From Home Furnishing Business
Publisher's Note: Our Secret Weapon
This month our focus is on those individuals who will ultimately lead each of their respective companies into the future. The importance of these individuals to their companies cannot be overstated. At a time when significant challenges are occurring not only in furniture retailing, but also in all retailing, the future is top of mind. Specifically, is brick and mortar retailing destined to disappear to be replaced by ecommerce?
Without a doubt, e-commerce, led by Wayfair to be followed by Amazon, has taken 15-20% of furniture/bedding sales. Will these juggernauts be stopped as the 1-800 distribution channel was stopped forty years ago? These are the discussions many multi-generational retailers are having as the next generation plans their careers.
The analysis is straightforward. Can a world-class web presence, supported by a national marketing campaign and a white-glove transportation/warehousing system, deliver a consumer experience more economically than the traditional brick and mortar stores? To date Wayfair has failed to do so as their losses mount even with increased revenue. However, this year Wayfair is implementing a national delivery system that will cover a substantial part of the nation’s households. Retailers who cope daily with executing the “last mile” are skeptical. Even third party delivery services that specialize in the furniture industry anticipate the challenge of execution on a national basis. What are the financial numbers? We will address this in the upcoming September issue on Internet Strategy.
What about our secret weapon? As important as our future leaders are, there is another group of individuals that cannot be replaced by a world class web presence. They are the retail sales associates. How important is the $1M writer to the retailer? How important are those long-tenured individuals who year after year consistently achieve that level of performance? They are expensive, but they are worth it. Industry statistics indicate that sales associates and their managers absorb 9.2% of every sales dollar. While this seems like a significant amount, the sales generated make the business run.
One of the key differences between average performance and top quartile performance is the percentage of repeat business. That is the percentage of sales in a quarter that is from consumers who purchased in the last eight quarters. For the retailers who exceed 25% for this statistic, total financial performance increases by 50-75%. These are the consumers who consider the retailer as their furniture store. The front line for creating that relationship is the retail sales associate.
While we recognize their importance to the long term future of brick and mortar furniture stores, the challenge today is attracting and keeping this talent. Minimum wage will not bring them through door, but a career that delivers $60-75K will. Moving them through the process is the challenge. Retailers, such as City Furniture, are making that initial investment by recruiting at some of the best colleges for entry level associates beginning with an internship and moving into a full-time position. An example of this importance is shown in the following. One retailer nominated one of his long term sales associates for the Forty Under 40. The only problem was that she was a bit over 40. From this retailer’s perspective he stated the following:
“We have a sales woman who is 71 years old, but is very young at heart. She’s spunky, acts like she’s under 40, and is an exceptional salesperson and an outstanding employee. She writes over $1 million in sales consistently year after year.”
We understand his perspective.
The overall point is that nothing can replace the knowledgeable, caring attention that only people can provide to a consumer when making a purchase that will impact their quality of daily life.
So I say to digital retailing – bring it on!!!