September 9,
2016 by Jane Chero in Business Strategy, Industry 
As a boy growing up in North Carolina I well understood the “dog days of summer” when it was too hot and humid to move too far from the porch and a pitcher of lemonade. This term in business refers to the quietest months of the year. Well, it has been dog days for all of 2nd Quarter and recent results would indicate that it is continuing. Our hopes are now pinned on the upcoming Labor Day.
When business is this slow the typical reaction is to look at external factors that may be contributing to this problem. When we see the statistics we find that they too are at a standstill. Housing starts annualized are up slightly. Consumer confidence is also up slightly going from 96.5 to 97.3, while unemployment for the year is down slightly. So what’s the problem?
The challenge is to get consumers excited about their environment, not merely to replace a broken piece of furniture. Disregard the impact of ecommerce and focus on what is, in my opinion, the most important internet opportunity, which is the ability to communicate with and, more importantly, to interact with your customers.
The retailers’ website has become the “front door” of your business. Take a hard look at your home page. How long has it been since it was updated? Not merely product update, but also color story, the site’s overall look and feel, and, very important, how inviting it is to the consumer. Give the site the same attention that you give the “landing zone,” that first impression the consumers have when they enter your store. Four times more consumers see your home page than your store entrance!
Once consumers pass the home page how are you engaging them? Oversized banners proclaiming the latest financing package should not be the first “words” out of your mouth. Engaging consumers with conversation about what they want to do with their houses is where their interest lies. Many retailers have design tools to assist consumers, but frequently these tools are not “front and center.”
While we wait for Labor Day to ignite the last quarter of the year, it is a good time to take a hard look not only at the web site, but also the merchandise strategy. How does your “bell-shaped” curve of slots by price point compare with the industry? Assortments out of bounds can negatively impact sales by 20-30%.
I understand that you don’t want to interact very much with your sales associates because they will complain about the lack of traffic. This is the time to engage them to keep them “sharp” when the customer does arrive. Take this opportunity to observe their sales techniques. Are they following the five-step selling technique they were taught or are they going directly to close?
The point of all of this is to use this time to visualize what you want your operation to be and then start the process. It is better than languishing in the dog days of summer. Call if you need a motivation session.
April 4,
2016 by in Industry
This issue continues our annual focus on the competitive battleground within the furniture industry. In the October 2014 issue, we explored the impact of the expansion of regional furniture chains. Many were moving beyond their state boundaries and challenging other large independent retailers.
Last year, we addressed the larger regional chains that were marching westward in a move to establish a national presence. This month, we focus more closely on the independent dealers—those mom-and-pop stores that have been the backbone of the industry. Today, however, independent retailers represent less than 10 percent of all furniture sold.
The Great Recession led to the demise of many stores; many of them impacted by family succession. There is no one to pick up the reins of the store. The strategy for many of these family businesses was to let the store support the family and the real estate provide for retirement. Unfortunately, today the promise of retirement has not been fulfilled when much of the retail has moved to creating shopping experiences close to the malls. Many family-owned retailers have the burden of high lease rates to support the first generation. The result is an unprofitable financial model. The struggle is similar to agriculture in the early 1900s when the family farm could no longer support two families.
The refrain I hear most often is—say it isn’t so. Folks are curious whether small, independent furniture stores will disappear.
Not necessarily so. The hope may lie in with manufacturer’s retail verticals. We are talking specifically about Ashley HomeStores, Ethan Allen, and Thomasville stores. Yes, many are corporate stores, but there are also multiple units owned by individuals.
I am not pushing any of these, but it is time to redefine the business model. Perhaps, suppliers should assume responsibility for delivery to the consumer after the sale similar La-Z-Boy’s current strategy. Yes, this does mean more of the margin goes to the suppliers’ side, but perhaps they can be more efficient. One-source product supply, another alternative, is like an Ashley store with virtually no inventory at retail. This means significant risk for the supplier, but less markdown loss for the retailer. Assuming responsibility for consumer advertising on a national basis for the retailer is another change that could be considered.
I could go on, but the bottom line is that there is a 60 percent to 70 percent gross margin in the distribution channel. Which entity can accomplish the transfer from the end of the production line to the consumer’s home? It is time to think in a different way. Who is ready to sit down with a whiteboard and diagram the process?
April 4,
2016 by in Industry
By Sheila Long O'Mara
The bittersweet time has come. After 112 print issues, 103 digital publications and too many e-newsletters to count, I’m signing off from the editor’s desk of Home Furnishings Business.
This month’s issue is my last, but rest assured, the magazine and the information it delivers will continue. The magazine was founded on one simple premise—create a strategy magazine for retailers about retailers and throw in a touch of edgy to keep things interesting. I remain steadfast in my belief of that vision as the industry becomes more challenging, and consumers more finicky.
Information is king, and the power to inform crucial to success.
Over the years, so many of you have taken the time to share your success stories, your struggles and even your failures so that others could glean nuggets that may be applicable in their businesses. For that, I thank you.
Thank you for believing in us along the way, as the magazine grew and prospered. Thank you for listening during those early days as I shared the dream of what Home Furnishings Business would be and how it would grow. Many of you watched—and often chuckled—as we found our sea legs. Over the last decade, there were times I’m sure you thought we’d gone overboard. Perhaps, we did just that, but only in the pursuit of crafting tales to inspire a better industry.
Sitting in this seat for more than 10 years has put all my dreams to shame. It’s been an amazing ride, but it’s time for me to head off in pursuit of another adventure.
I’m remaining in the furniture industry, and I’ll continue to write stories about a place that has become part of my fabric. As has been the case in this seat, I’ll be sharing stories and working diligently to connect companies with one another and with their consumers. I’ll just be doing it from a different vantage point at a public relations and communications firm.
You’ll find me at the High Point Market, and when you see me looking somewhat dazed and confused, give a shout. I’ll be the one searching for my sea legs once again, as I learn how to wear a different hat in a familiar ocean.
As for the magazine, I’ll continue reading each month, and I’m sure you all will, too. The search for a new editor is underway, and I look forward to seeing the magazine continue to evolve and blossom under his or her leadership.
Thank you all for being readers and business partners in this amazing ride. My glass overflows thanks to many of you.
On a personal note, feel free to stay in touch via slomara14@gmail.com, and the phone numbers will remain just as they have been for more than a dozen years.
March 7,
2016 by in Business Strategy, Industry
Free delivery. This phrase will trigger shivers from many retailers since, over the last 25 years, traditional retailers have been charging for delivery.
It has been the norm in the industry for a quarter of a century. From a financial perspective delivery income adds between 1 percent and 2 percent to a retailer’s bottom line.
Traditional furniture retailers are challenged to control their pricing multiplier to allow for discounting that will maintain an acceptable margin level. Offers to the consumer of discounts along with free financing have become a science to find the sweet spot of attracting buyers while maintaining margin.
Unfortunately, traditional furniture retailers live in an echo chamber listening to their perceived direct competition—other traditional furniture retailers. While traditional retailers still represent 40 percent of the industry, the marketing practices of other channels are ignored for the most part.
However, at times the noise from the other competitive channels becomes too loud to ignore. This is the case with the fast-growing channel, the Internet (15 percent of the total industry), when it shouts free delivery. Promises of big pieces ship free can’t be ignored. Consumers coming into traditional brick-and-mortar retailers have the promise ringing in their ears, and any delivery charge becomes an irritant. While free delivery for e-tailers means placing the product in the first dry area still in its carton, the consumer doesn’t read the fine print. It is only when placing an order that they discover what they want is white glove service, the level of service that traditional furniture retailers provide.
Should traditional furniture retailers match the e-tailers rather than allow the consumer struggle with self pickup?
A hard analysis may find the consumer would select the white glove service level. The 20 percent to 30 percent of consumers using customer pickup would obviously decline, and the cost of providing that service would also decline. Even though the policy states otherwise, costs of damages resulting from customer pickup are often incurred to retain good customers. The obvious solution to offsetting free delivery is to include it in the product pricing. However, the prospect of improving margins by 1 percent to 2 percent is daunting in the minds of typical furniture retailers.
Retailers can’t ignore marketing practices of their competitors in all channels. However, they also can’t ignore eroding profit margins. I suggest a side-by-side comparison of the alternative channels’ marketing practices could produce some interesting opportunities.
All distribution channels have the same objective—sell to the consumer. Maybe some of the things offered by furniture retailers aren’t necessary in today’s environment.
March 7,
2016 by in Business Strategy, Industry
The groundhog delivered a gift last month when he didn’t see his shadow predicting spring was on its way.
Despite tumultuous tornados across the Southeast and a few snowstorms in the Midwest since Feb. 2, it appears the rodent may have gotten right and milder weather is making its move. Consumer minds are turning toward outdoors and outdoor entertaining as they wake from hibernation.
Cabin fever and the desire for dining al fresco can deliver a bevy of sales for retailers in the casual furniture category—a category that continues to post steady growth.
Looking back over the last few years, the outdoor furniture industry has gone from $3.51 billion in 2013 to $3.79 billion in 2015. The category grew 5.36 percent from 2014 to 2015, and forecasts call for another 5.4 percent increase from this 2015 to 2016.
Not too shabby.
Consumers continue to turn to outdoor living spaces turning patios, porticos and poolside full extensions of their homes. The downside for furniture retailers is the channel consumers are choosing to buy their casual furniture.
According to the latest Home Furnishings Business survey of consumers who have recently purchased outdoor furniture, home improvement stores remain at the top of the list of distribution channels for consumers buying the category. Nearly 33 percent shopped Home Depot or Lowe’s for the category and 26.1 percent made their purchase at the chains. Outdoor furniture specialty stores came in second for consumers with 21.7 percent of the sample shopping at the specialty stores and the same number—26.1 percent—bought from the specialty store.
Compare those numbers to the 13 percent who said they shopped traditional furniture stores for their outdoor furniture. Slightly more than 21 percent (21.7 percent) made their purchase from a traditional furniture retailer.
Despite the lower percentage, there is good news in the numbers for traditional furniture retailers. The 21.7 percent is up significantly from the 6.6 percent of consumers who last year said they’d made their outdoor furniture purchase from a furniture retailer. Mass merchants like Target and Walmart were the losing channel. In last year’s survey, 23 percent of consumers said the discounters were their go-to location for their purchase. This year, that percentage dropped to 13 percent.
When it comes to cost, consumers are on the stingy side. Nearly 70 percent said they spent $999 or less for their recent casual furniture purchase. At the other end of the price spectrum, 13 percent said they spent $2,500 or more on their most recent purchase.
Twenty percent of those surveyed cited pricing being too high was a barrier in the process. Other issues they encountered included lack of selection in finding what they wanted (20 percent); inability to judge quality of the furniture (10 percent); available quality did not meet standards (5 percent); and salespeople who weren’t knowledgeable (2.5 percent).
The majority of the surveyed consumers have relatively long life expectancies for their purchases. They aren’t looking to replace their furniture next season. More than 56 percent (56.5) said they expect to use their purchase for between three and eight years. Nearly 22 percent think their furniture will last more than 10 years.
Want More?
A more in-depth report on the outdoor category is available for purchase by e-mailing Laura McHan at Laura@FurnitureCore.com
4.82%
Outdoor percentage of 2015 furniture sales
$3.79 Billion
2015 outdoor furniture sales
5.46%
Outdoor furniture 2015 sales growth
Suppliers Say
OW Lee’s Monterra
Featuring deep seating, OW Lee’s Monterra offers a cocoon setting. Signature side arm pillows and pillow-stuffed back cushions are highlighted by flat bar and rivet details. Retail starts at $1,525.
Kingsley Bate’s Sag Harbor
Made from all-weather wicker in natural colors, Sag Harbor consists of a range of items for different applications and configurations. The collection includes dining, deep seating, and sectional pieces.
Treasure Garden’s Veranda
The Veranda mounts directly to a wall without the need for a pole or base. Available in a 5’ x 10’ rectangle model, the umbrella pushes up and locks into place without cranks, cords or pulleys. Suggested retail $895 in Sunbrella or Outdura; $695, Obravia.
Palm Springs Rattan’s 4300
Designed to seat 8, the 4300 dining set is crafted of synthetic woven wicker and offers outdoor cushions. The contemporary dining table is of a baked on powder coating finish. Seating includes decorative cushions and high backs.
Pride Family Brands’ Park Place
The Park Place by Castelle from Pride Family Brands offers multi-configuration components that feature a modern aesthetic for patio, terrace or poolside. The Park Place is handcrafted with contemporary lines. Suggested retail $15,825 with pieces shown.
angleo:HOME by Walker Edison
The Coastal four-piece Wood Chat from angleo:HOME collection is made from solid, acacia wood in a vintage, weathered-gray finish. The deep-seated RTA design features wide, plush cushions. Suggested retail is $1,299 as shown.
Woodard’s Cortland
A blend of of cozy comfort and sophisticated style, Cortland combines design and on point fabrics with hefty welding. The collection features timeless details and a rust-proof aluminum frame. It is available in countless fabric and finish options to fit a variety of needs. Suggested retail is $1,392 per chair as shown; $2,425 for chat-height fire table with cast top.
Klaussner Outdoor’s Cascade
The two-piece Cascade sectional featuring a chaise and loveseat is ideal for areas smaller outdoor spaces. Designed with a traditional to contemporary feel, the collection features a slightly wider sloping arm for comfort with a bold look. Suggested retail is $2,699.
Kenzo by Tropitone Furniture Co.
Modern, sleek styling set the tone for Kenzo. The collection offers an array of cushion, woven, sling and padded sling seating options. Sleek lines give the group the ability to complement many outdoor spaces. Suggested retail for the group shown in an A grade fabric is $10,999.
Brown Jordan’s Pasadena
A nod to mid-century design and the birthplace of Brown Jordan Co., Pasadena’s sleek profile exudes understated sophistication. The collection frame features a smooth, flat aluminum extrusion in a gentle curvilinear. Sweeping lines seen on the arms and back legs highlight the beauty of the chair’s construction. Pasadena is available in both sling and padded sling styles. Suggested retail for sling lounge chair is $1,070; padded lounge chair is $1,225.
Opal Lounge Group by Jensen Leisure
The Opal Lounge Group offers comfort with transitional styling. Created in FSC Ipe timber by Swedish designer Dick Bjork, this group includes two lounges, a loveseat, side table and coffee table. Suggested retail as shown with cushions is $6,399.
Oxford Garden’s Tavira Collection
The Travira collection features a clean, contemporary and timeless design across a variety of products. The breadth of the line, combined with its low-maintenance material options, appeals to the varied preferences and needs of many customers.
Barlow Tyrie’s Aura
Aura offers an aluminum frame with teak accents for low maintenance. The table is available in various dining lengths and heights, and matching sun loungers are available in three frame colors. Slings are offered in four colors. Suggested retails begin at $532 per chair and $1,300 for the table.
Andalusia from Century Outdoor
Andalusia has always been a best-selling collection for Century Outdoor. Hence, the company added the swivel rocker lounge chair, which has become a top seller. Combined classic Mediterranean style in the comfort of a swivel rocker allows for luxurious outdoor living. Suggested retail is $3,765.