September 7,
2018 by HFBusiness Staff in Business Strategy, Industry 
Prior to the Internet, consumers followed the recommendation of friends and family as to which retailer to shop. Today, that source is one of the last steps that a consumer will process on the way to a purchase. The graphic below presents the steps by two distant groups: the Millennials and the Generation X / Baby Boomers.
Source: FurnitureCore.com
It is obvious from the accompanying graph that for over 50% of consumers that have purchased furniture, the first stop is research on the Internet. According to the same research, in total 72% of all consumers use the Internet during the purchasing process.
The conclusion is that the Internet has become the advertising medium of choice for the furniture purchaser. This is not to say that Internet advertising is the only source because the consumer must be influenced by other sources, to be enticed to visit the site initially through other traditional or digital advertising. The Internet is a primary touchpoint for everyone, but not everyone is using it for advertising purposes.
Without a doubt, the Internet is embedded into the buying process. An important measure is the differences between traffic into the store and the unique visitors to the website in that more than 72% of consumers visit the retailer’s site before purchasing.
The graphic below illustrates the measurement.
Source: FurnitureCore
It is true that prior to visiting the retailer, the consumer may have visited the retailer’s website in the prior month. Based on FurnitureCore research, 25% of the difference between visits to the website and a visit to the store consists of consumers educating themselves and indicates they will purchase beyond the month. Research from PERQ, a company that boosts website conversion through online guided shopping solutions, shows this at the beginning of the sales funnel, but 17% will buy within 2 weeks.
According to PERQ’s CEO Scott Hill, there is a significant opportunity. “Stores are getting traffic to the website and in some cases, paying a large amount to do so. This data shows the importance of having a way to stay in front of these consumers for the next 90 days while they decide their purchase destination. Nurturing these consumers through just e-mail marketing has proven to double the amount of consultations being set with sales associates. This is because, when on the website the first time, they were not always ready to schedule a consultation. But, 45, [or] 60 days later, all of a sudden getting an e-mail with an easy "Schedule a Consultation" button in it, allows them to engage when they are ready.”
Hill provided some interesting statistics (average).
- Website visitor – call to action click 12%
- Conversion from click to lead – 29%
- Conversion from lead to sale – 12%
According to Hill, the best performing clients have converted 20% or more of their leads into in-store sales. Hill added to the results, saying, “By giving consumers a way to research and engage that they value, local dealers can appeal to the type of consumer who will eventually come in-store and are able to learn more about the consumer prior to their purchase, to set automated nurturing efforts based on the personalized information learned. This allows for the consumer to better plan their purchase prior to visiting in-store the way they like, and allows the local dealer to stay in front of the consumer during their research process and for a personal reach out from a sales associate.”
A major concern with the design of the website is the impact of intruding into the consumer’s web-based research. It is documented that unsolicited intrusions increases the “bounce rate” of the site.
A more friendly approach is used by DesignCliq, an industry provider that helps furniture retailers realize the potential of internet marketing by offering a series of Style Preference Quizzes as an information feature on a retailer’s site. The tool assists the consumer in defining their unique style. The graphic below illustrates the output that is emailed to the consumer. In essence, it is the consumer’s “style DNA.”
Fred Star, founder of DesignCliq, offered some interesting statistics:
- DesignCliq builds immediate-long term customer loyalty—average 39% of visitors completing DesignCliq Style Quiz will register (name, Email address, and zip code) versus 4-6% Internet average
- Visitors’ DesignCliq engagement runs 7.14 minutes versus 1.6 minutes internet visitor site average
- DesignCliq Quiz establishes new retailer customer relationships—83% of visitors are new retailer customers
- Retailer enjoys immediate and lasting customer loyalty—33% of registrants will purchase within 12 months
- Retailers income—average DesignCliq Quiz customer purchase runs 29% higher than store average, as style becomes more important than price
With all brick and mortar retailers facing declining traffic, trying to influence the consumer at the one place they know potential customers (72%) will make that decision to shop is understandable.
When consumers that had purchased furniture were asked to rank the advertising media that had the most influence, the internet was number one for all consumers under 35 and 31% for older consumers. The graphic below presents the influence of all.
The importance of the other media should be noted. For example, Direct Mail is number three for Millennials and number two for older customers.
The major question for brick and mortar retailers is ‘when will the Ecommerce bubble stop’? Impact Consulting, a management consulting and retail operations firm specializing in furniture and home furnishings, offers research for durable furniture purchases which states that currently the level is comparable for both consumers under 35 and consumers over 35. The table below illustrates.
The Internet Has Changed Everything - Including Furniture Retailing
Perspective submitted by Micro D
Ever since the Internet became commercially available around 1989, much has been chronicled about how it would, and indeed has, changed everything. Just consider how it has transformed the way we stay informed, communicate, socialize, work, and shop. There’s simply no denying that in a short 30-year span, the World Wide Web has profoundly impacted our everyday lives.
The Birth of Ecommerce
Changes in consumer behavior are also driving a digital transformation for home furnishings manufacturers and dealers. Since the launch of the first ecommerce websites early and mid-1990s, companies large and small have embraced the connectivity, convenience, and power of the Internet to support our changing lifestyles.
Early marketers of books (Amazon 1995), online auctions (Ebay 1995), and other inexpensive and easy-to-ship products launched a new wave of ecommerce. While some home furnishings fall into this category, major furniture purchases and bulkier products like sofas and beds that typically require more research and consideration came online later.
According to Manoj Nigam, chairman and CEO of online furniture solutions innovator MicroD, “The earliest home furnishings websites started appearing around 1995, followed by the first successful furniture ecommerce sites in the year around 2000.”
One such early industry adopter was Carolina Rustica, a retailer of high-end furniture, lighting, bedding, and accessories. The company became nationally recognized as an industry leader in ecommerce for its progressive user experience, multichannel strategy, and growth that averaged 25% per year prior to being acquired by Mattress USA Inc, in 2012. Former president Richard Sexton, who now serves as chief product officer for MicroD explained, “In 2000, if you had a website with products and a checkout option, you were in business. Almost all the competitors I faced back then are now gone with the notable exception of CSNStores, who we now know as Wayfair.”
The Growth of Ecommerce
While furniture has lagged many other product categories in ecommerce, the relatively young online market for furniture has grown significantly in recent years. According to the U.S. Census Bureau[1], in 2004 ecommerce sales accounted for only 3.2% of the total furniture industry with store sales making up 93.4 %. The share of ecommerce grew to 15.3% in 2017, mostly at the expense of in-store sales. Since then, market analysts widely report steady growth of online home furnishings that consistently outperforms in-store growth rates.
Perhaps of even greater significance is the impact that the Internet is making on in-store furniture sales. MicroD’s Nigam believes that, “while some number of consumers are warming to making furniture purchases online, many more are using furniture sites to interact with products and make key buying decisions before they visit the store to finalize the purchase. When it comes to their bigger and most important purchases, most furniture shoppers still want to see and touch it in the store. The difference is that, rather than traveling to and shopping at multiple stores, they now visit just one or two stores that have the product they have fallen in love with online. That makes the quality of a retailer’s website even more important and why we focus so much on improving the customer experience.”
His observation is supported by analysis conducted by Statistica that shows 58% of U.S. home products in-stores were ‘digitally-influenced’ in 2016. Similar studies conducted by Google and others indicate that furniture sites will influence about two-thirds of all furniture sales in 2018.
Future Progression of Ecommerce
Looking at modern industry websites, it is easy to understand this growth. In contrast to sites of 15 years ago, new technologies provided by vendors have vastly improved the online shopping experience.
Difficult to navigate webpages have been replaced with fully integrated merchandising and ecommerce platforms. Flat product photos are being replaced with 3D assets that engage consumers to view products from every angle, get more accurate color representations, drape various upholstery fabrics, configure and personalize their product choices. Augmented Reality (AR) tools take the experience to a whole new level by enabling shoppers to virtually bring new products into their own home to confirm the look, fit, color, placement and more to be confident in their purchase.
According to Sexton, “Today’s furniture leaders are better adapting to market demands, leveraging their physical presence advantages, and making better use of visual technologies like 3D and AR.”
While many more advancements are certainly on the way, industry-focused technology partners will not only participate in the change – they will likely continue to be the agent for change in the home furnishings industry.
The Internet: Not One Size Fits All
Perspective submitted by BluePort Commerce
The Internet hasn’t impacted everything equally or in the same way.
On one hand, goods and services where “information” makes up the bulk of an offering – think music, books, photos, advertising, banking, TV, radio, newspapers and the like – have been fundamentally transformed.
On the other hand, areas involving more physical bulk have been more incrementally altered, mostly around the edges where information impacts a transaction that is primarily physical – think restaurants, car services, travel and, of course, dating.
Retail is somewhere in the middle. While shopping is an information-rich process, particularly in the area of marketing, it can also be deeply dependent on physical interaction with a product and its delivery.
Today, just under 10% of retail sales are transacted online with Amazon on track to do 50% of those transactions this year.Most of this volume is in easy to understand, easy to ship items, where the Internet’s strengths are most easily leveraged.
It’s in more complex categories like furniture, however, where the Internet’s impact on retail can best be evaluated. And, it’s by looking at these categories as the other 90% of retail transforms that the Internet’s future impact on retail can best be predicted.
The First Wave of Digital Retail: The Amazon of [Everything]
Despite looking the part, Jeff Bezos wasn’t a bookseller who put his bookstore online. Bezos was a hedge fund manager who shrewdly selected books to be the beachhead for Amazon, the website he launched in 1994. Books - easily understood, easily shipped, with a brick and mortar shopping experience easily disrupted by providing vast selection – proved right in the internet’s retail wheelhouse.
Amazon’s success led to a frenzy of copycats, applying the Amazon model to less ideally suited categories powered by a torrent of capital willing to fund them to do so.
The fundamental premise of these early dotcom models was the promise of vast selection at low prices, without the real estate or personnel expense of opening a store. In other words, more stuff, cheaper.
In categories where stores didn’t provide much value to shoppers, dotcom models thrived at the expense of suddenly useless brick and mortar players. Retailers like Blockbuster, Borders and Tower Records, all stores that essentially sold physically packaged information, didn’t stand a chance.
At the same time, retailers whose stores did provide value to shoppers, as a place to experience and/or efficiently obtain a product, rebuffed early dotcom insurgents like WebVan, Pets.com and, of course, my Furniture.com.
The First Furniture.com
As an attempted pure-play, Furniture.com was a perfect case study of a retail category stubbornly refusing to hop in an Amazon box. With over 250 smart, committed employees and nearly unlimited financial resources, we
developed amazing technology for marketing and selling furniture.
The economics of doing so, however, were horrendous.
Furniture isn’t easy for shoppers to understand online. As a result, we had to lower prices significantly to prompt “it’s so cheap, I’ll take a chance” purchases. And, once we sold a sofa, the expense of delivering it was punishing.
Our delivered margins were minimal, which when combined with the usual marketing expense of attracting shoppers online meant we lost hundreds of dollars on every order.
When Furniture.com ultimately closed, I spoke to a number of top 25 furniture retailers who were unsurprised by - and admittedly somewhat happy about - our demise. But, they also hinted that we were on to something, sharing that they’d had hundreds of shoppers in their stores carrying Furniture.com printouts, ready to buy.
It wasn’t that Furniture.com hadn’t impacted furniture retail it just wasn’t the same type of impact as the internet had on categories more readily suited for an Amazon box.
With ill-suited dotcoms closing in droves and VC funding evaporating in the “nuclear winter” that followed, it seemed possible that vast swaths of retail would remain unaffected by the Internet. Then, Steve Jobs relit the Internet’s retail fuse.
The first iPhone launched in 2007. Suddenly the Internet wasn’t confined to a bleak looking PC or laptop in your home or office. It was in your hand, it was personal, and it was everywhere.
Moreover, the iPhone unleashed two radical new capabilities. Its camera unlocked social media and democratized content creation. GPS finally anchored the Internet in the physical world.
Suddenly, the Internet was ready to disrupt two key pillars of traditional retail – media and location.
The Second Wave of Digital Retail: Enabling vs. Replacing Stores
Whereas the first wave of Digital Retail focused on replacing the store, these new capabilities made the second wave about enabling stores. As a result, this wave has had a far more profound impact on more of the retail landscape, particularly on big-ticket categories like furniture. Furniture retailers’ tried and true tactics of attracting customers – TV, Print and Radio – have been upended, with the internet both garnering shoppers’ attention, and raising the bar for smart, personalized advertising that traditional media can’t match.
The Internet is now in shoppers’ hands while they’re out shopping, raising the bar for synchronicity between the information they get online, and experiences in physical stores.
The New Retail Imperative
At one time, the Internet represented little more than a cheap way to open another store. It was, for many retailers, optional. Most retailers in big-ticket categories like furniture sat out that first phase, deciding that Amazon-style ecommerce wasn’t for them.
Today, a great retail website – the first place people land after seeing a retailers advertising, the means by which shoppers decide to allocate scarce time to visit a physical store, and a constant mobile companion inside that store – is no longer optional. Not just another store, a retailer’s website must now be their flagship store.
The Next Wave: Unique Solutions for Unique Product Categories
We are still in the early innings of the second wave of digital retail, as retailers adopt digital marketing strategies and point them towards increasingly powerful websites. For most retailers, there is a long way to go in both of these areas. In furniture, this transformation is just beginning.
At the same time, this transformation, nascent as it is, isn’t hard to predict. Other categories further down the Internet adoption curve provide a playbook for how retail will evolve in categories like furniture.
Perhaps more interesting is how furniture will evolve differently from other categories once this baseline digital competency is established. How will the Internet impact furniture retail and other big-ticket categories next? That has little to do with what the Internet can do for furniture retailers, and everything to do with what shoppers want it to do for them.
The Ideal Furniture Shopping Experience circa 2018
When it comes to furniture and the Internet, shoppers want something different.
A June 2018 survey asked 2,000 shoppers of all ages to describe their ideal shopping experiences on two dimensions:
- Whether they preferred shopping in a store or online
- Whether they wanted help shopping, or wanted to go it alone.
The result was striking and powerful evidence of something that those of us in this industry have felt for some time: Furniture shopping is a uniquely omnichannel experience, on both of these dimensions.
Future of Furniture Retail
80% of people prefer to shop in stores for furniture, and 50% want help when they do so.
It is in enabling and activating these shopping preferences that the Internet will ultimately most deeply impact furniture. Just like Amazon did for shoppers’ simpler preferences for books way back when.
In furniture, that means making store visits easy and efficient – as simple as making a reservation with Open Table or getting a car with Uber. Engaging one of retailers’ biggest assets – salespeople, currently on the sideline of digital retail – need to be providing the assistance shoppers want, both online and off. It is meeting unique requirements like these that will unlock the Internet’s true impact on furniture, and on the other 90% of retail.
Arguably, the Internet’s only superpower is to get people what they want more efficiently. Thankfully for furniture retailers, furniture shoppers want a store and some help. To the extent that Amazon-style businesses (or Amazon itself) capture share in furniture, it’s because brick and mortar retailers have failed to deliver an experience that feels easy, relevant and personalized. Those retailers who leverage the Internet to do so will prove as disruptive to the future of retail as those first dotcom insurgents, twenty-five years ago.
The Evolution, Optimizing for Mobile
Perspective submitted by FurnitureDealer.net Commerce
The Internet has revolutionized the computer and communications world like nothing we’ve ever seen before. It is the ultimate mechanism for moving information. From its roots on the PC or laptop, to today’s mobile devices, the Internet is everywhere including in shoppers’ hands before, during, and after shopping. As technology continues to evolve we need to harness the emerging technology to have an impact on the way home furnishings companies market and sell their products.
Andy Bernstein, CEO of FurnitureDealer.net agrees.
“I believe that the Internet is one of the greatest if not the greatest invention we have ever come up with, but it really only does one thing. It moves information, and does it incredibly well.”
Whether you are a consumer shopping for furniture, a retailer who wants to find perspective customers, a manufacturer who wants to sell to a retailer, or you simply want to share your product and tell your story to end-consumers, moving information is part of the equation.
Fifteen years ago, many in the industry thought it was too costly to extract data from a retailers POS system and too labor intensive to include pricing on websites. Additionally, retailers were concerned about making their prices available on the Internet. The initial thought was that once a retailer puts their prices on the Internet for the world to see, it would become easier for a competitor to beat that price, or for a consumer to use that price as leverage for negotiating elsewhere. There were pros and cons for both sides, but the mindset was “we need to focus on other things right now”. That’s no longer the case.
“Five years ago, we declared war on our customers’ sites that didn’t have prices on them,” Bernstein says. “Today almost all of our clients’ sites have pricing. It’s a massive amount of work but it’s necessary. At least half of our clients’ sites now connect to their POS software as well as their inventory system. Now we can communicate inventory, location and real pricing information.”
The retailers’ website is where many customers are making their initial furniture purchasing decisions. Searching for furniture that fits their needs and finding information about cost and delivery is a time saver. Visitors must have a good experience or we risk losing them as potential customers. Offering a sub standard shopping experience is something retailers can’t afford to do.
“At FurnitureDealer.net we’ve always hired digital natives. In most cases, they are recent college graduates with a good working understanding of the Internet. As long as they are good learners, they can learn the furniture part along the way,” Bernstein said. “But one of the things we realized is there were very few people in our company — who were creating information being used by furniture shoppers — that had first hand experience with furniture shopping. Since many of our employees were recent college graduates either still living at home or living on their own with hand-me-down furniture, we knew they had not walked in the shoes of our consumer,” he said. “We get about 4.5 million visitors per month on our network of websites from people who are actively shopping for furniture. So, it’s important that our team understand that journey. We decided to launch a training initiative and bonus program and gave employees who completed the training $2000 each to go furniture shopping. The goal was for them to really be a part of the experiences and the hassles of shopping and owning nice furniture,” Bernstein continued. “We got clubbed over the head,” he said. “The first thing we noticed during the initiative was that if you don’t show prices on your website, it’s useless. It’s hard to tell the difference between a $500 sofa and a $5000 sofa. They look the same. So, if you don’t show the prices on your website, the tool becomes less valuable.”
Now, mobile is changing the game. Devices like smartphones, iPads, and tablets are dramatically changing the way consumers shop and how furniture retailers should manage their business. We know that customers are using their main weapon of choice— the phone in their pocket— to access the Internet.
“ Over 55% of the traffic across our network is coming from mobile devices,” said Bernstein. “Very quickly mobile became the dominant way for people to access the Internet, which makes sense because we have our phones with us all the time now.”
With 85% of all searches for furniture beginning on the web, and mobile web searches exceeding desktop searches, furniture retailers must have websites that are optimized for mobile.
Mobile marketing is also becoming increasingly popular for retailers with tools like location-based marketing, SMS marketing, and mobile search ads allowing retailers to customize offers at just the right time. “It’s not easy to shift the mindset to be a mobile-first company, but the consumer shifted a long time ago and the furniture industry must do the same,” Bernstein said.
Bernstein believes we need to reinvent everything to be ‘mobile first’ and figure out how to create amazing experiences for the consumer. “Technology providers, including us, are creating friction, frustration and hassle in the process. Whether you are a retail employee servicing a customer or a consumer just trying to do business with a store, we are doing things that make it really difficult and we need to fix that. Our company is doing a lot of little things, as opposed to one or two big things. We are trying to look at every touch point and find ways to do things better.”
According to Bernstein, “We are looking at every single aspect of the consumer shopping experience and every aspect of the details to better understand the communication and information needs between the consumer and the retailer. We believe the consumer is using the Internet before they ever step foot in the store, as well as when they are in the store and even after they leave the store. They expect to use their main weapon of choice —the smartphone in their pocket—to access the Internet as part of their shopping journey.”
Bernstein says Amazon.com is having a profound impact on consumer expectations. He believes experience has trained us to be frustrated by any tiny little thing that is not quite as good as the Amazon experience. But, big box and brick and mortars are responding to Amazon’s Prime Day. Target and Best Buy have done some incredible things to make it so that consumers can use the Internet to find which products are available at which locations. “I’ve used both platforms and while Best Buys’ was a good experience, at the same time it was horrible compared to what Amazon provides,” Bernstein noted.
“So, If Best Buy and Target are struggling to deliver an experience that can satisfy a customer in a world of expectations set by Amazon, how do you think my customers feel? That scares me and keeps me up every night. Amazon is making a huge push into our category. My clients, the independent brick and mortar furniture retailer, are for the most part, a lot closer to flat instead of growing and growing, so we are looking into every single aspect of the customer experience from what they are researching online, to when they find products, to how they are managing their process, to how they are interacting with the salespersons. It’s a really hard mindset shift for companies like mine to make.”
FurnitureDealer.net has focused a lot on sight engagement tools. “Basically we built tools that engage customers. We ask them questions to understand what they are really interested in so we can personalize and automate a lot of different things, to continue to deepen our understanding of each person. We’re obtaining granular data one customer at a time,” Bernstein said. “We are programming the website to have a software brain that behaves much more like a salesperson would but it’s performing marketing functions. We are creating customized offers, but they are low on the totem pole of what really matters. I am far more excited about the ability to successfully understand, assist and recommend product solutions that match. “ Bernstein continued, “What’s far more valuable and harder to do is to develop the ability to more expertly make matches, not just make matches and discount them, but to make better matches by listening and understanding, but we still have a long way to go.”
September 7,
2018 by HFBusiness Staff in Business Strategy, Industry
Once a problem faced mainly by big cities like San Francisco and New York, the demand for housing is far outweighing construction in both big and smaller-sized cities. Inventories are low almost everywhere impacting furniture and home furnishings purchases. Table A shows the downturn in homes for sale from 2011 when the housing market bust was in full swing to 2018 (Q2 YTD). During that period inventories among all metropolitan areas fell 56 percent. Among MSAs with housing unit populations over 500,000 inventories this year dropped below 1.0 home for sale per 100 households. As the economy and housing market began to improve, the table shows the slight upswing in inventories in 2015, but a continual decline since. Note: Homes for sale include both single-family homes and multi-family condominiums.
Table B graphically shows the top 5 states with lowest housing inventories and Figure 1 expands that graphic to a list of the top 10. California leads the way with only 0.44 homes for sale per 100 households, followed by District of Columbia with 0.47 and Massachusetts with 0.53. Washington State had the most dramatic decreases – inventory dropping 68 percent from 2011 to 2018 Q2 YTD.
|
Figure 1
Top 10 States With Tightest Housing Markets
Number of Homes for Sale Per 100 Households
2011 to 2018 Q2 YTD
|
|
State*
|
2011
|
2013
|
2015
|
2017
|
2018 Q2 YTD
|
|
Total U.S.
|
1.70
|
1.19
|
1.12
|
0.94
|
0.88
|
|
CA
|
1.13
|
0.50
|
0.56
|
0.43
|
0.44
|
|
DC
|
0.78
|
0.35
|
0.39
|
0.40
|
0.47
|
|
MA
|
1.46
|
0.94
|
0.84
|
0.57
|
0.53
|
|
WA
|
1.67
|
1.07
|
0.90
|
0.60
|
0.54
|
|
NE
|
0.93
|
0.75
|
0.65
|
0.55
|
0.54
|
|
OH
|
1.36
|
1.05
|
0.96
|
0.74
|
0.68
|
|
MN
|
1.43
|
0.88
|
0.99
|
0.76
|
0.70
|
|
NY
|
1.38
|
1.07
|
1.00
|
0.77
|
0.74
|
|
KY
|
1.33
|
1.23
|
1.06
|
0.82
|
0.77
|
|
CO
|
2.19
|
1.44
|
1.08
|
0.85
|
0.78
|
|
Source: Zillow Inventory Data; Census Bureau Housing Units
Note: 2018 housing units have been estimated
*Data is unavailable for Nevada and Indiana
|
While housing inventory has fluctuated among the states with the highest ratio of homes for sale, no state has maintained above a ratio of 2.0 homes for sale per 100 households through June of this year. At the highest, Vermont has 1.6 homes for sale per 100 households – down from 2.4 in 2015 (Table C and Figure 2).
Figure 3 shows the how the largest metro areas have been affected by the housing shortage and highlights the problems being faced, especially by our big cities. The top three largest markets with the tightest homes for sale inventories are located in the West -- San Francisco, Seattle, and Los Angeles. And by far, the Seattle area has been hit the hardest – inventory plummeting 76.7 percent down to a ratio of 0.34 homes for sale per 100 households in the past seven years. Metro areas with high inventories in 2011 – Atlanta and Miami – have fallen 62.9 percent and 44.5 percent, but both markets are still in better shape than other major cities.
New Residential Building Permits
While many metro areas are suffering with tightening housing inventories, some areas are having better luck with building permits and new housing construction in an attempt to turn the tide. Furniture retailers should pay close attention to the markets where building is picking up and where building is slowing. Overall building permits grew 6.6 percent in the U.S. 2017 Q2 to 2018 Q2 annualized. Interestingly, it is the smaller markets where building permits have increased the most especially for single-family units. The larger MSAs, 500,000 to 1.5 Million and Over 1.5 million housing units, had the smallest growth over last year, 4.8 percent and 5.8 percent respectively. Mid-size range 250,000 to 500,000 increased the most at 9.4 percent, while the smallest range available (50,000 to 100,000) had the second highest growth at 9.3 percent. of 4.6 (Figure 4).
Looking at state increases in building permits this year, Table D shows that Hawaii had the highest growth in residential building permits since the second quarter of last year —jumping 32.6 percent followed closely by New Hampshire at 30.9 percent. Idaho, Utah, and North Carolina all had over a 20 percent increase. Note: Data includes all states.
Building permits declined in many states. Montana had the lowest growth in residential building permits declining 23.7 percent this year compared to 2017, followed by Mississippi, down 20.5 percent, and Illinois falling 15.7 percent (Table E).
Among the largest metro areas (over 1.5 million housing units), Houston leads the way with 21 percent growth last year. Boston and Atlanta both have over 15 percent growth, while Phoenix and Los Angeles have over 10 percent. By far, Chicago and Detroit are experiencing the worst negative growth in residential building – down 23.8 and 23.9 percent from 2017 Q2 to 2018 Q2 (Table F).
Some smaller MSAs made the list of metro areas with the largest unit growth in residential building permits with Houston, TX topping the list at 5,032, followed by Orlando, FL with 4,319. Certainly Hurricane Harvey last year is contributing to some of Houston’s housing permit growth. Charlotte, N.C. is third on the list with 3,788 permits. Phoenix, AZ, Austin, TX, and Salt Lake City, UT are also smaller cities that are showing growth in residential building (Table G).
For single family units only, Phoenix leads the way with 1,509 building permits added from 2017 Q2 to 2018 Q2, followed by Santa Rosa, CA with 1,007. Denver, Charlotte, and Atlanta all had above an 800 unit growth over the same time period (Table H).
From the 2nd quarter of 2017 to the 2nd quarter of 2018, Houston tops off the list for MSAs with the largest growth of multi-family units at 4,525, followed by Orlando with 3,767 and Charlotte with 2,892. Los Angeles, Atlanta, and San Diego all exceeded 1,500 units over the same year (Table I).
Furniture retailers in these high and low housing growth areas are paying attention to current housing inventories and future building growth in their specific marketing areas. Sluggish building and tight markets often equate to slower industry sales.
September 7,
2018 by HFBusiness Staff in Business Strategy, Industry
This month’s theme of Internet Strategy is particularly challenging because in the past three years I have written three articles dedicated to this subject. In addition, I believe that various aspects of what should be in your internet strategy plan have been addressed or at least mentioned in virtually every column I have produced. The Internet and how you use it is so critical to your business today that it becomes a part of almost any discussion about what you are doing to win the battle for customers in your market. Its impact spreads throughout your organization, touching marketing, sales, merchandising and operations.
My main focus here is normally on the front end of your business: sales, marketing and merchandising. A core element of that effort has been directed at helping the reader to become a better manager and more effective leader of their business. To that end, we have put forward many ideas and recommendations about ways to improve your management team’s efforts and to help you make better decisions for your company. As a result, several columns have specifically given the reader direction on either creating an internet strategic plan or at least some elements one should contain.
Last year’s September column presented some ideas about using your staff and customers to help you make decisions for your company. It talks about forming cross functional teams to study each area and make recommendations that management could include in any strategic plan for the company. This would certainly include researching and brainstorming about how to better utilize the many opportunities provided by the internet.
As I considered what to write about this month, I thought it might be beneficial to focus again on the strategic planning process itself, so the information could be helpful not only for your internet plan, but also for any other area. My thoughts went back to my own experience with this process at places I worked and how much it varied from organization to organization. Some of this was due to cultural differences between them (democracy vs. dictatorship models), but a lot was mainly a result of size variances (big companies have more people to throw at a problem or process). In my 45 plus business years, I have worked for or with some of the largest manufactures and retailers in our industry. I have also had the opportunity to work at or with some very small operations. Just like people, the personality of each company was different at each stop.
So, what was the difference between companies that consistently created great strategic plans and those that did not? To be honest, there were a lot of factors, but by and large, the bigger companies were able to be more organized and focused in their approach. They also had the distinct advantage of being able to put more heads around the table when brainstorming, developing and finalizing the plans. They could create multiple teams to focus on each area and aspect of the plan, so nothing got missed.
The larger corporations usually had an even bigger advantage over smaller ones. They had a board of directors, made up of successful executives from other companies who could provide a critical element to the process – an expert final analysis of the plan using experience and insight not present within the company. They were appointed and paid to ask pointed questions that insiders might not ask and provide insight which insiders might not possess. Depending on the quality of the board, the end result was almost always a much better thought out strategy and a more solid plan to execute it.
Smaller companies, on the other hand, needed to have one or more very high-quality individuals at the top, with experience in all aspects of the business, to create a good plan. Smart ones often hired outside consultants to guide and direct the process, plus provide the outside insight needed to stretch the talents of the management team. Those that did it on their own had to rely on the owner’s gut feeling and a little bit of luck. In many cases, a lot of luck!
Home Furnishings Business Magazine, as it says on the cover of every issue, focuses on providing “Strategy for the Furniture Industry”. The company that owns it, Impact Consulting Services, has been providing strategic planning research and consulting services to the furniture industry for over 35 years. I can tell you that having the right data that allows you to ask the right questions is absolutely critical. Knowing where your company is at and where it has the opportunity to go, is equally important. Creating a strategic plan is then the process of laying out the journey to the targeted result. There are many others that provide this type of assistance, including some accounting firms. Most of them can help their clients improve their planning process.
A great many companies have found help from membership in a buying group. One of the best things I have seen in the last decade or so is the evolution of these associations from mainly product focused purchasing and marketing advisors to full service support organizations, providing assistance to their members in almost all areas of their business. Their meetings, symposiums and other programs offer members fantastic opportunities to seek input to solve problems and find help with creating plans for their business. I highly recommend that every retailer finds one that is a good fit and takes advantage of all they have to offer.
Apart from the obvious benefits to your management process of hiring a dedicated professional consultant or taking advantage of the support offered by a buying group, there is one other opportunity for an owner that truly wants to take their business to the next level and beyond. It not only offers access to information, data and ideas to help improve your results, it also provides the opportunity to have a virtual “Board of Directors” to help better understand your business realities, create higher quality strategic plans and know what you need to focus on to succeed. It can also help hold you accountable to do what you said you would.
I am talking about a concept that began in the Auto Industry, probably thirty years ago, when a major manufacturer realized that the owners of its dealerships could learn more from each other than they could from in-house advisors, outside consultants and even other family members. So, they created what they called “20 Groups” that brought roughly twenty owners of similar dealerships together on a regular basis to visit a member’s operation, provide feedback for improvement, discuss what was working for each one, share best ideas, review each other’s financial statements, set goals and hold each other accountable from meeting to meeting.
Twenty-five years ago, the Charter Group was formed as the first Performance Group of this type for the furniture industry. The next year the Premier Group was born. Those two are still flourishing, with some of the founding members and many of the original companies still participating. Others have followed, serving retailers from under five million dollars of volume to those in the top 100. They normally meet three times a year and a major part of each meeting deals with strategic planning for all aspects of their businesses.
For the past dozen or so years, it has been my distinct privilege to facilitate the meetings for several of our groups. Internet strategy, a topic that is discussed at every meeting, led me to focus on them in this month’s column as a great way to help create better strategic plans. One of the biggest benefits of being a member in a performance group is the twenty or so heads around the table, helping each other solve the problems they all face owning and managing a retail furniture store in today’s marketplace. They help create strategies/plans for improvement. The amazing thing is how much smarter ten or twenty people are than one or two. They truly function as a “board of directors” for each other. In addition, members develop great and lasting friendships, along with a deep dedication to helping everyone succeed.
We are not the only company that provides this service. A few of the buying groups, some of the major systems providers and a couple of consulting firms also have similar programs available. It is by far the most rewarding experience I have had in my business career and I highly recommend that anyone out there wandering alone in the “business jungle”, that wants help, guidance and supportive friendship, look into joining one. “Strength in numbers” was never truer than with the performance group experience.