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From Home Furnishing Business

Are You a Merchant?

By: Powell Slaughter

What Does Your Store Sell? Furniture, or Solutions That Meet Your Shoppers' Aspirations? 

Merchandising is an art. It’s also a vital function of a retail store’s profitability.

How well does a store blend eye-catching floor appeal with a product mix that brings dollars to the bottom line?

Home furnishings retailers can blend aesthetics with dollars and cents to boost the bottom line.

The execution of merchandising covers a broad range of disciplines including what stores display from a style and price point perspective to how it is displayed. The starting point is determining how much of the selling space is allocated to a product category.

The accompanying graphic shows FurnitureCore participants’ floor allotments through this year’s first quarter, excluding bedding. The point is, analytics will never make a poor merchant great, but they can allow an average merchant to approach that threshold.

 

UPHOLSTERY RULES IN FURNITURE 

At stores reporting to FurnitureCore, upholstery accounts for more than 51 percent of furniture sales; case goods almost 42 percent; and occasional, almost 9.5 percent. Accessories and outdoor furniture have 3.5 percent and 3.4 percent, respectively.

We asked some retailers about their hottest categories, and their responses lined up pretty well with those overall numbers.

“Upholstery is what is working right now and we are devoting more floor space to upholstery,” said Peggy Burns, queen bee at Circle Furniture in Acton, Mass.

“For us, it’s stationary upholstery, then bedroom and bedding on account of the extra activity with power bases,” said Dorian Sims, president of Stacy Furniture & Design in Grapevine, Texas.

Sims is expanding its reach in the category, as well.

“In upholstery, we’re introducing different lifestyles and concentrating on more fashion at our price points—a little more color, a little cleaner lines than what we’ve traditionally done in the Texas market,” Sims said.

 

PRESENTATION ISSUES 

Within the designated product areas, an allocation must be made to both price points and styles. If a retailer focuses on one price point, it is simpler.

As an example, a middle-price retailer might display fabric sofas at retail price points between $399 and $899, which addresses more than 50 percent industry sales. The decision to venture into upper price points—sofas ranging to $2,000, for example—might target another 25 percent-plus of industry sales.

The question here: Can the retailer allocate 25 percent to 35 percent of the department to provide a proper selection?

At the next level of detail is the percent of slots by price point. Instead of relying on a “feel,” take a look at industry sales—look at the accompanying graphic for percentage by units and dollars of middle price points.

This retailer’s sales, we should note, are skewed to the $599 price point at the expense of the higher price points. The following graphic compares the hypothetical retailer’s slot allocation to the industry average.

“Obviously, with more than 47 percent of the floor assortment allocated to $500 to 599, that is where the majority of the sales occur,” said Bob George, CEO of Impact Consulting the parent company of FurnitureCore. “Would allocating more slots to higher price points improve overall sales? We believe so.”

 

SMALL-STORE ADVANTAGE? 

Sometimes smaller footprint stores perform better than the 200,000-square-foot behemoth. Why?

In a smaller, say 45,000-square-foot space, retailers have be more judicious in product selection. It requires them to really know their customers' tastes—a rifle versus shotgun approach, let’s say.

Circle Furniture’s stores fit that smaller category in terms of footprint.

“We tend to use a broader range of bold color than most stores and we are known for our floors using color,” Burns said. “Of course, not everyone can relate, as they would prefer a neutral pallet, as it is easier to envision it in their home.

“We have really terrific designers who will work with the customer and create a beautiful room in the customers vision.”

Stacy Furniture & Design has two 90,000-plus-square-foot stores, along with a 42,000-square-foot location. The latter has a distinct merchandising scheme.

“Our strategy there has been flooring our best-sellers for the most part, but we rotate items in and out faster” than in the larger locations, Sims said. “That floor space is too valuable to leave product out a long time for testing.”

 

VENDOR CHANGES 

Making a major vendor change in categories you floor is a challenge when it comes to merchandising. Beyond the training and advertising issues involved, re-structuring the showroom floor can make for headaches.

Circle Furniture is pretty lucky in that regard, Burns said.

“It is a major undertaking to add a new upholstery vendor because of all the fabric samples,” she said. “We are very fortunate right now that we have some great vendor partners, and we don’t need to add another vendor today. We would have to have a very specific need to add a major vendor today.”

At Stacy Furniture, Sims said they have a predicament when it comes to flooring new vendors.

“In the bigger stores, what works for me in bringing in a new vendor is going big,” Sims said. “If I haven’t dedicated six or eight new slots, it’s not a compelling enough opportunity for (customers) to learn more.

“And the larger the launch, it shows my commitment to the manufacturer. A lot of people cherry pick lines, and when I go big, I would hope that would help us when distribution issues come up. If I do it the right way, I should have a little more protection.”

She added that the cost of an unsuccessful buy seems much greater these days, especially when business is inconsistent.

“When I launch, I want to give it every opportunity to be successful from the beginning,” Sims said.

Smaller dealers should make the decision to stand for something as opposed to try being all things to every customer, said retail design specialist Connie Post of Connie Post International.

“By this I mean look at where the most return business is, and use more floor space to have a good selection to appear dominant in that category,” she said.

 

BOTTOM LINE: SALES PER SQUARE FOOT 

What are retailers doing to improve sales per square foot when it comes to merchandising, especially when they don’t have as much square footage to work with than big boxes?

It’s not rocket science: Look at product turns.

“We have very small footprints so it is important that what is on our floors is selling and earning the rent,” said Circle’s Burns. “If something isn’t working out we will take it our fairly quickly and try something new. We are constantly trying to ferret out the new best seller. We pay close attention to what customers are asking for should there be a need we cannot meet.”

Sims at Stacy Furniture & Design said it’s a must for product to prove itself on the floor at the retailer’s smaller store. Otherwise, the product is tossed from the merchandising mix quickly.

That particular store’s space is too valuable to allow a lengthy merchandise test.

Don’t forget supplementary sales, and the role merchandising plays there

“It’s all about accessorization and making each vignette its own unique story,” Sims said. “Adding the accessories and the rugs for easier add-on sales that build tickets.”

In smaller stores, retailers have be more judicious in product selection.

It’s indeed harder for a smaller footprint store to be “everything to everybody,” said Tom Zollar, practice manager for Impact Consulting. This requires retailers to really know and target their consumer’s wants and needs.

“The most successful small retailers do this with a combination of research, experience and what I call ‘customer intuition,’” he said. “Basically they watch what is happening in their market, they track what is selling in the store, they ask their customers questions and they listen to their answers. Salespeople, local reps, in-store events aimed at product feedback will all help you focus your merchandising decisions and increase your success rate.

“It all starts with knowing your market through quality research and analysis, then tracking and studying your results. But a consistently accurate ‘gut feel’ for what they want can be huge.”

 

DO SOME SURGERY

Bob Phibbs, the “Retail Doctor”, suggests going through a retailer’s product selection and doing some serious cutting.

“Cut your SKUs by 20 percent and give your displays some space,” Phibbs said. “The days of doing furniture like a department store are history.

“The consumer already has too much choice. The idea that you line up four brown recliners, maybe in a slightly different shade is old.”

Take a chance.

“Car dealers will find the most outlandish color, and that’s the first car off the lot,” Phibbs said. “Why not a turquoise sofa with a yellow pillow? Make some bold choices and stand by it—don’t discount it.

Appealing to various shopping demographics can be tricky. Different generations tend to prefer different styles and different store layouts.

Drilling down and really examining the different segments can make a difference in a retailer’s success—or failure.

Who's your customer? Who are you trying to sell? Does it matter for most retailers, and do they know the difference?

Do shoppers want a big selection of like product, or lifestyle vignettes? How do you make the call, and are there particular categories that lend themselves to the different approaches?

Target specific products to specific consumer groups. While typically 50 percent of a retailer’s assortment sells to all consumers, the other half is preferred by certain segments. Tailoring the store’s assortment to the store’s demographics is the next frontier for the traditional retailer.

First, do you know your best-selling frames? Do you know this by age and income of the consumer?

There’s often been an assumption that younger shoppers like lifestyle presentations, and older shoppers like categories lined up like soldiers to better compare. You’d best think before making that assumption.

Bob Phibbs, the “Retail Doctor,” disagrees that older shoppers like a line of like product. More than that, he believes the idea that you can sell to all generations is “a little off.”

“Who still controls most disposable income?” he asked. “The millenials are getting used furniture. Highlight the boomer audience and encourage it to take something home today.”

Tom Zollar of Impact Consulting also doesn’t agree that older customers prefer commodity products lined up like soldiers.

“If so we might as well be Walmart,” he said. “However, in many cases, displaying product by category can simplify the shopping experience for your consumer and that does have some merit.

“If you feel the need to lay out your floor in this manner, then the best thing to do is to create small lifestyle pods or mini-galleries within each category. Whatever path you chose, it is extremely important for both your customer and your sales staff, that the flow of product throughout your store makes sense and is visually exciting—tough, but doable if you think it through and plan it out in a war room first.”

Stacy Furniture is still figuring out how to sell home furnishings to various age groups, and President Dorian Sims said she has bigger fish to fry, particularly with the addition of Nebraska Furniture Market to an already crowded Dallas, Texas-area market.

“I’m trying to separate myself from my competition versus speaking to a specific audience and their buying habits,” she said. “My typical customer does tend to be older. When we expand to appeal to younger customers, I think they’ll be attracted more to a lifestyle experience. That’s what they’re seeing with catalogs and online.

“Lifestyle is the best way for us to go. Even if millenials have done their research and know what they want, they’re so used to (drilling) down on their computer that a huge amount of product in rows is overwhelming.”

Acton, Mass-based Circle Furniture doesn’t discriminate among customers.

“Our customer is anyone with disposable income who wants and needs new furniture,” said Peggy Burns. “Generally they are older, as our price points tend to be higher and furniture has not yet become an important purchase for the younger crowd. We do our display in more of a lifestyle vignette and space is tight, so it is often more crammed than I would like. I don’t like a lot of accessories, I prefer to have the furniture be the focus.”

Retail design specialist Connie Post of Connie Post International said the new rebranding of home décor retailer Garden Ridge to At Home is an excellent example of appealing to multiple generations.

“Special vignettes show products that are cross merchandised, while some areas are still racked and stacked to show dominance in categories,” she said. “This is not typically how big boxes handle their displays.”

Within the newly formatted stores, the retailer shows completely decorated room displays.

“These displays show consumers how to bring it all together inviting and stimulating guests to buy more,” Post said.

 

 

 

 

 




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Francisco    6 years ago

Good article !
Is the same for different markets.
Is good for the Mexican market.
Regards
Francisco (Mexico)

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