April 20,
2017 by Jane Chero in Business Strategy, Industry 
By: Tom Zollar
The April issue of Home Furnishings Business is aimed at helping you compete in retail’s highly competitive battleground. It really comes down to one of the most basic challenges every retailer faces – getting people in your market to want to do business with you instead of others or “Selling your Store”. That may sound simple, but accomplishing it has become much harder as the number of options the consumer has to purchase from has grown. Even though you very likely have fewer actual brick and mortar home furnishings retailers physically in your area, competition for the consumer located within your market has actually increased dramatically.
So how do we maximize our ability to compete? It really comes down to having a very clear vision of what our customers want from us and what we can offer them that truly differentiates us from all of those competitors chasing their business. Once we have that, we must translate it to the three areas that most impact our sales success: Advertising, Merchandising and In-Store Experience!
Last April’s Coach’s Corner addressed the importance of using the in-store experience to separate yourself from the competition. Obviously, your ability to provide it is certainly an advantage over the internet only retailers. But not every consumer realizes that they need or might even want to have that face-to-face interaction. In this year’s article, we are going to touch on some of the other areas of consideration that may help you define your store to the potential customers in your market and perhaps attract some of those that are on the fence about visiting a brick and mortar store. Below are a few approaches to consider.
Promote Your In-Store Experience and Services
Most of today’s retail advertising and much of the space on our store website, talks about items we sell, not services we provide. We are so steeped in our traditional approach to driving traffic by using product and pricing, that we have lost focus on what is really our difference - the in-store experience. We assume that consumers know about what we can do for them to help create the home of their dreams, when in fact, most do not. Instead of trying to add value to developing a relationship with us by visiting the store, we tell them how much we will save them if they buy from us. Rather than creating the impression that their results will be better by working with our staff, we tell them we are cheaper than the competitors.
We should be spending at least equal time helping potential customers understand the process and how visiting our store can help them through it. Even though they do research to find what they think they want and where to get it before buying, most don’t have a clue how to put it all together and create the look or feel they really want for their home. What better way to differentiate ourselves than by creating the perception in the public’s mind that we are problem solvers and creative assistants they can use to augment their abilities and improve the end result of their efforts? So, take a look at your marketing programs and make sure you are selling and adding value to having an in-store experience with your store as much as you are with its products and prices. If indeed what we offer when they come in is a benefit to them, then be proud of it and make it known in your market!
Create Strategic Alliances
Understand that our biggest competitors are not the other businesses selling furniture products. They are the businesses selling cars, travel, TVs, hot tubs, appliances, movies, massages and more. Indeed, anyone in our market who provides a service or product to the consumers that is paid for out of discretionary income is a competitor of ours day-in and day-out. Obviously, those that sell things for the home are our most direct competitors, but the fact that the average household only spends between 5% – 6% of its income on the home means there is not a lot to go around. We all fight over the scraps so to speak. Perhaps there might be some way to join forces or piggy back our efforts so that we can reach out to common customer groups and maximize our effectiveness together?
The key is to find businesses in your area that market to the same target customers as you and create a partnership with them. These strategic alliances can help both parties get their message to potential customers, in many cases at a very opportune time in their purchasing cycle. We all know that people tend to buy home furnishings soon after purchasing a new or pre-owned home, so the smart ones have already partnered with real estate professionals to reach out to their customers after a sale is complete. But can we go further? Sure, what about moving companies and title service providers?
There are many other partners to look for. Just ask yourself, when do people need our products? When someone buys a new TV they may need a place to sit, so talk to appliance stores. Just like when a family has a new baby, they may need a youth bedroom, so talk to local doctors or hospitals. Some businesses are letting their employees work from home and perhaps they need home office furniture. Great partners we often neglect are local insurance agents. They totally understand partnerships and usually know when people need new furniture because of a disaster or a divorce. Why not have them referring their clients to you?
These are obviously “you scratch my back and I’ll scratch yours” situations, but have you really looked out into your business community to find all the opportunities available? If not, now is a great time to start!
Maximize Your Community Visibility
Participating and being a positive contributor to your local community has always been of major importance to any business, but particularly a small local one. As the Millennials and younger generations take control of the spending power it is becoming critical. They expect it and indeed demand it of anyone trying to solicit their business. Having a positive reputation for community involvement is not just a plus, today it is part of the price of admittance to the retail game in every market. Therefore, you need to look at what you are doing and how you are actively supporting your employees’ efforts too. Sponsoring events, contributing products, money and labor to charities are only the beginning today. You must be perceived as being a doer that has a visible role in as many common good processes as they can support.
A side benefit of community participation is the networking opportunities it provides you and your staff. Often, we see owners joining the Chamber or other organizations, which is great. However, it is much stronger to be seen as someone that is a real leader who walks-the-walk and talks-the-talk by getting their employees out of the store and encouraging them to be involved in local support efforts. There are plenty of groups in which they can participate, that will further impact your company’s community involvement. Several clients have sent out their delivery trucks and crews to help people move their belongings after a disaster. What better advertising could you get then people in need seeing your name on the side of a vehicle coming to their rescue? Sponsoring soup kitchens, delivering food to the needy, it is all good!
If You Have Local Roots, Make Them Known
My last point is a very simple one that most small businesses do take advantage of often. It is the fact that they are from the place where they do business and they are part of the local heritage. While this has always had some traction with the American public, we are seeing a resurgence in its power. As the next generations evolve they are beginning to put more value on doing business locally with people that are part of their community. The better job you do with my previous point, the more important this one becomes!
In summary, who and what you are is not only the products you supply to your market, it is the services and benefit you provide the people in your community. It may sound self-serving, but the better you are at being a good neighbor, the more successful you will most certainly be as a retailer!
April 20,
2017 by Jane Chero in Advertising, Economic News, Industry
After years of fighting back from the housing bubble pop, the Housing Industry is finally on the mend and appears to be getting healthier by the year. Although still shy of 2007 pre-recession levels, housing appears to be catching up fast despite a couple of stumbles last year. This article picks up from Statistically Speaking’s September 2015 article Housing’s Rebound.
Although the rate of growth slowed for existing home sales last year, unit sales approached pre-recession levels. Meanwhile, new home sales, while still well below pre-recession numbers, are catching up to pent up demand as housing construction steadily increases its new single family homebuilding. Multi-family construction is the one area lagging in 2016, but starts are up in 2017. With both rental and homeowner vacancies at their lowest, the Housing Market is, most assuredly, on an upswing.
As shown in Table A, indexed growth for existing home sales in 2016 was only 3.6 percentage points shy of peak 2007 pre-recession sales. In 2016, 5.49 million existing homes were sold compared to 5.65 million in 2007. For new homes, the 559,000 units sold in 2016 were still 27.8 percent below the 769,000 sold in 2007. However, as construction has played catch-up to demand, new home sales have grown 82.7 percent since the recession bottom of 2011.
New Home Sales
New home sales had a solid performance in 2016 – increasing 11.3 percent from 2015. However, sales are off to a slow start with January sales flat on a seasonally annualized basis (Table B).
Existing Home Sales
Despite dipping in 2014, existing home sales (Table C) have grown steadily in recent years – up 3.8 percent from 2015 to 2016 and another 4.4% jump into January of this year.
Existing home sales grew consistently throughout the country last year. The Northeast region, the smallest in terms of home sales, was the fastest growing last year – up 5.7 percent 2015 to 2016 to 740,000 units plus an 8.1 percent boost (seasonally annualized) to start off 2017. Increasing 2.8 percent from 2015 to 2016, the South still leads the pack with 2.2 million existing houses sold in 2016. The Midwest had a slight decline from 2016 to January 2017 – down 0.8 percent to 1.3 million annualized resales, while the West had the biggest leap into 2017 – increasing 8.4 percent in January to 1.29 million annualized units (Table D).
New Housing Construction
Despite the growth in new and existing home sales last year, New Housing Construction, specifically, multi-unit apartment construction fell considerably. After solid gains since 2011, combined growth of single and multi-unit construction went negative last year – falling 0.5 percent to 1.17 million units. Due to booming housing starts in January of this year, 2017 began 9.6 percent higher with a seasonally annualized average of 1.29 million units (Tables E and F).
As shown in Table G, single-family construction has maintained its upward trajectory since the Great Recession. However, 2016 single- family units totaling 747,000 are still 23.1 percent below peak 2007 levels. Meanwhile multi-family construction at 392,000 units in 2016 is well below the 451,000 in 2015.
The flat growth in new construction was not a result of declining construction of single-family units (Table H). Growth has continued unstopped in recent years – increasing 7.5 percent from 2015 to 2016. Up 8.1 percent annualized, the first month of 2017 builds on the momentum.
The slowdown of total new housing construction came solely on the shoulders of multi-family apartments and condominiums where construction fell by 13 percent in 2016. On a positive note, authorized permits for the first month of 2017 are up 13.7 percent (Table I).
Rental and Homeowner Vacancy Rates
Rental vacancy rates at 6.9 percent are at their lowest in over 30 years, giving way to high rents (Table J). Meanwhile homeowner unit vacancies have also continued to drop to 1.7 percent in 2016 – the lowest in over 10 years.
The vacancy rate of rentals is lowest inside metro areas, both in principal cities and in the suburbs, compared to outside of metro areas. Inside metro areas for both urban (principal cities) and suburban areas have similar vacancy rates at 6.7 percent and 6.3 percent respectively. These rates have continued to fall over the last seven years. Meanwhile, vacancies outside metropolitan areas are much higher at 9.4 percent last year and have shown little improvement over the last few years (Table K).
For homeowner units, vacancy rates in the suburbs of metro areas are low at 1.5 percent in 2016 and only slightly higher at 1.9 percent in principal cities of metro areas. Vacancy rates outside metro areas are higher at 2.3 percent (Table L).
Pent up demand from Millennials aging into their prime homeownership years combined with low vacancy rates have set the stage for good housing growth in the near future. And nothing spurs the home furnishings industry as much as home sales.