Numbers don’t lie, or do they? I’m a wordsmith, not a math whiz. Even given that, I know the basic numbers that are important in the business of furniture.
Customers are steadily in your store or stores; employees busy and the cash register offers the frequent cha-ching as sales tally. (At least, I’m hopeful you’re hearing the ringing at your sales desk.)
We all know the importance in measuring same-store sales figures to last year’s revenue. The measurement tracks whether you’re growing or just maintaining. Comparisons are great, but what other components should be tracked.
1. Sales per square foot
As most know, this data helps with planning inventory purchases. Dividing your total net sales by square feet of selling space—not including your warehouse or distribution center—gives you your store’s square foot of selling space. Sales per square foot is a great measure of return on investment. Are you buying the right product for your market? Lower than the industry average, your merchandise mix could be off and not keeping pace with your target consumer’s wants.
2. Sales by category
The furniture industry loves to talk about categories. Dining room, bedroom, upholstery, home theater, recliners, and the list goes on. Which categories are the workhorses on your sales floor? Do you know? Figure it out and it could be that the category you thought was the winner if floundering, at best. Maybe the upholstery selection needs to be winnowed and youth bedroom boosted.
Who knows? But, until you do the math, you could be missing out on a key merchandising element.
Divide your the category’s total net sales by your store’s total net sales. Analyze the numbers for each category and see if your floor is in line with the results.
3. Staff productivity
Folks get a bit antsy about this one, but let’s be honest. If your sales associates aren’t performing, you have a problem, and you need to fix it fast. Your business runs on sales—doh!—without them you are out of business. Most of your sales come from your floor associates. Be sure you have the most productive ones around.
Figure sales per employee by dividing net sales by the number of employees. Keep in mind that you’ll need to consider whether your sales asssociates are full-time or part-time employees.
4. Sales per transaction
Or sales per customer, this figure tells you your average ticket or transaction. Do the calculations and you may find that your sales team could do a bit better by selling consumers up. Decorative accessories and rugs, let’s say, add the spice needed to pull together the new sectional and swivel chairs Sally just ordered. AND, makes for a bigger ticket at the register.
Divide gross sales by the number of transactions. Figure out a way to encourage your sales team to upsell your customers and boost those tickets.
Those are a few of the very basic items you should track and measure. In today’s e-commerce and social media climate, you also need to take into account how your Web traffic and social media efforts are playing into your business.
Inside, we’ve shared expert opinions on math that matters for retailers. If you happen to be a math whiz, well, let’s hope the inside offers you a few tips and ideas that you can put to work in your business.
Getting ups today is not good enough to grow your sales. Converting impressions into contact information is how you grow your sales.
The world has changed. This is not a news flash, but it has changed. Marketing messages and metrics have changed as well. Long gone are the days of “shotgun” approaches just trying to get impressions. Today, every advertising dollar is valuable and so are the eyeballs (or ears) that absorb it.
We need to focus on the idea of cost per lead and what that effectively can do to our bottom line.
Cost per lead is not a measurement of sales or closing ratio. Cost per lead is the measurement of did you get your advertising to effectively lead to an action. An action in this case is the following:
1. A Web site visit
2. A customer up
3. A social media interaction (Facebook like, Twitter follow, Pinterest follow, etc.)
4. An e-mail open and a click through
5. A text message sign up
6. Any thing that could result in a customer contact
For one of our retailer clients in the month of March the following data was compiled:
• Number of leads generated during the month: 2,860
• Advertising dollars contributed to those leads: $21,000
• Total Cost Per Lead/Opportunity: $7.32 per lead/opportunity
How do you begin driving down cost per lead and generating more leads? Direct the consumer to go some where.
Here are some awesome things you can do to help drive her somewhere:
1. Utilized paid search on the major search engines. The consumer is searching for items every single day. However, getting in front of her is not always easy. To have your ad showcased when a consumer is searching for keywords that relate to you can only help drive home a possible opportunity.
2. Have different traditional mass medium (newspaper, TV, radio, direct mail) drive to different pages on your Web site, social media portals or dynamic landing pages. This will help you gauge the overall effectiveness of your messaging and media selection in your marketplace. It will also allow you to experiment with giving different offers and promotions to different segments of people.
3. Make your e-mail marketing messages come to life! Just sending out bland images or your current ad does not allow consumers to shop. Most e-mail suppliers allow for custom designs to help drive activity to multiple areas on the Web that can help allow for tracking and costs per lead to go down.
Today’s consumer does expect an offer. However, she also does not mind having to find that offers through different avenues. Let your advertising drive Ms. Jones to different vehicles so you can start capturing information from the consumer.
Once you captured Ms. Jones’ information you have the opportunity to speak to her before, during and after the sale. Not getting any information means the conversation cannot occur and thus an opportunity has slipped through your fingers.
New Ways to Sift, Think About The Information that Matters to Your Store.
“There are lies, there are damned lies—and then there are statistics.”
It’s an old saw, and while outfitting customers with products that match the lifestyle of their dreams takes a human touch, today’s furniture retailers—especially if they’re running operations employing more than a few people—can’t ignore the numbers that tell them what they’re doing right and also where they could make some improvements.
Analyzing your stores numbers is more than bean counting. It’s about pulling what’s really useful out of the huge amount of information generated even by basic store operating systems. As important—communicating what you find to your sales team and management personnel in an effort to help them do their jobs more effectively.
Numbers alone aren’t enough, said Bob George , CEO of Impact Consulting/FurnitureCore—it’s more about understanding what they mean, and using them to execute a business plan.
At the recent High Point Furniture Market George gave a presentation, “Big Data,” on how retailers can better utilize the huge amount of information their Web sites and store systems generate.
“The key to utilizing data is understanding the sorts of information; using it to identify customer segments and the opportunities they represent; using data for better promotional execution; and monitoring the results,” he said.
That can be a daunting task considering how much information a store automation system can generate. The first step is to create a place where that data can be organized and accessed, and George used the smart phone as an analogy.
“Every one of you probably has a smart phone,” he said. “Think about how much information you have on that phone—pictures, addresses, contacts—you’ve probably become dependent on that phone.
“Take one piece of data and expand it from there—it’s the what you did with your phone—your kids pictures, your calendar. Do it with you business in the same way.
Take that concept of all that information you have and layer it in. … If you don’t integrate that data and pull it together, you can’t use it.”
Create a place to store that data.
“The cost to store that data has fallen dramatically, and you also need the speed to get at it,” George said. “Where it should end up is where the rubber meets the road—in the salesperson’s hands. How can you use that data to influence the sales process?
“With ‘Big Data,’ the goal is to be able to say, ‘Bill bought something, but I knew he was going to buy it.’ He went to the Web site and asked about this SKU. Help your salespeople facilitate that movement from ‘I think I need some furniture’ to ‘I’m going to buy some furniture.’”
Traffic measurement, along with inventory, closing rate (both team and individual) and average sale, are absolutely critical sources of information, said Profitability Consulting Group CEO John Egger.
You might have those numbers, but understanding what they really mean takes deeper digging. Analyzing traffic numbers, for instance, is more than counting bodies.
“If you want to, drill down and use cameras at your door you can measure things like groups of people, family, ethnicity,” Egger said. “If the raw numbers say 80 people came in, that drill down will tell you that you had, say, 12 families, six groups of women, etc.”
Again, looking beyond the numbers, analyze where shoppers go in the store. Where do they stop?
“What if 70 percent of people stopped at a particular vignette?” Egger said. “That’s going to tell you something you can use in your merchandising.”
Say you’ve been gone for a week, and sales were half of what you’d counted on for that period.
“Your immediate reaction is to get all over the salespeople, but maybe there was a storm, maybe you were understaffed,” Egger said. “There are a lot of things that could have happened to let you know if there was a real problem with your people.”
DIGGING DEEPER: INVENTORY
Knowing how much furniture you have in your warehouse and on your floor, and how often you turn your inventory hopefully got covered in Retail 101.
Knowing you have X dollars in hand and that you turn it X number of times a year is fine, but if that’s where you’re stopping, those figures don’t really help you figure out how to make that investment in goods make money.
Do you know what part of that inventory has been sitting around for a while? Staying current on aging inventory is critical, Egger said.
“Someone has to be in charge of an aging report, and keep track of ‘not in location’ or ‘not available for sale’ items,” he noted. “That stuff can stack up to thousands and thousands of dollars. Suddenly you end up with $500,000 in dead items that could be cash. Someone has to be accountable for that.”
Egger shared an analysis Profitability Consulting Group performs for clients—slot cost.
“We go into a warehouse and see how many slots can be filled there,” he said. “We take total occupancy cost and divide that by slot—that’s the slot cost.
“If you have X amount of slots, we know that piece of furniture costs you X amount of money to sit there. If you have 1,200 slots that are (not in location) or (not available for sale), that could be replaced with merchandise that’s making you money.”
DIGGING DEEPER: TRAFFIC
While more than 50 percent of American retailers have installed traffic monitoring systems, they don’t always apply the information gathered to improving sales, according to Michael Bunyar, president of Montreal-based SMS Store Traffic.
SMS’ furniture retail clients include names such as Ashley Furniture Homestores, City Furniture, Dufresne and The Brick.
Today’s traffic counting technologies now provide queue management data, age and sex recognition, hot spot identification, group counts, employee elimination, dual view cameras and more. But retailers can do more to apply what they learn from those numbers to convert shoppers into buyers.
In applying store traffic to your operation, Bunyar said customer-to-staff hour ratio is one of the most useful ratios you can generate.
“That’s total traffic divided by the number of staff hours you use in a given day, or period of the day,” he said. “If your customer/staff hour ratio is 15, that means everyone on your floor dealt with 15 people. When you get to 30 or more, there is simply no available service. The floor staff is getting pulled every which way.
“When you look at that ratio on a daily basis, people agree that Saturday and Sunday are the big hours. The ratios for those times are typically the worst of the week, meaning your highest traffic is getting the worst service of the week.”
That ratio could well be an acceptable 15 on Tuesday or Wednesday, but if it’s 25 or 30 on Friday, Saturday or Sunday, you might be burning turf customer-wise.
“Just re-establishing staffing levels, bringing a little more available service to your key selling days has a huge impact,” Bunyar said. “The bottom line is that most retailers are desperate to increase sales. It’s all about your conversion rate. Are you selling 1 to 2 percent of your traffic? That’s a problem. Just adjust staffing so when people come into your store you can give them the service you need.”
Are you already selling 20 to 25 percent of your traffic? Taking it to 26 or 27 percent represents a huge impact in sales.
“It’s an easy fix, it’s a quick fix, and it’s an inexpensive fix,” Bunyar said. “If you talk with store managers, you find they’ve been petitioning their head office for years to get more people, but are told they’re staffed properly for their sales level. Improve the service, and you’ll improve the sales.”
DIGGING DEEPER: SALES
Jeff Winter is an owner at Discovery Furniture in Topeka, Kan., along with brother Jamie Winter. The operation includes Discovery Furniture, RoomMakers stores carrying Ashley goods Mattress Headquarters locations in Topeka, Kan., and Lawrence, Kan.; and an Ashley Furniture Homestore in Salina, Kan.
Discovery/RoomMakers has deepened its sales analytics in the past couple of years. More important, management puts the information it gets to work on managing and counseling its sales team and managers to help them perform more effectively.
“All the information is in our computer systems—what was purchased, who bought it, who sold it,” Winter said. “We have several components in the analysis we do. That includes normal sales specialist measurements like sales per hour, sales per guest, average sale, sales productivity.”
Discovery analyzes by week, month and year for each person; and it graphs that information by performance, and by furniture category.
“The manager sits down with each person so they know where they stand,” Winter said. “It’s making it so you can change and improve. … You can’t improve what you can’t measure, and it all leads to communication.
In the past year Discovery has added protection sales and delivery into the measurements the business tracks.
“We put those in because people who purchase product protection and delivery are our happiest customers,” Winter noted.
Sometimes, for example, customers decide to pick up the furniture themselves, and end up damaging it.
“That’s not our fault, but you still have an unhappy customer,” Winter said. “Say a customer opts out of delivery. We’re able to identify that, and help (the salesperson), coach them.
“With a lack of information, people tend to think they’re above average. Everyone wants to do a good job, it’s a matter of helping them with specific things, specific sales tools.”
Discovery looks at those same measurements by store and by each category. On a graph, a gold bar indicates expectations are met or exceeded; green means performance exceeds the prior period of measurement, be that year, month or week; and red indicates performance trails the prior year.
“We’ve formatted how we get that information into people’s hands, and it’s compiled every hour,” Winter said.
Daily text compare performance by day, week, month and year; and store managers see not only their store but also every other store.
“We also have merchandising tools, managing that in a real-time war room,” Winter added. “We determine what’s generating our gross margin dollars.”
It’s all part of re-thinking the way retailers can apply the numbers available to them in their business. HFB
Lessons from Outside
How Retailers in Other Sectors Use Numbers to Increase Sales Conversions.
SMS Store Traffic has been providing traffic counting systems to retailers for more than 40 years, and while the technology involved generates more information than ever before, retailers don’t always tap its full potential.
That’s according to Michael Bunyar, president of Montreal-based SMS Store Traffic.
While accurate counting is important, how the retailer applies the data is the key to using traffic information to impact sales in a major way. SMS has examples of client retailers outside furnitureland who are doing just that.
Eric Champagne, was vice president of information technology and logistics at Liz Claiborne/Mexx Canada from 1997 to 2011, where he in doubled the chain’s conversion rate over a three-year period using a traffic counting system from SMS.
He said at first there were some reluctant store managers who felt the system had a “big brother” feel to it.
“I told them I’m giving you a tool that will double your sales,” Champagne said.
The process began with a discussion with store managers about what they could affect, and what was out of their hands as it related to increasing store sales. Ultimately, they came to understand that they could directly affect their closing ratio and average dollar per transaction using information provided by the system, which provides combined traffic and sales information they can use to guide their sales efforts.
“In retail, driving sales with numbers is probably the most difficult thing to do,” says Champagne. “The sales force wants to be on the floor and selling is very emotional. But once they understand these numbers, they can take them and focus those emotions and energies toward the customer.”
One of the fundamental was to identify key traffic patterns at each store on a daily basis.
“Traffic behaves in such a predictable way that it’s scary,” Champagne said. “Within a few weeks of collecting data you can forecast how many people will come into your store on a Wednesday afternoon at 2 o’clock.”
In the vast majority of stores, the answer to increasing sales lies in providing more effective customer service during the key traffic periods identified by the software. This can occur in a number of ways, from altering staffing to provide more consistent customer service, to training, to setting more specific performance targets and standards.
Another way is to ensure the top-selling personnel are on duty during the peak traffic periods.
At Liz Claiborne, the changes increased closing ratio from 8 percent to 16 percent, all with the same amount of traffic.
Larry Lombardi, vice president of stores for 8 years at the 1,100-store Fashion Bug chain, reported a similar experience.
He led the retailer on project to improve conversion rates at approximately 75 Fashion Bug locations.
In instituting the SMS system, a training program was designed to be more customer focused at certain times of the day and less task-oriented. Fashion Bug also altered the way it scheduled sales staff to capitalize on identified sales windows when there were more people in the store.
Prior to the project, conversion rates at Fashion Bug were a little more than 20 percent. After several years, the conversion ratio had risen to 29 percent. The chain ultimately adopted a similar program at the rest of its stores and some related brands.
Lombardi said viewing data at “face value” is the biggest obstacle to maximizing the value of traffic counting—i.e., “traffic is up, traffic is down.” He adds that there must be a commitment of time and resources as well.
“Some people look at the information from traffic counting and say, ‘it is what it is,’ but it’s not,” says Lombardi. “It’s what you do with it.”
Traditional Furniture Stores Continue to See Competing Channels Emerge.
It doesn’t look as if there’s any end in sight for new consumer alternatives to traditional home furnishings stores.
For instance, high-end furniture retailers that haven’t lost sleep over different ways consumers might find the sort of product they carry might want to check out Chairish.com.
The online consignment shopping site for upscale home furnishings launched in late February specializing in good condition, upper-end furniture, accessories and accents.
A browse through the site indicates the concept can move product—a fair amount of what you’ll see already is labeled “sold.”
Chairish aims to meet two needs in the marketplace. First, well-to-do and wealthy consumers who are moving or giving their home a makeover have a vehicle to get some cash out of their old furnishings versus giving them away or storing them.
Second, it makes gently used, but high-style furniture available at a savings to aspirational consumers, or those who while well-off, still want a value.
Think about how the value of that new car drops the moment you drive it off the dealership’s property. (I know I’ll probably never buy a brand-new automobile again.)
The site serves customers anywhere in the United States who have a major credit card, and offers white glove-shipping as well as a standard 48-hour return policy on all items.
For sellers, Chairish offers to levels of service: first, a standard service anywhere in continental United States. Sellers complete an online form, share the story behind their piece and upload photos. Once Chairish curators approve the listing, it is posted and ready for purchase. Listing is free, and Chairish receives a 20 percent commission upon sale. There is a $250 minimum listing price per item.
The second seller-service level, Concierge, is currently offered in the San Francisco Bay Area, where Chairish is based, and will roll out in additional major markets. With this service, a Chairish representative comes to the seller’s home, inspects the furnishings, writes the listings, take the pieces from the home via white glove movers, puts them into secure storage, and professionally photographs the items. When the piece sells, Chairish manages payment, shipping logistics and only takes a 40 percent commission. Listing is free.
The site brings plenty of e-commerce experience to bear, with its founding team includes entrepreneurs from places such as Hotwire, TripIt, Yahoo, Expedia, eBay, and Levi Strauss & Co.
A DEVELOPING STORY
Chairish is one of the latest examples of how people are finding furniture in new places.
Greensboro, N.C.-based furniture marketing consultant Joe Carroll has long maintained a list of distribution channels for furniture.
His updated list, which he shared with Home Furnishings Business, stands at 86 now, same as last year, but it has changed slightly, losing “computer specialty” stores and gaining a new category, “sleep specialty” stores.
“Sleep specialty used to be under ‘product-specific specialty stores,’ but bedding specialists are one of the fastest growing channels within that group, so they rated their own listing,” Carroll said.
With retailers such as CompUSA no longer in the picture and consumers now purchasing office furniture at other electronics outlets such as Best Buy, Carroll felt the computer specialty channel had pretty much gone away.
“I’ve talked to a lot of people, and they say computer stores just aren’t carrying furniture anymore,” he said.
Along with “sleep specialty” stores, Carroll said he’s seen most growth in the “multi-regional chain,” “regional chain” and “national chain” segments among furniture stores; “online furniture retailers”; and “flash sales sites.”
“Online furniture retailers also have divided into three kinds: furniture retailers selling on line, wholesalers like Amazon selling online and the Internet-only dealers like Wayfair,” he noted.
Flash sales sites are a permanent part of the home furnishings distribution picture, he added.
“Flash sites are reminiscent of the ‘80s when catalogs came on, or when Internet sales began,” Carroll said. “Everyone said those would always be a small part of furniture sales, and now the Internet has $5 billion. Flash sales sites are growing, and they’re here to stay.
“That turned out not to be a ‘flash in the pan.’” HFB
As of press time, the country was just going into the Final Four weekend of March Madness of the NCAA championship. The four teams—Louisville, Wichita State, Michigan and Syracuse—have made their way to Atlanta, soon to be followed by ardent fans of the sport.
I absolutely love college basketball.
Some of that love comes from growing up in North Carolina where passions run deep and rivalries are hot. Back in the day, who could argue with the strength of Tobacco Road, and its majestic cluster of basketball powerhouses? Much of my love for the sport comes from spending my college years in Chapel Hill, N.C., at THE University of North Carolina. (The REAL Carolina, for all my friends in Columbia, S.C.)
While my beloved Tar Heels fell to the Jayhawks of the University of Kansas in the third round of play, I’m still watching. My bracket, chosen through loyalties to the ‘Heels and the Atlantic Coast Conference, started to fall apart weeks ago. It’s pretty much disintegrated now with none of my chosen four anywhere near Atlanta. Every year, I say I’ll fill in the bracket without following my heart. THAT isn’t likely to happen—EVER—and even if it did, given this year’s topsy-turvy, unpredictable month of games, my picks still would have gone down. I might could have improved my chances of winning the pool had I collected a few quarters and opted for a heads-or-tails strategy.
That’s the beauty of March Madness. Short of my team winning it all, the craziness and excitement of the unknown keeps me tuned in for “just one more game.”
I’m sure you’re wondering what the heck college basketball, March Madness and the Final Four has to do with the furniture retailing business.
The way I see it, retailing, like college basketball, is an extremely competitive sport.
To succeed and play well, it takes practice, the right tools and of course, some information on who your competition is. I have no doubt that each of the teams playing in the Final Four in Atlanta have been studying and reviewing the other teams to decipher their strengths and weaknesses in an effort to develop the most effective game plan. Coaches and assistant coaches are all poring over strategies that have been successful in previous games, but to do that, they must know their competitor.
Preparation is the key to success. Knowledge is power.
Who is your primary competition in your market? Is it Amazon? Your neighborhood pharmacy? Walmart? Target? The local bookstore? The Best Buy in the local shopping hot spot? Look around, you’re likely in the fight of your life with someone other than what we think of as a “traditional” furniture retailer.
Duking it out for those elusive consumer dollars, and the consumer’s time and attention.
So jump in with both feet, figure out who your competition is and be ready for the big win. Find the tools that make the most sense and put them to work in your operation. You’ll be thankful when you come out on top.
Now, back to basketball.
Thank goodness for Cinderella teams, underdogs, enthusiastic players and coaches with the desire and will to win. Going into the weekend of play, my heart lies with the Wichita State Shockers—a fabulous mascot given the circumstances.