries. Why has this happened and what does it mean for us as business people? Let’s take a big picture look at the marketplace dynamics that have caused this to happen and perhaps gain some insight into how we might improve our planning process for the changes we face.
I once attended a presentation by renowned marketing wiz Rodger Blackwell that included a history of our marketplace economy in the U.S. In simple terms, he stated that much like the rest of the world, we began with the well-known “supply and demand model”, where the manufacturers made what they thought the consumers wanted and that is basically all that was available. Henry Ford’s famous statement about the Model T pretty much sums up that situation: “you can have it in any color you want as long as it is black”. So initially our economy was mainly supply driven, with the maker of the products running the show for the most part. During much of the first half of the last century, most consumers purchased from traveling sales people, small local stores or factory direct and large catalog mail-order houses.
In the middle of the 20th century, as our economy began to grow by leaps and bounds, it evolved and a third entity joined the mix. Larger brick and mortar retailers like Sears, Wards, and Penny’s began opening stores across America, even in small towns. Professor Blackwell called this third element “distribution” since it got the products from the manufacturer to the end consumer. Now we had a “supply – distribution – demand” economic marketplace. As the distribution segment grew, these major retailers also began to dictate to the manufacturers what they wanted to buy for their customers. So, for most of the latter half of the century, distribution became the dominant segment of our economy, telling the producers what to make and the consumers what they could buy.
Then as we all know, we hit the 90’s and the “consumer revolution” took hold. This is where the power shifted full circle to the place it should have always been. Smart retailers and manufacturers actually began asking consumers what they wanted and doing research to make sure the products they made were right for their target audience. By the time we made it into the 21st Century, the tide had turned and the demand segment of our economy became the dominant player. As stated, this is the way it should have always been. However, a lot of things had to happen to get us there, not the least of which were the many improvements in communication technology, the advances in data processing and our ability to conduct accurate and timely research about consumer needs, wants and desires.
Now the consumer is telling both the retailer and manufacturer what they want, when they want it and how much they are willing to pay for it. Supply and distribution must listen and react to what demand is telling them or they will fail. The history of retail is littered with dead companies that did not change with the times and continued to do things the way they wanted to do them. It was not just the wrong products that killed them. It could have been any aspect of the consumer shopping and/or buying experience. Big boxes dominated for decades and now struggle against smaller, more nimble boutique stores. Regional and even local tastes vary and product or services offered must reflect what the customers in each market are looking for or sales will fall.
Not only do we deal with all this but also the fact that nothing stays the same for very long now. It seems that just when we think we have it all figured out, things change on us. Trends, fads and even brands come and go with the wind lately. Stores like The Limited and others that were at the top of the heap are gone as the consumers’ tastes shift. Big destination indoor malls have struggled while large outdoor Outlet Centers have flourished. It is even possible that there are more food and beverages sold in gas stations today than in grocery stores. This all supports that old adage, “change or die”!
Innovation usually involves changing something. Just like every new product is not right for every customer, not all new ideas, systems or processes are right for every business. The biggest problem is deciding what needs to change and how to how to adjust in the best way possible for your company. There are no easy answers, but if the above history of our market driven economy tells us anything, it is that the consumer is king. They are the ones we aim to please, so whenever we consider improving or changing what we do, the first questions we must answer are: What does this do for our customers? How does it make their experience with us better? What impact will this new change have on the most important person in our business?
This might sound a bit simple or maybe even naive, but I have found time and again that business people, myself included, often get so wrapped up in a project that we lose sight of what it does or does not do for the process of connecting to people and helping them create beautiful and comfortable rooms/homes in which they are happy to live. The biggest distraction is often getting buried in the numbers related to how much time and money it will save or how much easier it will make it to do something within the organization. Don’t get me wrong, that is a huge reason to make changes! The only thing I am saying is that before we create a business impact statement, we need to first create a customer impact statement. Make certain that the outcome is not only good for your business but that it also enhances your ability to serve your customers the way they want to be served.
Just step back and have everyone involved take a look at what you want to do from the viewpoint of your consumer. This means that in most cases your sales and service staff needs to be involved since they are the ones that have the most direct contact with the public. I recommend that within reason, each innovation you want to pursue goes through a review process that involves staff members from all areas of the company and when possible, perhaps even some of your loyal customers. Take their feedback to heart before you finalize your decision, then have your new “innovation committee” help you develop your implementation strategy and plan. That way you will not end up with a bunch of big bad surprises when you roll out the “next big thing”.
You might read this and think I am out a little on the fringe here, but I am really not. If you were to survey the top 100 most respected consumer product companies, I would bet that at least 90% - if not all of them - have some sort of cross departmental teams or committees that participate in the development and planning process for all major company initiatives and most of them will also include customers on their teams. It is senseless to innovate unless you know what you want the end result to be and who can tell you more about that than your customers?
So, what is today’s “fax machine” or the “thing” many of us have resisted accepting? This time it is not a device, it is a service that your customers want you to offer – online sales. Many of your potential customers want to avoid the traffic and hassle of driving to your store. They see what they want on your site and just want to buy it then and there, but many of us still make them call or visit us. I believe a lot of them will just find another company that lets them do what they want, just like they always have. Maybe it is time to “upgrade” your website and the above review/implementation process might be a good way to determine how to make online sales an important part of your business plan!