Monthly Issue
From Home Furnishing Business
May 10,
2018 by HFBusiness Staff in Economic News, Industry 
The brick and mortar home furnishings industry is not immune to the worker shortage crisis facing American businesses. Data from the Bureau of Labor Statistics supports the growing need facing companies to attract and retain employees, while adapting their training methods and introducing technology that fills the gap of a smaller workforce.
Successful companies are also looking at ways for technology to enhance the customer experience. Conversational “Live Chat” options are now widespread for online retailers. But technology is also creeping on to the sales floor. For example, home improvement retailers Lowe’s and Home Depot already have apps that can direct you within their stores to the exact location of a product. In addition, for the past year and a half Lowe’s has tested its second generation in-store robot fleet in the San Francisco area to assist customers as they walk in the door. The robots answer questions, are bilingual, and can physically guide a customer to a specific product. Lowe’s claims the robots are not meant to replace the human worker, but rather assist with the more mundane sales information functions leaving more complex questions to the sales personnel.
Labor shortages throughout the U.S. are fast becoming a real issue across all major industries. From farms to factories, employers are having a hard time finding both unskilled and skilled workers. In healthcare, hospitality, and retail industries, companies are struggling to find qualified and available employees.
According to the latest data, the U.S. has 6.3 million job openings and 6.7 million unemployed workers (Table A). In many cases, the skill sets required for the job and/or the wages required by the worker for these open positions do not match with the available unemployed labor force pool in the required geographic area.
Job Openings by Industry
Accommodation (hospitality) and food services is the hardest hit industry with 5.5 percent job vacancy – increasing from 4.6 percent last year (Table B). According to the World Travel and Tourism Council, tourism accounts for over 14 million jobs in the United States and a continued rise in job openings could impede economic growth for the hospitality sector.
Healthcare and social assistance had 1.03 million jobs open in January 2018, the most of any sector, and was among the highest with an open job rate of five percent. Job openings among transportation, warehousing, and utilities jumped 63.1 percent over a year – from 187,000 to 305,000. Retail trade, which includes all furniture and home furnishing stores, had 711,000 jobs opens and a job opening rate of 4.3 percent– up 28.6 percent from the same period last year.
Table C shows the five industries with the lowest rate of job openings. Government jobs – Federal, State, and Local – had the lowest rate of job openings at 2.1 percent. With rates under 4 percent (3.5 percent and 3.1 percent), job vacancies among Construction and Educational Services still rose 57.2 percent and 42.9 percent respectively from 2017 to 2018.
With 711,000 job openings in January, Retail Trade is struggling to hire and keep sales people. This accounts for 11.3 percent of total job openings – up from 10.2 percent last year. Both Healthcare and Social Assistance and Professional and Business Services make up 34 percent of all job openings – a total of 2.1 million jobs. 12.7 percent of job openings in 2018 (Jan) belong to the Hospitality industry (Accommodation and Food Services) as shown in Table D.
Job Openings by Region
While the South leads the way in total job openings (2.2 million), openings in the Midwest soared in one year to a rate of 4.6 percent – up from 3.7 percent (Table E). As many farms struggle to find workers, job openings in the West jumped 26 percent to 1.5 million jobs from 2017 to 2018 and finished January with a rate of 4.3 percent, while the Northeast has both the lowest rate (3.6 percent) and number of vacancies (1 million).
Civilian Labor Force
The Civilian Labor Force includes persons employed and those unemployed, but actively looking for work. Down 3.2 percentage points from 2006, the current work force (February 2018) makes up 63 percent of the total civilian population over the age of 16 (Table F). Roughly 37 percent of the population over 16 is not considered part of the labor force. This segment – Not in the Labor Force – consists of people who are in school and do not work, those who have grown disillusioned searching for work and not actively looking, and those who choose not to work for various reasons.
As shown in Table G, the unemployment rate has dropped to 4.1 percent in February of this year – the lowest since 2000. Unfortunately, this has not translated into big gains for the employed population. At 63.0 percent, the percent of the population employed continues to stay well below pre-recession levels, while people not in the labor force climbs further, growing 3.2 percentage points from 2006 to 2018 (February).
The labor force historically includes teenagers, ages 16 to 19, as they make up a large portion of the part-time labor market. This year, ages 16 to 19 account for 6.5 percent of the total civilian population over the age of 16, but only 3.7 percent of the workforce. In addition to an unemployment rate of 14.4 percent among teens, many are opting out of summer jobs and represent 11.3 percent of the total persons “not in the labor force.” According to the Bureau of Labor Statistics, teenagers opting out of summer work is not due to laziness, but rather education taking its place. In addition to many school districts either lengthening the school day or academic year, many students are taking summer classes to “get ahead “ – cutting into time for a job.
Not in the Labor Force
Of the 37 percent of the civilian population over age 16 that are not in the labor force, only 5.4 percent actually want a job, but are just not actively looking for one (Table I). This figure represents 5.2 million Americans, down from 6.6 million in 2012, that want a job, but are not in the workforce.
The number of men not in the labor force as a percent of the total labor force has slowly increased over the last decade and beyond. In 2006, only 37.9 percent of those not in the labor force were men. Since then, the number has grown yearly – up to 40.3 percent in February (2018). Conversely, the number of Women as a percent of those not in the labor force is declining. They represent 59.7 percent of those not in the labor force, down from 62.1 percent in 2006. Table J depicts how the percent of the civilian population not in the labor force by sex has shifted over time.
Adding to the worker shortage is that the desire for a job is falling as those not in the labor force keeps climbing. Table K shows the percent of people not in the labor force but still would like a job fell 6.6 percent last year, with women growing slightly more interested in working than men.
With many companies having a difficult time finding qualified employees, real concern is growing over worker shortage. Many older workers are retiring or choosing not to work and there are less young, not as qualified, workers to replace them. As a remedy, some industries are turning to robots, automation, and artificial intelligence to adapt to labor shortages. Through education, training, and pairing human skills with technology, companies may find ways to cope with a smaller labor force.
May 10,
2018 by HFBusiness Staff in Business Strategy, Industry
Unfortunately, many small and medium sized retail furniture stores cannot answer these questions positively. Even some larger ones would struggle to hit on half of them. Obviously, the key query of the four is the initial one. Because the result of a proper, formal sales management training effort should be that a store’s sales management team focuses on customer experience, has the right systems/procedures and uses the numbers to coach and drive sales growth. In my experience, fewer retailers today invest in a professional training program for their sales management team than in the past. As a result, most sales managers I meet are self-taught, which in many cases means they were basically trained by the very people they are supposed to manage. I think we can all agree that is not the best scenario since a key component in managing a sales staff is accountability and that is not something that many sales people are apt to ask their manager to provide on the sales floor.
When I started in the business over 40 years ago, there were many programs and providers available for a furniture retailer to choose from that would help their sales managers get started on the right foot. They also helped upper management learn how to coach the coach, which was the key to having consistent success developing great sales leaders for our industry. At the time, the strong domestic vendor structure we had in the USA supported and promoted these programs. As a result, most managers I encountered then had taken advantage of at least one opportunity. While there are still some organizations and consulting companies that offer this type of learning experience for retailers, it seems that fewer and fewer stores are willing to invest the time and money to train their sales managers. We then wonder why it is so hard to hire, develop and keep good sales people in our stores when a key to making that happen is having a strong sales management effort on the sales floor.
In many of the past Coach’s Corner columns we have pointed out what managers should be doing to drive sales performance improvement in your stores. We have presented our thoughts about hiring, coaching and training sales people. Last May we discussed the essence of sales management and the things you need to put in place for it to deliver the results you want. This month I thought we would give you some insight into the elements we think you should have in any sales management program you either provide in-house or receive from an outside supplier. Together with the foundational information presented in last year’s issue, you should have a pretty complete picture of the areas you want to address in your program.
The May 2017 Coach’s Corner article includes details about sales managers being agents of change, the need to develop a high-performance organization and underlying principles your program should address. These will provide a good basis to introduce your program and position it as a part of your total approach to business. Once that is done, our course covers the two major areas critical to managing a sales team: The first is Management Functions, which include decision making regarding policies, strategies and the establishment of your basic structure/systems. The second one consists of the Coaching Disciplines, which are the functions that define the sales manager’s job on a day-to-day basis.
The Management Functions
Measurements
As we have discussed in many previous articles, there are three key measurements that provide the foundation data for driving performance improvement in furniture stores: traffic (number of UPs), close ratio (number sold versus number seen), and average sale (total volume divided by the number of sales made). A fourth measure — revenue per UP (total volume divided by the number of UPs) — is also important to management for analysis of overall individual effectiveness. Your section on measurement must discuss these in detail, showing how they can be used by managers to determine store and individual potential and establish the service standard for handling customers and begin the goal-setting process. Whatever system you use to track and report these critical metrics must be in place and your managers should be schooled in how to use it, from data entry to report creation.
Selling Strategies
Managers must participate in developing your store selling strategies, so that they have total buy-in on them and understand why they exist. This will include polices and procedures, plus tactics that lay the groundwork for implementation of the principles and methods in whatever sales program you use. This is where management sets the rules of engagement for the entire selling process, including your UPs System, selling steps, client development and other customer focused elements that your sales team must perform.
Staffing and Scheduling / Recruiting and Hiring
Managers need to be trained on how to use the information from the previous sections to determine how many salespeople are needed to fulfill the selling strategy and to ensure that adequate time is allowed for them to do it with each and every opportunity they encounter. Time related traffic counts must be used to determine when floor coverage is required, and a secure monitoring system should be put in place to maintain the information flow. Once this is known, the next critical step to staffing is recruiting and hiring. Insights need to be given into successful strategies and methods to ensure that sales managers always have resumes on hand from people who want to work in their stores, that they can reach out to when openings develop. Finding good people is a function of good recruiting practices and having high-performance managers.
The Coaching Disciplines
Goal Development
Your segment on goal development must present the principles and methods for motivational goal development utilizing knowledge and information from the previous sections. We recommend developing employee-centered goals as a method for gaining commitment. Goals that your sales people develop for themselves provide them with ownership and create far more motivation then those management gives them. We utilize a workshop to ensure that sales managers employ correct methodology when assisting employees in setting their goals, so that they are meaningful and drive the growth the business needs.
Training Strategies
Your program must provide managers with specific methods and instruction in how to train adults so new skills will be learned and applied in real life situations. The use of structured, non-threatening role plays ensures that a high percentage of new skills will be internalized by participants. They need to develop a training schedule for new hires which gets them prepared to begin assisting customers in as little as three weeks with high levels of product knowledge and selling skills. Then they need to be prepared to use the following steps to help the new hires and existing staff members become as successful as possible.
Observation as a Management Tool
Observation is your manager’s best tool for determining who and what to coach. Therefore, they need to be trained to use on-the-floor observation of individual performance as a key coaching method. You need to provide guidelines and suggestions to make this concept become part of the store’s performance improvement culture. Observation should be directed by the performance measurements and focused on improving them. This is your key form of visual performance measurement.
Feedback for Performance Improvement
Observation without feedback is a waste of time, because it is feedback that drives behavioral change and performance improvement. Your program must present the paramount importance of daily feedback as a crucial coaching tool in the goal management process. Make sure your managers understand the importance of making goals achievement a primary management and organization focus.
One-on-One Meetings
One-on-one meetings are the most effective method to achieve immediate and long-term results. Your program needs to take participants through the structure and format of a one-on-one meeting between a salesperson and a manager. This is where the rubber meets the road and is the most powerful communication opportunity managers have with their staff members, therefore they must be trained how do it right consistently.
|Supervisor Meetings
Supervisor meetings are all about coaching the coach. Owners and GMs need to be trained to use the same methods discussed in previous chapters, so they can meet regularly to drive improvement to the sales management process for the organization. Your program needs to present strategies that will ensure that the management team works smoothly together and establishes systems for regular high-level communications.
Sales Management Training Summary
We believe that the above list is the bare minimum that needs to be addressed in a sales management training program for the retail furniture business. Any sales manager who becomes proficient in the performance of these factors will be successful, because managing in accordance with these principles, methods and practices will help remove some of the dangerous subjectivity and personal trauma inherent in the process of dealing with individuals from a position of leadership. Performance results dictate outcomes; difficult decisions regarding individuals can be made based on detailed data rather than on opinions and guesswork.
Any program you create yourself or purchase from an outside provider, should be a holistic one that embraces the entire selling experience related to the buying experiences of your customers. If your sales manager has not had any formal training, someone needs to start coaching the coach to help them develop into the sales leader every store needs. As a sales management consultant, I highly recommend that you check out the programs that are available in our industry, find one that fits your store culture, then invest in your manager so they can return the favor by growing your business.
May 10,
2018 by HFBusiness Staff in Business Strategy, Industry
“The term ‘solid wood’ lost a lot of meaning during the flood of imports, starting in the early 2000s with China joining the WTO,” says Gat Caperton, president of Gat Creek Furniture. “Five to 10 years ago, many retailers would say to me, ‘No one cares about solid wood anymore.’ Today, people care again.”
High-quality, high-end American-made furniture should be in demand for a lot of reasons, says Charles Curry, vice president of sales and strategy, Simply Amish. “American ingenuity has created some of the finest products in the world. Is it all about price? To some consumers it is,” he says. “Retailers are smarter than ever, but are losing money by not catering to those buyers who want higher-end product, customized to their exact wants and needs.”
Renewed Interest
Some of the reasons for the renewed interest in solid wood, says Caperton, are quality and the growing importance of having a healthy home.
“Solid wood is still one of the best building materials ever available,” he says. “It’s long-lasting, beautiful, and repairable. The furniture makers of the past were often called joiners—these are people who knew how to join two pieces of wood together to make something functional and long-lasting.
“Healthy home is about not bringing chemicals into the home. MDF and plywood are potential carriers of formaldehyde and other VOCs,” Caperton adds. “With solid wood, you know what you get, and you know that it’s natural.”
Luke Simpson, president and CEO of Durham Furniture, based in Durham, Ontario, Canada, expects growth in solid wood to continue “as consumers want to own quality more and more.”
“We’re seeing consumers return to heirloom-quality solid wood product after experiencing the shortfalls of lesser quality product,” says Simpson. “For many, ‘solid wood’ includes those products created from wood, including plywood, medium density fiberboard, and veneer. At Durham, solid wood does not include these products—all of our pieces are pure solid wood, including end panels and drawer components.”
Furniture becomes a part of your life, says Curry, “so case pieces that are funky, askew, and aren’t even wood, are akin to putting a rusted, oily engine block in your living room, and using it as a coffee table. Although that’s being sold as steampunk.
“American companies who still manufacture domestically would be well-served, in my opinion, to focus on design, quality, and instead of bludgeoning each other, band together to create a marketing campaign that resonates with American furniture buyers, gets them excited, and gets them into stores,” he adds.
A Trend Toward Softer Woods Online
Keith Covey, president of New Ridge Home Goods, an online retailer of birch storage products, has seen a trend toward softer woods, particularly pine, in the online space.
“That is part and parcel to the fact that the price points are more important than the actual wood,” he says of the uptick in pine. “Everybody’s using pine because it gets you to the price point where you need to be.”
New Ridge Home Goods has basically one line, Covey says, and has found its greatest success in what could be thought of as an unusual space—the bathroom. “It’s kind of been an underserved room in the home, [that] the traditional furniture store has certainly forgotten,” he says.
“For us, space savers, bathroom stools, shower stools, ladder shelves, any of the occasional furniture you might find somewhere else, the solid wood end of it has been very successful.”
The Right Price
Price points for New Ridge Home Goods are fairly low. “I would say our key pieces are $99, and that really goes back to the dot-com end of things,” Covey says. “It becomes very crucial to hit those specific price points for folks—$99, $149, $199. You can certainly find products for less money, but we try to do a better product.”
Gat Creek’s bestselling line is called Vineyard. “I created it 17 years ago,” says Caperton. “It’s based on New England Shaker, Arts and Crafts design.” Bedroom cases range from $2,000-2,500 in the collection, with a dining table and four chairs around $2,500-3,500.
The Defined Distinction Bedroom is Durham’s bestseller, with the four-piece collection, including queen bed, nightstand, dresser, and mirror, retailing for $6,500-7,500.
“The combination of solid cherry construction available in multiple finishes, brushed stainless steel bases, and dealer support of the collection have made it a top seller for the company,” says Simpson.
A bestseller for Simply Amish is the casual contemporary Auburn Bay dining table, with a retail price of $3,342 and available in soft maple and six other hardwoods, with custom surface treatments available. Another of their bestsellers is the modern-style Wildwood Cross Base end table, available in walnut and six other hardwoods, retailing for $1,620.
Contemporary Styles, Customization Find Popularity
Caperton describes Gat Creek’s second best-selling line, Sabin, as a contemporary take on classic forms. Their fastest-growing collection, Monaco, is also a contemporary take on traditional.
Contemporary is a bestseller for Durham Furniture as well. “In the last year or so, our bestsellers have been more contemporary than traditional,” says Simpson. “The majority of our contemporary lines have been introduced in the last three years.”
Durham offers more than 40 finishes on their collections and has found customization helps drive sales. “There was a time when solid wood was only offered to consumers the way the manufacturer presented it,” says Simpson. “Today, consumers want their purchases to reflect themselves, so providing customization options is the biggest change we’ve seen in the last few years.”
Designs are getting very creative, Curry notes. “You’re seeing larger American companies do designs that traditionally came out of boutique builders,” he says.
Caperton has seen a shift in colors and finishes, from warm tones to cooler. “Cool tones are grays, whites, and ‘walnut’ brown,” he says. “A secondary trend is away from glossy and thick finishes. People prefer a close-to-the-wood finish. This type of finish looks and feels more natural. Thick or glossy finishes too often remind people of plastic.”
May 10,
2018 by HFBusiness Staff in Business Strategy, Industry
When Veronica Schnitzius came to the United States in 2004 to work on her MBA, her goal was to earn her degree and then return to Colombia. But fate had something else in mind.
While the path up for most executives begins in sales and marketing, Schnitzius started her career as an industrial engineer with KPMG when she returned to Colombia after college to wait for her visa.
Back in the United States—after a brief time with The Leather Center, before it declared bankruptcy—she joined American Leather, also as an industrial engineer, and moved through the ranks to cutting supervisor, assistant production manager, director of product development, vice president of operations, and chief operations officer.
Last October, Schnitzius was named president of American Leather, a company with more than 500 employees and a facility with more than 350,000 square feet.
She recently spoke with Jason Schneider, associate editor of Home Furnishings Business, about her career path, her goals for American Leather, and how the company will continue to disrupt the market.
Home Furnishings Business: Your career has been built from an entry-level position. Besides working for a great company, what led you to take this path?
Veronica: When I was going to college, I had to do an internship, so I got a job here in Dallas with a company called The Leather Center, as an intern. I worked with them for six months, and when I finished my internship, they said they wanted me to keep working with them, but I had to go back to Colombia to finalize my degree.
I had one more year, so I went back [to Colombia] and when I was there, I worked for KPMG as an industrial engineer until my visa came in.
When my visa came in, I came to Dallas to work for The Leather Center; unfortunately, they went chapter 7 seven months into the job. As an immigrant, that’s not a great thing. A month later, I was working here at American Leather and I’ve been here for 16 years in May.
I wish I could tell you it was a plan. It was destiny, you know what I mean? God had a plan for me to come here. My plan initially when I decided to come to the U.S. was because I wanted to do my MBA in the U.S., so obviously having a visa and a job makes it easier to come and start a life here.
When I lost the job [at The Leather Center], I ended up doing the MBA while I was here at American Leather. My plan was to come, work, do my MBA at night, and then in five years I would be back in Colombia. That was my original plan, but it deviated a little bit.
HFB: The usual path up is through sales and marketing. Yours has been through production and product design. What have been the advantages?
Veronica: Advantages? I don’t know, because this job is pretty new to me. I only have been [in this position] six months, so I’m learning a lot.
Understanding the operations and how things happen is good, and now I’m learning the sales and marketing side. I don’t know if that is an advantage, but it’s a different learning you have to go through. I’m more about execution, about what can be done, what we can really commit to.
The only advantage I can think of is maybe credibility with the customer, because somebody in execution, they have done it and they know when it can be done. I know if I’m giving them a delivery date, I have that credibility because I have done it and I’m not just talking about it.
HFB: As a woman in the industry, have you experienced any discrimination?
Veronica: As far as my career in general, there’s still a bias to being a woman, as much as I don’t want to think that. Instead of me complaining about what we have to go through, I guess I try not to think about that; I just do my job, be very professional and show results.
There is discrimination, and there probably always will be. That’s the world we’re in. My job is to show that I’m capable of doing any person’s job—a man’s, another woman’s—and just show results. I don’t want to get too hung up on being a feminist; I want equality for everybody.
I don’t want to look at people based on gender, or the color of their skin, or their accents. Show me what you can do. Show me the results. The final product is [the result of] skills and capability. Because a lot of times, people have the skills, but they don’t want to do the work.
HFB: What changes have you seen in the industry?
Veronica: I would say not as much as you might think, in the sense that this industry is a little less like technology, that changes dramatically. I think people are comfortable with the way they do things.
I think there’s more pressure now for more transparency, what’s in the products. The regulatory aspect obviously is forcing some people to do it. I think that people are more into technology, more into cutting equipment. The employees are changing; after the recession a lot of people got out of the furniture industry because a lot of the manufacturing went to China. Now it’s coming back to the United States.
I think we’re being forced to put more technology on the manufacturing side; that’s just what I’m seeing in the industry. Now it’s harder to get experienced people, and technology is becoming a bigger part of the manufacturing process. As far as the retail side, there are a lot of big players coming along; there’s a lot of consolidation in the industry. Those are some of the things I see.
HFB: American Leather has an extremely loyal dealer base. How will your company assist them with the consolidation trend for smaller retailers?
Veronica: What we’re doing is continuing to learn. What we’re trying to do is help them make sure that we continue to have amazing products, quality, and delivery, and keep working with them on how we market the product, how we make people aware of how to buy there, why local, why American Leather, why the store.
Every dealer is different, and it’s not like there’s one magic bullet that fits all. Our job is being out there, learning, listening to what they’re saying, listening to what they need, reacting, so it’s a win-win formula.
I think there’s still going to be room for big and small, because people buy differently. The big chain stores are for some people, and some people, they hate it. Variety. I think that the biggest thing with the small stores is making sure that they can execute, making sure they can deliver, making sure they can pay the bills.
We always say that we do more dollars per square foot than anybody else, so if they don’t have to have any inventory because we ship fast, it can be more efficient, and they can get more money for other stuff, so that’s our job.
HFB: Is direct-to-consumer via ecommerce or American Leather stores a consideration to contend with a lack of retail partners in the upper/premium price points in all markets?
Veronica: We are continuing to learn how the landscape is changing. We don’t know where things are going to go, but we are going out there, learning, listening, experimenting, moving with the times. We have loyal customers and we want them to be part of that.
HFB: What opportunities for growth do you see for retailers?
Veronica: I think there’s a lot of opportunity. I think a lot of people want to buy online, but they still want the touch, the feel, of a store. I think the opportunity is, how do we make brick-and-mortar work with the digital world. Both are needed.
I think the opportunities are to make the process where there’s less friction for the end consumer, where they want to go in the store, spend time in the environment at retail stores. Make it easier for the end consumer to have a reason to go to the store. Those are things that you cannot get online—they cannot give you the touch, the feel of it, the comfort of it. The personalization of it is not as easy online.
HFB: Production innovation requires investment in an industry known for knock-offs. Why the American Leather commitment?
Veronica: For us, it’s like “why not?”—the opposite. For us, innovation is what’s going to separate us, what is going to differentiate us from the competition. Innovation is part of the core of this company; it’s the DNA of the company. Speed, innovation, quality, and people—those are the four pillars to us.
Why the commitment? We don’t want to be like anybody else. We want to keep separating ourselves, so we keep giving our customers an advantage.
If we’re like everybody else, it’s just a question of price, and it’s not just about price—consumers want value, they want something different, they want special. That’s what innovation can provide.
We in the company are very excited about the future. We want to continue to grow the products that are innovative for our customer. We’re going to continue to disrupt the market—being faster, bringing things that nobody else is wanting to do.
We want to be that company that people [look at our products and] say, “Wow, that’s cool.” I want them to be copying us because we don’t want to be copying others.
April 11,
2018 by HFBusiness Staff in Business Strategy, Industry
We will forget for the moment, these brick and mortar retailers that have a physical presence that we can drive by and consider the silent invaders of the Internet. Okay, this is not a new story. Depending upon what product categories are included, 15-20% of all furniture and bedding is sold on the internet.
The initial invasion of the internet was facilitated by the traditional retailers. While the industry was slow in establishing a web presence, often treating the new media as just an electronic “yellow pages,” they created a placeholder with address, and store hours, and brands sold.
With the help of pioneers such as FurnitureDealer.net and Micro D, many retailers have an outstanding web presence — a necessity in that 70%+/- of all purchasers visit the web to research price prior to shopping. The result is less stores shopped (UPS) but a better informed, ready-to-buy customer.
In the research process, the consumer stumbled across the early internet pioneers and was enticed by price and to some extent, selection. They defied industry assumptions that a consumer would buy without seeing/touching the product. We should have learned from the decades earlier experience of the 1-800 number invaders. Traditional retailers drove consumers to the e-tailer sites through advertising, giving the internet players an opportunity to cash in on the traditional retailer’s advertising.
The e-tailers grew from small renegades to behemoths like Wayfair and Amazon. They launched their own advertising with messages such as, “big items ship free” that are changing the basic business model of the industry.
Many traditional retailers have started to fight back by executing their own internet strategy. Today, the results have been minimal with their internet strategy producing less than 3% of total sales. However, the overall contribution could be more when the internet/brick and mortar strategy is combined. A physical presence should be a strategic advantage.
The latest battle tactic that is emerging from the digital invaders is online decorating assistance. Companies such as Laurel and Wolf should cause the traditional concern. The industry has long embraced the fact that if a sales associate secures a visit to the home, the close rate increases by two times and the average ticket does likewise. For years, the home plan was a standard in the Impact Consulting Training Program, and still is. However, the resistance from retailers that “my sales people will not do it” is the problem.
Before the online decorators seize the advantage, should traditional retailers create a “home plan” for the Internet?
From our historical experience, the invaders will not go away. We just need to fight back.