From Home Furnishing Business
You Had Me at Product
Furniture design matters to consumers, and that’s why it is so important to get it right.
The consumer price index has been stagnant for the last six years. This is great for the consumer, but not so great for the industry.
Those who have been in the furniture industry for some time understand it is all about the product. It is important for newcomers with new marketing concepts and advanced supply chain processes to understand their goals must be tempered by the intricacy of the product and why it sells to a fickle consumer.
While other consumer durable companies, such as the automotive and communications sectors, understand the consumer ignores the practical questions, such as “Did I really need that new phone?” and lines up outside the retailer’s door to be the first to have a product. Unfortunately, consumers of furniture are much more practical with only 31.3 percent buying simply because they want new furniture. Our challenge is to double that number.
Is our challenge the design process? In my conversations with professors and top students in the leading furniture design schools the concept of design trends is a foreign concept. They look to classic design principles of form and function and to the talent of the designer. The residential industry relies on design trends. Why else then would we have so many sleigh beds?
Decades ago the residential furniture industry could rely on carefully updating the classic styles—Chippendale, Louis XIV, Early American and the like. The customer preferred the execution of more refined designs with careful attention to detail. This was combined with multi-finishing steps to carefully maintain the consumers’ preferred sheen. The marketing department’s focus was to communicate the pedigree of the design as well as the company producing the product.
Shift to today and the role merchandising plays in the long-term success of a traditional furniture retailer. Simply put it’s about prices, both the retail price and the wholesale price. When the top quartile retailers are achieving gross margins of 47 percent and the top quartile suppliers are achieving 26 percent gross margin, what is the problem? The problem is the selling price that the consumer will pay for the product. Is that all the consumer will pay?
The consumer price index has been stagnant for the last six years. This is great for the consumer, but not so great for the industry. With no price growth compared to all consumer goods there have been ever-decreasing funds to properly advertise and display the product to the consumer. This fails to create the desire. Thus, the industry has resorted to price as motivation to entice consumers to buy.
The traditional furniture store distribution channel competitors are the lifestyle stores, such as Pottery Barn, Arhaus, and Restoration Hardware (RH). These stores are not bashful about their pricing strategy. Is it because of the world class collateral they execute? Restoration Hardware’s catalogs and magalogs are gorgeous and leave consumers wanting a home that looks the same.
We tried before to create an industry campaign to communicate furniture and the impact our products can have on the consumer’s life. What would one-half of one percent—$350 million—do to enlighten the consumer? Just a thought.