From Home Furnishing Business
In my weekly conference calls with our Performance Groups, I have been amazed at the resilience of the furniture retailers, who discovered new ways to engage customers via phone and email, which resulted in appointments while stores are closed. The results refl ect signifi cant sales during these trying times. The importance of websites that produce inquiries from the engagement applications has led to chat sessions that result in sales, leading to my belief that as the stores reopen retailers will survive.
From this experience, the retailers will embrace new ways to do business. Ecommerce will become a must and not a “maybe”, left to the major players like Wayfair and Amazon.
The business model by necessity must change with the probability of less demand in the near future. ADVERTISING as a % of revenue will decline as the need for the block buster promotions transitions to a continuing relationship with their best customers. SALES EXPENSE could change as less retailer sales associates sell more. The importance of LONG TERM FINANCING will be challenged. Does the retailer need to expand 3-4% of revenue for fi nancing? The bright spot is the consumer demand as can be seen from the graphic below. After an initial blip, the consumer is back on the Internet researching how home furnishings can enhance what is becoming the new normal of being at home. The graphic from FurnitureCore, (the parent company of Home Furnishings Business), is a national sample of a balanced sample of INDEPENDENT furniture retailers. The consumer is waiting for the industry to open.
The many sales tactics that can be utilized, such as selling as part of a seating group or as an individual cash-and-carry sale, will help captivate your customer—but merchandising will be key. As the industry continues to see the growth of Generation X and Millennials as the target audience, retailers will need to shake up their merchandising assortment to reflect their style. Manufacturer Durham Furniture has developed thoughtful solutions for retailers in their bestselling, customizable collection.
“Our contemporary-styled Milestone Collection was designed to reach the next generation of consumers and the interior design community,” said Luke Simpson, president and chief executive officer of Durham Furniture. “The style and design is more in-tune with what the younger generation of consumers are looking for and the mixed media look gives our design partners the diversity in texture and materials that they often seek when designing more contemporary spaces. The group is available in any of Durham’s more than 50 finishes, allowing our customers to express their individual style, a key selling point and benefit of our products on the retail sales floor.” Durham Furniture is not the only manufacturer that embraces the power of customization. Especially in our current climate that is grappling with the realities of newly implemented tariffs compounded by the ongoing Coronavirus wreaking havoc on manufacturing and shipping, American made furniture has found additional momentum. “Simply Amish makes a lot of occasionals, and on our Standard Order end tables, most can be raised or lowered up to 6” without a custom quote,” says Charles Curry, vice president of sales and strategy of Simply Amish. “American made occasional pieces, especially with custom options, are as hard to find as a white buffalo.”
When consumers walk onto the retail sales floor, what are they anticipating for their occasional furniture purchase? While the fastest growing section of occasional furniture is accent furniture, which includes bars, breakfronts, and the like growing 7.1% and exceeding the overall growth of the occasional category at 5.6%, we analyzed the general style that consumers are searching for. According to the same FurnitureCore, Inc. study, when consumers were asked what the style of their most recent occasional table purchase was, a tie was found between traditional and contemporary at 32.47%, followed at 15.58% by country/rustic. The remaining responses where European at 9.10%, mission/shaker at 5.19%, and transitional at 5.19%.
It is absolutely critical we understand that in most cases, we will be faced with a customer that has a much different approach to shopping for her home. It will require us to rethink how we work with them and find creative ways to provide the buying experience they now desire. This is not a completely new problem for us, since our consumer’s needs have been changing dramatically over the past two decades, causing smart retailers to adjust how they sell and service their customers.
The crazy thing for me is that the article that follows was actually written for our March issue and submitted in mid-February. This was before the pandemic hit hard and was in response to the changes we saw happening with the consumer over the last year or so. The impact of the virus and the way it has affected how the consumers returning to the marketplace want to shop, actually makes it a much more relevant and realistic idea. Read what I wrote back in February and see if you agree.
Most consumer research over the last two decades has indicated that for various reasons, many people do not want to spend a great deal of time shopping, even for traditional big-ticket items. While much of the initial search and information gathering is taking place on the Internet, the amount of time they actually spend in stores has been curtailed dramatically. They now go to just over two, instead of the five that were visited in the past. This has reduced traffic in most stores. However, there has also been a growing number that simply choose not to visit any stores and either buy online or through someone else.
In our May 2017 issue, our cover story offered some insight in the feature entitled, “Is It Just In My Store That Traffic Is Down? – Maybe”. Here is an excerpt from the article: The fact is that the time-starved consumers do not have the inclination to extend the process and enjoy decorating their homes. If we look at the percentage of consumers that consult a professional designer as the first stop, it is small. In discussions with the ever-expanding cadre of “designers” in the industry, it becomes obvious that they are more “personal shoppers” than certified designers.
Indeed, one of the faster growing distribution channels for home furnishings in the last decade has been the independent interior designer. However, as mentioned in the article, the main service many seek from these professionals may be changing from providing design direction to actually doing the shopping, so the client does not have to invest the time in shopping for the right pieces. Certainly, this has always been an attractive aspect of using a designer to assist in the process, but today it seems to have become a more important element.
Last month I presented some ideas about selling and marketing the important problem-solving services we provide our customers. While I did not make the specific point that working with our sales staff also saved consumers time, that would be a benefit they would receive, because someone else would be helping them find what they desire. Unfortunately, I am not convinced that the majority of consumers actually look at it that way. Perhaps thinking that the time spent at the store or communicating back and forth with a salesperson would be time added instead of time spent making their search more efficient.
My point is that we already can provide time saving assistance for a customer. Add to that our ability to handle every other aspect of the process as a one-stop solution provider and the total package should be very attractive to these consumers, IF we could get them to look at it that way. So, one of the key things we can do is fi nd a way to package this and market it. I think that the concept of providing a “Personal Shopper” or “Furniture Concierge” service for our potential clients may be worth considering.
This idea came from a recent story in the Detroit Free Press newspaper about a car salesperson that did exactly that. The service he had provided clients literally became his product, which launched a successful new career for him, basically doing much of what he had done before only packaged in a much diff erent way. Obviously, the goal of presenting this information is for the reader to use it as a launching point for the consideration of new ways to package and promote the services your store already provides. It is NOT intended to encourage salespeople to leave and try to do this on their own, although that could happen!
The article, “Fired salesman disrupts car-buying industry with word-of-mouth ‘concierge’ business” appeared on January 23, 2020. You can find it at https://www. freep.com/story/money/cars/2020/01/23/ fi red-car-salesman-brian-carroll-dealership/4533934002/. Basically, it tells the story of Brian Carroll, a guy who had never been fi red or let go from a job, who after eight years of loyal service and steady sales at the same dealership, was let go as part of a cost saving move. Needless to say, he was devastated and drove home not knowing what he was going to do or how he would support his wife and three sons. He loved selling cars and had worked at several dealerships over the years but knew starting over at a new one, if he could even fi nd an opening, would be very tough.
Then something happened. A guy called wanting a car. Carroll explained to the buyer that he didn’t work at the dealership anymore, but the buyer said he didn’t care. It was at that point Carroll decided he would go solo, however, not as the usual car “broker,” who charges a direct fee to shoppers, but as a car “concierge” who would work on commission. After all, he fi gured, fewer people have time to go to dealerships and many people like the idea of enhanced personal service. So, he decided he would ride a trend of changing consumer expectations in the automotive industry, all by word of mouth.
The rest of the article includes extensive quotes from his clients about how they do not have the time to shop and compare cars. They know for the most part what they want from the start and Carroll is enough of an expert on all brands to give them good guidance if they have questions. The process begins with a call, text or email. After that Carroll conducts a needs analysis and once he is confi dent that he knows what the client is seeking, he begins his search. When he locates some options that fi t the profi le, he can contact the client and set up a time for him to bring the vehicle to them for review. When they buy, the paperwork is often done at the kitchen table instead of having to make a trip to the dealership. Again, saving the client time and eff ort. As one client, a member of a local fi re department said, “For somebody like me who works 24-hour shifts and has an active lifestyle outside the job, with young kids active in sports and school, I don’t always have a day to look at vehicles or another day to sign paperwork, I start at 8 a.m. and I get off work at 8 a.m. If we’re running fi re calls or medical calls all night, I’m not going to want to sit in dealerships. I want to go home and go to bed.”
Carroll is now selling 30 to 35 cars a month with a peak of 52. I am not sure, but I think that is prett y darn good, even for a salesman at a good dealership. He has changed the buying experience for all of his clients and according to published research from the industry itself, he is answering the exact needs and wants the consumer has voiced to them. According to Jessica Stafford, senior vice president and general manager of Autotrader and Kelley Blue Book, “Consumers are looking for personalized experiences tailored to their specifi c needs and preferences. Their expectations and demands are gett ing higher.”
That certainly sounds a lot like what all of the research for our industry is telling us. In Carrolls case he had to leave the retail environment in order to provide this type of service for customers. Basically, his clients are all potential clients of the dealerships at which he fi nds them cars. Since he earns a commission from the dealership for each sale, it was not a big issue for anyone involved, as it is a win-win situation for the client, the dealer and him.
The big question is how can we as furniture retailers who already provide all of the services a shopper needs, create a process that develops, supports and markets Furniture Concierges or Personal Shoppers on our staff ? Perhaps for some it will be an enhancement to their existing design and in-home business. For others it may be a designated special team. In my view, this is a way to appeal to customers you are not gett ing and maximize those you are. I believe this is an idea that is certainly worth thinking about. I believe that this is certainly worth thinking about, given the fact that many potential customers do not even want to visit a store now because of the COVID–19 pandemic.
But that hasn’t slowed down the 75-yearold Ploy. He maintains a schedule as rigorous as an executive 20 years his junior, and travels regularly to furniture markets and meetings with customers. “I love what I do,” he says. “I wake up every morning eager and anxious to get to work.” Recently, Ploy made time in his busy schedule to talk with Home Furnishings Business about what keeps him motivated, AICO’s unparalleled success in the past two decades, and his work with non-profit groups such as City of Hope and the American Home Furnishings Hall of Fame.
HOME FURNISHINGS BUSINESS: What is it about the home furnishings industry that keeps you motivated to go to work every day?
MARTIN PLOY: One of the wonderful things about this industry is the fact that there is constant change. This change is the challenge we face every day, and this continues to drive and motivate me more. I’ve always believed that yesterday’s lessons quickly move to the rear-view mirror as we train our eyes on the road ahead. The unpredictability of the day is an exhilarating and stimulating part of my life. I may drive to work with an agenda in mind for the day, but it often changes with the first email or the first phone call. Take5 The one constant is the fact that we still need to work and deal with people. Each employee is unique, and their needs, concerns and efforts make them a part of my daily routine. Sometimes their issues are about business, and occasionally they are even greater -- they are personal. If our staff didn’t feel that I care, then I can assure you that our turnover would be higher and productivity lower.
HFB: Much has been written about the culture at AICO. What makes the culture so unique? What are you doing to make sure it remains intact for years to come?
PLOY: I think our culture has been very solid and appreciated because it is very employee centric. We call it the AICO Family. We encourage new ideas. Each person has the power to make a difference, and we make sure they feel empowered to recommend and create change. Plus, it’s critical that individuals feel respected in our company. We help by giving them the best working environment possible. From the break room to the individual office spaces, to all the available facilities, we prioritize quality and comfort. Their health and well-being are most important, so we provide a complete gym, locker room and showers for their personal use. In addition, we provide excellent employee benefits … and host a fun filled AICO Family Day picnic, an annual Holiday party with recognition awards, a fabulous Halloween costume contest, various employee luncheons as well as our Employee Appreciation Day. And we always have a monthly Employee of the Month meeting. In the end, AICO has a very loyal staff, with over 65 percent employed for more than 10 years, and we have many at 15, 20 and even 25 years. I feel confident that this culture will sustain itself because it is so heavily employee focused. If the culture of a company is strong and positive, it will mark the path to the future.
HFB: The industry has changed significantly since you joined AICO in 2002. How has the company continued to grow and thrive in this rapidly changing environment?
PLOY: The shopping experience has been dramatically altered by generational changes and constant access to the digital world. Consumers have become far more educated and their expectations are greater than ever. It is our responsibility to be adaptable and have the flexibility to offer different designs that are more targeted to today’s consumer tastes. As you know, we were once known for our ‘Old World’ traditional designs. Michael Amini was able to sling-shot this company forward by offering these heavily carved, over scaled traditional masterpieces at great values. As one of the pioneers in China, he created a company synonymous with unique and original designs at great prices. Then Michael created a look the marketplace didn’t even know it needed -- the brilliance and bling of ‘Glam.’ Our Hollywood Swank collection launched a new era at AICO, and since then, we’ve introduced a diverse catalog of contemporary, modern, urban loft and now elegant and chic transitional furniture. As a designer, Michael has displayed great creativity and flexibility in his ability to answer the buyer’s question of “What’s new?”
HFB: What have been the keys to the success of the Michael Amini/Jane Seymour Collection? What makes it stand out from other licensed collections?
PLOY: Jane is not just a celebrity. Aside from being a world renown actress, she is an artist, author and a mother. She has always shown her commitment to the Michael Amini – Jane Seymour brand by her consistent visits to all of the markets. She’s always eager to engage and even educate customers on the new products. She’s really a part of the sales force and part of the public relations team. The longevity of this collaboration goes back to the launch of Hollywood Swank ten years ago with the introduction of Michael Amini – Jane Seymour, A Design Collaboration. This Glam collection was slow starting, but rapidly picked up steam. And after all these years,it’s still one of our top sellers. It’s just remarkable. This truly helped position Michael and Jane’s acceptance by retailers everywhere, which eventually led to other Glam intros like Overture, Hollywood Loft, Glimmering Heights and Melrose Plaza. There appears to be a greater consistency in the Michael Amini and Jane Seymour offerings that other licensed brands don’t seem to have. The longevity has so much to do with the ability to keep coming out with fresh new collections that reinforcethe brand and resonate really well with retailers and consumers. Today’s recent offerings of Michael Amini & Jane Seymour Living are setting new sales records with multiple collections offering a look of chic elegance, neutral tones and refined transitional designs. It appears that customers like the quiet elegance and subtle details that these designs offer, not to mention the value they represent. We’re also proud of our more recent relationship with Kathy Ireland. She has demonstrated a similar commitment and dedication to supporting the Michael Amini - Kathy Ireland Home Designs brand. Of course, these offerings are more causal and at lower price points. We’re optimistic that this relationship will be as long-lived as Jane’s.
HFB: AICO is well known for its support of several charitable causes – notably the City of Hope. Why is this important to the company?
PLOY: AICO does support several charitable causes, not just City of Hope. We also support industry groups like The American Home Furnishings Hall of Fame Foundation and ADL, as well as (organizations outside the industry) like Jane Seymour’s Open-Heart Foundation. When you are fortunate enough to have the opportunity to achieve and experience the rewards and accomplishments of your efforts, it becomes very appropriate and important to give back. But yes, there is a close connection at AICO with City of Hope. We have many supporters here. There is always a large turn-out for the annual Walk for Hope at City of Hope, benefiting women’s cancer research. (Executive vice president) Chuck Reilly does “Chuck’s Ride,” a hundred-mile fundraising bike ride for COH. Many of our staff participate every year in the West Coast Golf and Tennis Tournament for COH. And more recently, AICO hosted the City of Hope’s blood mobile with over 40% of our employees donating blood. We’re most proud of Michael’s philanthropic efforts, especially the Michael Amini Transfusion Medicine Center at City of Hope. This facility is where blood, platelets and stem cells are collected, processed and stored. Robert Stone, CEO and president of City of Hope said, “That building is the beating heart of City of Hope.” Why are we tied so closely to City of Hope? I think it’s because we have all been touched in some way by cancer and/or diabetes. It is the extraordinary work, research, clinical trials, and new drugs and treatments discovered by the scientists, doctors and researchers at City of Hope that pridefully connects us to this special place.
The newest consumers entering the furniture and home furnishings industry, known as Generation Z, are reaching adulthood, but the vast majority are still in their teenage years. While much has been written about their psychographic profiles, research published by the Census Bureau quantifies demographically how these high school and early college age teenagers, regardless of race, are faring better than the previous generation of Millennials at the same age. Generation Z is benefiting from stronger economic times, more affluent Generation X parents, and more stable households. Education also appears to be a big contributor.
In 2010, the Census Bureau’s American Community Survey (ACS) profiled Millennials ages 15 to 19, and newly released ACS 2018 data has done the same for Generation Z at the same ages. Generation Z includes anyone born in 1997 through 2009, although the end date is still under heavy debate. The ACS profile offers changing demographic and household characteristics in these two generations as teenagers, all encouraging for these future Generation Z adult consumers. Last year, Statistically Speaking began looking specifically at Generation Z, also known as iGen, Centennials, or the New Silent Generation. This article compares the core high school and early college ages statistically to Millennials by race, suggesting this new melting pot generation is entering adulthood better prepared and without all of the drama.
Although currently a smaller cohort than the generations preceding it with the end date still under debate, Generation Z accounted for 54.9 million people in 2019 – roughly 17% of the U.S. population (Table A). The newest generation, recently coined Generation Alpha, is currently at 40.4 million people and some demographers differ on the start year – placing the first year at 2012 rather than 2010. The year 2010 reflects the year the iPad was introduced.
Many studies have explored the differences between teenagers today (Gen Zs) and those in the Millennial generation (Figure 1). While Millennials grew up during healthier economic times, the recession hit as many entered the workforce faced with exorbitant college debt. On the flip side, Generation Z has grown up more mindful of the economy and financial issues, making them more realistic and pragmatic.
A big influence on Generation Z has been technology. Teenagers today have grown up in an age of rapid innovation. They do not know a world before mobile technology where everything is immediate. Due to the increased diversity among American teens and access to content around the world, Generation Z appears more interested in and accepting of different cultures and ideology. Because the year span is shorter, there were about 3% fewer Generation Z, 15 to 19-year-olds, in 2018 than there were Millennials in 2010, but they are much more diverse (Table B). The population of both White and Black/African American teenagers in 2018 has dropped 9% from teenagers in 2010, while the number of Hispanics has increased 11% alongside an increase of 17% for all other races.
Possibly for the first time in history, over 85% of all White, Black/African American and Hispanic/Latinos ages 15 to 19 are enrolled in high school or early college, as shown in Table C. The greatest strides have been made among Hispanic and Latino teens, increasing 2.3 percentage points.
Depicted in Table D, private school enrollment is up for Generation Z compared to previous Millennials by 0.5% to 1% for all races. For Gen Z, 16.2% of White teenagers in 2018 were enrolled in private school, compared to 15.5% of 2010 Millennials. As a percent of the total teenage population, Black/African Americans ages 15 to 18 have the highest increase in those attending private school -- 9.2% of the Gen Zs in 2018 compared to 8.1% of Millennials in 2010. Hispanic/Latino teenagers have gained some ground in private school attendance but still only represent 7.6% of their race.
Households with Teenagers
As Generation Z has aged into adolescence, households with teenagers are becoming more diverse. Hispanics and Latino teen households increasing up to 24.6% of teen households in 2018, compared to 21.6% for Millennial households in 2010. The percentage of households with White teenagers has dropped 3.4% alongside a decrease of 1.3% for Black/African Americans over eight years (Table E).
One slowly changing, but important household demographic is more teenage Gen Zs are living in parent married-couple households than Millennial teenagers did in 2010 – up 1.1% across all races. The number of teens living in male household families is up slightly at 8.3% in 2018, compared to 7.9% in 2010 and female households with no husband has dropped down to 26.1% in 2018 from 27.6% in 2010 (Table F).
In another important trend, the teenage birth rate has dropped dramatically for Generation Z teens across all races compared to Millennial teens at the same ages (Table G). The rate for all teenagers 15 to 19 is down to 1.2 births per 1,000 teens in 2018 from 2.6 in 2010. For Black/African American teenagers, the birth rate decreased from 4.2 births per 1,000 teenagers for Millennials in 2010 to 1.9 for Generation Z. Hispanic/Latinos also saw a large drop in the teenage birth rate with the Generation Z rate falling to 1.7 births per 1,000 teens in 2018 – down from 4.3 in 2010.
Teenage Labor Force
Although some researchers have said there are less teenagers today with jobs due to school-focused activities, according to the Census Bureau, the percentages of teenagers in the labor force has increased across all races from 2010 to 2018 (Table H). The percent of both White and Hispanic/Latino teenagers in the labor force has grown by 1%, while 2.7% more of Black/African Americans were part of the workforce in 2018 compared to 2010.
Data shows that Generation Z teenagers are less idle than the Millennial teens of 2010. More teenagers in 2018 were either in school or working. From 2010 to 2018, the percentage of teenagers across all races not enrolled in school and not in the labor force dropped from 5.6% to 5.0% (Table I). Over eight years “idleness” among White teenagers decreased by 0.3%. For Black/African American teens idleness fell by 1.1%, and by 1.5% for Hispanic/Latino teens.
Although many of the percentage increases and decreases comparing Generation Z to Millennials at the same teen ages seem small, these strides are important. No doubt Generation Z appears to be approaching adulthood more quietly, confidently, and better prepared than Millennials. All of these strides will benefit the furniture and home furnishings industries and the economy in total.