Furniture Vendors Can’t Ignore Online Sales’ Potential for Future Growth.
By Powell Slaughter
Traditional furniture stores might not like it, but it’s hard for their vendors to ignore the business potential of selling furniture on the Internet.
With online channel growth in home furnishings chugging along at double-digit growth every year while the category overall is in the low-single digits, e-commerce gets an increasing amount of attention from manufacturers and distributors in our sector.
A lot of vendors weren’t willing to go on the record about their business with Internet retailers, but the channel is of increasing importance for many—one that declined to go on the record noted that it sold $200,000 worth of goods during a five-day flash sale at Joss & Main, part of home furnishings e-commerce giant Wayfair, which expects to hit the $1 billion mark this year.
That’s a hard potential customer to ignore.
Niraj Shah, CEO of Boston, Mass.-based Wayfair said traditional stores blaming the online trend for lost sales might want to look to their own business.
“What we hear from suppliers we work with … is that some retailers complain that the online business should belong to them,” he said. “The biggest group of complaints, though, are from brick-and-mortar retailers who aren’t doing well, and they blame online sales. The fact is they’re probably losing share to their brick-and-mortar competition.”
A CORE BUSINESS
While most vendors remain mum on the sales volume they conduct with Internet retailers, commenting was no problem for Abbyson Living. Online sales constitute the core of the Los Angeles-based supplier of lifestyle home furnishings’ business.
Since 2008, Abbyson has worked on a drop-ship model that’s tailor-made for e-commerce. The company has a strategic partnership with white-glove delivery service Ace Delivery that accounts for 70 percent or more of its transaction fulfillment, according to Homaira Shifa of Abbyson Living’s marketing department. Ace is growing, but in states not served yet, Abbyson contracts with other third-party delivery services.
“Shoppers order through the Web site of our retail partners, and we ship the items from our Southern California distribution center,” Shifa said. “We have about 68 percent of the top 100 <st1:country-region w:st="on">U.S. retailers we partner with.”</st1:country-region>
Those include pure-play Internet retailers such as Wayfair and DirectBuy, as well as retailers with brick-and-mortar locations that also play on the e-commerce field. All Abbyson’s business is drop-ship and through the Internet.
Exclusivity is an issue in e-commerce, but Abbyson also has customized programs with retail programs to grant exclusives on certain products in its line.
At any rate, Abbyson is riding the growth of online furniture purchasing.
“The Inc. 500 has us as one of the fastest-growing private companies, and that’s because of our e-commerce,” Shifa said. “This is our business.”
In addition to ranking No. 159 on the 2012 overall list, the company received three Inc. 500 category achievements, as well: No. 15 in Top Consumer Products & Services Companies; No. 37 in Top 100 California Companies; and No. 14 in the Los Angeles Metro Area.
Traditional retailers really can’t fault vendors for wanting to get their products in front of consumers. With as many as 80 percent of shoppers using the Internet at least to research their purchases, an online presence is of particular interest to manufacturers and distributors.
Hooker Furniture has a presence with a limited number of pure-play e-commerce retailers. Those include Wayfair, Hayneedle and Cymax.
“E-commerce is by far the fastest-growing channel in our industry,” said Johne Albanese, vice president of corporate marketing for Hooker. “It remains very important for our brands that they are available where the consumer wants to shop. We recognize that the online business is very important to our future.”
A HYBRID APPROACH
Pure-play, national e-commerce sites for furniture appeal to those consumers who want a massive choice of products from which to choose. While Hooker has a presence there, its major e-commerce focus right now runs along more traditional retail lines.
“The big opportunity is local-based e-commerce,” Albanese said. “Imagine for a minute from the consumers’ perspective why they purchase online. The number one reason is convenience. If you add to that the ability to purchase locally, they know can get service after the sale.
“Second, in the omni-channel marketplace there’s significant influence in the e-commerce channel that’s transacted at the retail-store level. Say they’ve never bought a Hooker piece—if they see something online, and even if they want to buy it, they still want to check it out at the store. I start from the customer and work my way back. My opinion is the best model for the consumer, if the product she wants is available, is a local hybrid,” that is, a local retailer with the ability to sell online.
Such is the reasoning behind P3, the e-commerce platform Hooker launched earlier this year, in which Hooker is building out Web sites or “iStores” for retailers that offer the company’s brands for sale in the retailer’s local marketplace. Those brands include Hooker, Sam Moore, Bradington-Young and Seven Seas Seating. Retailers eventually may add other vendors to their iStore as desired.
The iStores are being built and serviced by Hooker’s partner, Channel Redefined of Green Bay, Wis., which has more than 15 years of e-commerce experience in the home décor arena.
“We have around 22 retailers live on the platform and another 30 we’re trying to get to,” Albanese said. “It comes down to finding a way to address an opportunity. For an individual retailer to engage in e-commerce from 0 to 60 is very difficult.
“We have a responsibility to our retailers to help them move into the omni-channel space,” he said. “It gets them started in the channel—it’s not the end of the road, just the beginning. We make it clear that to be successful in e-commerce they need to add additional brands.”
Retailers who’ve gone live on P3 include Toms-Price in Chicago; Belfort Furniture in the Washington, D.C., area; Interiors of Harrisburg, Pa.; Maynard’s of Belton, S.C.; Brownlee’s in Lawrenceville, Ga.; Bacon’s of Sarasota, Fla.; and Design Spree of Lawrenceville, N.J.
The P3 program also includes in-depth training by Hooker in online marketing and sales best practices; consumer trends and product knowledge through an ongoing P3 University Webinar program.
DEFINING ONLINE SALES
Albanese believes mobile technology is blurring the line between online and in-store sales.
“If someone’s in the store, sees a product and buys it on their phone, what kind of sale is that?” he said. “I’m convinced that as of today, nearly half the influence defining what consumers will do regarding furniture purchases takes place on your Web site. Our perspective is that the best solution for independent retailers is a locally focused e-commerce business that’s essentially a new location.”
It’s also closer to the heart of what traditional retailers do best. Selling furniture online on a national basis, relying on drop-shipping arrangements with vendors, and such, is an entirely different business than serving a local market.
“We discovered that that’s not a sales business, it’s a logistics business,” Albanese said.
Furniture stores, he added, must recognize how consumers’ shopping habits are challenging traditional ways of reaching furniture shoppers.
“The emerging young Millennial consumers have shopping preferences that are vastly different from our industry’s core Baby Boomer customer,” he said. “Simultaneously, we’ve seen a major shift in shopping activity to the Internet and an explosion of activity on smart phones and Web-enabled mobile devices.
“The purpose of the P3 Partnership Program is to help our retailers navigate these new paradigms in a way that will grow sales in both their brick and mortar and online channels.” HFB
By Bob George
This is not something many of us want to do. However, this is an inevitable condition in today’s fast-paced environment. And the Internet is a big part of that environment. We cannot slow its growth or lessen its influence even if we want to. It is hard to contemplate the fact that today 17.5 percent of all furniture is sold via the Internet. What happened to the age-old maxims of “They need to sit on it or see the quality or appreciate the finish”?
Before you dismiss these statistics as not believable, understand the fact that only one-third of this 17.5 percent is sold by direct e-tailers—the balance is sold by brick-and-mortar retailers who recognize that consumers want to shop online. There was a time when no one would have envisioned the owner of a fast food restaurant would cut a hole in the wall of the restaurant and sell food through it. However, today one expects this type of restaurant to have a drive-thru window.
This is not to compare furniture to fast food. Instead, it is to help us emphasize the fact that the retailer must conform to how the consumer wants to shop. In the research focusing on this subject (see “Hot Wire” on page 16), the Ease of Shopping was as important to the consumer as Price.
We also cannot ignore the consumer’s perception of Selection when shopping on the Internet (sharing first place with Price as the most important reason for consumers to shop the Internet). To understand this perception, observe the in-store interaction between the sales associate and the consumer. Notice your sales person as he or she goes through a “needs analysis” with a customer. Then, compare that with the efficiency of the Sort capabilities on the Internet. You can begin to understand why more than 50 percent of customers leave the store believing “I couldn’t find what I wanted.”
The Internet is here to stay. Its scope spans such a wide-ranging territory that it boggles the mind. Therefore, it is important for the furniture retailer to recognize the inevitability of change, be willing to make the leap, and embrace the ‘Net.
The successful retailer must anticipate change, not wait until competitors have seized the advantage. This is true of major strategic shifts, such as the Internet. However, it is equally true of certain ongoing changes as well. Among the more important areas on which to focus are the strengthening or weakening of certain product categories, the effectiveness of advertising and the measurement of that effectiveness, and a careful consideration of price point migration. To anticipate change requires a measurement. Without a sundial, a watch, or a digital phone, you would not know what time it is. As pointed out in this issue’s section on motion upholstery, there has been significant growth in the category. However, there are still retailers with limited assortments of motion who wonder why their upholstery sales are down.
From outside the industry there is a fear that furniture retailing is destined to move in the direction of apparel and footwear retailing with the concentration of the volume being in mass merchants or very focused specialty stores. The results are declining dollar volume with stable unit volume. We don’t believe this is true. However, retailers that meet this challenge need to embrace change and adopt the current business model to meet consumers’ demands. Or they will have to create a new retail model that satisfies a need they have yet to recognize.
By Sheila Long O’Mara
Take a tour down nostalgia lane with me for just a few minutes. For those of you over the age of 40, think back to shopping when you were a young teen. Not just for home furnishings, mind you, shopping for nearly anything—clothes, cars, sunglasses, books, toys, wine—and everything.
For me, the lone girl in a family of three kids, shopping for the back-to-school wardrobe was the best. First of all, neither of the boys gave a hoot about clothes—t-shirts, jeans and sneaks got them through. I, on the otherhand, did care, and it just so happened that my mom did, too. Secondly, a day spent shopping was a day spent building a mom-daughter bond.
Back in the day, in small town <st1:place w:st="on">North Carolina, store options were limited. We had the home grown department store of Belk, where you could spend nearly a day in the juniors’ department. There was an Ivey’s. Remember that name? The Charlotte-based department store was acquired by Little Rock-based Dillard’s in the 1990s.
For jeans and corduroy Levi’s in all the colors of the rainbow, the Gap was the place to go. I, a lanky teen with a small frame and long legs, appreciated the abundance of waist-length combinations available in those cubbies stacked floor to ceiling with denim and cords. Shopping was an all-day adventure that always included at least one meal, and sometimes three, out. It was THE scavenger hunt of all scavenger hunts.
At the end of the day, the prizes were all folded and tucked neatly in the bags, carried home by an exhausted yet happy girl. Fast forward to back-to-school—or any other—shopping today. The experience has changed exponentially. I still find myself living with boys who don’t care to shop, but the choices in store fronts has exploded over the years. The department stores don’t carry quite the same draw, whereas specialty stores have developed quite the cult-like following.
Add the World Wide Web—the Internet—to the number of brick and mortar stores and the total of places to shop has become nearly infinite. E-commerce is booming, and the Internet has become a shopper’s first stop prior to buying most things, including furniture. Oh, she may not buy, but she’s certainly looking, and IF she finds the perfect match to what she’s hunting, then look out. She’s just as likely to put that bed or chest or dining table in her virtual shopping cart, pull out her credit card and own both the product and the shopping experience.
E-commerce no longer only revolves around books, shoes and hard-to-find wines. Like it or not, the phenomenon is here to stay. Laptops, desktops, tablets, smartphones—consumers are using all devices to shop with AND buy from.
Is the thought scary? Of course it is, if you’ve not figured out how to add that shopping cart feature to your Web site and the back end logistics needed to make it work. Is e-commerce the end all be all for retailing—furniture or otherwise? No, but it is a very real, very tangible part of the business.
In this issue, we explore e-commerce and share insight from retailers who are making it work and experts who understand the subject and how to help home furnishings retailers create a dynamic, online experience.
Here’s to figuring out the future of retailing on the Internet while we old folks reminisce about the good ol’ days of running from store to store in search of the perfect fall wardrobe.
Bedding Vendors in Las Vegas Stretch Technologies to drive home comfort.
By Sheila Long O’Mara
Bedding suppliers this summer proved that the Las Vegas Market is THE market for bedding by pulling out creative advertising programs, a broad selection of new product and technologies to encourage sells. Adjustable beds, gel-infused sleep surfaces and technology topped the highlights for bedding producers. Here’s a roundup of some of the things we saw.
Sealy married the comfort of latex with gel in its Optimum by Sealy Posturepedic. The line features the company’s OptiCool to offer consumers a more responsive feel in their bed. The Optimum collection features four beds all infused with Outlast technology, which is used in high performance outdoor gear, and is shown to be effective in removing excess heat.
The Optimum gel latex line starts at $1,699 retail.
A more personalized sleep experience is the goal Kingsdown has set for its Sleep Smart sleep system. The company has pumped up the technology behind the Sleep Smart collection so that the bed will read a sleeper’s body and create an individualized sleep experience. The beds now offer adjustability, integrated Wi-Fi and Bluetooth technology. The technology allows the bed to adjust to sleep patterns and movements and offers an update on how soundly a night’s sleep was. Pricing starts at $6,999 for a queen.
The Prestige collection from Pure LatexBliss is an all-latex mattress that recreates the feel of beds crafted of horse hair, cotton and wool. Quilting Talalay Latex is used in the top panel and the latex inside the beds features graphite-infused latex to help regulate temperature.
Four models round out the collection with two styles retailing at $4,999 and two styles priced at $5,999 in queen.
Tempur-Pedic put its focus on giving consumers the power to create a personalized sleep environment. The top of the company’s line, Tempur-Choice allows each partner to set their ideal comfort level. The beds feature two hand-held remotes, each programmed to one side of the adjustable bed, to achieve the perfect in surfaces. Each remote has more than 120 comfort settings.Tempur-Choice offers two models; one priced at $3,499 and the other at $3,999 for a queen.
Simmons went full bear after the coveted Millennial market with its introduction of Curv, a three-model, Simmons branded memory foam line at a more affordable cost. Priced at under $999, each mattress features the company’s specially designed memory foam shaped in a horizontal curve pattern designed for comfort and support.
Pairing two bedding trends, Therapedic’s Buoyancy collection features latex and gel. The Buoyancy collection features Therapedic’s hourglass-design made with a gel layer fused on top of natural latex to offer cooling and support for key areas of the body—shoulders, hips and lumbar.The collection features four styles and is priced to retail from $1,499 to $2,999 in queen.
Geared toward consumers who are athletically built or plus-sized, Englander’s The Big Sleep Solution includes three new models and two comfort choices. Ranging in price from $1,599 to $1,999 for queen, Posture Support Plus models use the company’s Dual Coil construction. Available in foam-encased pillow top and tight top styles, the new beds incorporate combinations of extra firm, highly resilient poly foam, natural latex and gel memory foam. HFB
A merchandise scheme that appeals across price points and big selection are keys to the self-image Gorman’s Furniture Projects.
By Powell Slaughter
A commitment to offering a huge range of styles at upper-middle to high-end price points coupled with a “flat” management approach that inspires all employees to make offering solutions to customers their top focus have Gorman’s Furniture thriving in a highly competitive region for furniture retailing.
Based in Novi, Mich., Gorman’s serves the suburban Detroit area and, since March 2011, Grand Rapids. It’s an area chock-full of familiar, powerful retail brands. Those include Art Van (which has revived the high-end Scott Shuptrine name), Gardner White, Hillside Furniture and the 800-pound gorilla, Ikea. Not only that, research from Home Furnishings Business’ parent company Furniturecore/Impact Consulting shows the markets Gorman’s serves—Warren-Troy-Farmington Hills, and Grand Rapids—vary in terms of age and income, which might create problems for some furniture retailing models.
FROM “GOOD” TO “EXCEPTIONAL”
“The way we’ve competed is to have a clear understanding of who we are and project that to the marketplace,” said Tom Lias, president and CEO. And what Gorman’s projects is a huge selection at a range of prices. “As you enter one of our stores, you’ll see about half the store is set up into lifestyles, and the other half is divided into (category specific) shops,” he said. “Around half our customers coming in are product-specific. They’re looking to solve a problem, generally with a particular product category. Those customers are easy to talk to.” For the other half that says, ‘We’re just looking, we want to browse,’ Gorman’s sales staff, which consists mostly of interior designers, can steer those customers to defined lifestyles that are shown in vignettes. Gorman’s vignettes blend vendors, and they blend price points.
“Our merchandising platform is good, better, best and exceptional,” Lias said. “We treat merchandising in a horizontal fashion, like a flat management style. In flat management, everyone is equal, and everyone is important, they just have different job descriptions. That’s the way we run the business. The partners are out on the floors.
“The total (presentation) is what services the customer. Our ‘good’ presentation is branded under the ‘Intro’ brand—we’ve had that copyrighted for 17 years. You’ll have a $799, $899, $999 sofa. All the product categories are represented in Intro. It helps our competitive position, and makes us approachable. We know people have different needs for different times in their life, and for different parts of their house.” The contemporary furniture store in Southfield, Mich., is an exception to the look of Gorman’s merchandising scheme at the other stores, but the good, better, best and exceptional platform remains the same.
“We can have a $799 sofa and a $7,999 sofa from Baker in the same store,” Lias noted. “They’re there for a different customer, or for the same customer for a different part of the house. They might want that Baker piece for the living room, but something less expensive for where the kids hang out.”
If Gorman’s internal merchandising is good, better, best and exceptional, its external merchandising is led by ‘100 Brands.’
“About six or seven years ago, because we want to be a destination for the best selection, we created the platform of ‘100 Brands,’” said Lias, who joined Gorman’s as a partner in 1984 after long experience in dedicated, single-brand stores that included Ethan Allen, La-Z-Boy and Drexel Heritage. “We believe we have the broadest range in Michigan, maybe the Midwest in prices and styles, because most traditional stores don’t do contemporary. We have the 100 best brands in furniture all in one place, all in one time.”
Television is Gorman’s number one vehicle for getting that message out to the marketplace, along with some radio and print in supporting roles.
“In addressing those 100 brands, we say ‘We are Michigan’s style leader,’” Lias said. “When you define yourself that way, you can have the moderate prices and the high end in the same store, because it’s all about style. That is our market position.” The style and selection range fit well with Gorman’s emphasis on design-oriented sales. Of its 60 sales staff, Gorman’s has around 50 with design degrees, background and experience. Their services are complimentary.
“Working with a designer is a by-product of coming to Gorman’s,” Lias said. “All of those 50-plus people will make house calls, create plans for customers. That could involve just answering a couple of questions about color to designing a complete floor plan for the home.”
FROM FREIGHT TO FINE FURNITURE
Gorman’s dates back to 1940, when Founder Ben Gorman began selling damaged railroad freight from an outlet in Southfield. Soon, Gorman’s started receiving damaged furniture, which it would repair for sale. As word spread, furniture retailing was a natural next step. In 1965 Ben Gorman sold the store in Southfield to Bernie Moray who continues the operations with partners Tom Lias, Jeff Roberts and John Moray. That led to opening new locations, and a new direction.
“After Bernie acquired the company, he wanted to take it more upscale,” Lias noted. Gorman’s opened a store a couple of hours from its Detroitarea base in Grand Rapids in March 2011.
“We actually returned to the same store we were in 15 years previously,” Lias said. “We had Drexel Heritage store there for 15 years. It was bought out from under us while we were negotiating the lease.
“Ultimately they did us a favor, because we moved back to Detroit, where we opened new locations and moved existing stores. We really built up our business in Detroit, so it ended up a blessing in disguise.”
Lias mentioned earlier that Gorman’s runs on a “flat” management model. The owners are on the floors, and they solicit input from all employees, which has generated powerful esprit de corps. And Gorman’s worked hard during the recession to keep those people in their jobs.
“The adjustments we made in 2008 were almost instantaneous,” Lias said. “By the end of October we had restructured the company. We took everyone to a four-day work week, and we were able to retain almost all our staff for the duration of the downturn. By moving early we didn’t have to be as drastic in our cuts, no closing of stores, laying off staff.”
It’s no surprise, therefore, that Gorman’s has been rated one of Michigan’s “Best Places to Work” for three years in a row by the Detroit Free Press.
“We have almost no turnover, and that includes administration and warehousing,” Lias said. “We keep everybody involved in the business —we communicate the goals, the standards, across the board.
“Gorman’s has one policy, and that’s ‘Must Be Right’ (see accompanying box). Everything else is a standard or procedure. And ‘Must Be Right’ isn’t a phrase for us, it’s a way of life that creates a very positive environment to work in.” It’s all part of flat management’s egalitarian approach, and it’s helped Gorman’s attract top-notch talent.
“Everyone’s treated with respect and involvement. It goes back to that flat management,” Lias said. We have no trainees; everyone here is a career furniture person. “When furniture stores were closing right and left, we went after their top one, two or three people. Almost everyone at Gorman’s was the best at their job someplace else.
You have to have a very strong image, based on the needs of our designers, because that’s what they need to solve customers’ problems. If you solve problems, you’ll deliver a whole lot of furniture.” HFB
Four co-owners include Tom Lias, president and COO; Bernie Moray, senior partner; Jeff Roberts, executive vice president; and John Moray, vice president of operations and information technology.
American Leather, Bernhardt, Century, Better Homes & Gardens, Drexel Heritage, Hendredon, Hancock & Moore, Hickory Chair, Hickory White, Hooker, Lazar, Lexington Home Brands, Natuzzi, Rowe, Serta, Sherrill, Stanley, Stickley, Stressless by Ekornes, W. Schillig.
Gorman’s Furniture has just one policy, and it’s “Must Be Right.” It reads: “Before you arrive, we assure you that Gorman’s is prepared to make presentations that meet your expectations. Whether your interests lie in classical motifs and traditional ambience, or in the latest contemporary trends, our objective is to help you visualize all the choices you have to achieve your unique design goals.
While you work with us, we assure you that the professional staff members who assist you are experienced, informed and – above all – sensitive to your needs: that you and your specific requirements come first and foremost. “After your purchase, we assure you that everything meets our standards for quality, specifications, and service. If there is a problem, Gorman’s will correct it.” “In short, we assure you that everything must be right, or we will make it right.” “That is more than our promise. It is our policy.”
"We can have a $799 sofa and a $7,999 sofa from Baker in the same store. They’re there for a different customer, or for the same customer for a different part of the house".
-- Tom Lias
Warren-Troy-Farmington Hills, Mich., MSA (includes Novi, Mich., Gorman’s Hometown)
2013 1st Quarter Retail Sales: $200.8 million
Change in Sales: -3.42% from 1st Quarter 2012
2012 Retail Sales: $837.1 million
Other Retail Players: Art Van Furniture, Hillside Furniture, Gardner-White, Restoration Hardware, Crate & Barrel, Pottery Barn, Arhaus Furniture, American Freight, Value City Furniture, Ikea.
Gorman’s Furniture at a Glance
Founded: 1940 as a retailer of damaged freight
Homebase: Novi, Mich.
Store Count: 5
Other Real Estate: 2 warehouses totaling 66,000 square feet
Annual Revenue: $30-$35 million
Web site: Gormans.com