April 20,
2017 by Jane Chero in Business Strategy, Industry 
By: Tom Zollar
The April issue of Home Furnishings Business is aimed at helping you compete in retail’s highly competitive battleground. It really comes down to one of the most basic challenges every retailer faces – getting people in your market to want to do business with you instead of others or “Selling your Store”. That may sound simple, but accomplishing it has become much harder as the number of options the consumer has to purchase from has grown. Even though you very likely have fewer actual brick and mortar home furnishings retailers physically in your area, competition for the consumer located within your market has actually increased dramatically.
So how do we maximize our ability to compete? It really comes down to having a very clear vision of what our customers want from us and what we can offer them that truly differentiates us from all of those competitors chasing their business. Once we have that, we must translate it to the three areas that most impact our sales success: Advertising, Merchandising and In-Store Experience!
Last April’s Coach’s Corner addressed the importance of using the in-store experience to separate yourself from the competition. Obviously, your ability to provide it is certainly an advantage over the internet only retailers. But not every consumer realizes that they need or might even want to have that face-to-face interaction. In this year’s article, we are going to touch on some of the other areas of consideration that may help you define your store to the potential customers in your market and perhaps attract some of those that are on the fence about visiting a brick and mortar store. Below are a few approaches to consider.
Promote Your In-Store Experience and Services
Most of today’s retail advertising and much of the space on our store website, talks about items we sell, not services we provide. We are so steeped in our traditional approach to driving traffic by using product and pricing, that we have lost focus on what is really our difference - the in-store experience. We assume that consumers know about what we can do for them to help create the home of their dreams, when in fact, most do not. Instead of trying to add value to developing a relationship with us by visiting the store, we tell them how much we will save them if they buy from us. Rather than creating the impression that their results will be better by working with our staff, we tell them we are cheaper than the competitors.
We should be spending at least equal time helping potential customers understand the process and how visiting our store can help them through it. Even though they do research to find what they think they want and where to get it before buying, most don’t have a clue how to put it all together and create the look or feel they really want for their home. What better way to differentiate ourselves than by creating the perception in the public’s mind that we are problem solvers and creative assistants they can use to augment their abilities and improve the end result of their efforts? So, take a look at your marketing programs and make sure you are selling and adding value to having an in-store experience with your store as much as you are with its products and prices. If indeed what we offer when they come in is a benefit to them, then be proud of it and make it known in your market!
Create Strategic Alliances
Understand that our biggest competitors are not the other businesses selling furniture products. They are the businesses selling cars, travel, TVs, hot tubs, appliances, movies, massages and more. Indeed, anyone in our market who provides a service or product to the consumers that is paid for out of discretionary income is a competitor of ours day-in and day-out. Obviously, those that sell things for the home are our most direct competitors, but the fact that the average household only spends between 5% – 6% of its income on the home means there is not a lot to go around. We all fight over the scraps so to speak. Perhaps there might be some way to join forces or piggy back our efforts so that we can reach out to common customer groups and maximize our effectiveness together?
The key is to find businesses in your area that market to the same target customers as you and create a partnership with them. These strategic alliances can help both parties get their message to potential customers, in many cases at a very opportune time in their purchasing cycle. We all know that people tend to buy home furnishings soon after purchasing a new or pre-owned home, so the smart ones have already partnered with real estate professionals to reach out to their customers after a sale is complete. But can we go further? Sure, what about moving companies and title service providers?
There are many other partners to look for. Just ask yourself, when do people need our products? When someone buys a new TV they may need a place to sit, so talk to appliance stores. Just like when a family has a new baby, they may need a youth bedroom, so talk to local doctors or hospitals. Some businesses are letting their employees work from home and perhaps they need home office furniture. Great partners we often neglect are local insurance agents. They totally understand partnerships and usually know when people need new furniture because of a disaster or a divorce. Why not have them referring their clients to you?
These are obviously “you scratch my back and I’ll scratch yours” situations, but have you really looked out into your business community to find all the opportunities available? If not, now is a great time to start!
Maximize Your Community Visibility
Participating and being a positive contributor to your local community has always been of major importance to any business, but particularly a small local one. As the Millennials and younger generations take control of the spending power it is becoming critical. They expect it and indeed demand it of anyone trying to solicit their business. Having a positive reputation for community involvement is not just a plus, today it is part of the price of admittance to the retail game in every market. Therefore, you need to look at what you are doing and how you are actively supporting your employees’ efforts too. Sponsoring events, contributing products, money and labor to charities are only the beginning today. You must be perceived as being a doer that has a visible role in as many common good processes as they can support.
A side benefit of community participation is the networking opportunities it provides you and your staff. Often, we see owners joining the Chamber or other organizations, which is great. However, it is much stronger to be seen as someone that is a real leader who walks-the-walk and talks-the-talk by getting their employees out of the store and encouraging them to be involved in local support efforts. There are plenty of groups in which they can participate, that will further impact your company’s community involvement. Several clients have sent out their delivery trucks and crews to help people move their belongings after a disaster. What better advertising could you get then people in need seeing your name on the side of a vehicle coming to their rescue? Sponsoring soup kitchens, delivering food to the needy, it is all good!
If You Have Local Roots, Make Them Known
My last point is a very simple one that most small businesses do take advantage of often. It is the fact that they are from the place where they do business and they are part of the local heritage. While this has always had some traction with the American public, we are seeing a resurgence in its power. As the next generations evolve they are beginning to put more value on doing business locally with people that are part of their community. The better job you do with my previous point, the more important this one becomes!
In summary, who and what you are is not only the products you supply to your market, it is the services and benefit you provide the people in your community. It may sound self-serving, but the better you are at being a good neighbor, the more successful you will most certainly be as a retailer!
March 15,
2017 by Jane Chero in Business Strategy, Industry
We feel strongly that creating and managing a professional Clientele Development Process is easily the weakest aspect of most home furnishings retailers selling efforts. So much so that it is part of every training program we conduct with both managers and sales staff. I’m not talking only about follow-up or sending thank you notes -- many stores do that -- but about a more fundamental paradigm of building long-term relationships with customers through truly caring about them and their needs and then making this a core part of the company culture. I have pulled a great deal of content from our training program manuals for this article to help drive the point home.
We often hear retailers say that there is no longer any customer loyalty like there was in the good old days. The fact is that loyalty still comes the old-fashioned way – you must earn it! In rare instances, we have encountered salespeople who, through true relationship building and caring for their customers’ needs, have developed a sufficient clientele to be totally self-sufficient in terms of traffic. These people work full-time hours and are always top producers in their stores, but do not take any UPS -- they are not part of the salesperson rotation system. In every case, these people maintain extensive customer files and always maintain a timebased file system. Most are built around index cards and some use automated calendar applications, which they have adapted to their needs. These systems tell the salesperson when to follow-up with each customer. Alphabetical files and lists can only tell them how to follow-up – mainly what the customer’s contact information is -- but not when. When is far more important than how.
In rare instances, we have encountered salespeople who, through true relationship building and caring for their customers’ needs, have developed a sufficient clientele to be totally self-sufficient in terms of traffic.
Lifetime Value
LTV is a concept that has driven the marketing efforts of the largest consumer goods manufacturers in the world for decades. It is completely missing from our industry’s thinking. That is a major cause of our disconnection from the customer’s purchasing power. Lifetime Value puts a dollar value on items such as how much detergent or toothpaste a family will use in a lifetime and what has to be done to tap into that huge lifetime expenditure.
What about lifetime value in the home furnishings business? These are large, seldom-made purchases. They are called highly considered purchases in marketing terms. The average American homeowner spends upwards of $60,000 on them in their lifetimes. If your store has an average sale of $1,500, how much of that $60,000 does the customer have left to spend when your order has been delivered? Of course, there is no way to tell. But we do know that people spend more on home furnishings as they become older. So there is no doubt that finding a way to tap into even half of that amount, would be extremely valuable. The top writers we spoke about know the way. It is called follow-up after the sale.
Customer versus Client Paradigms
A customer is someone who purchases merchandise from your store. The salesperson acts as a facilitator in the process, handling the details of the transaction. No relationship has been established. The next time the customer needs furniture the odds are that she will not seek out that same salesperson. There is, in fact, substantial research to indicate that more than 75% of these people will not even shop your store.
A client, on the other hand, has established a relationship with a salesperson based on the customer’s belief that the salesperson truly cares about her need to create a beautiful home environment and about her level of satisfaction with what she buys. These relationships take time to develop and involve active participation by both parties but mostly by the salesperson. When this customer is ready to make another purchase,she returns to that particular salesperson. It would not matter where the salesperson worked. - People do not build relationships with stores -- they build them with people.
A salesperson who builds a strong trusting customer relationship adds value to the purchase through the process. He or she seldom gets involved in price problems because the customer places high value on the relationship. They don’t have to worry about the customer asking for them when she comes in because the customer usually calls first to make sure the salesperson will be there. Friends and relatives are continually referred to the salesperson by the customer. These people in turn become part of the salesperson’s client base.
Your sales training program must teach the actions aimed at developing these kinds of relationships and how to use clientele development processes to maintain them. But it is leadership that will make it happen. Client development is management’s responsibility, not the salesperson’s option. Management has the responsibility for the growth and financial health of the company. Clientele development is mainly a management function and they must take ownership of it.
Share of Customer
Share of customer deals with getting more out of the customers who already come into the store. You already invested marketing dollars to do that and no new assets are required. Share of customer means tapping into that lifetime purchasing potential for your products and developing long-term relationships based on trust and caring for the customer’s needs. It means doing the right things to ensure that you help your customers use your products to enhance their quality of life and not just help them make purchases.
It means using the valuable information you gather about a customer’s lifestyle, likes, dislikes and needs to become proactive in offering her new ideas and products to help her achieve the final goal -- a beautiful home. Increasing your share of customer is what your selling and management processes should be all about.
It Starts with the Sale
Customers want you to track and follow-up on their orders and delivery. One of the issues that surfaces in all of the research we see, is that customers don’t think a sales person cares about them at all after the sale is made. For most furniture salespeople, there is ample evidence that this is true. Few send thank you notes, even to their biggest customers. Even fewer maintain contact with customers prior to delivery. In cases where there is contact, it is usually initiated by the customer. Professional salespeople act differently and the results show in higher incomes and more satisfied, repeat customers. For them, following up with the client after the sale is the critical point where the relationship is cemented and the consumer’s trust is verified.
Key Contact Points After the Sale There are seven times when follow-up is required with customers who purchase from you:
1. Immediately after writing up the sale – thank you note or message
2. When special orders are acknowledged or a ship date changes
3. During long order cycles, to let them know you are watching
4. Prior to delivery to tell them how excited you are for them
5. Immediately after delivery to see how it went and congratulate them
6. Within six months after purchase, just to check in and see how it is going
7. Prior to the customer’s anticipated next purchase, which you should already know from your selling process in the store
All of the contact points listed above should be part of a professional salesperson’s follow-up program. These contacts yield handsome returns even in the short term. The most important contact is the call after delivery. It is difficult to imagine building a strong, trusting relationship with a customer (and helping her use your products to enhance her quality of life) by not calling her immediately after her delivery to be sure the promise has been delivered. Yet, this is just what happens to thousands of customers every day. Then we wonder why there is no customer loyalty
We believe this is the most important call a salesperson can make. This is when the real satisfaction occurs -- when the furniture gets there. This is when other needs such as accessories or additional pieces come to the surface vividly. So, this is when your salespeople need to be talking to their customers.
The most often-heard reason for not calling is that something may be wrong and the salesperson does not want to hear it. What backwards thinking. This is an opportunity to satisfy the customer again! However, if your store’s culture and systems do not allow the salespeople to solve customer problems rather than just kick them somewhere else, we suggest that you re-think your systems.
If you do not already have one, you should develop a system for notifying the salespeople of all deliveries. In addition, develop a reporting system so that you know that post-delivery calls are being made.
Customer loyalty must be earned. Your salesperson’s caring will earn high returns in loyalty despite problems. If they do their best and keep the customer informed, the loyalty will be to them. The selling cycle is completed when a customer returns as the result of this follow-up and makes another purchase. Now the customer is indeed a client that your salesperson developed. Our data indicates that there can be as much as 15% - 20% in additional business each year created by proper and consistent follow-up after the sale. Much of this business would have gone to another competing store except for the efforts of your salesperson.
March 14,
2017 by Jane Chero in Business Strategy, Industry
The movement of product from one geographic location to another has always been a critical, but often silent consideration in the structure of the furniture industry. Even from the beginning when the Mayflower landed in Plymouth there was a furniture maker on board. This person, responsible for making barrels, was called upon to make the most basic items that made a house more of a home. We have moved beyond the local craftsman.
Our focus in this issue is transportation; however, more broadly, it is about logistics. This involves the process of moving product on a timely basis from one geographic location to another satisfying the demands of each entity from the producer to the retailer to the consumer and, finally, to the landfill when its useful life has come to an end.
As transportation innovation and infrastructure improvement have revolutionized the movement between the raw material source and production, the distance between retailer and consumer has increased. Now products can be made in the Far East from raw materials that are harvested in the Appalachian Mountains. Then they are returned to the United States and, after being selected by the consumer from the Internet, these products are then shipped from a New England distribution center to Southern California.
Let’s start at the initial stage, the source of the raw materials. We will begin with the major premise that furniture is made from solid wood. For many years this translated into hardwood species that were mostly available in the United States. This included oak, maple, cherry, and pecan. There were also some of the more exotic imports, such as mahogany. As the availability of raw materials diminished in the North, producers were forced to haul raw materials further or establish plants closer to the raw material source. That is how North Carolina became the furniture capital of the world, supplanting Jamestown, New York and Grand Rapids, Michigan. The economics of moving raw materials north compared to finished products from the South dictated that strategic decision.
One hundred years later the attraction of cheaper labor with offshore manufacturing and a developing transportation system (container ships) led to the consideration of relocating the manufacturing to the Far East beginning in Asia and migrating to other countries driven by the fluctuation in labor costs and tariffs.
The retailer now has to cope with product shipped from thousands of miles instead of hundreds of miles and in transit times of weeks instead of days. The obvious motivation was lower prices which would translate into additional sales or improved margins. However, after thirty years the increased margins are questionable and the industry’s share of disposable income has shrunk. Maybe this was not a good move, but this is what we have.
Without a doubt the retailer must focus on the last mile in moving the product to the consumer. However, just as important are the thousand + miles that it must be moved before it can be delivered to the consumer.
Over the last thirty years the furniture industry has extended its supply chain from miles to thousands of miles. The local or even regional craftsmen who produced the product have all but disappeared. However, I often experience “deja vu” when I visit Amish country where a collective of small manufacturers, each with his own unique skill set, combine to produce an overall product collection. There was a time when there were manufacturers who were producing only fine chairs. However, back to reality – or should we dwell a moment?
With this extended supply chain comes increased risk. The memory of the 2015 dock strike is just that – a memory with all the resolves of not having all vendors as direct importers. This falls into the category of New Year’s resolutions – made with conviction, but soon forgotten. (See Home Furnishings Business, April 2015 for a refresher at: hfbusiness.com/Magazine/Past-Issues/April-2015.)
Freight has traditionally been a cost incurred by the retailer, with contracts rendered FOB the plant. This means the retailer is absorbing the cost for moving the product as well as the responsibility for in-transit damage. While some manufacturers experimented with quoting delivered prices, the confusion caused by the keystone pricing (2X wholesale) rendered the concept impractical.
Historically the concentration of manufacturers in North Carolina for case goods and in Mississippi for upholstery placed West Coast retailers at a distinct disadvantage over their East Coast counterparts. Today the tables have turned with West Coast retailers enjoying a 30 to 40% advantage over East Coast retailers. However, Midwest retailers incur even more of a disadvantage - 70% to 90% - when compared to both coasts. Besides transportation being a substantial cost factor adding 35% to 40% to the off the production line cost (first cost), there is substantial variance driven by the instability of the container pricing. While Table 1 illustrates a period just prior to a particularly volatile period (Chinese New Year), it demonstrates the point that importing is not for the faint of heart.
“The warehousing and inventory challenges can be especially daunting for small and mid-sized retailers who sell imports because they don’t have the staff or the expertise to monitor inventory levels and product flow”, said Peter Giorgio Jr., president of Global Logistic Solutions.
“With some of my clients, the person who oversees the imports is also the buyer, which kind of makes sense, but they’re busy buying too, and they may not have time to manage the flow and things like that,” Giorgio said. “It’s not that people don’t want to pay attention to it. I’m not sure they have enough time to pay attention to it.”
He said his company targets small and mid-sized retailers because few other logistics providers pay attention to them.
“It’s a double-edge sword because they don’t have the staff; they don’t have the expertise. And because they’re on the smaller side, they’re kind of off the radar of the service providers. So no one is calling on them,” said Giorgio. “Many retailers (who don’t import directly) probably could do some importing, but it’s easier for them to order from the manufacturer’s U.S. warehouse. They pay more, but they can also take it in the quantities that they want.”
Monitoring product flow is especially important in the weeks leading up to Chinese New Year, a two-week period in February where virtually all factories in China and some other parts of Asia shut down so workers can celebrate with family and friends.
But it’s not just that two-week period where production is halted. Giorgio said as many as 20% of factory workers leave a week or two before Chinese New Year, which disrupts production, and another 20% to 30% don’t come back when the holiday period ends. That means up to eight weeks of abnormal production levels.
“It’s a challenge for buyers just to try and get product earlier and earlier every year to protect against production hiccups,” he said. “You probably end up carrying more inventory, especially on your best groups, just to protect yourself. Depending on when the cuttings occur, you may have to start taking that (extra) inventory in early December in some cases.”
Manufacturers can help, he said, by providing realistic lead times, regardless of the season. “If your lead times are wrong, that really messes up your whole situation,” said Giorgio.
Imports, however, are here to stay having more than doubled in the past fifteen years. The pricing element that adds more than 35% to the product cost that converts to a 70% at the retail level greatly influences the retail strategy. (Table 2)
From a retailer’s perspective, getting the product to the warehouse needs to be addressed before the last mile. No matter how well the product sells, if it is continually out of stock the results are lost revenue and poor customer service. (Table 3)
Retailers and suppliers enter into a relationship with the best of intentions. However, many factors can inhibit fulfilling the commitment. To avoid a breakdown requires a measure of performance against a predetermined goal. Many retailers actively use a vendor performance system.
The first step in the buying process at Market is a review of current vendor performance. Nothing emphasizes the requirement more than this barrier before committing to the next buying cycle.
From the consumer’s perspective it is only natural to want to receive that new furniture that is anticipated to make their home environment change. However, on a scale of 1 to 5 only slightly more than 20% consider it extremely important while over 50% rank it 4 to 5. Having the stock and being ready to deliver is a strategic advantage. (Table 4)
Traditional retailers with fully stocked warehouses and well equipped delivery teams should have a strategic advantage when compared to Etailers that must rely on a third party delivery service or lifestyle stores that must wait for delivery from centralized distribution centers.
The consumer’s expectation is that furniture, when delivered, is ready to use (fully assembled) with a truck and company delivery personnel extending the experience that they had when they made the purchase. Is it important? Certainly, with only 13% saying it is not important. The key word is “expectation.” The consumer never focuses on how their delivery will occur unless the retailer tells him or her. Again this should be a strategic advantage for the traditional retailer. (Table 5)
Providing a first class delivery service is not inexpensive. As can be seen from Table 6, for the top quartile performers, the cost for all retailers is 3.19%, but, as would be expected, this would decline as the retailer’s volume increases leveling out at the high 2%.
The good news is that with an efficient delivery operation, two thirds of the expenses can be recouped with delivery charges. For larger retailers a small profit can be generated. It should be pointed out that these are top quartile performers and many retailers lose a significant amount of their potential profit from inefficient delivery operations. In addition many of the larger retailers use outside delivery services thus achieving that positive contribution to profitability. The old adage of sticking to what you are good at (retailing) and leaving the rest to the experts rings true.
What are the key performance indicators in judging a retailer’s performance beyond finances? As a retailer grows the addition of another delivery crew is a critical decision. Trading the additional fixed cost against deterioration in customer satisfaction is a difficult trade-off. The question is how much can a delivery crew accomplish. On average, each handling employee can deliver $75,000 each month. The size of the retailer does not create much of an advantage. (Table 7)
As important as personnel is equipment – how many trucks and what size? An interesting metric is sales per square foot of truck space. (Table 8)
Moving out with a full load is the key and every warehouse manager has his own solution. However, every month that square foot of truck bed must average $1,500 out the door. But whatever you move out the door must delight the customer. How do you know? You ask. Many third party providers execute an outstanding consumer package. (Table 9)
The challenge of moving product from the distant manufacturing plant back to the retailer and ultimately to the consumer is significant. What was at one time a relatively simple process has become fraught with opportunities for increased cost and disappointed customers.
What About the Other Direction?
Without a doubt the furniture industry has a trade deficiency when it comes to furniture. Although almost doubling in the past fifteen years in terms of total volume, it is just over 10% of imports. While in the United States many style categories are in demand, much of this production is shipped directly from the offshore plants of American companies. (Table 10)
The real winner in the export game has been the raw material harvested in the Appalachians. In 2016 exports of hardwoods grew 9.3% in terms of revenue and 11.1%in terms of board foot. The major growth countries have been, as would be expected, in China, but surprisingly the United Kingdom and Germany showed increases. (Table 11)
In terms of species growth, cherry and birch lead the way. It should be noted that the United States enjoys an abundance of healthy hardwoods protected by a significant environmental policy. In comparison, many countries suffer from deforestation and unhealthy forests. (Table 12)
These facts present an interesting strategic consideration. As the percentage of solid wood sold in the United States declines, the consumer preference continues to increase. Would the demand for specific species dictate the relocation of production closer to the raw material source? Do the math. We have.
Recycling for Furniture and Mattress? Don’t Bet Against It
One of the thorniest after-the-sale issues has little to do with the availability of qualified drivers, the efficiency of delivery routes or the increased demand for same day and next day delivery. It’s how to get rid of the old furniture or bedding that is being replaced by the merchandise on the delivery truck.
Some retailers will pick up the used stuff – especially if it’s a mattress -- when the new merchandise is delivered, while others urge consumers to arrange for pickup by a non-profit group that sells used furniture such as the Salvation Army, Goodwill Inds., or Habitat for Humanity. And other consumers will give the used goods to a friend or relative, or try to sell it themselves using methods ranging from consignment stores to yard sales to Craigslist ads.
But sadly, those techniques move a relatively small portion of the used furniture and mattresses that consumers replace every year. The rest can be found alongside a lightly traveled street or highway -- illegally dumped there, of course -- or even worse, wind up in a landfill.
Susan Inglis, executive director of the Sustainable Furnishings Council, hopes to see that pattern change someday. She would like nothing better than to see furniture recycling programs established in order to keep the products out of landfills and create jobs for people who would repurpose or reuse them. Plus, it might help industry sales by giving consumers an easier way get rid of their old furniture.
She said she’s keeping an eye on a Scandinavian company that is making MDF out of recycled wood furniture, for example, to see if a similar program would work in the U.S. And she also would like to see the rejuvenation of the re-upholstery business, which would allow consumers to inexpensively re-decorate and re-use existing furniture.
“Something like that could become a profit center for designers,” Inglis said. “We would just need to encourage manufacturers to make more product that could be re-upholstered.”
Statistics compiled by the U.S. Environmental Protection Agency show that 11.1 million tons of furniture and furnishings (including mattresses) were dumped in
municipal landfills in 2011, the latest year for which data is available. That represented 4.4% of all municipal solid waste that year –
a much larger percentage than major
appliances (1.6%), small appliances (0.7%),
or carpet and rugs (1.5%).
The EPA data showed that essentially no furniture was recycled that year, and only 10,000 tons of mattresses – a tiny portion of the total.
But in the past two years, the mattress industry’s own recycling program, dubbed Bye Bye Mattress, has been launched by the Mattress Recycling Council, an arm of the industry trade group, the International Sleep Products Assn.
With only three states participating in the program thus far – California, Connecticut and Rhode Island – Bye Bye Mattress already has diverted one million mattresses weighing nearly 25,000 tons from landfills since May 2015, when Connecticut became the first state to launch the program. California joined in December 2015 and Rhode Island began in May 2016.
“During the initial year of its program, Bye Bye Mattress has significantly increased mattress recycling for communities across the states served. Having surpassed one million units shows that the mattress industry has created a practical solution that is showing real promise,” said Ryan Trainer, president of the Mattress Recycling Council and ISPA. “It is a major milestone, but is also just the beginning. We are still committed to making mattress collection and recycling in these states easier and more efficient for everyone.”
Each participating state passed a mattress recycling law that established a program that’s overseen by the MRC and funded through a recycling fee added to each piece of bedding sold in the state. The fee is used to operate the program by providing containers for collection sites and transportation of mattresses to contracted recyclers for deconstruction.
In Connecticut, consumers pay $9 per piece of bedding, while the fee is $10 per piece in Rhode Island and $11 per piece in California.
The fee is assessed on all mattress purchases in the state, regardless of its size, price or brand name, and regardless of whether the consumer is replacing an existing mattress.
In the participating states, there are 11 recycling facilities that deconstruct mattresses and box springs under contract with the MRC, separating the steel, foam, fiber and wood and selling it to scrap dealers. MRC officials said several of the recycling facilities are run by non-profit organizations who provide jobs for veterans, ex-offenders, homeless people and others who have had difficulty finding work. It enables them to gain skills in areas such as logistics, transportation, deconstruction and administration.
The used bedding is gathered at hundreds of collection points in each state, and in many cases, retailers bring the mattresses to the collection sites. However, Connecticut and Rhode Island retailers can arrange to have it picked up as long as they have at least 50 pieces to discard.
MRC officials said they don’t have a pickup program established yet in California – the logistics are much more complex in such a large state – but one is in the works and will be announced soon.
Consumers also are encouraged to bring used bedding to the collection sites themselves – and the participating state will pay them from $1 to $3 per piece for their trouble.
MRC’s website, ByeByeMattress.com has detailed information about the collection sites and recycling centers in the three participating states, as well as numerous mattress recycling facilities in other states.
Officials said the MRC is trying to urge other states to pass mattress recycling laws, using programs in the three initial participants as a model.
And Now for the Last Mile
There it is! The perfect sofa for the living room she is redecorating.
After long hours of shopping online and/or in retail stores, she’s ready to whip out the credit card or complete the financing application and make a purchase. With any luck, she also will buy a matching loveseat or possibly some occasional tables, lamps or other accessories to go with it.
Then, in a few days -- a little longer if the sofa is a special order, or a little quicker if the retailer offers ultra-fast delivery – her new furniture arrives at her home.
She has only a vague idea what happened between the time she paid for the order and the merchandise appeared at her home – and she may not care – but its arguably the most important part of the sale process. Because if something does go wrong during that time, she will really care what happened, and it could have long-term, negative consequences for the retailer and possibly the manufacturer.
It’s often called final-mile delivery, but that may be a misnomer. The product could easily have traveled thousands of miles before it ever reached the distribution center where it was loaded onto the delivery truck.
And all of it virtually invisible to the consumer.
“Today’s consumers expect an effortless experience with flawless execution,” said Bob Elkins, senior vice president and general manager of Schneider Dedicated Services, the final-mile delivery division of Schneider Transportation. “Retailers and manufacturers oftentimes do not have a second chance to provide a great buying experience.”
In other words, get the delivery right, or be prepared to get torched on social media.
“Home delivery is certainly a big component of the buying experience,” said Elkins. “Just check the online reviews provided by consumers.”
But before any piece of furniture is loaded onto a delivery truck, it probably has been loaded onto the trailer of one or more long-distance carriers and/or cross-docking specialists who hand it from one shipping route to another.
And if it’s an imported piece (which applies to about 75% of all the wood furniture sold in the U.S., but less than half of the upholstery) it was loaded into an ocean cargo vessel in Asia or Europe long before it was ever touched by a domestic furniture carrier. And the domestic carrier may have received it from a drayage company whose trucks pick up merchandise as soon as it is unloaded at the port.
Sound complicated? Yes, it can be. But don’t try to explain it to the consumer, unless she happens to work in the field of logistics. She merely wants her furniture when she wants it, and the retailer will feel the brunt of her wrath if it doesn’t get done.
The challenge is especially being felt in the ultra-competitive long-distance carrier market, whose participants increasingly find themselves squeezed by increasing federal regulations and a decreasing number of qualified drivers.
“Carrier capacity levels have been tightened with the new Hours of Service rules, the shortage of new drivers entering the field, as well as the upcoming federal mandate for electronic logs,” said Stan Froneberger, vice president and general manager of SunBelt Xpress.
SunBelt, which offers both long-distance hauling and last-mile delivery, already has equipped its fleet with electronic logs – well in advance of the government’s December deadline – but the Hours of Service rules have only exacerbated the driver shortage, Froneberger said.
The complex rules, in essence, prevent a trucker from driving more than 11 hours after 10 consecutive hours off-duty. Plus, there are mandatory rest breaks, and after a driver has been on duty 60 hours in a seven-day period or 70 hours in an eight-day period, he must be off duty for at least 34 consecutive hours.
The bottom line, said Froneberger, is that it now requires more drivers and better scheduling – not to mention more time -- to get the furniture from the port or the factory to the retailer’s warehouse.
“Better service always is a goal for shippers and carriers. However, the impact of the Hours of Service regulations as well as driver hiring challenges for carriers are becoming more recognized (by furniture manufacturers),” he said.
Interestingly, he said these challenges give a modest advantage to domestic manufacturers, since their goods simply don’t have to be handled by as many entities as an imported product.
“Some of our leading growth accounts over the past couple of years are those with domestic production, especially in upholstery,” Froneberger said. “The domestic producers are some of the most innovative and customer-driven shippers we have.”
Froneberger and other logistics executives say retailers also are being forced to be more customer-driven as consumer expectations for shipping and delivery have risen right along with the fortunes of Amazon.com, and more recently, home furnishings e-tailers such as Wayfair.
That has led to the widespread practice of next-day delivery, and in some cases, same-day delivery by furniture retailers.
But Rob Davis, national sales manager of last-mile delivery provider Diakon said even Amazon can’t execute next-day delivery of most large furniture pieces, unless the consumer happens to live very close to one of its distribution centers.
“As long as (the furniture retailer) is carrying the inventory, they’re doing pretty much everything next day,” Davis said. “Next day and further out is pretty much the same in terms of the delivery process. You can maximize space on the trucks with no problem.”
Same-day delivery, on the other hand, poses an entirely different set of challenges that only a small number of Diakon clients want to tackle. “The productivity changes dramatically,” Davis said. “No matter what, we have to send a truck and a couple of guys out there to make the delivery. If we can get 15 stops, then we can charge less (per delivery) than if we only have four stops.”
Plus, same-day delivery requires essentially a 24-hour warehouse operation, which also increases the retailer’s costs, he said.
“I think retailers have to ask themselves, ‘Does my customer really want to come into the store at 4 p.m. and then stay up until 12:30 at night to take delivery?’ I don’t think there are many people who do,” said Davis.
He also said there’s usually not the same sense of urgency for the consumer who purchases furniture as the one buying a major appliance, for which Diakon also provides last-mile delivery services.
“If your freezer breaks down and you’re facing a loss of frozen food, you need to replace it right away. But if you’re couch breaks, I’m not sure there’s that same urgency,” said Davis.
But regardless of how quickly the furniture is delivered, Davis and other executives say retailers increasingly are turning to third-party logistics providers to handle last-mile delivery.
“There is a growing realization that experts in delivery of goods – particularly furniture – make a difference,” said Schneider’s Elkins. “Final-mile delivery is an extension of the retailers’ or manufacturers’ brand. We compliment the delivery gap in the consumer’s buying experience and ensure we represent the brand of our customers to their customers.”
Schneider became a major player in furniture transportation last summer when the company acquired Watkins & Shepard and Lodeso, two of the industry’s best-known furniture logistics providers. That deal instantly gave Schneider a huge footprint in the truckload and less-than-truckload transportation of furniture, as well as last-mile delivery of furniture and other oversized goods that can’t go through the UPS and FedEx delivery systems.
“Watkins & Shepard know this market well and have built a strong reputation for providing high-quality, claims-free service,” said Elkins “When combined with the scale and financial resources … Schneider brings, this creates an integrated capability that takes the complexity out of the supply chain for omnichannel retailers and manufacturers. It also provides a superior home delivery experience for consumers of high-value, over-dimensional goods.”
And not only are carriers such as Schneider and SunBelt challenged to find qualified drivers, they’re starting to encounter similar difficulties finding qualified people to operate distribution centers and fill other key logistics posts.
“It’s not the same old ‘warehouse manager’ position that is was a few years ago,” said Bill O’Malley, chief recruiting officer at Connector Team Recruiting, a search firm that targets clients in the furniture, bedding and appliance industries. “Today, you have to have skills in areas like industrial engineering and process improvement.”
O’Malley, who has a background in logistics himself, said positions such as distribution center manager and vice president of logistics have been in high demand in the past four to five years as retailers have evolved into omnichannel operations trying to survive and thrive while butting heads with the likes of Amazon.
“The final mile (delivery) component now makes the distribution center practically a 24/7 operation,” he said. “Next day delivery is a fact of life. At the very least, there are multiple shifts … and other challenges that the old ‘warehouse manager’ never faced.”
He said today’s logistics professionals don’t necessarily need an engineering degree, but some exposure to the subject – including training in Six Sigma principals – would be very valuable to a job candidate.
“The second largest (capital expenditure) in our company – next to rolling stock – is technology such as bar code scanning, on-board computers and other IT areas,” added Froneberger of Sunbelt Xpress. “The associates we are hiring today in operations needs to have a comfort level with these new technologies.”
February 21,
2017 by Jane Chero in Business Strategy, Industry
By Tom Zollar
Our issue themes for the first two months of the year, merchandising and advertising, play a major role in how well you do with the potential customers that enter your store. In this column, we are most focused on the third element in that process, the in-store experience provided by the sales staff. This ultimately delivers the results that we measure as closing rate and average sale/ticket. We have previously discussed the fact that training selling skills and coaching them can have a positive impact on closing rates, but we have not spent as much space addressing average sale/ticket. We have discussed its importance and some of the business dynamics that contribute to it, but I do not believe that we have specifically addressed ways to drive improvement to this extremely important number.
The good news is that it has been growing all by itself over the past decade rather nicely. We can probably take a little credit for that, but not too much, because for the most part, that has been more a result of the changes the consumer has made than to our efforts in the stores. They came out of the recession ready to buy and as the they have aged, Millennials, Generation X and others, have moved up to better goods, custom orders and lifestyle driven decisions that tend to lead to whole room/house make-overs. All this was predicted and has come to pass, driving increases in this vital statistic.
Today, better retailers across all product categories are using advanced research to maximize how much they know about their targeted customers. As a result, many are doing a much better job creating advertising that drives these motivated consumers into their stores and using targeted merchandising to have what they want, displayed how they want to see it. The result is that even in some product areas where retail prices have declined, we have seen increases in average sale because the customer is buying more. Our industry most certainly has benefited from this overall trend and the fact that so much focus has been placed on the home by the media and the public as the center of our life.
However, are you just riding the wave here or are you doing all you can do, to push it as far as it will go? Only you can answer this question for your company, but before you do, you need to realize one extremely important fact: you can do a fantastic job of driving in the right customers and having the right product for them, but in the end, it is the sales person that CONTROLS your average sale! They and they alone are ultimately responsible for this result, because it is their skills and desire to maximize the sale that delivers higher tickets. It is their attitude that influences what they do with each customer and when they stop trying to build the sale. Therefore, if you are not doing all you can to hire, train and coach your staff on how to increase their tickets with each and every customer, then the answer to my question is no.
Since it is your sales person who decides when to complete the sale, they are the ones that limit the size of it. Whether they do this in order to move on to the next Up and see as many people as they can, because they lack the skill to develop design/in-home opportunities or just are not motivated to give their all to each customer they meet, it is up to your sales management team to define the individual situation and take the appropriate steps to improve it or replace the person.
As a sales coach, I am often asked which of all the various sales numbers I would target for improvement in the coming year. For 2017 my answer is always average sale/ticket, the amount you actually sell to each customer with whom you successfully connect. Not only is there abundant opportunity for growth with today’s consumers, it is also the easiest number to drive improvement on from a training and coaching standpoint. Much more so than closing rate, which is more tied to people skills in most cases than selling skills. From an owner’s perspective, average sale is also the prime profit driver of them all, delivering more to the bottom line than any other single metric (except perhaps protection closing rate).
So, what can your sales management effort do to drive growth in this critical area? Here is a list of a few areas you need to look at and some activities that would deliver improvement to your average sale/ticket.
Sales Process and Selling Skills
Opening the Sale – The Greeting and the entire process of opening the sale has become the most critical step with today’s consumers. It is here that your sales staff most often makes or breaks the relationship needed to develop enough trust that the customer will share their needs and wants. It is the sales staff that will drive the sale and allow the development of larger tickets. Make certain that your sales people are not moving onto product or discussing business subjects before the customer is ready. Those sales, if made often, become more product than room focused and deliver lower tickets.
Needs Analysis – This is where average ticket development is really centered. The key is training your staff to ask the right questions, at the right time. Low average sales are often the result of a line of questions that is mainly product focused as opposed to room or lifestyle driven. If we concentrate first on finding only the product they seek, then we will miss out on the opportunity to help our customers develop their dream of a perfect room or home environment. Make sure your staff is room/lifestyle focused and not just a tour guide showing product after product to their ups.
Sketching – There is no tool or element in your selling process more important to building average sale than sketching. It is by far the main ingredient in developing both the relationship and knowledge to build larger room and home centered sales. This has been addressed in several previous columns, such as the one from our June 2015 issue, “Sketch to Build Sales”. Read it and make sure your staff is using this valuable tool to the fullest with every opportunity!
Design and In-Home Business Development – We all know that the biggest tickets come from design projects and in-home visits. This does not mean that everyone must be a designer but they do need to be able to recognize customers that need or want that type of service, then direct them to someone else on staff that can deliver it. If your process does not provide this great opportunity, both your customers and team are missing out!
Product Knowledge and Category
Performance
Product Knowledge – Having knowledge of your products and knowing how to use it to drive sales growth is at the core of successful selling in all industries. However, it is not the nuts and bolts, technology based situation we see in computers and other areas that are important to us. It is what the ingredients and look/feel of our products really do for the customer that matters. We must train and coach our sales people to understand that it is the happiness and satisfaction our products deliver that are key to answering our customer’s needs in the home. Make sure your staff is using lifestyle focused vs. only technical, product centered knowledge to excite their clients.
Product Category Sales – In virtually every low average salesperson or store that I have studied, a common cause is inconsistent or poor performance in product areas that drive higher tickets. A store that is under performing on average sales is almost always a low achiever in case goods, premium bedding and/or better goods. This can be caused by a lack of product knowledge, a limited understanding of relative value or a poor attitude towards a vendor/product. Whatever the reason, this is the single biggest average sale opportunity I see in most stores. Make sure your staff understands your good – better – best story in each category and how to sell it. Some sales people will not sell a product because they would not pay that much for it, or they don’t like the company/rep/delivery, or are just too lazy to work a little harder for the sale. Run category and vendor performance reports for your total store and each staff member. Target those that underperform with any category or vendor for improvement. Find out the cause and train, coach or replace each person.
Average Sale Ingredients and Focus
Numbers to Track – Just like close rate and average sales are ingredients in revenue per up, that can be tracked and coached, there are also performance elements in average sales that can be tracked, trained and coached. Here are a few that will indicate how a sales person is doing:
o Items Per Ticket
o In-Home and Design Sales Percentage
o Better Bedding Percentage
o Leather Percentage
o Power Motion Percentage
o TLA Percentage
o Special Order Percentage
o Sketching Percentage
o Personal Trade/Be Backs
Drive Focus with Coaching and Contests – Harry Friedman always said that the only reason to track a statistic is so you can improve it. Every one of the above numbers contributes to increasing average sale in a furniture store. I am sure you won’t be surprised to learn that you have people on your sales team that don’t sell better bedding, don’t waste their time on custom orders, seldom have more than a few items on a ticket, don’t sketch at all, etc. All of them are hurting your business. Find them and fix them. Run contests aimed at each statistic to create focus and drive improvement. A Saturday “Pass the Buck” contest for the Ticket with the most Items on it works wonders!
There are many more ways to improve your average sale and the great thing is that almost everyone on your staff can do it. Even your best people can grow by being more consistent and adding in-home or design skills to their toolbox. The key is to get them focused on it and make sure they are not rushing through customers just to wait on as many ups as they can each day – that is a real volume killer!