From Home Furnishing Business
By Powell Slaughter
An eye for opportunity and continuing development of new market segments and services has Stacy Furniture & Design staking a claim in the highly competitive Dallas/Ft. Worth market for home furnishings.
Last year, Stacy racked up more than $42 million in sales at its Grapevine and Allen, Texas, namesake stores, an outlet store at its Flower Mound distribution center, and another location at a
former Robb & Stucky store in Plano.
Since incorporating as a retail operation in 1991—prior to that it was a wholesale furniture distributor, serving dealers in Texas, Oklahoma, New Mexico and Louisiana—Stacy has grown into a full-service home furnishings resource, building its price points into the middle and upper end, and offering full design services.
FROM WAREHOUSE TO SHOWCASE
The showrooms Stacy’s customers see today are a long way from its beginnings as a store. The retail operation opened initially in the warehouse that served the original distribution business, “selling in and through our racks,” said Dorian Stacy Sims , Stacy Furniture & Design president, and daughter of founder and owner Rick Stacy .
“This proved to be cost effective but made for very difficult conditions for our customers,” Sims said. “The heat in a warehouse during a typical Texas summer can be grueling.”
Despite the less-than-ideal shopping environment, business continued to grow at a steady, dependable pace, helped along by a wave of home developments in the market.
In 1998, Rick Stacy, who Sims called “our leader, visionary, chief ‘dreamer’” decided it was time to build a “real” store, and construction began on Stacy’s Grapevine property. That store opened in July 2000.
“His vision was a one-stop shopping experience for our customer’s home furnishing needs,” Sims said. “The Grapevine property has 40,000 square feet on the first floor dedicated to other needs for the home that Stacy’s doesn’t sell. For instance, we have Carpet One, Morrison Appliance, Yard Art, a drop-in day care facility and a restaurant as tenants.
“The Stacy Furniture showroom is on the second floor featuring 90,000-plus square feet of stained concrete and carpeted areas displaying furniture in both category specific and lifestyle vignettes. Over the years we continue to evolve with our assortment, display and price points due to the ever-changing needs of our customer. In 2003, we opened a similar, one-story footprint in Allen, Texas, and have had great success with that expansion of the market area.”
When Gabbert’s decided to leave the Texas market in late 2005, Stacy looked at purchasing its Fort Worth facility. The structure, however, didn’t fit Stacy’s needs, so while it passed on the building, it expanded its own reach with consumers by hiring the former Gabbert’s Design Studio staff.
“We opened Dorian’s Interior Design studio in Fort Worth in 2005 to expand our selection in higher-end goods and design services,” Sims said.
A new Trader Joe’s grocery leased that Fort Worth property in late 2011, and the Design Studio moved out, but design services for a higher-end clientele by that time were an established part of the retailer’s repertoire. And that meant a new brand to reflect Stacy Furniture’s abilities.
“This dynamic product assortment proved to be a very successful decision and a challenging one at the same time,” Sims said. “We began to incorporate more and more of the higher end lines, such as Henredon, Hickory Chair, Century and Sherrill into our existing Stacy Furniture stores until it became more efficient for us to incorporate the entire mix together and change our company name to simply, Stacy Furniture & Design. Today the customer experience at any Stacy Furniture & Design will host a wide variety of price points from Klaussner to Henredon, custom window treatments, whole house finish out and so much more.”
Stacy will be moving out of the Former Robb & Stucky location in Plano this year. The retailer had a short-term lease on the property, and while Dorian said that location has been successful, the landlord has contracted to demolish the building and replace it with multi-story office towers.
“At this time, we are currently running a moving sale event and negotiating details on another property in the North Dallas area,” Sims noted. “We’re hoping to make a ‘new home’ announcement very soon.”
The product selections between the existing Grapevine and Allen stores are primarily the same, but the feel of the two showrooms is different due to interior details. The Allen store, for instance, is a former Kmart location and has very high ceilings and carpeting. The furniture showroom segment of the Grapevine store has stained walls and tile flooring over much of the area.
“Since starting our moving sale from Plano, we’ve begun to remodel and enhance the displays at our Allen location,” Sims said. “By creating a more open feel in some areas while building smaller, power display opportunity areas the customer can shop the store with ease.”
UPSCALING THE MESSAGE
Stacy Furniture & Design’s primary advertising medium is television.
“Rick and I personally appear in our commercials and try to balance between event driven offers as well as informative messages about products or services,” Sims said. “We are doing more and more social and digital media but are still trying to find the best balance to reach our customer.
“For several years now, biannually we’ve mailed a 44-page Magalog (an upscale catalog) piece that has been very successful in expressing to our customers what we really offer in a format customers are proud to keep on their cocktail table for months to come.”
The retailer also is working on scaling up the brand image.
“Our trade line has always been ‘if you’re not shopping at Stacy’s your burning money,’ but that just is too price-oriented, and that’s not how we want to compete,” Sims said. “We’re working on our marketing and branding to expand and talk to the current customer we’re trying to sell.”
Sims noted that Stacy Furniture & Design is in a very competitive market with very astute independent retailers and successful chain operations.
“It forces Stacy’s to keep on our toes, stay ahead of pricing issues and marketing opportunities, and ultimately makes us better merchants,” she said. “We are different in the respect that we offer a wider variety of price points and opportunities to fully address any customer’s needs—no matter the budget. From the chain perspective, you can never replace the value of a locally owned and operated, family business dedicated to great customer service.”
Like most retailers, Stacy Furniture & Design felt the heat during the recession, but Sims is optimistic about the retailer’s prospects.
She said Stacy’s had been on a consecutive sales growth pattern for 17 years until late 2008.
“While Texas was slower to feel the fall out of the economy than other areas, we have felt it,” Sims said. “Sales did drop, significantly at times, and we had to make many changes to our operation costs and cut expenses wherever possible.
“I think the most important thing we’ve learned is, most likely, you can always keep evaluating expenses and overhead to reduce waste, and it should be a priority, not fall to the back burner. For the customer, we continued to partner with manufacturers that have shorter lead times to help manage our inventory costs but also provided the customer with a quicker delivery fulfillment.”
Sims said she’s hearing good things about the housing market picking up in the market Stacy’s Furniture & Design serves.
“By continuing to expand our advertising and fine tune our product mix message, we feel we are doing a better job at reminding them how important it is to make their house a ‘home’” she said. “Boiling it down, we are continuing to advertise as much as possible to remind people that new furniture is a good thing.” HFB
So, who are your competitors? Seriously, think about this a minute before reading further, list them in your head. You probably named the traditional retailers in your area, but did you think of your local grocer or drug store? They didn’t make my list either, but after doing a bit of research and reading a rough draft or two of articles appearing in this issue, my list would be a lot longer.
I could list a few more for you here, but will let you uncover that information for yourself in later pages.
We all know the importance of real estate on your showroom floor, and I would imagine it’s the same in the grocery industry, so why is the widest aisle in my local Kroger the one with furniture and accessories?
I don’t believe it’s for the convenience, heck I’ve never said let’s run by Kroger real quick and check out those recliners. I’d like to know who has. I mean really, how would you get it in you basket and through the 20 items or less lane? I joke, but the only reason they would give up this floor space is because they are making profit on these items.
The same thing is happening at my local CVS. Now they haven’t ventured into furniture, but they have a few accessory products that could appear on your retail floor. Granted the quality is probably much different than what you offer, but my point is consumers have options besides the traditional furniture retailers today. In my opinion, these places seem very strange for a furniture purchase. I don’t believe
I would ever take a serious look at either location when shopping for something new for my home. That said, others must be purchasing items from them if the merchants are willing to give up the floor space to feature the products.
Traditional brick-and-mortar furniture stores are facing more competition than ever before. The days of being the only game in town have long past. It’s up to you to find a way to reach your customers and get them in your door. It can be done, you just need to point out your strengths and tell them why you are the better selection for making any furniture purchases.
Your core business is furniture and it always will be. You have a vast selection of products and designs to fit any home. You have the fabric and color selection that will allow them to have a custom piece in the home. Your staff is knowledgeable and can answer any questions or help with overall room design. Your delivery and customer service people will help them if needed after leaving your showroom. None of these items can be said for a grocer, drug store or most any other non-traditional competitor you might name.
This issue of Home Furnishings Business magazine takes a look at all the channels retailers face daily while trying to conduct business. After reading this issue, you will have learned a few things from other retailers and how they are positioning the traditional furniture stores to remain the first choice for customers.
Are you the first choice for home furnishings in your marketplace?
Thinking of Incorporating Mobile Technology into Your Operation? Read on for Issues to Consider.
Got a smartphone? Next time you have a few minutes, run a search on the App Store for “shopping apps.”
You’ll find a lot of companies already on the mobile technology bandwagon. Best Buy, Walmart, Toys r Us, Overstock, Amazon, Zappos, Office Depot, Staples—the list could fill a lot of this page.
In home furnishings you’ll see names such as One Kings Lane, Ballard Designs and Ikea—no big surprise there—on the App Store, but for the most part furniture retailers are playing catch up with other consumer products sectors when it comes to granting their customers access to their products and services via mobile phones and tablets.
Sales of those units are growing every year, and there’s a generation of consumers entering their buying years that has never known a world without digital mobile technology.
Just when we were getting used to shoppers heading first to the Internet, it appears that not too far into the future, they’ll be heading for their smart phone or tablet instead—a lot of them already are. When that time comes, will they find you?
OPPORTUNITY & CHALLENGE
Mobile technology presents both opportunities and challenges to retailers, said Myriad Software Principal Carolyn Crowley. The San Diego-based home furnishings retail automation specialist made mobile the centerpiece of a couple of sessions at its user conference last month in San Antonio.
With so many consumers using their smartphones during the shopping, and sometimes purchasing, process, Web sites optimized for mobile users and in-store mobile-friendly features for product information and such can be a competitive advantage.
Crowley pointed out that Lowe’s is deploying iPhone-based mobile POS to compete with Home Depot. Furniture retailing, she pointed out, has some catching up to do.
“When you go to places like Best Buy, the capability of what you can see and do online is better in other industries,” she said in a phone interview after the conference.
One reason is that furniture retailers looking to put information onto customers’ phones face challenges unlike, say, an airline selling tickets or taking reservations via mobile.
“That airline controls what it’s selling, its own tickets,” Crowley said. “The challenge a furniture retailer has is that you’re working with products that aren’t yours, you’re getting them from a lot of different vendors.”
Take QR codes that could be on product in your store.
“Does that QR code lead the consumer to the retailer’s Web site or the manufacturer’s Web site?” Crowley said. “Manufacturers need to make the information available on the retailer’s Web site. That’s an initiative that needs to happen.
“From a technology provider’s standpoint, the more connections we can give the retailer to the manufacturer’s information, the more the consumer will come into the store.”
She added that from her clients’ feedback, she believes manufacturers are more comfortable driving traffic to their Web sites versus the retailers’ sites.
“The customer’s often already doing the shopping on line and knows what they want, but not all retailers carry the all the product they see on the manufacturer’s Web site,” Crowley said. “Wouldn’t it be great if the retailer could tell the customers (who visited the manufacturer’s site) we don’t have that particular product in the store, but we can tell you everything you need to know.
“It’s a challenge that some of the retailers can’t show (a manufacturer’s) product on their own Web sites because the customers are driven to the manufacturer’s Web site.”
At a Best Buy, a shopper can know for sure via her smartphone if the product is at the local store, and maybe go ahead and pull the trigger on a purchase.
While with furniture, especially something like upholstery or bedding, the customer is more likely to want to come into the store for a “touch-and-feel” test, having a shopping list on the customer’s phone when she walks in the door is just one example of how mobile can make the furniture buying process easier.
“Wouldn’t it be great if you could walk them around your store with their mobile device—you don’t even have to ask them what brought them into the store,” Crowley said. “Technology service providers like us should work with our clients’ manufacturers to get as much of that information available at their fingertips as possible. Ultimately, we’re trying to sell that manufacturer’s product line, and the more a Myriad or other service provider can provide to the retailer, to arm them for the consumer walking into that store, the better off we’re all going to be.”
Myriad brought an expert in mobile applications to its conference to give retailers advice on how to make the most of mobile. Scott Gamble, vice president of digital solutions at Alliance Data Retail Services, is accountable for all the Columbus, Ohio-based company’s consumer-facing digital initiatives in the areas of the Internet, mobile, e-commerce, social media and e-mail. He and his team are responsible for the development and execution of the Alliance Data mobile strategy, which has led to multiple industry-first products in the areas of mobile marketing, payments and service.
In addition to his 15 years with Alliance Data, Gamble has more than 20 years of experience in the retail payments industry, including management roles at GE Capital and SPS Payment Systems.
Things like virtual loyalty cards, optimizing credit programs for mobile users and “geo-fences” that alert customers to deals when they’re in a store’s vicinity are ways mobile can help retailers get consumers’ attention and build sales.
A NEW CONTEXT
Location-based marketing using geo-fences, for example, targets customers in a defined area around a store. It’s important to note that those customers have to opt in to receiving information from your store.
“That location awareness ties the context of knowing that it’s a brand I’m aware of that I’ve opted to receive information from and that the brand’s nearby—it ties all that together,” Gamble said. “The cellular networks will sell you that (locational) data for customer’s who’ve opted into receiving information from you.
“You can build a ‘fence; and be notified that one of your customer’s is in that fence—you can then send them a text.”
Consortia of non-competing retailers in the same area, for example around a mall, have made locational marketing using geo-fences much less expensive.
A key is getting those customers to opt-in, and mobile-optimized loyalty programs are one way to inspiring that commitment. It’s also convenient for customers to have that loyalty program on their phone.
“I don’t know anyone who has space in their wallet for another (loyalty) card or room on their key chain for another one of those tags,” Gamble noted.
Alliance Data research indicates that 18 percent of consumers agree that a mobile loyalty program gets more valuable as they have begun to expect offers to arrive; and that 31 percent of consumers agree that the program gets more valuable as it gets more relevant to their interests.
“Allow consumers to express preferences and filter those messages to correspond to that data,” Gamble said. “This context drives them to action,” adding that ADS found 52 percent of those on the program will visit the store’s Web site, and 50 percent will visit the store soon.
“Someone isn’t going to sign up for text promotions from 50 different brands. We’ve found they’re open to six or seven,” Gamble said.
MAKE THE RIGHT MOBILE
ADS research found that 61 percent of people have a better opinion of brands when they offer a good mobile experience.
Be careful here—if that experience is unsatisfactory, the reverse is true. Say you have a QR code shoppers can scan. Gamble related an anecdote of a retailer whose code generated a message telling shoppers they needed to view the target site on a computer.
“If you don’t connect the dots all the way to the end, it creates bad vibes from the consumer,” he said. “There are plenty of options for you to make your Web solutions mobile-friendly without spending a lot of money. Don’t do anything just to go mobile without tracking everything all the way through.”
Retailers can go out and buy an e-mail list, but they can’t buy a list of phone numbers for a texting campaign. Engage customers in the store and on your Web site to create that buy-in to what you have to offer.
“Create a database of mobile short-message service (that’s text in common parlance) users, and engage them responsibly with relevant content,” Gamble said. “Seventy-nine percent of active shoppers would opt in to store alerts for special offers and discounts; and 75 percent are interested in receiving location-based offers when near the store,” according to ADS research.
Above all, make sure the experience is mobile-friendly from end-to-end. Provide product information and add links for consumers to share via social networking sites. HFB
Scott Gamble, vice president of digital solutions at Alliance Data Retail Services, offered these suggestions for retailers considering the use of mobile technology.
• Respect the mobile consumer.
More and more shoppers are taking their mobile phones into stores, and they’re expecting to be able to use them in yours.
• Understand that mobile is a shopping tool.
Consumers are using their smart phones to access product information, coupons and offers, comparison shop, purchase goods online and locate stores.
• Control your customer’s mobile experience.
Make sure your Web site is optimized for smartphone and tablet users.
• Build mobile-friendly in-store experiences.
Create a database of mobile users, and engage them responsibly with relevant content.
• Use barcodes to your advantage.
Deploy barcodes on your in-store merchandise that take consumers to your mobile Web site for more product information.
• Make sure your digital properties are in sync.
Audit your digital properties from end to end to ensure smooth transitions between channels.
• Mobile-optimize your credit program.
Introduce the account acquisition process to earlier in the shopping cycle to increase initial-purchase size; and educate customers on promotional offers and spending power while you can still influence shopping behavior.
Furniture Retailers Should Get Ready to Come out Swinging This Year.
Home furnishings retailers are getting back into fighting trim versus survival mode as the economy returns to some sense of normalcy.
Wretched headlines out of Washington and news media that seem more intent on generating heat than light in a 24-7 competition for attention sometimes overshadow the fact conditions favorable to our industry have improved. Could the furniture retail sector be in for a stronger competitive stance relative to other areas where consumers can spend their money, such as travel, electronics and automobiles?
While he predicts a “mild” recession next year, economist Alan Beaulieu, president of ITR Economics in Boscawen, N.H., thinks the answer is yes.
Beaulieu talked to attendees at last month’s Myriad Software Conference in San Antonio about moves retailers should make this year and the next.
“2013 is going to be a positive year, but 2014 will have a mild consumer recession,” he said. “The government has ensured that” with changes to FICA and concerns about the impact of health care legislation.
He added that 2015-2018 will be see very positive growth, with increased hiring and economic activity.
“How do I get ready for 2015?” he said. “Training, cross-training, improving efficiency. Start doing it now, because training takes time.”
He pointed out that a little more than 40 percent of American’s still think the country is in recession, largely due to negative headlines and continued high unemployment levels.
“Don’t let the media tell you the economy’s going to crater,” he said. “This (2014) recession—a mild one—has nothing to do with the last one. … The consumer has done a tremendous job of right-sizing and deleveraging. … Debt-to-equity ratios are at 20-year lows.
“If you can reach that consumer and line up with their expectations you’ll find they will spend.”
Home furnishings, he predicted, will outperform other retail sectors, what with steady improvement in the housing market: “While overall retail sales are okay, people want to buy what you’re selling.”
He added that now is the time to borrow money to invest in your business, since the Dodd-Frank (Financial Regulatory Reform Act) will have a negative effect on lending in 2014.
“You have this year to get your best deal,” he said. “You have to spend money to invest in a growing business.”
While furniture retail is off to a desultory start in 2013, retailers should expect and set themselves up for brighter times ahead, said Jerry Epperson, director, Mann Armistead & Epperson, Richmond, Va.
“Unfortunately, we were slammed pretty hard in February—retail was tough in general, and home furnishings was one of the worst categories,” Epperson said. “We think a lot of that has to do with severe weather tax returns running 10 days behind. A lot of retailers are telling us March is flat at best.
“If you want the reasons we’ll have bad business this year, there’s a long list, and Washington has been a very generous contributor.”
Now, for a very large “but” that gives retailers reasons for optimism.
“The housing numbers are blowing the doors off what anyone expected in their wildest dreams—we’re getting in range of it being a healthy market,” Epperson noted. “This year, new household formations will be double what they were in 2010, and Amex just said 50 percent more people will be changing homes than during last year.
“If you focus on what we rely on as an industry, you can have a good year—if you just watch 24-hour news you won’t,” he said. “The things that create demand for home furnishings are up. That’s what we’re trying to get people to focus on. If you want to be miserable, be miserable, but someone’s going to be out there meeting demand for all these people.”
Epperson believes exciting concepts are emerging for home furnishings retail, such as Ashley’s Sleep and Art Van’s Pure Sleep shops, and pointed out that more retailers are expanding, with more new stores opening in any year since 2002.
“The larger retailers are investing in growth,” he said. “Last year our total sales for all routes of distribution were up 5.9 percent. The real driver was the mattress sector, which I showed as 9.7 percent growth, the third straight strong year for mattresses.
“I think this will be a great year for outdoor furniture sales,” Epperson said. “We had this exceptionally cold, snowy winter, especially compared with last year, and people are excited about spring and summer.”
New stores in Epperson’s home town of Richmond, Va., include a Rooms to Go, and he said what happened there is an object lesson in opportunity.
“Their being here has made our Ashley stores, our Value City stores, Haynes Furniture, which is local, better,” he said. “Television, print ads are way up. It’s like Rooms to Go woke up the city.
“I don’t have the exact numbers, but with their coming to town, I’m willing to say furniture sales around Richmond are up 20 to 25 percent because of all the excitement created by this big guy and what everyone else did to respond.”
THE ENEMY AIN’T US
Retailers don’t need to wait for new furniture competition to start building consumer mind-share for furniture relative to the real competition—other categories of consumer goods.
“The mom and pops need to not worry about the big boxes and the giants of our industry,” said Mary Frye, president of Home Furnishings Independents Association, which is merging along with the National Home Furnishings and Western Home Furnishings associations next month into the new North American Home Furnishings Alliance. “They need to tap into their knowledge of their customers and customize the experience for those customers.”
Frye always has believed furniture retailers’ true competition lies outside the industry, and that retailers should have some fun in taking on other sectors.
“Retailers can take a tongue-in-cheek approach regarding other categories in their communications,” she said.
Going on a cruise? You might come back with some pictures, and you might also end up on a broken ship. Did that hotel look as good in person as it did on the Internet?
“Spend your money on something you can’t keep, or you can turn your home into the place you want it to be,” Frye said.
PRIMING THE PUMP
Home Furnishings Business asked a number of retailers what they’re doing to get consumers thinking more about buying the products they offer.
With Internet shopping—and purchasing—gaining ever more traction across a range of consumer categories, e-commerce is getting plenty of attention.
Colfax Furniture & Mattress in Greensboro, N.C., for example, is getting set to open its online store within the next couple of months after it tested the waters with an e-mail program that generated a big response from consumers.
Starting at the beginning of February, the retailer began showing products on its Web site for which consumers could request a quote.
“We have a person who manages those e-mails and sends back a price to the customers,” said Jan Linder, finance operations manager for Colfax. “They can come to any of our locations with that e-mail with pricing, and we’ll process a special order for them.”
The move generated overwhelming response.
“We haven’t tracked how many of those converted to sales, and that’s the reason we want to get our shopping cart up and running,” Linder said. “The interest is out there—we’ve been very pleasantly surprised at the amount of interest.”
Colfax is working with Micro D on phase two of the project, setting up online product displays with pricing.
“The general market is going toward online shopping, and also the ability to see the product and the pricing is often enough to drive people into the (brick-and-mortar) store,” Linder said.
The online move is attractive from an overhead standpoint, she added, noting that it’s far less expensive than opening another brick-and-mortar store.
“Online shopping is a boat that has sailed, and the furniture industry needs to get on it,” Linder said. “If we limit our shopping cart to our delivery area, we can deliver absolutely anything we can sell in our store. We believe it can do just as well or even exceed our brick-and-mortar sales.”
In March, Furnitureland South in Jamestown, N.C., went live with its online store, targeting shoppers across the country and beyond.
That initiative also came in response to consumers’ tendency to hit the Internet first when shopping for just about any big purchase.
It also builds on Furnitureland South’s brick-and-mortar service roots. Customers are encouraged to contact a design consultant for full-service design expertise; from space planning to color coordination and fabric selection, expert consultants work to create a turnkey service free of charge. Purchases also are delivered by the retailer’s in-house, white glove delivery team.
Colfax expects its online store to pay dividends at its brick-and-mortar locations.
“Everyone starts on the Internet seeing what styles they want, whether it’s a store they want to go to,” Linder said. “That’s very important for us because of where we’re located—we’re a destination, we aren’t sitting on Wendover Avenue (a major Greensboro traffic artery), and you have to make a decision to come see us.
“It’s not just a matter of convenience for shopping, it entices customers to come to the store if they’re not an online shopper.”
Above all, Colfax wants a “seamless” relationship between its online presence and its stores.
“We’re trying to design our Web site and our Web store to match the message and the quality of our brick and mortar,” Linder noted. “We don’t want customers to go to the Web site, decide to come see us and have get a different impression of the our stores.”
Frye at HFIA noted that retailers can offer customers via their Web sites service that pure online retailers often don’t.
“Retailer’s can search out that source and make things happen that the customer doesn’t know how to do,” she said, noting that with an Internet-only retailer, customers can be on their own. “We sell a very subjective product. What’s beautiful to one is awful to someone else. Our reasons for buying are equally subjective. Emotion sells so much more than statistics do.”
The economist Beaulieu noted that e-commerce held up better during the recent recession, and retailers should explore that avenue before the next downturn.
“E-commerce can provide additional opportunity if you can optimize your presence on the Web,” he said.
PLAYING TO STRENGTH
Bassett Home Furnishings licensee Bassett San Diego’s San Marcos, Calif., store is the network’s No. 2 performer nationwide, and Bassett’s new HGTV Home collection should help maintain that high standard, said Matt Huffman, vice president.
Bassett San Diego has been doing in-home sales for more than 10 years—the technique accounts for as much as 20 percent of business. HGTV is all about makeovers, and the Bassett/HGTV Home connection makes Bassett San Diego’s in-home efforts an easier sale.
“Our HGTV partnership helps tie up our in-home designer sales,” Huffman said. “And that’s really important since those are normally five times the average ticket of other sales.
“There’s a correlation between HGTV and what we’re trying to do. It makes what we’re doing so much easier—people just don’t invite you into their home very readily,” he said.
Larry Marquez is president of La-Z-Boy Furniture Galleries of New Orleans in Metarie, La., which has two stores in the New Orleans market. His plan is to continue what worked last year.
“In 2012 we were up 30, 31 percent,” he said. This year we want a minimum of 12 percent growth, hopefully closer to 18 percent. Since we’re a La-Z-Boy dealer, the brand’s not an issue.
“We sell our quality story and the La-Z-Boy brand,” Marquez said. “It appears people are looking for quality products and that they do have the financial means to buy that middle to upper-end product.”
Marquez’s advertising goal is to focus on direct mail and television, the two media getting people into the stores.
“We’re also offering some special financing on occasion—30 months, no interest,” he said. “When you can buy something of quality and can pay it off in three years with no interest, that’s a draw. We do that once a quarter.
“It’s a simple plan—it worked last year and we’re going to try to carry it on this year.”
TWEAKING THE APPROACH
Harkness Furniture in Tacoma, Wash., isn’t into full-blown e-commerce, but it’s tweaking its online approach to grab consumers’ attention and business.
“It’s a long road. One of our main competitors is the technology realm—televisions, electronics,” said Kellen Harkness, purchasing manager. “The hard thing for us to compare against is the ease of purchase. We’re trying to make furniture easier for consumers to buy.”
For that reason, Harkness Furniture has added pricing to its Web site like Best Buy would.
“We aren’t in full-on e-commerce yet but we want to head in that direction with a cart or taking credit card information,” Harkness said. “We recently updated our Web site—we priced our top best-sellers that we know we have in stock. When people see anything priced online they assume you have it.”
The store was on an older version of Ayr1, but upgraded three months ago.
“If we do go with e-commerce we’re set up for it now,” Harkness said. “We’re still determining what to price and what not to. … The big boxes do that well, but it’s a slower process for furniture.”
Around 150 people a day review the Harkness Web site, which the store views as a virtual showroom.
“We get buyer inquiries all the time from the Web site. They can build a shopping cart and send it to us,” Harkness said. “I took those inquiries over, and I try to answer every one the same day, and I attach a $25 gift certificate good on any purchase in the store over $99.
“We don’t have a set letter, and I try to personalize that e-mail. If they’re looking for something we don’t carry in stock, I might say, ‘I can definitely special order it in X-amount of time, but we also have these options you can purchase immediately.’ I also include pricing.”
Formerly, Harkness just sent pricing on customer inquiries, but Kellen revamped the process when he took over the e-mail responses about a year ago. Those inquiries get a lot more traction now.
“In the first week, we had five people come in the store with the $25 certificate—before, we had none,” he said.
He’s also transitioning into a new position where he’ll have more access and more time to work on the Web site.
“In the near future, we’re looking at pricing as much product as we can,” he said. “That means staying up-to-date with what our competitors are doing; examining our stock levels; and if special ordering, focusing on the amount of time it will take.”
Vermuellen Furniture in Jackson, Mich., is examining where to put marketing dollars in a time its traditional print advertising partners are cutting back. Part of that process involves better tracking of what brings customers to the Jackson, Mich., store, and that’s one of the reasons Vermuellen signed on with Myriad Software a few months ago.
“Our local newspaper is printed only two days a week now, and is just online the other days,” said Denise Fisher, CFO at Vermuellen. “A lot of the (surrounding) rural communities had their own newspapers, and a lot of those are going away.
“We used to do a lot of print broadsheets, but we can’t rely on that now. My boss isn’t real comfortable with digital, but we’re pushing him into it—life is pushing him into it.”
Vermuellen has begun e-mail marketing, which Fisher said is cost effective, and more television advertising and is using its new Myriad system to better track what brings customers to the store (Vermuellen also operates three La-Z-Boy locations, but uses La-Z-Boy’s own system at those). Fisher said the store’s local market demands care in how it approaches digital marketing.
“Jackson is a very traditional town,” she said. “We can’t necessarily do what everyone else is doing. It has to be area specific. We’re getting more into television, but there you have to decide whether to go cable or broadcast.
“We do direct-mail pieces, but that’s pretty expensive. We’ve started doing billboards, but we haven’t determined their effectiveness … We need to collect more data on what brought people in, and Myriad has a program for that.”
Vermuellen’s advertising manager also is developing the retailer’s Facebook presence to appeal to newer customers.
“Expectations are very generational,” Fisher said. “Our older customers expect a lot of customer service—they’ll want to repair a 15-year-old recliner. The younger buyers don’t seem to want as much since they’re used to finding everything online.”
TAP INTO ASPIRATIONS
HFIA’s Frye said furniture retailers need to celebrate the fact that they do good things for people, and the smaller independents that make up so much of the association’s members can make that happen personally.
“I can’t imagine there are many retailers I deal with who can’t sit down and call all their customers and have a meaningful conversation in a reasonable amount of time,” she said. “Be the person who can make it happen, who’ll use all their contacts and all of their knowledge to get that customer something they might not even know they need.
“We need to give our customers permission to say, ‘I’ve changed, and this doesn’t fit me anymore,’” she said. “Furnishings can lift you up.” HFB
Checklist for 2013-2014
Alan Beaulieu, president of ITR Economics in Boscawen, N.H., offers this checklist for ways retailers can
prepare for business conditions in the next year and a half.
• Positive leadership modeling (culture creates behavior).
• Invest in customer market research (know what they value).
• Training programs (people, process, internal metrics).
• Review and uncover your competitive advantages.
• Spend money on new products, marketing, advertising.
• Improve efficiencies with investment in technology and software.
• Check systems for readiness to accommodate increased activity.
• Add sales staff and hire top people.
• Lock in costs.
• Judiciously examine credit.
• Work on “What’s Next” (What are you doing to get ready for improved conditions?).
California Is Set to Revise its Flammability Standard—the Rest of the Country Awaits.
Never underestimate the power of the media.
A Chicago Tribune investigative report last summer examining the eco-toxicity of flame retardant chemicals used to meet the State of California’s open flame test for furniture led Governor Jerry Brown to demand a revision to the law, Technical Bulletin 117.
California regulations governing substances such as formaldehyde in home furnishings products have led to national standards, so retailers need to keep track of developments in the state regarding the issue of flammability in the products they sell on their floors—and anything else that might land them in legal trouble in the future (see accompanying story, “Prop 65 Looms”).
When it comes to flammability, a lot is happening fast, and that’s one reason the American Home Furnishings Alliance made flammability a focal point of its annual Sustainability Summit last month in Charlotte, N.C.
“People doing the science aren’t talking to the people making the decisions,” said Arlene Blum, a biophysical chemist who’s executive director and founder of the Green Science Policy Institute, Berkeley, Calif., and a visiting scholar at the University of California’s Department of Chemistry, during her keynote address to the AHFA gathering.
CHEMICAL HARM VS. LIVES SAVED
Blum has examined the toxicity of flame retardant chemicals since the 1970s, when her research was instrumental in banning the use of brominated tris in children’s pajamas, and her studies played a big role in the Chicago Tribune’s report. She got more media attention again in November with the release of a study examining the flame retardant chemicals found in sofas purchased over the last two decades. The gist of her argument is that the long-term health effects of off-gassing from flame-retarding chemicals causes more harm than any lives purportedly saved through regulations such as TB 117.
The revised standard does not direct manufacturers to use particular flame retardants. It’s a flame test only. It also exempts items believed to be of little fire risk from labeling requirements. For residential upholstery, it calls for a smoldering test only standard; addresses the upholstery cover fabric; tests the interactions of components of upholstered furniture; and adheres to testing standards of the American Society for Testing and Materials International (ASTM).
Tonya Blood, chief of California’s Bureau of Electronic and Appliance Repair, Home Furnishings and Insulation, is responsible for overseeing revisions to TB 117. She presented the revised state rule at the AHFA gathering.
“Health and safety relates to the workers in your plants and factories as well,” Blood told the AHFA gathering. “I do not test for chemicals. That is not my or my bureau’s function. We test for flammability alone. … If you want to use other products or other technology, we want to make sure our standard is flexible enough for you to do that.”
The new California standard also acknowledges the role that cover fabrics play relative to filler material such as foam in fire behavior with upholstered furniture. Why ASTM standards?
ASTM “has broad stakeholder participation … and it’s a consensus-based standard,” Blood said. “The test methods are reproducible, reliable and widely practiced.”
California work also found smoking is a huge problem in furniture-related fires. Blood cited Department of Homeland Security research showing that the fatality rate was more than seven times greater in smoking-related residential fires than non-smoking-related residential fire; and that the National Fire Protection Association found smoking materials remain the leading cause and the greatest risk factor of upholstered furniture fires and losses today.
In California, of 50 deaths related to upholstered furniture fires annually, 44 are smoking-related.
Other impetuses to the changes in TB-117:
• A Consumer Product Safety Commission study found that flame retardant treated foam actually increases the damage to cover fabrics from a smoldering cigarette relative to untreated foam.
• A CPSC study found there is no significant difference between the flame retardant foams formulated to pass TB 117 and untreated foams.
• Upholstery cover fabrics play a more important role in fire behavior performance than filling materials per a CPSC study.
• Research confirmed that when the cover fabrics were changed to less smolder-prone fabrics, smoldering resistance of the mock-up assembly significantly improved.
The new standard addresses testing materials used including standard polyurethane foam, where it narrowed the density range of the foam; specified more properties of the foam; and selected higher density foam for testing, which screens out the most smolder prone fabrics or weak barriers.
For cigarettes as an ignition source, the new standard specifies the properties and the ignition strength; reduces potential for variable performance; and allows manufacturers to procure material from various vendors.
Type II tests specify a more smolder prone fabric for a more rigorous test of the barrier material.
The proposed new standard was published Feb. 13, which opened the floor for written comments. (Written comments should go to TB117comments@dca.ca.gov by e-mail; or by mail to BEARHFTI, 4244 S. Market St., Sacramento, Calif. 95834). A public hearing is set for the changes on March 26, and adoption should take place this fall. By July 1 next year, all upholstery manufactured for sale in the state of California must be in compliance.
For inclusion in the public record and consideration in the revision of TB 117, comments must be received in writing.
“Get comments in in time for review so you can perhaps impact changes to the standard,” Blood told the AHFA gathering. “Once adopted, it’s too late to make a change.”
After the March public hearing, Blood’s bureau will spend April reviewing comments, after which it will open the revised standard to additional comment in May or June.
Blood said when it comes to enforcing TB 117, California takes about 50 sample products a month for testing—mostly from retail storefronts.
“If products are failing, we notify the manufacturer,” she said. “We’ll issue a citation, a fine, up top stopping sale of that product in California. We’ve found manufacturers are quick to want to come into compliance and address the issue.”
TALKING ABOUT THE ISSUE
AHFA assembled a stakeholder panel at its Sustainability Summit to bring further depth to the fire-retardant chemical conversation, moderated by Dr. Ana Mascarenas, policy and communications coordinator with Physicians for Social Responsibility in Los Angeles. In addition to Tonya Blood and Arlene Blum, the panel included Robert Luedeka, executive director of the Polyurethane Foam Association; Hardy Poole, vice president of regulatory and technical affairs for the National Textile Association; Don Coleman, president of the Upholstered Furniture Action Council; and Malin Nasman, product requirements and compliance specialist for Ikea North America.
How attentive are retailers in general to regulations governing the product on their floors?
“For Ikea, it’s in our DNA,” Nasman said. “I do think it’s very important for retailers to get educated because regulators go to retailers to get product for testing. Tonya (Blood), Arlene (Blum) and I are reaching out to many retailers for that reason.”
Ikea has trading offices worldwide working with around 1,000 suppliers to control product development from design to retail floor. The retailer’s product requirements and compliance group must comply with standards in the 41 countries where it does business. The group monitors laws and standards, safety and compliance and global testing requirements. Ikea owns testing labs in Sweden and Shanghai—the latter facility serves as a training center for store associates and suppliers in China.
“Our policy is to minimize or completely refrain from using harmful materials,” said Nasman, who noted that Ikea has much more control over its supply chain than most home furnishings retailers.” We’ve removed several questionable substances (from our products) before they were even regulated.
“In general, our policy is when there are regulations, we go with the strictest one.”
TB 117 already has affected Ikea, due to flame retardant chemicals required to meet the state’s flammability standard.
“TB 117 requires a special range of upholstered furniture,” Nasman said. “We could never sell that sofa in Europe” because of the chemicals.
In general, she said Ikea’s avoidance of flame retardant chemicals leads to three benefits: positive effect on environment and human health; cost savings; and increased product lifetime.
UFAC’s Coleman said TB 117 isn’t the only potential regulatory issue of which retailers should be aware.
“It’s not just the flammability issue, but also what’s inside the product,” he said. “The UFAC tag can help with that. It gives consumers information on what they’re buying.”
Luedeka of the Polyurethane Foam Association warned retailers to make sure they don’t get too comfortable after any regulatory change.
“Any time there’s a change in a safety requirement, there’s a false sense of security,” he said. When it comes to furniture flammability he stressed the “importance of separating the ignition source from the fuel source” by way of example.
TB 117 Check List
Following is a check list for your vendor
partners under revised TB 117 guidelines.
n Do I have to test or re-test any
components or materials?
No, provided the material will not cause the upholstered furniture to fail.
n How will I know if a product will pass?
Manufacturers may demonstrate this by using the results from historical data OR Use a
barrier material between the cover fabric and the foam.
n When can I manufacture furniture under the new standard?
Once the regulation is adopted (Fall 2013).
n When must I manufacture furniture under the new standard?
July 1, 2014, is the mandatory compliance date.
n How will this impact me selling my
product to retailers?
There is no sell-through provision for retailers. Retailers must purchase furniture under the new standard on or after July 1, 2014.
Prop 65 Is an Issue
Don’t Look Now, But Plaintiffs Might Be Shopping
Your California Store
In October 2011, the California Office of Environmental Health Hazard Assessment added tris (1,3-dichloro-2-propyl) phosphate (TDCPP) to its Proposition 65 list of 800-plus chemicals “known to the State to cause cancer.”
Once a chemical is listed, businesses have 12 months to comply with the Prop 65 warning requirements, and some in the furniture business are getting into trouble. Since December, nearly around 20 furnishings manufacturers selling products in California have been listed in prospective lawsuits related to Proposition 65 labeling of upholstered furniture allegedly containing the TDCPP. AHFA offered guidance (http://bit.ly/XQKCkW) on Prop 65 labeling last October, and Bill Perdue, vice president of regulatory affairs for the association, gave an update at the Charlotte event.
The California law requires any product for sale, or that might be handled in the course of manufacture and delivery, containing a product on the list to be labeled with the statement: “WARNING: This product contains a chemical known to the State of California to cause cancer, birth defects or other reproductive harm.”
“This is a notification and warning to consumers that these chemicals are in a product or workplace,” said Bill Perdue, vice president of regulatory affairs for the American Home Furnishings Alliance, at last month’s AHFA Sustainability Summit in Charlotte, N.C. “All consumer products for sale in the state of California are subject to Prop 65,” he said.
Forget CARB, forget TB 117—this is a separate issue.
“Our suggestion is that on the label, include the language that takes care of ‘cancer, birth defects or other reproductive harm,’” Perdue said. “The business must provide a clear and reasonable warning of exposure—throughout the entire supply chain.”
He advised attendees at the Charlotte meeting to make a formal communique to any of its retail customers in California and come up with a label that notifies customers prior to purchase that a product contains a chemical on the Prop 65 list; and to even label their products’ boxes so they’re protected while goods are in transit.
Stores should place appropriate signage at the entrance, and Perdue said it’s a good idea to have a “billboard” in the store along with labeling on the product itself, since a sign on the door or a poster on a wall does not suffice as a point-of-purchase warning.
“The regulation doesn’t specify where to put the label, only that the consumer can see it prior to purchase,” he added.
A big problem for retailers is that ordinary customers aren’t necessarily the ones bringing attention to the labeling requirements. “Professional” plaintiffs are hiring people to purchase products, say an inexpensive ottoman, and testing it for TDCPP. Fighting such cases can be expensive.
The choice to fighting is to settle, either alone or with a group of businesses facing the same complaint.
“We’re told this is now a cost of doing business in the state of California,” Perdue said.
He added that Prop 65 applies to retailers selling goods over the Internet to customers in California: “Put the label on the Web site’s home page, or have it pop up when they type in a California ZIP code.”