Tech Talk

June 24, 2014  by in Business Strategy, Industry   

Furniture retailing is a people business, and many store owners — especially in smaller operations — tend to rely on their gut to tell them whether business is good, bad or somewhere in between.

While instinct is often a reliable guide, cold, calculating technology can help separate fact from fiction and help grow your business.

This month, we’re talking to retailers about how they are putting technology to use in their stores—not only to help run the numbers, but to assist in training, process improvement and enhance the customer experience.

Josh Hudson is president of Hudson's Furniture, based in Sanford, Fla. As Hudson’s almost doubled in size from nine to 17 stores, technology became even more important in managing the business—and Hudson brought a younger generation’s techno-savvy as he rose to leadership in the family business.

“Technology is such a critical part of increasing your effectiveness and staying on top of things,” he said. “I wasn’t (implementing) it to make things more complicated—it makes it so much simpler to manage the business and clarify goals.”

Simplifying access to the technology itself helped.

“We went to a cloud-based system, and we’re in the process of taking our (point of sale) to the cloud,” Hudson said. “Everyone should be able to access everything through the Web. Making it Web-based makes it so much simpler.”

In addition to serving as company president, Hudson also heads up the stores' information technology: “That’s how important it is.”

IMPROVING CUSTOMER EXPERIENCE San Diego-based Jerome’s Furniture is taking advantage of the proliferation of Web-friendly mobile technology to make shopping more convenient—wherever the customer’s touch point lies.

“We are working on providing access to Jerome’s wherever customers want to interact—their mobile phone, tablet, the Web,” said COO Phil Kenney. “They can now create online shopping lists, so when they come into the store, our associates can recall that information with the customer. We’re rolling out tablets to our sales team so they can pull that shopping list for them.

“The key here is that we’re centralizing all the data, because we look at it as a continuous shopping experience.”

Jerome’s started out by improving the customer’s ability to quickly get to the product she wants on the Web site.

“When we did that, our Web sales increased 10 to 15 percent,” Kenney said. “The next piece was that we wanted the customer to be able to create a shopping list on the Web site. When people come into a store with a list, those turn into orders two to two-and-a-half times the size of our average order.

Jerome's also uses e-mail, geo-targeting and in-store Wi-Fi to reach online customers.

“If they have their tablet or mobile and want to do their own research on the products they see,” Kenney said, “we say go for it.”

TRAFFIC SIGNALS Hudson’s tracks key performance indicators on all aspects of its business — including sales, inventory, profitability marketing, staffing and traffic count data.

Hudson’s uses the Flonomics traffic counting system to identify sales opportunities.

“Everything else we track — profit, inventory, marketing — shows how well we’re maximizing those opportunities,” Hudson said.

Using traffic data, instead of sales data, to determine staffing needs, has led Hudson's to a better shopping experience for clients and higher revenue per store.

“We guarantee every sales associate to have 140 customers a month,” Hudson said. “Better staffing allowed us to improve our customer experience.

“We use secret shoppers, and when we have a negative experience, it’s always some variable on, ‘I didn’t have the time to serve the customer and go through the steps you want me to cover with them.’”

Plotting traffic also helps manage store performance, he said.

“We found the No. 1 store we have (showed) double the sales performance of our lowest store—and in a much worse demographic area,” he said. “When you start measuring, it shows where you can improve.”

As a furniture retailer expands from one or two stores to three or more, the owner who might have eyed a lot of information in a single location can’t be in all the stores every day. Accurately counting information about sales, ratio measurements and traffic gets more difficult.

“At that point, gut instinct isn’t enough,” said Flonomics CEO Charles Von Thun.

Are you staffing according to sales peaks or traffic peaks? If you're staffing based on sales, you might be missing opportunities, and that’s why a number of retailers are using traffic-counting technology such as Flonomics.

“The idea is that furniture retailers have an experience they want every person walking through their door to enjoy,” Von Thun said. “There needs to be enough people with the right training and experience on the floor to deliver that brand experience.

“What we see with our furniture clients is that, historically, most don’t have traffic counting in place, or the data they do generate isn’t available quickly enough.”

That leads to staffing by sales instead of actual traffic, which has a couple of effects.

“First, they don’t know what they might be missing” in terms of lost sales due to inadequate service levels, Von Thun said. “Second, we asked for the typical length of the purchase experience, and a significant number said it’s more than an hour.

“If you open at 10 and have (a salesperson) coming in at 11, you might have lost an hour of sales experience with a customer.”

GET TO THE POINT Retailers also can use technology to develop customer relationships at the point of sale.

One key is capturing information. Not everyone makes a purchase on the first visit, so you need the ability to follow up. If they’re in your store, you know an opportunity exists.

“Fifty to 80 percent of people walking into a store walk out without buying,” said Kenney, Jerome’s COO. “Furniture is a big purchase—it’s the third-largest investment people make—and customers want to take their time and do research.

“We make sure our sales associates are, first, equipped with the tools to gather that information and, second, use an e-mail to follow up on the people they talk with and ideally get them to come back to the store” or make a purchase online.

Jerome’s also is investing in point-of-sale technology to enhance its “continuous shopping experience.”

“We have touch screens for credit applications now, and we’re moving to what we call assisted work stations around the store, so the customer doesn’t have to have a cashier to check out,” Kenney said. “Within a year, we’re going to make that tablet-based. We expect that to increase conversion rates.”

Meshing point of sale and point of purchase is another step Jerome’s is taking.

“That way the sales associate doesn’t need to leave the customer,” Kenney said. “We put technology in proximity to that customer’s purchase decision. We don’t … have them sit down and wait for a cashier to check them out, and we’ve seen an increase already in our conversion rates.

“The overriding thing with point of sale is that purchasing furniture—the research, the store visit, delivery—is a complicated process. You need to make technology available, but not intrusive.”

ONLINE POS As more and more retailers are selling furniture online, they can take a cue from some things e-commerce retail specialists are doing at this emerging point of sale.

Beyond Stores, a Davie, Fla.-based online retailer, credits a program called PriceWaiter for its 25.4 percent increase in sales and 22.8 percent increase in conversions over a three-month period—without cannibalizing existing revenue.

Beyond Stores has been using PriceWaiter—which allows a shopper to make an offer on items — since last summer. 

“When you’re on an individual product page, you can go through the regular checkout process (which includes a coupon for a discount), or access PriceWaiter on the ‘make an offer’ button and tell us what you’re willing to pay for this item,” said Mark Ginsberg, marketing director at Beyond Stores.

“You can leave specific comments. The shopper puts in an e-mail and password, and that enters the offer and starts a discussion.”

The best thing about the program, he said, is that it engages customers in a dialogue with the retailer.

“It brings back some of the personal relationship and conversation to online shopping,” Ginsberg said. “It can also be used as a price-matching system.”

Say a customer comments that she found the same item at a lower price on another Web site. Beyond Stores makes sure to verify the price on its own before responding.

“If we accept the offer right away, the customer purchases the item immediately,” Ginsberg said. “We want to provide high quality home furnishings at discount prices where we can, and this allows us to work with the customer and engage in dialogue.”

Beyond Stores also asks for a customer's ZIP code, which enables it to factor in delivery costs. 

“If they’re close by,” Ginsberg said, “it’s easier to push that discount over to the customers, and it helps the negotiating process.”

Another online retailer, Chattanooga, Tenn.-based Smart Furniture, uses PriceWaiter to sell high-ticket items — average retail price of around $700 — to price-sensitive consumers. The result of adding the PriceWaiter “Name Your Price” tool to its site was a 3 to 5 percent boost in conversions, and the average value of a PriceWaiter transaction increased to $1,100.

At 25 percent, PriceWaiter is Smart Furniture’s highest converting lead source — over catalog requests, newsletter sign-ups and e-mail campaigns.

Partnering up, Getting it Done:

Teaming up with a technology partner not as simple as flipping a switch.

The first step is to analyze what you need your system to do, and whether that system fits your business model.

“Every system says they’re easy to work with, but really they aren’t,” said Phil Kenney, COO of San Diego-based Jerome’s Furniture. “There’s a lot to learn. Jerome’s has 500 people, and if we make a change, that’s a very big job.”

Jerome’s uses a retail operating system from JDA Software Group.

“We’re trying to do some of our own things to tie around the operating system,” Kenney said. “One of the things we’re working on right now is to give the associates information about the customer, and about their performance, through business intelligence systems.

“You have to match your business model to that system, and make sure your model can run in that system. The system can’t dictate your business model—that’s what makes you unique. I think a lot of people forgot that for a while.”

The second step, Kenney said, is to assess the capabilities of both your technology and your operations team.

“Are you going to build on top of a system,” he said, “or rely solely on your vendor?”

Finally, you’ll have a lot of options to sift through. Be patient.

“There’s a lot of technology available,” Kenney said. “Work through your options, check who’s using it. This is very important.

“There’s a community of users around whatever you go with where you can get support.”

Cloud-based services such as Google Apps offer a lot of tools geared toward helping small businesses grow, said Josh Hudson, president of Sanford, Fla.-based Hudson’s Furniture. They also don’t cost as much as a lot of other options.

“You can get everyone on a common platform and move away from so many PC-based functions that drive up (the cost of) technology,” Hudson said. “A lot of the furniture-specific systems are going Web-based.”

IMPLEMENTATION ISSUES When implementing new technology, you can't just flip a switch and expect results.

Hudson's Furniture started using the Flonomics traffic-counting system three years ago.

“It’s been a push, with lots of one-on-one conversations,” Hudson said. “You have to explain why you’re doing it, and get buy-in from the team.”

Also, look before you leap.

“I don’t jump into anything without full research and testing,” Hudson said. “We started out with Flonomics at one store to see how it would work” before rolling it out to more locations.

Implementation of any technology requires a willingness to change, Flonomics CEO Charles Von Thun said.

If you’re used to having two or three people on the floor during the week and four or five on Saturday, real traffic numbers might indicate you need just one on Monday, but seven on Saturday.

“Once you get the right people on the floor at the right time … you can get a meaningful bump in conversions,” Von Thun said. “If your (conversion rate is) in the low 20s raising it a couple of points can mean a lot.”

Implementation has to come from the top. A manager or owner has to show buy-in to the new technology and follow through to make it stick with the sales team.

With Flonomics, Von Thun said, there’s a sequence to implementation.

“First, get the right people and number of staff on the floor at the right time,” he said. “Second, make sure they’re all delivering the experience you want. At that point you can start refining and fine-tuning — find where you can shave a couple of minutes off the process, use technology to improve the process.

“The last piece: We think this system works best when the numbers are out in the open. The sales manager should coach (the sales team) through it, say ‘Here’s an opportunity we missed.’”

It can take two to three months to get everyone up to speed.