From Home Furnishing Business
Coach's Corner: “Is it Time for an Upgrade?”
By Tom Zollar
Home Furnishings Business often features articles about the newest and greatest ideas or innovations we see in the industry. Over the last few years, many of these have involved the internet, including web- based programs, applications, social media and other marketing efforts.
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!