Monthly Issue
From Home Furnishing Business
April 20,
2017 by Jane Chero in Business Strategy, Industry 
Although it’s been around since American Express’s 1983 Statue of Liberty Restoration campaign, cause marketing has gained a lot of momentum in the last few years. More and more retailers have grasped the value in partnering with the organizations, people and happenings their customers care about. It’s a meaningful way to achieve corporate social responsibility goals while increasing customer loyalty, solidifying your brand, and growing your business.
Cause marketing is the marketing of a for-profit business that benefits a nonprofit charity or supports a social cause in some way. Usually it takes form as a marketing partnership between a nonprofit charity and a for-profit business in service of both parties’ goals. Businesses typically benefit from the good virtue associated with cause marketing while nonprofits benefit by increased exposure and the funding driven to their cause.
The motivation is in part a matter of social pressure because consumers have come to expect charitable conduct from companies. But the list of retailers sponsoring causes is also driven by the need to drive store traffic, engage employees and demonstrate community involvement.
At the end of the day, the connection between corporate and the consumer is the retailer. Retailers tend to emphasize cause-marketing programs with a local component, which makes sense because people typically feel good about doing business with companies that do good, allowing the merchant to draw attention to themselves and build good will.
We surveyed a sample of our retail readers and heard about many inspiring programs that have helped transform causes, local communities and the world. Many raise funds for a main cause but contribute to others during the year as well. It’s a testimony to the generosity of the furniture industry and the passion and commitment that has been ignited.
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Retailer: Bernie & Phyl’s Furniture
Program Name: Multiple Sclerosis Fundraising
Benefit to: National Multiple Sclerosis Society
Contribution: $100,000 per year
In addition to supporting the MS Society, the Rubin Family has contributed to various charities for many years including combined Jewish Philanthropies, The Boys and Girls Club of America, Bridgewell, and The Home for Little Wanderers. Toy drives, ginger bread house contests and outings to Red Sox games with local children, are among the creative events organized. The retailer also donates furniture they are not able to sell to an organization called Teen Challenge, which helps teens recovering from drug and alcohol addiction.
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Retailer: Brooklyn Bedding and Coconis Furniture
Program Name: Ante4autism Poker Event
Benefit to: Five Autism Charities
Contribution: $110,931
At the 9th Annual Ante4autism event at the Golden Nugget during the January Las Vegas Market, celebrities, professional poker players, Las Vegas residents and furniture industry attendees enjoyed a fun evening, while raising awareness and money for Autism charities. Brooklyn Bedding and Coconis Furniture are co-hosts for this worthy event.
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Retailer: City Furniture
Program Name: The Kevin Koenig Memorial Covenant House Cup Golf & Fishing Tournament
Benefit to: Homeless/runaway youth in Broward County
Contribution: $100,000 this year ($1.5 Million+ over several years)
City Furniture cares greatly about their community and has earned the Philanthropic Company of the Year award in Broward and Dade, Fla. Counties in the same year. It all started many years ago by making a donation to Covenant House, a faith based runaway shelter for kids and teens. They also began supporting the Museum of Discovery & Science and have donated close to $1,000,000 over the years. Their biggest focus for donations has been Habitat for Humanity
City Furniture is a major sponsor for; the Making Strides against Breast Cancer Walk, Dolphins (Cycling) Cancer Challenge event and the Broward Heartwalk. They also support Camillus House and many others.
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Retailer: Furniture Fair
Program Name: The Anthony Munoz Foundation (Celebrity Dinner and Auction, and Youth Football Camp)
Benefit to: Tri-State Youth
Contribution: Approximately $450,000 each year
Furniture Fair has given to many different charities in the Greater Cincinnati and Northern Kentucky area over the past 54 years. They are great supporters of cause marketing and feel it is a wonderful way to show Furniture Fair cares.
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Retailer: Hudson’s Furniture
Program Name: Pink Fundraising Event
Benefit to: Moffitt Cancer Center
Contribution: $10,000 per year
Hudson’s Furniture’s Pink Fundraising Event benefits the Moffitt Cancer Center and is Hudson’s largest fundraising effort.
Others include Hudson’s and the Salvation Army Angel Tree, The Boys and Girls Club of America, Back to School Supply Drives, and Basecamp.
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Retailer: Gates Furniture
Program Name: Extreme Home Makeover
Benefit to: A Medford Oregon family
Contribution: $50,000 worth of furniture
The designers from Extreme Home Makeover approached Gates Furniture to ask if they would donate furniture to the local project. The Grants Pass, Oregon retailer was happy to oblige. When the house was ready, Gates closed for a half day and the staff of 30 went to the makeover project property and furnished the entire house. Owner, Giff Gates said “the team has been inspired by others. They’re fantastic”. Gates also donates to other causes including Hearts with a Mission a cause that serves local homeless and at-risk youth.
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Retailer: Michael Alan Furniture & Design
Program Name: Sleepless for a Cure in Havasu
Benefit to: Cancer Association of Havasu’s low cost Mammogram Program
Contribution: Over $212,000 in eight years
Sleepless for a Cure in Havasu starts with a 24-hour sleepless-a-thon- at the store kicked off by the Mayor. Women from the community decorate mattresses in honor of those that have fought breast cancer followed by a vote for the most outlandishly decorated mattress. The event continues with chair massages, auctions, fashion shows and trips to the local coffee shops to stay awake all night. After 24 hours, local cancer survivors join in to announce total donations.
As a local, family operated furniture store, owner Chris Cooley said, “We want to be more than just a furniture store, we want to give back and be good neighbors to our surrounding communities.”
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Retailer: Olinde’s/Ashley HomeStores
Program Name: Habitat for Humanity Donation of Goods
Benefit to: Habitat for Humanity
Contribution: $101,934
In addition to charitable donations of goods to Habitat for Humanity, Olinde’s supports the Inner Wheel of Baton Rouge Trash & Treasure Sale donating approximately $70,000. Other organizations like The American Red Cross, American Cancer Society, Baton Rouge General Foundation Burn Unit, the Greater Baton Rouge Food Bank as well as many local churches and schools have also benefitted from door prizes, gift certificates, auction items and monetary donations from Olinde’s.
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Retailer: Schneiderman’s
Program Name: Annual Golf Tournament
Benefit to: Ronald McDonald House – Twin Cities
Contribution: $650,000 (Total Direct Giving)
Schneiderman’s Furniture contributes to charitable causes in which their customers and associates are involved. They participated in a fundraiser for Parkinson’s research and contributed $155,000 to the University of MN. They have also partnered with Bridging, a charity organization that helps those in transition. When delivering new furniture, the delivery team often re-purposes customers used furniture (when in acceptable condition) to donate and have passed the 10,000 mark for items contributed.
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Retailer: Turner Furniture
Program Name: 100th Anniversary Celebration
Benefit to: Local charities
Contribution: $100,000 for charities plus $100,000 worth of free furniture to customers with a value match to a charity
For their 100th anniversary Turner Furniture gave away $100,000 to local charities and $100,000 in free furniture to their customers. The customers that won the free furniture were allowed to choose a local qualifying charity and Turner Furniture donated a dollar amount equal to the furniture they won to the charity of their choice.
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Retailer: Wolf Furniture
Program Name: Annual Vendor Outing
Benefit to: Local women’s, children’s, and veteran’s causes.
Contribution: $60,000 to $100,000 annually
Since 1902, Wolf Furniture has recognized the importance of being a good neighbor to its local community and supports well over 100 local charitable organizations allowing for increased visibility for events with limited budgets. Wolf’s is also involved with The United Way, The American Cancer Society, Boy and Girl Scouts of America and Habitat for Humanity. The Wolf family also has a foundation that supports the arts and education in their region.
Through charitable donations and philanthropic community activities, the furniture industry has a reputation of being committed to making a positive impact. So find a cause, if you don’t already have one and start planning.
Consumer Trends: NRF Says Consumers Plan to Save Tax Refunds for Later
A record low number of Americans will spend their tax returns this year while the second-highest number on record will put the money into savings, according to the annual tax return survey released in late February, by the National Retail Federation and Prosper Insights & Analytics.
“Financial security continues to be top-of-mind for all Americans, and consumers are hanging on to their tax refunds tighter than ever,” NRF president and CEO Matthew Shay said.
“Consumers are leveraging their tax returns to build up their savings, but that’s good news in the long run because money saved today is money that can be spent down the road, particularly during the back-to-school and holiday seasons later this year.”
Of the 66 percent who are expecting a refund this season, only 20.9 percent of consumers will spend their refunds on everyday expenses, 8.7 percent will use them for major purchases such as a television, furniture or a car, and 7.6 percent will splurge on special treats like dining out, apparel or spa visits. The numbers are down from 22.4 percent, 9.2 percent and 8.3 percent last year, respectively, and are record lows in the history of the survey. The number planning to spend the money on vacations dropped to 10.7 percent from last year’s 11.4 percent, the lowest since 10.3 percent in 2013. In addition, 8.8 percent plan to use their refund on home improvements.
The survey, which asked 7,609 consumers about their tax return plans, was conducted February 1-8, 2017 and has a margin of error of plus or minus 1.1 percentage points.
Furniture Retailers Missing Another Chance to Engage Customers?
Omnichannel — the buzzword of retail in recent years — is being added to the vocabularies of retail finance professionals as well, but an executive at one major finance provider is concerned that many furniture retailers may be missing the party because they don’t have a mobile app for their store.
Mike Ritter, who heads retail card services at TD Bank, said a survey the company conducted at the winter Las Vegas Market showed that 58% of the retail respondents didn’t have a mobile app. Only 32% said they had an app for their customers, and another 11% said an app was in the works, but wasn’t live when the survey was conducted.
He said the results were “a little surprising,” especially since 47% of those who didn’t have an app said they didn’t see a business need for one.
“It’s something the industry is still wrestling with,” Ritter said of the use of mobile apps. “We’re working really hard to try to do this omnichannel experience of promoting product and promoting financing until the purchase takes place, regardless of where it takes place.”
Of the 142 retail executives surveyed, 59% said most of their customers make the purchase in their brick-and-mortar store, while 31% said most make the purchase online and only 4% said most use a mobile app.
And even though physical stores still account for a majority of purchases, Ritter said the vast majority of consumers shop online first, which magnifies the importance of having a good website and mobile app.
“The more information you put in their hands, the easier you can make that final transaction,” he said. “It makes it more likely you’re going to be able to close the sale.”
He said TD Bank, which offers private label credit cards and promotional financing programs, encourages retailers to allow consumers to apply for credit online before they come to the store — or while they’re using a Smartphone in the store. He said the company is “very active” with mobile apps and can help develop promotions and financing programs that engage customers through the app.
“As we work with our partners on app development, it’s very important to make financing a part of it,” Ritter said “The ability to serve up product offers or financing offers when people are engaging at the store can be a really powerful tool from a financing perspective. Most people think they can afford less than they are actually going to qualify for.”
In addition to the retailers who didn’t see a business need for an app, 19% said technology limitations prevented them from having an app, 18% said their customers didn’t want one, and 14% said financial limitations were holding them back.
In addition, the majority of respondents (64%) said most of their customers were 35-54 years old, while 19% said the majority of them were age 55 and up. Only 16% said the most of their customers were age 18 to 34.
Storis Does it Again: Awarded Best Place to Work Honor
Retail software provider Storis has been recognized by New Jersey publication NJBIZ as a “Best Place to Work in NJ” for 2017.
The Best Places to Work in NJ is an awards program produced by NJBIZ since 2005. The program identifies, recognizes and honors the top places of employment in New Jersey that benefit the state’s economy, workforce and businesses.
“This award is greatly influenced by the team of people here at Storis. It’s gratifying to know that our people are happy to come to work every day,” said Barbara DeGenova, senior manager of human resources.
The Best Places to Work in New Jersey program is made up of 100 companies split into two groups: 65 small/medium-sized companies (15-249 employees) and 35 large-sized companies (more than 250 employees). Companies from across the state entered the two-part process to determine the 100 Best Places to Work in New Jersey.
A significant factor in determining who makes the list is feedback compiled anonymously from the company’s employees. The registration and survey process was managed by Best Companies Group, who analyzed the data provided and used their expertise to determine the final rankings.
Storis currently has 116 employees in New Jersey.
Companies who made the list will be honored at an April 26 awards ceremony, during which each company’s specific ranking will be revealed for the first time. In 2014, Storis received the #1 Ranking in the Small to Medium Business Category.
April 20,
2017 by Jane Chero in Business Strategy, Industry
The excitement of the election is in the distant past even though the media continues to do replays of what happened. With some degree of optimism we forecasted a modest increase of 4.5% for 2017. Historically, with the exception of 2008, the year after an election has been an improvement over the election year.
After getting off to a slow start in January, President’s Day was a bright spot. March has been all right, but not a barn burner. All the soft data – consumer confidence, stock market indices, and manufacturer’s sentiment are very positive. Unfortunately, the hard data continues to show the slow, but steady growth that has been the case for the past five years. The upturn in housing starts/home sales sputtered a little in January/February with the increase in interest rates. However, the first time home buyers continued to participate,which is key to industry performance.
As an industry we should all continue our optimism. I believe that barring an international event we will achieve the forecasted growth. However, with this optimism we should take a hard look at the underlying value of our industry, specifically what the consumer is willing to pay. In the past six years all home furnishing prices have continued to decline with furniture and bedding leading the way. Why does the consumer not value our product when compared to other consumer products?
The answer cannot be to allow quality to deteriorate. Or is it that what the consumer wants is disposable furniture? Our future is not bright if this is the case.
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!
February 21,
2017 by Jane Chero in Advertising, Industry
Developing furniture and bedding advertising was a relatively simple process for decades. For retailers, it meant getting material for the upcoming weekend’s newspaper advertisement submitted on time, and possibly taping another radio or television spot to go with it. Yes, there were direct-mail pieces and the occasional billboard to deal with, but for the most part, the biggest concern was what other newspaper ad or news story would get placed adjacent to the space purchased by the furniture or mattress retailer.
For manufacturers, it meant checking insertion deadlines for their favorite shelter magazine, and touching base with key retail customers to do a deal on getting them co-op advertising dollars (that means the manufacturer foots some or all of the bill).
But a few years ago – way back in the early 2000’s – consumers started yelping about late furniture deliveries, tweeting about their comfy new mattress, and pinning pictures of that cool living room makeover they saw on HGTV. So much for those meetings with the ad salesman for the local newspaper.
“What has happened is that the amount spent on print – except for circulars – has dropped significantly.” Said Steve Rotman, president and CEO of Rotmans Furniture in Worchester, MA. “Radio and TV has dropped from what it used to be. And the amount spent on (direct-mail) circulars has dropped, although we still do them.”
No, Rotman and other furniture and bedding retailers like him haven’t cut back on advertising. But their dollars are being re-directed in a big way to the digital realm, which includes everything from social media sites such as Facebook and Pinterest to paid search programs such as Google AdWords to YouTube videos.
What use to be simple in terms of communication has exploded into a multiplicity of ways to communicate with perspective furniture consumers. Let’s start the discussion with how retailers are allocating their advertising budget.
Print is definitely trending down with some larger retailers in larger markets moving entirely away from the medium even with substantial discounts and value added. The fact is the consumer has moved away from the newspaper as a source for news reducing the impact of advertising.
Television which exploded on the scene more than a decade ago as the workhorse to attract potential customers to furniture retailers, is slowing. The fact is that consumers are viewing less television and when they are viewing, they are doing so on devices that exclude advertising.
Even in instances where television is the centerpiece of a marketing and branding strategy, digital media plays a key supplemental role. This is especially true with brand-building strategies by well-known manufacturers who advertise nationally such as La-Z-Boy, Ethan Allen and Tempur-Pedic.
Internet is either the first or second step when the consumer decides to make a furniture purchase.
As can been seen from Graphic B, 46.3% of consumers first visit the internet shopping various sites before selecting those 2-3 stores they will visit. This is a devastating blow to the less dominant retailers in the market. More retailers today have a web presence of some degree. However, the challenge is the site management, populating the site with new products and current advertising are the basics.
The other 38.8% visit the store first to scout out the retailers shopping environment. This is a critical visit influenced by the retailers branding effort as well as the reputation in the market. An important note is how the sales associate treats the scouting consumer. A lack of interest by the sales associate because of a perceived “tire kicker” can result in no return visit.
Of late, however, Rotman said his store’s most effective ads have been videos used as so-called “pre-rolls”, or short ads that run before a user can watch a selected video. He acknowledged that the click-through rate on such is small, but those who do click on the ad and visit Rotman’s website are much more likely to visit the store.
“It has a positive effect on store traffic and sales because it drives people to the website”, he said of the pre-rolls. “And, we’re finding that when website traffic goes up, store traffic goes up. And there’s a direct relationship between store traffic and store sales.”
He said that makes it critical to keep the website fresh and engaging so it accurately reflects what the in-store shopping experience is like.
“We want to create value for each web visitor,” said Rotman. “It has been very effective for us in terms of (an improved) closing rate and in terms of store sales.”
Social Media still has the buzz to be the solution to the furniture retailers advertising problems. Anecdotal research is the most often cited as reasons for pursuing this medium.
As can be seen from Graphic C from the consumer research, social media is not the most effective method to inform the consumer.
Rotman and Julia Rosien, brand manager to bedding producer Restonic, agreed that the measure of social media and digital programs is very important, but they noted that the traditional advertising measure of gross ratings points is only a small part of the measurement puzzle.
“At Restonic, we measure a wide variety of things – impressions, reach, engagement, and especially sentiment, which is very difficult to measure in traditional advertising,” Rosien said. “There’s a misconception that a social media strategy is easy to develop and implement. You can spend hours on social sites gathering and creating content, commenting on others content and sharing it all, and measuring the wrong thing. Valuable resources could be wasted on a vehicle that is not driving toward your goals.”
Rotman likes to call it “web-oriented advertising.” And he said, it now takes up about 40% of his annual advertising budget, and by next year, it probably will be 50% of the total. Five years ago, it was barely 10%. “I don’t see that trend reversing itself,” Rotman said.
Neither does Rosien who is an early proponent of a digital-heavy advertising and marketing strategy. “The goal of any well-conceived digital campaign should be to improve the connection between the brand and its consumers – turning fans into ambassadors,” she explained. “In this way, the sale becomes the by-product, but the community that drives engagement and love for the brand, that’s the sweet spot.”
She said Restonic’s digital media strategy has become important for both a business-to-business and business-to-consumer standpoint. Restonic dealers, for example, have access to a library of blog content they can incorporate on their own social media pages, while the company’s Facebook page now has more than 30,000 “likes” from consumers.
“Brand awareness and growth have been phenomenal in the past few years,” Rosien said. “Our blogger outreach campaigns have allowed us entry into groups and communities on social media that we wouldn’t have reached otherwise.”
She said the B2B side is important because retailers, especially smaller independent operations, often lack the time or staff expertise to execute the strategy. “We know retailers struggle to produce content and our digital publishing program takes the burden from them,” she said. “Social media is no longer a nice-to-have. It’s a must have.”
Rotman agreed, but said social media can be the classic double-edged sword if a retailer’s customer service or product quality consistently falls short of expectations. That can result in numerous negative comments and harsh reviews on sites such as Yelp, which a retailer generally has no ability to remove.
“If you have a lot of customer service issues, then it’s not a positive thing,” Rotman said. “But, if you have good customer services, there’s no reason to be afraid of it.”
Direct Mail, with the advent of computer graphics and digital printing, has evolved to the next level. This process allows small-run quantities with the ability to change product shots to match the targeted consumer. From the consumer’s perspective using more information/product shots makes the message more effective. Graphic D illustrates.
Over the past two years the concept of magalogs has been introduced to the traditional retailer. A combination of editorial content and product presentation devoid of a “sales pitch” has produced substantial results with 9%+ of existing customers and 4%+ of targeted potential customers visiting the store to make a purchase. Lifestyle stores, such as Pottery Barn and Restoration Hardware have used this approach instead of television advertising.
The introduction of targeting the consumer “most likely to purchase” has more than doubled the response rate of direct mail. The same targeting concept is now being applied to email transmissions. This involves moving away from the weekly total emails to numerous emails to specific consumer targets with products that most likely would appeal to them in terms of style and purchase cycle.
The focus going forward will be to direct a specific message to a potential customer incorporating a feedback loop for performance.
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WHO DOES THE TALKING?
Advertising is the communication from suppliers and retailers to persuade a consumer to purchase their product. It is a simple statement but a difficult objective to accomplish, especially to quantify success.
The starting point must be what influences the consumer purchase. According to the latest buying process study conducted by Impact Consulting Services, parent company of Home Furnishings Business, price was obviously number one well down the list. The graphic to the right illustrates all of the purchase motivators.
Manufacturing Role to
Attract the Consumer
In the past decade, the industry has lost many of its major brands or, of those that remain have muffled their voices. The traditional role of the manufacturer was to create, in the minds of the consumer, an aspirational desire for the product. The chief purveyor of this message was the “shelter” magazine. Starting at the upper end with Architectural Digest and Elle Décor and moving down stream to Southern Living and Good Housekeeping. If they still exist, there is little furniture advertising. Interestingly, there are rugs and accessories advertising which could explain the increase in the consumer price index for these product categories (index at 93.8 compared to furniture/bedding at 71.9).
There are brands that are the exception. In our discussions with Eli Winkler, Vice-President of Digital Customer Experience and e-commerce, he shared the La-Z-Boy approach to advertising to the consumer.
“La-Z-Boy’s hugely successful “Live Life Comfortably” effort, featuring actress Brooke Shields, wouldn’t be as effective without the benefit of digital media, despite the presence of her high-profile television and print ads,” said Winkler.
“La-Z-Boy has an integrated media plan across numerous channels: print, TV, digital video, display, social and search engines,” Winkler said. “It has been incredibly successful for us, garnered attention, and shifted people’s perceptions and knowledge of the brand based on our research findings. And, we have seen unprecedented sales growth.”
He said a key goal of the branding strategy is to change the perception that La-Z-Boy only makes recliners – a view that persisted among consumers despite the company’s nearly 90-year history of making a variety of upholstery products.
“We addressed the outdated associations head-on”, Winkler said. “We used Brooke to capture consumer’s attention, and her welcoming personality and authentic charm helped communicate that La-Z-Boy offers a wide range of great looking furniture options that fit almost any lifestyle and home. And, with Brooke in the furniture, customers took notice of our variety of stylish offerings.”
In 2017, he said Shields’ (and La-Z-Boy’s) visibility will increase as her ads will be used more extensively online, and will move into prime time broadcast TV slots. That’s in addition to the usual mix of non-prime broadcast and cable TV.
“Our target is the woman who wants to create a great looking, comfortable home where she can relax and enjoy life; where both family and friend feel at home the second they walk in,” Winkler explained. “She looks for quality and style that will stand the test of time and provide the functionality of her family needs, and is never interested in just following the newest trend. Her home is a place she really lives, not just a showpiece meant to impress others.”
Another successful brand-building effort built around TV and digital is found at Palliser, a Canadian upholstery producer who is wrapping up a national campaign in Canada and is planning to extend into the U.S. later this year.
“The secret to our success is the Palliser brand reputation in the Canadian market,” said CEO Cary Benson. “Palliser believes everyone deserves to have their home furnished exactly how they want it and when they want it. Their home furnishings reflect their personal style, color, comfort and function that matches their taste and lifestyle.”
He said the most recent TV commercials aired during early morning and evening news shows, as well as several national entertainment and sports broadcasts.
“We included a large hockey buy because, in Canada, female buyers are avid watchers of hockey broadcasts with an almost 50-50 split with men,” Benson said. “In addition, we have been sponsoring nationally televised Winnipeg Jets games with signage on the rink boards” (Palliser is based in Winnipeg).
He said the company currently is evaluating the best way to spend its media dollars in the U.S. market, but said the campaign will probably focus on digital and social media because national TV buys in the U.S. are not as cost effective as Canada.
“Our goals with our advertising investments are to help educate consumers about our brand and attempt to develop brand preference for our products so a consumer will visit our website, learn about our products and visit one of our local retailer partners,” said Benson.
Manufacturers acknowledge that some retailers are reluctant to promote a particular furniture brand – preferring instead to promote the store as a brand. Rotman, however, said he’s fine with including both the store brand and the manufacturer’s brand in his advertising, since the combination can convey the message that the store carries quality products from reputable manufacturers.
“The store brand is effective when it’s placed with the manufacturer’s brand,” he said, pointing out that some of Rotmans ads promote a particular category of furniture, such as solid wood and don’t mention any specific brands. “In that case, it’s the store brand used with a phrase that signals quality to the consumer.”
Retailers Role to Attract Consumer
The retailer’s role is to communicate price/value, selection and service. However, this message has evolved to “you can afford it” a financing message. The costs of this message, in addition to the medium used, is a hefty sum. The following graphic compares traditional retailers to the lifestyle stores (retail verticals).
These expenditures are quite a bit out of the average gross margin 48.6% that can be achieved. We should carefully understand the comparison to other distribution models such as lifestyle (retail verticals) brands Crate and Barrel, Pottery Barn and others, as can be seen from the graphic. An expenditure of half that amount by these retailers can be used to reduce margin targets or increase advertising.
As traditional furniture retailing moves into the future, the role of the suppliers to this distribution channel must be better defined. Suppliers are now comfortably selling other distribution channels, such as Etailers and Lifestyle stores as private labels.
Likewise, many retailers are directly importing using their brand. However, the focus from the consumers perspective is not aspirational, but one of price.
Without branding to the consumer of a product’s attributes, quality, design, etc… the product category will become a commodity.
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WHO ARE YOU SELLING?
There is an old adage that says, “I know 50% of my advertising is not effective. I just don’t know which 50%!” This is the challenge that must be addressed in order to reduce the cost and to improve the effectiveness of advertising. The foundation must be to know who you are selling at the most basic level of age and income. This is accomplished by appending — on an ongoing basis — the consumer demographics down to a product category level. Impact Consulting Services/FurnitureCore, the parent company of Home Furnishings Business, provides a Consumer Segmentation application that delivers this ongoing service. It is shown in the graphic above.
Comparing these findings to the consumers in your individual markets allows you to better understand your primary consumer. This information, when compared to the consumer you should be selling based upon your merchandise mix, gives direction to the buyers.
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TARGETING YOUR CUSTOMERS
One of your most valuable assets is your customer list complete with mailing addresses, email addresses, and telephone numbers. When this list is appended with basic demographic data and purchase history it allows you to use a “rifle approach” to targeting your consumers. Impact Consulting Services/FurnitureCore, the parent company of Home Furnishings Business, maintains a subscription-based application that maintains your databases. The targeting screen is shown in the the graphic above.
The application has a feedback loop to measure the results of direct mail campaigns as well as email campaigns. This provides the opportunity for you to communicate directly with your millennial customers (25-35 years old) about the targeted merchandise just purchased at Market or a special offer to your customers with available credit line or even the customer who has recently bought a bed, but not a new mattress, etc. All of this allows a more targeted approach to advertising. But most important, did it work?
February 21,
2017 by Jane Chero in Advertising, Industry
By Larry Thomas
Continuing a pattern of slow, but steady growth, area rugs kept pace with nearly all other home furnishings categories last year amid the often turbulent election-year retail climate.
That wasn’t surprising since furniture and rug purchases often go hand-in-hand, but many rug company executives believe the bevy of products launched at January trade shows – particularly the Atlanta International Area Rug Market and the Las Vegas Market – could help send the category to new heights.
Executives say blues and neutrals remain the dominant colors – known as colorways in the rug world -- on most top-selling rugs, but rugs containing splashes of brighter colors have worked their way onto the best-seller lists of several vendors.
“Our hand-tufted and hand-knotted rugs continue to evolve with changing and modern color palettes, bringing an updated look and feel to traditional interiors and providing texture and sophistication to modern environments,” said Satya Tiwari, president of Surya.
However, he noted that modern color palettes are no longer limited to hand-made products, which typically carry a high retail price tag.
“With our new machine-made rugs, great ‘high-end’ design is within the reach of more people,” Tiwari said. “What’s possible in rug design continues to inspire us every day to create ever more relevant designs that are so well in tune with home design and color trends.”
Research by Impact Consulting Services, parent company of Home Furnishings Business, shows that retail sales of area rugs totaled an estimated $5.49 billion in 2016, a 3.7% increase from 2015. Furniture and bedding sales growth was slightly slower, rising 3.4% to an estimated $95.68 billion in 2016.
For the first three quarters of 2016, area rug sales growth outpaced furniture and bedding growth more significantly, rising 4.2% from the first three quarters of 2015. During that same period, furniture and bedding retail sales grew just 3.1%.
In fairness, the furniture and bedding figure was dragged down by bedding sales, which grew a meager 1.3% in the first three quarters of 2016, according to Impact Consulting research. When bedding is taken out of the mix, furniture retail sales were up 4.1%, just 0.1% below area rug growth in the first three quarters of 2016.
It’s Not All Blue and Neutral
Additional research by Impact Consulting, including a survey of consumers who recently purchased an area rug, bears out manufacturers’ focus on blue and neutral colorways – but indicates the door should be left open for some brighter hues. According to the survey, 36% said neutral was the dominant color of their new rug, while 24% said it was blue.
Interestingly, 24% also said red was the dominant color, but no other color was named by more than 8% of those surveyed.
The survey indicated design trends are not as clearly defined as color trends. Some 24% said geometric was the overall design element, but another 20% each said solid and contemporary print was the main element, and another 16% said it was a traditional print.
Florals and zig-zags garnered 8% each, while stripes were mentioned by just 4% of those surveyed.
If the increased interest in brighter colors and non-solid design patterns continues, executives say it wouldn’t be the first time for such an occurrence. Capel Rugs, for example, said they saw significant growth in those areas last year, and is celebrating its 100th anniversary this year by bringing out two colorful collections inspired by products that were popular in the 1970s and 1980s.
One is a collection of braided rugs that gives “the original colonial design a modern spin,” while the other is based on a design that was selected for the World Floor Covering Assn. Hall of Fame in 1978.
“Our theme for the centennial celebration is ‘100 years of heritage in every rug’,” said Cameron Capel, vice president of national accounts. “One hundred years in business is a major milestone, and it underscores our long tradition of providing the very best quality, service and customer satisfaction.”
Who Needs the Internet?
Unlike furniture, where internet research is king, 40% of the recent rug purchasers surveyed said they did no internet research before making their purchase. Some 20% said they did one to two hours of internet research, while another 32% said they spent two to four hours.
The relative lack of internet research suggests an area rug is often purchased as an add-on during or shortly after a furniture purchase. Some 84% of those surveyed said they bought their rug after buying furniture, and another 4% said they bought the two together. Only 12% said they bought furniture after their rug purchase.
Another casualty of the lack of internet research (and quite possibly a lack of retail sales training) is basic product knowledge, the survey also suggests. A whopping 88% of those surveyed said they did not know the country of origin of their most recent rug purchase, while 52% said they did not know what their rug was made of (wool, natural fibers, synthetic fibers, etc.).
And not surprisingly, 40% said they did not know if their rug was machine-made or hand-made.
But the interest isn’t being totally dissed by consumers buying area rugs. The survey showed that 24% of recent purchasers bought their rug on the internet, while a solid 48% said they bought it at a mass merchant such as Target or Wal-Mart. Another 12% found it at a home improvement store such as Home Depot, and only 8% made the purchase at a traditional furniture store. The final 8% used a rug specialty store, according to the survey.
Regarding price, lower price points ruled the day, as some 80% said they paid $399 or less for their rug – 40% paid less than $100 and 40% paid $100 to $399. The next-highest price category was $800 to $1,499, which was paid by 8% of those surveyed. Just 4% each reported paying $400 to $799; $1,500 to $1,999; and $2,000 and above.
Loloi’s Anastasia
Ornate distressed traditionals are modernized by illuminating colorways in this collection. Power loomed in Egypt of polypropylene and polyester, the rug is durable and easy to care for, plus it gives the appearance of being a fine rug made by hand. The intricate detail, luster of colors, and unbeatable price point establish its value.
Safavieh’s Florida Shag
Detailed tropical patterns in warm, neutral colors bring Key West flair to this collection. The high and low pile of this shag floor covering accentuates the sculpted damask vines, colored in sandy beige, for a visual display with flowing dimension. It is machine-made using plush, durable synthetic yarns for added comfort and long-lasting beauty.
Couristan’s Madera
Made of 100% linen, this best-seller features cut pile accents over a sumac weave. Hand-made in India, it features soft, contemporary geometric patterns blended in a series of fresh, modern neutral colorways. Available in five sizes, it is shown here in a design that utilizes space-dyed yarns.
Tufan Rugs’ Vintage
This rug features a carving design that mimics a wear-off antique rug creating a “vintage” look, which makes it suitable for modern or classic settings. This luxurious rug is a combination of cotton and polyester and is hand-made in India. The collection comes in a variety of styles, designs and colors.
Jaipur Living’s Fables
Constructed of machine-tufted viscose and chenille, the Tria design brings any space to life with a fashion-forward color palette and a sophisticated, boldly-scaled contemporary pattern. The soft texture highlights the gardenia and pumice stone colorways.
Kaleen’s Weathered
This collection of indoor/outdoor rugs is hand-made of 100% PET polyester using a unique cross-tufting to create a distressed appearance. It is shown here in the popular blue/gray colorway.
Rizzy Home’s Dimension
Utilizing an innovative construction that combines a looped background with cut pile, this collection features a textured, striation appearance and a seamless blend of traditional and contemporary design elements. It is made of hand-tufted wool with a cotton/latex backing and is available in blue, gray and ivory colorways.
Orian Rugs’ Skyline
From the Next Generation collection, Skyline brings a casual look into the home with its exquisite details. The faded colors of cream and blue switch off to make an ocean tide theme. It is soft and durable and machine-made domestically. Suggested retail for a 5 x 8 rug is $375.
Surya’s Zahra
Hand-knotted in India, this 100% wool rug features a low-pile construction and is available in 10 colors. It comes in four standard sizes (2 x 3, 3 x 6, 5 x 8 and 8 x 11), but custom sizes also are available.
Nourison’s Twilight
A supernova takes shape in this rug as a spectrum of neutrals expands from the nucleus of rich platinum tones into an effusion of taupe rays on an ivory ground. With a burst of light, it brings dynamic radiance into the room. The hand-washed, hand-finished collection is machine-made of 40% wool and 60% Luxcelle.
Capel Rugs’ Simply Gabbeh
A traditional variety of the Persian carpet, tribal designs and geometric patterns are combined to create this colorful collection. It is hand-loomed in India of 100% wool and comes in four sizes.
Suggested retail for a 5 x 8 rug is $599.
Tayse Rugs’ Dakota
Part of the Festival collection, this versatile rug can be used with rustic or modern décor. Rich hues of brown, green, tan, red and blue are paired with a simple brushstroke pattern to make it suitable for virtually any room. It is machine-made with soft polypropylene fibers and jute backing.
Feizy’s Fiona
The Fiona collection is a dramatic grouping that interprets transitional designs in a bold palette of contrasting neutrals. Power loomed in art silk, the luminous sheen lends each piece a modern edge, while erased patterns impart a hint of vintage. It is shown here in dark gray.
Kas Rugs’ Artisan
Marketed as “artwork for your floors,” rugs from this transitional collection are hand-tufted and add an element of dimension to any room. Featuring a half-inch pile height, the collection is made in India of wool and viscose.