Monthly Issue
From Home Furnishing Business
June 14,
2018 by HFBusiness Staff in Economic News, Industry 
The rise of e-commerce in the furniture industry continues its momentum as many brick and mortar stores search for strategies to compete with giant online retailers. And while many brick and mortar furniture retailers are strengthening their digital presence, their online furniture sales only account for 1 percent of e-commerce furniture totals. Meanwhile, furniture and home furnishings e-commerce retailers celebrate rapidly increasing sales, but struggle with how to become profitable.
It is estimated that 2017 Internet sales of furniture alone from both brick and mortar and pure e-commerce retailers totaled an estimated $19.7 billion or 18.8 percent of the total industry. This article picks up from Statistically Speaking’s August 2016 article The Rise of E-commerce in the Furniture Industry.
Sources: U.S. Census Bureau’s Annual Survey of Retail Trade (e-commerce) and Impact Consulting Services, Inc.’s proprietary FurnitureCore.com Industry Model.
Furniture Industry Sales
The retail furniture industry reached $105.2 billion last year, a growth of 3.9 percent over 2016 (Figure 1).
Of the $105.2 billion industry total, sales can be distributed between (1) brick and mortar stores, (2) e-commerce retailers plus e-commerce sales by brick and mortar companies, and (3) mail order houses. Pure e-commerce retailers are those that do not have physical store locations, like Amazon or Wayfair, or their e-commerce is operated as a separate business unit, like Walmart.com. Additional e-commerce sales from brick and mortar stores total only 1 percent of the total industry.
Last year furniture and bedding sales by brick and mortar stores (non Internet) totaled $83.1 billion compared to $19.7 billion e-commerce (all outlet types), and $2.3 billion from mail order houses (Table A).
As shown in Table B, e-commerce continues to gain a greater share of the furniture industry – jumping from 5.1 percent of sales in 2006 to 18.8 percent in 2017. Meanwhile, brick and mortar share of total sales fell from a 92.2 percent share to 79.0 percent – decreasing dramatically as the economy improved after 2009.
The total furniture and bedding industry grew 3.9 percent last year. It is estimated that brick and mortar store sales of furniture grew only 2 percent while e-commerce retailer sales grew 12.9 percent.
Over the course of seven years since the bottom of the recession in 2009 furniture sales through e-commerce have grown at an annual rate (CAGR) of 22.2 percent compared to brick and mortar retailers at 3.0 percent. Total industry sales have grown at an annual rate of 5.1 percent (Figure 2).
Table C shows the annual year-over-year growth of the three outlet types. Note that the rate of e-commerce sales peaked at 26 percent in 2015, but has slowed somewhat over the last two years to 12.9 percent in 2017. Meanwhile, brick and mortar sales have struggled to reach 2 percent growth over the last two years.
Along with furniture e-commerce sales, other home furnishing products – floor covering, window treatments and home accessories – have grown at an even faster pace and surpass furniture in online sales. Consumers are still finding it easier and less daunting to buy home furnishings online without seeing or touching them in a store. Table D shows that while furniture e-commerce sales have grown from over 300 percent since 2009 (bottom of the recession) totaling $19.7 billion last year, home furnishings have grown 489 percent to $27.7 billion in 2017.
Brick and Mortar Stores e-commerce
In many brick and mortar stores, consumers have the option of physically visiting the store and/or using the store’s website to shop and make purchases. The online capabilities and offerings vary by retailer. Although “showrooming,” the customer’s act of checking out an item at a mall, brick and mortar or big-box store, then heading out to buy it from an online retailer, has grown commonplace over the years, the reverse is also true. Many consumers still need to see, touch, and feel an item and will do online research before heading out to a store to make a final purchase. While the success of online retailing among brick and mortar merchants has increased over the years, the e-commerce sales comparison remains vast between brick and mortar stores and pure e-commerce retailers. E-commerce sales among combined furniture and home furnishings stores jumped 200 percent from $367 million to $1.1 billion 2006 to 2016 but furniture stores only held one percent of that volume. (Note: 2017 data has not yet been released.)
Comparing combined furniture and home furnishings stores to other retail brick and mortar companies, furniture and home furnishings stores lag behind in percent of e-commerce sales to total sales but has shown 25 percent growth from 2014 to 2016. Just reaching 3.0 percent in 2016, clothing and clothing accessories stores have the highest volume of e-commerce sales as a percent of total sales among brick and mortar retail store types (Table E).
Mail Order Retailers
Technically the mail order business is a small part of the furniture industry but the lines between mail order and e-commerce are blurring and print catalogs are making somewhat of a comeback as another medium to reach out and touch the consumer. Data from the Census Bureau and Impact Consulting’s FurnitureCore.com Industry Model estimates the furniture mail order business at $2.3 billion in 2017, only 2.2 percent of industry sales. These sales were flat compared to the previous year. And according to the U.S. Postal Service and research by Data & Marketing Assn., in 2016, consumers are getting fewer catalogs in the mail compared to the glory days. In 2016 9.8 billion catalogs of all types reached American mailboxes compared to double that amount in 2007 (Table F).
Despite the gloomy statistics, last year saw evidence that print catalogs are resurging but not in traditional mail order formats. For example, home furnishings e-commerce giant Wayfair produced its first print catalog at the end of 2016 and continues to roll them out. Wayfair claims its catalogs are meant to inspire a lifestyle as opposed to promoting a brand.
Research points to several reasons print catalogs are growing. First, consumers are getting less and less mail overall as the “paperless” movement has become popular and therefore catalogs now stand out in consumer mailboxes. Also, the advertising clutter in email boxes along with saturation in social media has driven companies to give the old fashioned catalog another look. Plus, software ad blockers are causing fewer marketing messages to actually reach the consumer. And finally, research by Data & Marketing Assn. suggests simply that Millennials really do like them.
E-commerce Retailers
E-commerce retailers are defined as companies without physical stores competing with brick and mortar establishments. Sales of combined furniture and home furnishings through e-commerce retailers have increased from $7.9 billion in 2006 to an estimated $46.3 billion in 11 years (2006 to 2017) – a growth of 486 percent (Table G).
Growing at an average annual rate (CAGR) of 17.4 percent a year, e-commerce furniture and home furnishings retailers show no signs of slowing down. The two giants in the industry, Amazon and Wayfair, are both looking at ways to incorporate brick and mortar stores into their portfolios. These companies see the desire held by a majority of consumers to see especially higher ticket furniture items in person before making the leap to buy. Along with Wayfair’s entry into the print catalog business, according to Boston Magazine, the company is looking to open its first showroom in an old Marshall’s storefront in downtown Boston. Rather than resist the looming presence of Amazon, mattress manufacturer Tuft & Needle has partnered with the online company to expand its brick and mortar stores using Amazon technology and selling various Amazon products in the stores. These moves could put more stress on traditional furniture retailers.
In addition to furniture and home furnishings, other consumer merchandise lines dramatically increased sales through e-commerce retailers. At $59.1 billion in sales, clothing/footwear leads e-commerce retailer sales in 2016 up from $12.9 billion in 2006 – skyrocketing 358 percent. Although not as high as clothing/footwear, furniture and home furnishings experienced the highest growth among e-commerce retailers over two years 2014 to 2016 – jumping 54 percent. Sporting goods sold through e-commerce retailers also continue a positive trajectory, increasing 44 percent in two years and passing the slower growing computer hardware merchandise line (Table H). Note that data for 2017 is not yet available.
Retail Trade Total
Internet sales of all consumer products from all retail types of outlets, whether brick and mortar or e-commerce companies, are estimated to have reached $437.5 billion in 2017 (Table I). It may be surprising to some, however, that these internet sales represent only 8.6 percent of all retail sales for all consumer products (Table J). But Internet purchases continue to make major inroads into many consumer products with no sign of slowing down.
The rapid growth of furniture industry sales by successful e-commerce retailers are challenging brick and mortar stores, but traditional store fronts still offer a customer experience that an e-commerce retailer cannot. But e-commerce companies are quickly moving into areas (for example, store fronts and print catalogs) to challenge the customer experience of traditional brick and mortar retailer.
Understanding the Role Geography Plays
Research is emerging to help both brick and mortar stores and online retailers better target customers. For example, the affluent urban customer has totally embraced the e-commerce experience.
However, in more rural areas where shipping costs are higher and delivery times longer, e-commerce has been slower to catch on. It also appears the less affluent consumer responds better to online sales events. Understanding these economic and geographical profiles will be a feature in a future Statistically Speaking article.
June 14,
2018 by HFBusiness Staff in Business Strategy, Industry
That got me thinking about my career, which leaders I followed and the impact they had on my growth. There were most certainly a lot of people that influenced my development, but I must say that the biggest factor was the amount of effort my direct supervisor put into training me and providing me with opportunities to learn even more through additional educational activities outside of the company itself. Sometimes it took a push or a challenge to get me motivated, but in hindsight I probably got more from those experiences than I did from all of the on-the-job training over the years.
The best boss I had in my career, totally believed in this. I have well over a dozen notebooks in my bookcase from AMA programs, various seminars and other business courses I took because he challenged all of his direct reports to constantly find ways to grow and improve. Sometimes it was a pain in the neck to fit these external events into a busy schedule, but it was always worth it, because I use things I learned from them every day.
Looking through my book case, I found a segment from one event that seems to be an appropriate preview for next month’s Forty Under 40 issue. It comes from probably the most memorable one day session I ever attended. Our leader took all of his direct reports to Cobo Hall in Detroit for the “Success 1993 Seminar” which featured the top motivational speakers of the era, including: Zig Ziglar, Peter Lowe, Mary Lou Retton, General Norman Schwarzkopf and others. All day long we sat transfixed while these famous, successful people gave us their insight into what it takes to be all you can be.
They were all excellent, but the one that really blew me away was General Schwarzkopf. Certainly, the fact that he had just retired as a hero of the first gulf war was a factor as his presence and presentation were both commanding to say the least. However, it was his message that struck me the most and has stayed with me ever since. His topic was “Picture a Leader” and he spoke with a clear passion that you could feel throughout the hall. Here are some notes I jotted down from what one of our great military leaders said about being a leader:
The secret to the 21st Century will be leadership.
Nearing the end of the last century, Schwarzkopf’s concern was that we were not developing enough strong leaders to take us into and through the next century. Others have expressed similar thoughts related to generational shifts in values and focus. Each generation has always seemed to have concerns about how the next one will carry on. As people change so too must their leaders. However, the basic points he made back in 1993 will always hold true.
Leadership does not equal managership – leaders lead people, managers manage processes and procedures that involve people. One is an art, the other is more of a science.
His meaning here is pretty clear - leaders lead and managers manage. In my experience many people can be trained to be good managers. However, leaders must be developed and not everyone has what it takes to be a leader. Social psychologists have often said that leadership qualities and skills show up very early in childhood, but I have seen good people evolve into great leaders as they gain experience and confidence. Of course, I have also seen it go the other way. The best is to have a true leader who can also manage, but these individuals are hard to find.
The Challenge is to get people to do willingly, that which they would not normally do willingly.
This is probably the best definition of the difference between a manager and a leader I have heard. Leaders find ways to get people on board, so they actually do the right things because they want to, not because they have to. Teams with leaders in charge are always the most motivated and successful at whatever tasks they perform or roles they play.
Mostly, being a leader takes character. Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy. Lead by example, because people hope that their leaders are better people than them. It’s nice to be liked, but you must be respected.
Webster defines character as “the mental and moral qualities distinctive to an individual”. In this usage, the word is intended to indicate a high level of mental and moral strength. Good Leaders must be dedicated to their principles and values in order to be affective, so they need to be strong in these areas. Often this is hard because not every decision is always the easy one. Being a leader is not a popularity contest and as he says, respect is necessary for success, but being liked is not. I have read several articles stating that “wanting to be liked” is the top reason that new managers and aspiring leaders often fail. By the way, my understanding is that General Schwarzkopf managed to be both respected and well liked throughout his career.
A leader cannot delegate responsibility – that is theirs alone. Leaders delegate authority, so others can get their jobs done.
Leaders that pass the blame for failure on to subordinates or other team members lose the respect discussed in the previous point. Not only do those below stop trusting the leader in this case, so too do those above. There have been several examples of sports coach’s blaming the players for losing a game and in most cases the resulting news articles and player quotes reflect a loss of respect for that individual. Train your people how to be successful, give them the proper tools, coach them to make them the best they can be, then let them do their job.
“Leadership has many peaks and valleys. A good leader does not live for the next promotion or tangible reward. He or she derives pleasure from leadership itself. It is almost a calling.
This was the general’s way of saying that there is a certain amount of passion and a whole lot of dedication that goes into being a true leader. The rewards and adulation will come if an individual stays focused on the act of leading and is motivated by doing it. When they lose that, they will begin to be less and less affective as a leader.
The Six Points of Leadership:
- Things will not improve until you admit that something is wrong
- Set Goals – Pick goals that everyone can understand and know their roles in achieving them
- Demand High Standards – Let people know what is expected from them. People will rise (or sink) to the standards you set.
- People work to succeed – Let them know how success will be measured.
- Recognize Success – Also accept mistakes, “Latitude to learn, NOT Freedom to fail”.
- Power Down! – Don’t tell people how to do their job. Give parameters – give standards – give authority – tell them WHAT to do, then let them do it! Weak leaders lack confidence in themselves and thus their people.
No comment necessary for this section since it is probably one of the best “To Do Lists” anyone interested in being a leader could have. Straight from one of our best military leaders!
General Schwarzkopf’s Secret to Success as a leader:
The general wrapped up his presentation by announcing that he was going to provide us with his “secret” to becoming a successful leader. He then told a humorous tale about when he arrived at the pentagon to take over as the person in charge of managing all military personnel – over three million people at the time.
The general he was replacing had been in the position for a long time and was beloved by everyone. Schwarzkopf expected to have three months of training at the side of his predecessor only to discover him walking out of his office to take three months leave before officially retiring.
He dramatically told us that he literally chased the old general down the hall, finally stopping him to ask how the heck was he going to be able to take over without proper training and guidance from him? The old man said, “Oh that’s easy. Just follow Rule #13,” and then he walked away. Schwarzkoph stopped him again and said, “I am sorry sir, but I do not recall a Rule #13.” As if reading it from a manual the older man said, “Rule #13… when placed in command, take charge, make something happen, don’t just sit there!” He then walked away again. Schwarzkopf yelled after him, “but how will I know what to do?” The old man paused and said, “Just follow Rule #14”. Schwarzkopf then asked, “What does Rule #14 say?” The old man didn’t stop, he just shouted over his shoulder and said, “Rule #14…do what’s right!”
General Schwarzkopf said he followed Rule #14 the rest of his career and it was the single biggest reason for all of his success as a leader. His last comment was, “The truth of the matter is that you always know the right thing to do. The hard part is doing it.”
It is this last point that I have tried to live by ever since hearing his presentation. It has served me well when I have been faced with tough decisions and I hope it will help you too.
The real message of this column is that all too often we keep our managers locked up in our stores and then wonder why they still do things the way they have always been done, instead of taking our businesses to another level with new ideas and knowledge. Take a lesson from my best boss and invest in your people so they can grow and move your business forward.
Thanks John!
June 14,
2018 by HFBusiness Staff in Business Strategy, Industry
Luxurious … stylish ... elegant—words you might not expect to hear when talking about recliners and motion furniture.
But times have changed.
Comfort and style have converged to create motion furniture that fits almost any lifestyle and décor.
“The large, bulky frames are losing their place,” says Bobby Gantt, director of research and development for Southern Furniture Company. “Better styling is taking over. Companies are making sleeker units to hide in frames better.”
Power play
“Comfort is always key … but power continues to grow and remains a demand of customers. Additionally, technology enhancements like USB charging are strong added features,” says Penny Eudy, product manager of upholstery, merchandising and TLA. “For La-Z-Boy, our Duo line has been a big hit. It offers the stylish look of stationary, but the comfort of reclining—so it’s the best of both worlds.”
USB ports are standard on Duo, and there’s an optional battery pack to provide power, cord-free.
Also gaining momentum in the category, says Craig Young, president of Bradington-Young, are new mechanisms that deliver a variety of design options. “Power recline and power headrests remain appealing features for our motion consumers,” he adds.
“As motion furniture continues to grow at an increasing rate, we continue to offer more innovation and increasing functionality with our products. Power headrests have become a must-have in motion products and offering power lumbar support has also proven to be the perfect touch to add to our product,” says Rodd Rafieha, senior vice president of Abbyson.
“We also have more versatile features we are including, such as drop-down consoles with pull-up headrests that include lighting as well as lighted cup holders, power and USB ports,” he adds.
“Connectivity is important these days—USB ports and charging stations,” says Gantt, adding that simple but effective power mechanisms are gaining popularity. “It allows for more comfort options as opposed to just three positions.”
Scaling down
While comfort is king and technology is the icing on the cake, manufacturers are finding success with scaled-down versions that have the look of stationary furniture.
“Consumers crave the comfort of motion furniture, and we find a strong appetite for motion designs that don’t look like the category’s traditional silhouettes. We continue to innovate our designs so that they look like stationary designs, but offer a comforting surprise,” says Young. “Our smaller-scale, stylish designs with an optional lumbar support are also capturing the attention of motion-savvy consumers.”
An example is Bradington-Young’s bestseller, the Newman Luxury Motion sofa. “The sofa, which falls into our luxury motion segment, offers a sophisticated design that incorporates the functionality and comfort consumers want in motion upholstery,” says Young. “Newman allows comfort and incredible design to coexist in one great sofa.”
One trend that Gantt has seen in motion furniture is “frames aimed for women … smaller, curvier, and a larger array of fabric and leather options,” he says. “A large number of consumers look for motion furniture that resembles traditional stationary seating.”
“Consumers’ taste in motion furniture has shifted from the bulky, oversized products to focusing on a more transitional look that still focuses on comfort and style,” says Rafieha. “Our bestsellers are the sleek and slender styles that mirror the look consumers are aiming for.”
Strong performers
So what makes a bestseller a bestseller?
“Bestsellers for us is what sells the most volume for our partners and provides our partners with the best gross dollars profit,” says Rafieha. “We also monitor customer reviews and their experience with our products so that we can continue to develop products that consumers are looking for to complete their homes.”
The motion category continues to be one of the industry’s stronger performers, says Young. “We are selling at all price points in the category,” he adds.
La-Z-Boy, says Eudy, has always been known for comfort. “When you add in the quality of our products and the overall value and sheer number of scaling options, there is a great fit for everyone,” she says. “Additionally, the fact that our furniture is fully customizable makes each piece truly unique.”
Larry Smith, CEO of Barcalounger, says their Seymour Collection is a top seller because of its "clean modern design and the trend-forward white leather with gray undertones. The pieces are highly functional as well, with both power headrest and power recline, USB ports, and personal memory position." The color, Dove, has proven so popular, he adds, that it’s been requested on other pieces manufactured by the company.
Motion forward
Innovation, manufacturers say, continues to attract consumers.
“Innovation will be critical as the category moves forward,” says Eudy. “Consumers want function and comfort. It’s bringing the two worlds together to give them everything they need and want.”
Part of that innovation is making the pieces more comfortable and convenient. “We see a number of newly engineered mechanisms coming into the category that accommodate longer legs, a deeper seat, and a taller power headrest,” says Young.
Another area of the market that continues to see solid growth, says Gantt, is stylish lift chairs. “The aging population is into technology,” he says.
“Looking forward, the motion furniture industry will continue to add more functionality to every piece that is being offered,” says Rafieha. “The time is coming when every piece in retail stores will include power features.”
What the data shows
Research by Impact Consulting Services, parent company of Home Furnishings Business, sheds light on some of the amenities consumers seek in motion furniture.
When asked about the top four items they have now or would want to have in reclining furniture, in the fabric category 59.38% chose automated adjustable headrest and lumbar supports; 53.13% chose a storage drawer; 50% chose heat/massage; and 43.75% chose a docking station for telephone.
Rounding out the list were a hidden tabletop and built-in remote, both at 34.38%; surround sound system, 21.88%; and built-in beverage cooler, 18.75%.
In the leather category, the top choice was heat/massage at 63.33%. Both a telephone docking station and automated adjustable headrest and lumbar supports came in at 53.33%, and at 40% was a hidden tabletop.
Thirty percent chose a built-in remote; a storage drawer, 26.67%; and at 23.33% each, a built-in beverage cooler and surround sound system.
When it comes to reclining mechanisms, for fabric recliners, 62.5% preferred a hand-operated mechanism vs. 25% who preferred power. Just over 12% preferred a body pressure mechanism. However, power mechanisms were the winner for leather recliners, at 50%, with hand-operated and body pressure coming in at 26.67% and 23.33%, respectively.
Style is a factor as well when choosing motion pieces. When asked, “Is the style of reclining furniture an inhibitor to your purchase of this type of furniture?”, in the fabric category 52.94% responded “yes” and in the leather category, 60% responded in the affirmative.
How does price factor in consumer decisions? When asked, “What would you expect to pay for a good quality fabric reclining chair?”, 52.94% responded with $300 to $599, and 29.41% with $600 to $999. Just over 11% considered $1,000 to $1,999 to be a fair price, and 5.88% in the less than $300 price range.
Cost expectations were just slightly higher for leather, with 46.67% expecting to pay $600 to $999 for a reclining chair and 26.67% in the $300 to $599 range. Just over 13% would pay less than $300, and 6.67% were in the $1,000 to $1,999 price range. The same percentage—6.67%—expected to pay more than $2,000 for a quality leather recliner.
June 14,
2018 by HFBusiness Staff in Business Strategy, Industry
The company has a history of providing value to the customer, and Price is continuing that value by adding new product categories and recognizing the importance of e-commerce in today’s marketplace.
Price recently spoke with Home Furnishings Business about growth strategies, the challenges faced by home furnishings retailers, and what consumers are looking for.
Home Furnishings Business: The Houston market represents $825 million in the upper/premium price point, or about 33 percent of the total market. While the Houston market is more affluent than the rest of the nation, pressure still exists on the better segment. What is a possible strategy for Star Furniture?
Bob Price: Our merchandise strategy is simple and straightforward—build assortments that are balanced by style and price point. Price points cover good, better, and best pricing. Additionally, the products represent the best value at each price point.
Today, there is pressure and competition in each pricing category. The strategy also places the highest priority on quality, as well as being in-stock on the items that are in the assortment. Our goal is that every customer who appreciates style, regardless of income or type of home, can find furniture they want at Star Furniture.
HFB: Your background is in providing significant value for the consumer. Will elements of that strategy appear in the Star game plan?
Price: Yes, certainly. But, to be fair, providing value for the consumer has been a key strategy at Star Furniture for over 100 years.
Many in our industry concentrate on value at certain price points. We believe the objective is to provide value in every item, regardless of price point. Price is certainly a component of the value equation, but value also includes quality, scale, style, and service.
HFB: Out of the gate, you were challenged with the hurricane. For a seasoned management team, this was a challenge. As a new leader, was it a time to bond?
Price: Bonding may not be the right word to describe what happened with the challenges Star Furniture experienced from Hurricane Harvey. I can tell you that as a company, there was a single focused effort to do the right thing for the community, the customers, and our associates. If working together as a team is bonding, then yes it was.
HFB: There are several retailers in your market, some local (Gallery Furniture); others regional (Rooms To Go). Is the strategy for everyone to stay in their lanes?
Price: Our strategy is a growth strategy. While we are always respectfully aware of the competitive realities in all markets, our number one objective is to better serve the customer.
The fact is that we must focus on the customer, while at the same time, be aware of the strategies of other furniture retailers. We need to grow our sales and grow our brand. If we constantly strive to improve our assortment, improve the delivery of furniture, and most importantly, improve the customer’s experience in our stores and on our website, we can achieve our strategy of growth.
HFB: While the home furnishings sector is growing nicely compared to other retail sectors, furniture stores are not achieving the same growth. Are there any plans to add other product categories (i.e. top of the bed) to the store assortment?
Price: Yes. We plan to add more style categories, as well as new merchandise categories. The first new merchandise category we are planning to add is a complete assortment of window product. This assortment will include hard window and soft window. There are several other new product categories that are in the planning stages.
HFB: E-commerce is obviously a future consideration. With Star’s sister companies a significant demographic presence would be possible. What is Star’s forward look on e-commerce?
Price: E-commerce most certainly plays a huge role in our growth strategy. Our website is one of the ways we can tell the customer who we are and what merchandise we carry. A viable, competitive website also provides the customer with options. We realize some customers want to buy from a store, others want to buy online and perhaps most important, a lot of customers want to pre-shop online and then come to a store. We face the same challenge online as we do in stores and that’s to address improving the customer experience. As the customer continues to change, we have to change our strategies, including how we present our assortment online.
HFB: What do you think are some of the biggest challenges faced by home furnishings retailers today?
Price: People—recruiting, hiring, and maintaining a best-in-class management team, buying team, selling team, and support team; in-stock/inventory levels—having the merchandise the customers want to buy on hand and ready to deliver; logistics—flowing the inventory needed; having the right amount on hand/not too much and not too little; differentiation—what will insure that when the customer is deciding where to shop, they choose Star Furniture; vendor partnerships—we have developed some great partnerships with our vendors. Even with that, there is still opportunity in having a mutually beneficial relationship that boils down to simply listening to what each other’s needs are.
HFB: How has your past experience in merchandising helped in your role as a CEO?
Price: Personally, I know I have been blessed to have worked for some exceptional CEOs and many great merchants during my life. I have also been blessed to have learned from a lot of people I have worked with. Many of these people have served as role models, whether they are aware they were or not. Today, not one day goes by when I don’t learn something from someone who I work with at Star Furniture.
HFB: What attracted you to the job at Star Furniture?
Price: The opportunity to significantly help grow a business, the opportunity to be a part of the Berkshire Hathaway company, and maybe most important, the opportunity to spend my day with some very talented and special people who come to work with the same one single mission—to grow Star Furniture.
HFB: What opportunities for growth do you see for the home furnishings retailers?
Price: All retailers, including home furniture retailers, have the same number one opportunity—to better serve the customer. This opportunity never goes away in retail. The customer experience gets a lot of conversation. But more times than not, that’s about all.
Improving the customer experience is a mission that is never complete. It’s something we have do every day for the rest of our life. It’s interesting to see how the results differ when a retailer builds a business that addresses what the customer wants and needs as opposed to a more selfish motive that addresses how the company places the priority on doing what the company wants to do.
Other opportunities for growth include:
- Respecting the customer’s time—how do we help them purchase what they want faster
- One-stop shopping for the home—how many products that the customer uses in their home can be purchased in one location; this opportunity is both for a store and certainly for online
- Training—qualified and knowledgeable selling associates and websites that have all the product information the customer wants
- Excitement—a store environment that is colorful, fun, easy to shop, and [up to date]
HFB: Are you seeing any trends in what consumers are looking for, such as sustainability, customization, etc.?
Price: Number one is customization. Customization has been a consistent and evolving trend over the last decade. I think customization will continue to be even more important. For example, offering a sofa in only one color is really a merchandise decision made with the retailer in mind. A sofa that gives the customer the option, at the same price, to choose from three other stocked colors, is a merchandise decision made with the customer in mind. This would be good example of customization. Another example that supports customization is offering custom order options. The custom order category continues to grow, particularly when the product is available domestically.
Casualization is another trend. It supports having furniture you live in, not just look at. Store presentations are more casual today, dress codes are more casual today, and with a possible exception of bedroom, casual continues to grow and formal continues to decline.
One more trend that seems to continue to grow is in the mattress category. Comfort and better health are the drivers for this growth area. Selling systems and floor presentations continue to be more focused on comfort level rather than price. Demand for related product such as adjustable beds and bed pillows are also growing and seems to get more important every day.
May 10,
2018 by HFBusiness Staff in Business Strategy, Industry
Today, if someone approached you at a gas station, your reaction would be fear; it must be a car-jacking. This human interaction has left the retail experience. Is gas less expensive? Probably not.
We should not dismiss the cost in that selling expenses currently average 9.38% of sales for traditional retailers, a significant amount compared to other consumer goods retailers.
Traditional department stores are struggling to survive. The Bon-Ton stores are in liquidation and the other major department stores are on deathwatch. Many things contributed to their demise and it was not their home furnishings category. The appearance of the discount department stores, with less service, but the appearance of lower prices, shifted the consumer traffic. Some will argue the service left first and the consumer followed. There is some truth in that, as the department stores struggled with finding competent sales associates, so service did deteriorate. This struggle is there today (see Statistically Speaking in this issue).
The home furnishings stores are growing faster than their cousins, the furniture stores, for many reasons. However, the retail sales associates in the home furnishing stores do not have the same job descriptions as their counterpart in furniture stores. Whether we want to recognize it or not, the discount department stores, such as Target and Big Lots, are becoming the strategic threat.
It may be time to let go of our most treasured concept of the retail sales associate and the UPs system.
We should take it slowly and first, begin with the UPs system. Today, retailers are spending thousands of dollars each month to make the system fair and measurable. Facial recognition cannot tell the retailer how the consumer wants to be sold. It can only tell them it’s the mailman.
Let’s focus the attention on the consumer and let a “natural selection” process happen, as our retail sales associates approach the customer. From Impact Consulting research, certain retail sales associates sell older/younger lifestyle, and so forth better than others. Forcing the matches can be detrimental.
Analyze how successful your sales associate is with different consumer characteristics and coach improvement. While you are doing that, I am working on the ultimate solution.