Monthly Issue
From Home Furnishing Business
September 4,
2017 by Jane Chero in Business Strategy, Economic News, Industry 
Despite the dramatic decline in the percent of Americans moving and changing residences over the last 60+ years, the patterns of mobility have shifted much less than might be expected. Once a country on the move, mobility reached a historical low from 2015 to 2016 with only 11.2 percent of the population moving to a different home or apartment. This compares to a 1948 peak of 20.3 percent.
After detailing the “who” and “why” in two previous articles on Mobility in America, the current issue explores “where” people are moving. Are more movers simply relocating to a nearby apartment or home? Is there migration into the cities from the suburbs? Are some more people moving to sunshine states? (Sources: U.S. Census Bureau, Current Population Survey: (1) 2016 Annual Social and Economic Supplement and (2) Annual Geographical Mobility Rates 1948 to 2016)
Mobility by Year
While the percent of Americans moving has changed overtime, how far away they tend to move has not. Looking at the last 28 years, in 1987, 17.8 percent of the population moved compared the 11.2 percent from 2015 to 2016. Since that time, a slightly higher percentage of movers are moving to a different county within the same state – an increase from 18.3 percent (1987) to 21.3 percent (2016). Meanwhile, while fewer movers are relocating to a different state – down from 16.7 percent to 13.6 percent. (Table A)
Both long distance and shorter nearby moves have fallen by similar rates over the past 60+ years. Between 2015 and 2016, 61.6 percent of all movers relocated within the same county compared to 67 percent in 1948. As shown in Table B, as a percent of the total population, just 6.9 percent of Americans made shorter moves last year within the same county, down from 13.6 percent in 1948. Different county and out of state moves dropped to just 3.9 percent of the total population in 2016.
As expected, metro areas have the most movers by far, with 64 percent of movers electing to stay within the same metropolitan area (Table D). At 16.7 percent, the next highest group of movers traded one metro area for another metro area between 2015 and 2016, while 9.3 percent of movers continued to reside in a nonmetro location.
Despite the perception that inner cities are increasing in desirability the data reflects differently (Table E). Actually a yearly average of 1.5 million movers have left Principal Metropolitan cities (urban areas) since 1985 while Metropolitan suburbs keep growing – increasing by an average of 2.9 million movers a year.
When it comes to the distance a homeowner moves versus a renter, what might be surprising to some is that the geographical mobility patterns among both renters and owners are very similar as depicted in Table F. At 60.7 percent owner-occupied units and 61.7 percent renter-occupied, the vast majority of movers in both housing types moved within the same county from 2015 to 2016. A higher percentage of homeowners moved to a different county within the same state (25.2 percent) versus 19.7 percent of movers that rented in the same year. Not surprisingly, movers from abroad account for a higher percentage of renter-occupied units (4.9 percent) rather than owner-occupied units (1.9 percent).
Regional Movers
Overall the sunshine states in the South and West had the most movers from 2015 to 2016. The South had the highest flow of people in and out of the region with Inmigrants and Outmigrants both over 900,000 people. (See definitions below.) At 247,000 persons, the West had the most Net Internal Migration, with the South leading the way in total Net Migration (including movers from abroad) (Table G).
Table H shows the Net Internal Migration of movers (current residents moving within the country) over the last five years. Between 2012 and 2015, the South had on average the greatest net increase in population from movers each year. However in 2015-2016, the West took over adding 247,000 additional people compared to 39,000 for the South. The Net Internal Migration in the Northeast and Midwest has been either null or negative for many years with more people leaving than moving in.
Movers from abroad relocate into all regions of the country (Table I). However, the South has been the greatest beneficiary over the last five years but with 497,000 movers from 2015 to 2016.
Although Net Internal Migration in the Northeast and Midwest has been null or negative over the last few years, the influx of movers from abroad over the last three years has increased their populations. Meanwhile, the South and West are still holding the most appeal for mobility.
September 4,
2017 by Jane Chero in Business Strategy, Industry
No, we’re not talking about indoor upholstered furniture – although we could be. Those same ingredients are also the keys to selling outdoor furniture – a category that’s embarking on another selling season poised for growth amid expanding distribution channels and continuing product innovation.
After all, what’s not to like about a relaxing summer evening enjoying steaks hot off the grill and your favorite beverages with family and friends? And what better place to do it than the outdoor space at your own home?
“If you care about how your house looks on the inside, it’s natural to care about the outside,” said Lyle Ecoff, director of outdoor products at Emerald Home Furnishings. “It’s the place where relaxation and memories occur.”
And in the view of Ecoff and other executives in the category, those things can’t be fully achieved without comfortable outdoor seating, a dining table or two, and perhaps an umbrella or fire pit.
“It’s great to be comfortable in cool outdoor furniture. It’s what drives out business,” Ecoff said. “The consumer is lucky because there is more great product out there than ever before.”
Ecoff might have added that retailers also are fortunate because there are more outdoor furniture resources than ever before. Well-established indoor furniture vendors such as Lexington, Klaussner, Century, Emerald, A.R.T., Zuo Modern, and most recently Ashley, have added outdoor furniture in recent years, and that list is likely to grow.
Not surprisingly, those well-established indoor vendors have had their greatest success selling outdoor furniture through furniture stores – a distribution channel many casual furniture specialists have had difficulty penetrating. The indoor vendors have a built-in advantage because they’ve already established relationships with key furniture stores around the country, and they often use the same sales force as their indoor line.
“If nothing else, it raises the profile of the category,” said Gary McCray, president of Klaussner Outdoor. “And the business doesn’t have to be as complicated as it was in years past. It’s becoming an easier business for retailers.”
McCray was one of several executives who said Ashley’s recent entry would raise the profile even more because of the company’s extensive retail distribution network.
“They’re going to drive furniture stores into the category – and not just theirs,” McCray said. “Stores that aren’t in the category now will have to consider it.”
A survey by Impact Consulting Services, parent company of Home Furnishings Business, showed that a plurality of consumers who recently purchased outdoor furniture (30.8%) said it was purchased at a mass merchant such as Wal-Mart or Target. Another 23.1% said they used a home improvement store such as Lowe’s or Home Depot, and 18% said the purchase was made at an outdoor furniture specialty store.
Traditional furniture stores were mentioned the least (10.3%) of the five available options, even losing out to the internet, which is where 18% of respondents made their purchase.
To outdoor furniture veterans such as McCray and Ecoff, that relatively poor showing by furniture stores screams opportunity – primarily by selling outdoor to their existing customers
“If you’re not in the category, it’s certainly something you need to look at,” said Ecoff. “How do you not leverage your current customer base? You spent a lot of time and effort converting an indoor sale, so you now have a customer that trusts you and wants to do business with you.”
The survey indicated plenty of purchase opportunities are available, especially for consumers willing to spend $1,000 or more for an outdoor furniture purchase. It showed that a whopping 71.8% spent $999 or less, but just 20.5% spent $2,000 or more. And less than 10% were between $1,000 and $1,999.
Reflecting the concentration of purchases below $1,000, some 41% said the furniture they purchased was metal, while 35.9% said it was wicker, 12.8% said wood, and 10.3% bought plastic.
Among other survey findings, nearly two-thirds (61.5%) said they bought outdoor furniture because they were replacing or adding to existing outdoor furniture, while 18% said they had recently moved to a new house with a deck or patio, and 23.1% said they had recently added a deck or patio.
Plastic, which manufacturers prefer to call resin or polymer, appears to be one of the faster-growing outdoor furniture materials, thanks to the recent popularity of synthetic wood and wicker products that require far less maintenance than traditional wood or wicker.
McCray noted that a collection of synthetic teak products rolled out last year by Klaussner was one of the stars of the just-concluded 2017 selling season.
“It did really well this year, and based on the initial orders we’re getting for placement next year, it looks like it’s going to grow dramatically as we go forward,” McCray said.
At high-end producer Century, the star of the most recent season was a lineup of outdoor upholstery pieces that mirrored some of the company’s best-selling indoor seating. Haynes King, director of outdoor products, said the company re-engineered the indoor pieces by, among other things, switching to marine grade frames, using stainless steel staples (which don’t rust), and using plastic to reinforce the corners of the frame. That’s in addition to switching to outdoor performance fabrics designed to withstand just about any type of weather.
“People are starting to treat and decorate the outdoor space more like an indoor room,” King said. “So we created a collection of outdoor upholstery using popular styles from indoor upholstery. We’ve been pleasantly surprised just how quickly it has ramped up.”
The company was so pleased that an extensive collection by designer Thomas O’Brien being introduced in October will include the designer’s first-ever outdoor pieces.
King said the ability to blend indoor and outdoor is one of the many innovations that are driving the category – an observation echoed by McCray, who has been merchandising and selling outdoor furniture for more than three decades.
“Unlike the indoor side, there is just so much push to do new and innovative things (in outdoor),” said McCray, noting that innovations in fabric and cushion construction head the list.
However, McCray may be most excited about an innovation Klaussner quietly introduced at the most recent Las Vegas Market – power motion.
He says the lineup currently includes the industry’s first power lounge chair and power chaise, and based on the success of power motion in indoor furniture, he’s looking for big things from power outdoor motion.
“It’s a natural for outdoor. It turns a chair into a chaise,” McCray said.
He said all the chair’s electrical components are sealed and the mechanism is powder coated. The unit is powered by a lithium ion battery that can easily be removed and taken indoors for recharging, but a full charge should last 200 to 300 cycles. (A cycle is opening and closing the mechanism one time.)
“We’re pretty excited about this,” he said. “For us, it’s all about comfort and innovation. You’ve got to be able to do that.”
September 4,
2017 by Jane Chero in Business Strategy, Industry
The goal is to make our readers aware of what is available, so they will be better able to make educated decisions about what new technology, systems and processes they may want to buy, upgrade to or adopt. However, as we all know, change can be expensive, scary and disruptive. As a result, many people and companies resist it as long as they can, putting off the pain, so to speak.
Our industry has traditionally been somewhat slow to adopt new ideas and technologies. I remember how revolutionary the fax machine was when it first came out. The first ones were clunky, messy and did not always work properly, but eventually they became must have tools in all businesses. It took many of the furniture stores I knew a few years to install their first one. It was often the manufacturers that forced them to do it so they could get orders entered and communicate about service issues.
Things are a bit different for us today. The industry has embraced many new tools and ways to do things, with the internet being the major game changer over the past decade or so. It now seems that we are not replacing as much as we are upgrading or enhancing. Every week there are upgrades on my PC, iPhone and iPad. Systems, processes, apps and devices are no longer completely “new” they just continue to evolve. How we use the internet has been a key factor in that evolution, indeed it has changed how we must do business.
Unlike much of the last century though, it is not the manufacturers and suppliers pushing retailers to change. Today it is the need to better serve the customer that drives innovation and thus change for all consumer product industries. Why has this happened and what does it mean for us as business people? Let’s take a big picture look at the marketplace dynamics that have caused this to happen and perhaps gain some insight into how we might improve our planning process for the changes we face.
I once attended a presentation by renowned marketing wiz Rodger Blackwell that included a history of our marketplace economy in the U.S. In simple terms, he stated that much like the rest of the world, we began with the well-known “supply and demand model”, where the manufacturers made what they thought the consumers wanted and that is basically all that was available. Henry Ford’s famous statement about the Model T pretty much sums up that situation: “you can have it in any color you want as long as it is black”. So initially our economy was mainly supply driven, with the maker of the products running the show for the most part. During much of the first half of the last century, most consumers purchased from traveling sales people, small local stores or factory direct and large catalog mail-order houses.
In the middle of the 20th century, as our economy began to grow by leaps and bounds, it evolved and a third entity joined the mix. Larger brick and mortar retailers like Sears, Wards, and Penny’s began opening stores across America, even in small towns. Professor Blackwell called this third element “distribution” since it got the products from the manufacturer to the end consumer. Now we had a “supply – distribution – demand” economic marketplace. As the distribution segment grew, these major retailers also began to dictate to the manufacturers what they wanted to buy for their customers. So, for most of the latter half of the century, distribution became the dominant segment of our economy, telling the producers what to make and the consumers what they could buy.
Then as we all know, we hit the 90’s and the “consumer revolution” took hold. This is where the power shifted full circle to the place it should have always been. Smart retailers and manufacturers actually began asking consumers what they wanted and doing research to make sure the products they made were right for their target audience. By the time we made it into the 21st Century, the tide had turned and the demand segment of our economy became the dominant player. As stated, this is the way it should have always been. However, a lot of things had to happen to get us there, not the least of which were the many improvements in communication technology, the advances in data processing and our ability to conduct accurate and timely research about consumer needs, wants and desires.
Now the consumer is telling both the retailer and manufacturer what they want, when they want it and how much they are willing to pay for it. Supply and distribution must listen and react to what demand is telling them or they will fail. The history of retail is littered with dead companies that did not change with the times and continued to do things the way they wanted to do them. It was not just the wrong products that killed them. It could have been any aspect of the consumer shopping and/or buying experience. Big boxes dominated for decades and now struggle against smaller, more nimble boutique stores. Regional and even local tastes vary and product or services offered must reflect what the customers in each market are looking for or sales will fall.
Not only do we deal with all this but also the fact that nothing stays the same for very long now. It seems that just when we think we have it all figured out, things change on us. Trends, fads and even brands come and go with the wind lately. Stores like The Limited and others that were at the top of the heap are gone as the consumers’ tastes shift. Big destination indoor malls have struggled while large outdoor Outlet Centers have flourished. It is even possible that there are more food and beverages sold in gas stations today than in grocery stores. This all supports that old adage, “change or die”!
Innovation usually involves changing something. Just like every new product is not right for every customer, not all new ideas, systems or processes are right for every business. The biggest problem is deciding what needs to change and how to how to adjust in the best way possible for your company. There are no easy answers, but if the above history of our market driven economy tells us anything, it is that the consumer is king. They are the ones we aim to please, so whenever we consider improving or changing what we do, the first questions we must answer are: What does this do for our customers? How does it make their experience with us better? What impact will this new change have on the most important person in our business?
This might sound a bit simple or maybe even naive, but I have found time and again that business people, myself included, often get so wrapped up in a project that we lose sight of what it does or does not do for the process of connecting to people and helping them create beautiful and comfortable rooms/homes in which they are happy to live. The biggest distraction is often getting buried in the numbers related to how much time and money it will save or how much easier it will make it to do something within the organization. Don’t get me wrong, that is a huge reason to make changes! The only thing I am saying is that before we create a business impact statement, we need to first create a customer impact statement. Make certain that the outcome is not only good for your business but that it also enhances your ability to serve your customers the way they want to be served.
Just step back and have everyone involved take a look at what you want to do from the viewpoint of your consumer. This means that in most cases your sales and service staff needs to be involved since they are the ones that have the most direct contact with the public. I recommend that within reason, each innovation you want to pursue goes through a review process that involves staff members from all areas of the company and when possible, perhaps even some of your loyal customers. Take their feedback to heart before you finalize your decision, then have your new “innovation committee” help you develop your implementation strategy and plan. That way you will not end up with a bunch of big bad surprises when you roll out the “next big thing”.
You might read this and think I am out a little on the fringe here, but I am really not. If you were to survey the top 100 most respected consumer product companies, I would bet that at least 90% - if not all of them - have some sort of cross departmental teams or committees that participate in the development and planning process for all major company initiatives and most of them will also include customers on their teams. It is senseless to innovate unless you know what you want the end result to be and who can tell you more about that than your customers?
So, what is today’s “fax machine” or the “thing” many of us have resisted accepting? This time it is not a device, it is a service that your customers want you to offer – online sales. Many of your potential customers want to avoid the traffic and hassle of driving to your store. They see what they want on your site and just want to buy it then and there, but many of us still make them call or visit us. I believe a lot of them will just find another company that lets them do what they want, just like they always have. Maybe it is time to “upgrade” your website and the above review/implementation process might be a good way to determine how to make online sales an important part of your business plan!
September 4,
2017 by Jane Chero in Business Strategy, Industry
Intrigued by this possible new distribution channel, he pieced together an internet site for his store and began offering a selection of products for sale online in 1998 – a time when most consumers still had dial-up internet access. But within two years, the monthly sales volume from the store’s web site was equal to the annual sales of the brick-and-mortar operation.
“I realized this was something that was not going to go away,” Sexton understated.
So he rebranded the store as Carolina Rustica and began focusing on upper-end goods. His online and brick-and-mortar sales continued to soar, and the business survived and thrived through two recessions. He and his partner sold the business in 2012, but he remained there as president until 2015.
Today, Sexton is hailed as a pioneer of omnichannel retailing, and earlier this year was hired by home furnishings technology firm MicroD as chief product officer.
He recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the enormous challenges faced by brick-and-mortar retailers today. He also offered his thoughts on that start-up bookseller that piqued his interest in the mid-1990s.
Home Furnishings Business: There has been lots of speculation that Amazon is about to ramp up its efforts to sell home furnishings. What do you think Amazon’s next move will be?
Richard Sexton: Do I think they’re going to buy a national furniture chain? I think it’s pretty likely. Or they could set up hundreds of Amazon furniture stores in a year if they wanted to. Having said that, their next move has to be consolidation. I think they have to absorb that (Whole Foods acquisition) first.
Their issue is not the front end, but the back end. It’s more on the infrastructure, logistics and fulfillment where they’re going to be focused. Drones can’t deliver a high-end sofa to your house.
That hard stuff -- the white glove, in-home delivery service – is the thing Amazon has not been able to get its arms around. Nor has Wayfair. That’s the core competency of your local furniture retailer.
HFB: Will logistics and other back-room processes play a larger role in the ability of brick-and-mortar retailers to compete with e-commerce?
Sexton: Yes. It’s the Achilles heel of Amazon. They’re all about volume. If you have a $5,000 custom built sofa that you’re delivering, the local brick-and-mortar retailer knows how to do that. That’s not an Amazon experience, and I can’t imagine it ever will be. When the product comes in, the local retailer will unbox it, inspect it, put it on their local truck, and do it efficiently. And most importantly, the local retailer will do it in a way that results in a good customer experience. It’s personalized and has accountability. That is where the local brick-and-mortar retailers will always have the advantage -- and they should hold onto that advantage.
If Amazon ever came to me as a retailer and said, ‘we want you to do our fulfillment,’ I would tell them to walk away in not so polite words. Because you would be giving up the one thing that you can compete on. That’s where the local retailer has the ability to control the (customer) experience.
HFB: What other things do brick-and-mortar retailers need to do to stay competitive?
Sexton: To be successful, retailers need to continue to embrace who they are, which is either a regional or local furniture store, and dominate in that space. They can’t compete on a national scale for e-commerce anymore because the product discovery process doesn’t allow it. They’re going to be successful by having lots of reviews, having good content on their websites, and making sure that their store information is current and consistent so it drives traffic either to phone calls or to in-store visits.
Local furniture retailers are really, really good at taking in-store customers and converting them into buyers. Their conversion rates are much higher than your e-commerce player.
There is not an inherent (cost) advantage in being a pure-play e-commerce retailer because you have to spend a lot more upfront for customer acquisition on the e-commerce side because your conversion rates are a lot lower. Onsite conversion rates are going to be one-half percent to 1 percent. So there’s a lot of upfront investment in terms of getting visibility because you have to compete against Amazon and other big players like that.
HFB: What role should social media play in a retailer’s marketing strategy?
Sexton: I don’t think social media is necessarily the best fit for commerce, but it needs to be leveraged to express the uniqueness of the in-store experience. The objective should be to build a social following, and take those fans and turn them into advocates. You really want your followers to share your narrative to their own circles of friends and acquaintances. That’s how you get that multiplier effect.
For furniture retailers to think it’s going to be an actual source of sales revenue, I wouldn’t focus too much on that. The social channel feeds visitors to the in-store experience, and you can control it from there. People want to keep the social experience separate from their buying experience, so that kind of brand awareness is the most effective thing to do on social media.
HFB: How do retailers address the challenge of keeping good, up-do-date product photography on their website?
Sexton: I don’t think you need to have a photography studio, but you do need to have the discipline to take the pictures. Keeping up the product catalog is critical.
You should have the discipline and processes in place to take your own photography whenever possible, in context. As a retailer, I would be less concerned about having studio quality images.
If you’re a multi-store environment, your customer is going to expect more in terms of the digital experience. If it’s not good, it will reflect poorly on you as a brick and mortar retailer.
HFB: Are voice-activated searches such as Amazon Echo and Google Home the next wave of search engines?
Sexton: It is. Depending upon who you ask, between 25% to 40% of all searches are being driven by voice-activated search. It’s huge. With the use of mobile phones, the ability to just speak into a little microphone has driven a lot of it. The second thing is that (sales of those devices) are growing exponentially, and are becoming integrated into people’s lives.
The impact that has on retailers is so significant because they have to optimize their site for natural language since that’s how people are interacting with them. If someone says, ‘Siri, I need to replace this old couch,’ how would you answer that question in a way that would get you to appear in the search results? That’s critical for retailers.
Google wants to make every search a local search, and that can create some real visibility challenges for retailers. They have to understand the dynamics in terms of where the searches are originating from, and build their content to answer that question.
The one thing you can’t do is stick your head in the sand and say, ‘I don’t get it. It’s too complicated.’ Talk to your grandkids or talk to your neighbor’s kids (laughs). They can educate you in terms of the product discovery process.
HFB: How have the things you learned at Carolina Rustica helped you in your new job at MicroD?
Sexton: I never take off my retail hat. I’m the voice of the retailer when we’re structuring our products. How will this help our retailers grow their business? Does this have meaning to their customers? We always want to make sure that whatever we do, it is with the mindset for creating a better experience and making our retailers more successful with their particular strategies.
The retailers today are my heroes. Retail is at such a critical point right now, and it’s so dynamic. The challenges are real. You cannot take anything for granted. And for us to be successful, we have to make them successful.
July 21,
2017 by Jane Chero in Industry, Special Events
Having been raised in the Information Age, Millennials are the most tech-savvy generation yet. They transitioned from snail mail to e-mail to text messaging in under a decade and have an affinity for the digital world. Their inherent need for speed is in their DNA, and they expect instant gratification.
As a result, a large portion of the workforce is drawn to STEM careers (science, technology, engineering and math) and hard technical skills. And even though top employers today value technical skills, most of them say ‘soft skills’ are just as important.
Soft skills such as leadership, communication and collaboration are crucial, and the Millennials who were selected for the Home Furnishings Business Forty Under 40 list exhibit all of that, and more.
However, according to Caroline Beaton, a contributor to Forbes magazine and a workplace psychology journalist, there are four additional soft skills that are under appreciated, but essential in the modern workforce:
Attention: Attention to detail is the ability to achieve thoroughness and accuracy when accomplishing a task. But Jake Rozmaryn, CEO of Eco Branding, told Forbes that his firm sees a lot of “careless typing and formatting errors in Millennial applicant writing and work samples, cover letters, resumes, etc.” In the workforce, even the grandest project depends on the success of the smallest components. It really is “all in the details.” Time management and the ability to follow through are must-have skills as well.
More Than College: Bachelor’s degrees may now be less important than they used to be – largely because they have almost become commonplace. College education isn’t the simple recruiting filter it used to be. Most entry-level business jobs involve a customer-facing component, but few colleges offer classes preparing students for sales, customer support or client relationships. Therefore, curiosity and commitment, not college, will be among the most important skills for Millennials in 2017 and beyond.
Agility: To adapt to the rapidly changing demands of modern work, employees need agility and the ability to overcome setbacks. Agility manifests itself in individuals as resourcefulness, goals-driven behavior, a team player mentality, and relentlessness. Agility is “not getting stumped at an early stage,” said Anna Crowe, CEO of Crowe PR. Instead it’s “here’s plan B and C to get us where we need to be.”
Humility: Not taking yourself too seriously, admitting when you don’t know stuff and asking for help when you need it are some of the most advanced skills of all. In the digital age, it has never been easier to inflate your successes and white-lie your way to and through a job.
In summary, Millennials want their work to serve meaningful purpose. They’re looking for career development, more meaningful conversations, and a more connected workforce. Companies that can find ways to make their workplaces exciting enough to attract good Millennial talent can reap the rewards by harnessing their power and developing future leaders.
The Millennials on the newest Forty Under 40 list are on that track. And for those Millennials out there who may be waiting for their own nomination -- be a story worth telling.
A Story Worth Telling
Success requires passion, resilience and wisdom and the talented home furnishings professionals you will see on the following pages have had a measurable impact on their brands, their peers, their companies and the industry.
Meet the Home Furnishings Business 2017 Class of Forty Under 40, a fine selection of ambitious individuals. Some are entrepreneurs and some are leaders who have climbed the ranks of the family or corporate ladder, but all of them have what it takes to excel in their fields and are ready for any challenge that may come their way. As the new generation of home furnishings executives, their stories are worth telling.