Monthly Issue
From Home Furnishing Business
Editors Letter: Standing Out From the Competition
December 11,
2018 by HFBusiness Staff in Business Strategy, Industry 
By Bob George,
Another year in our rear-view mirror. The total industry continues to grow (7.3% through Q3) but this includes all distribution channels, including e-commerce. The primary focus of this magazine is the traditional retail channels that we break into these segments: Independents, Large Independents, and Regional Chains. Additionally, we focus on the suppliers that primarily serve these retailers. The content in the magazine focuses on both strategic issues as well as the more immediate tactical issues that must be addressed on a daily basis.
Our industry well understands competition. What was local, friendly competition where owners knew each other has expanded geographically. The major factors, such as selection, price, quality, and service are still the areas in which to differentiate. The weighting of these factors has changed. Many retailers believe that price is the dominant factor, totally eliminating selection and quality. Service often defined as delivery / availability is being challenged. Next day delivery, the foundation of traditional retailers, may not be as important as consumers accept 2-4 weeks from other distribution channels executed by delivery services. Traditional retailers find it hard to change, even though it could have a significant impact on inventory turns and delivery expense.
The Power 50 list we compiled for this issue focused on the traditional furniture stores. How did they perform as a group? In total, these best performers increased sales by 7.2%, in line with the overall industry. Of the Power 50, 23 were Regional Chains, 22 were Large Independents (over $50M revenue / one state) and 5 were Independent. This group captured 8.1% market share in their markets served. Compared to the previous year, store count increased 10.1%. Revenue for Large Independents increased 6.4%, behind Regional Chains at 7.1%. Independents increased 3.1%, struggling to cope with the outside competition.
The Retail-Verticals (Pottery Barn, Crate & Barrel, etc.) struggled with revenue growth of 3.1%, a significant comparison to their counterpart Manufacturer-Verticals (Ashley Homestore, Arhaus, etc.) at 8.3%.
In summary, it’s a battle out there. No matter the classification, it is important to define your strategic advantage. The list below begins the process — add to it.
Strategic Advantage
| Independent |
Large Independents |
Regional Chains |
| Local Connection |
Price |
Price |
| Service |
Proximity of Stores |
Proximity of Stores |
| Focused Merchandise |
Employee Benefits |
Employee Benefits
Available Capital |
Oh, and by the way, after you define your strategy to cope with furniture retailers that are similar to you, it is time to focus on the home furnishing stores, such as Target, Home Goods, etc. which find our margin levels very attractive. That is a subject for later discussions.