Monthly Issue
From Home Furnishing Business
January 17,
2020 by HFBusiness Staff in Business Strategy, Industry 
One thing is for sure Generation X doesn’t want the “brown furniture” of their parents. Just call a consignment shop to inquire about purchasing your 18th century Henkle Harris dining room group. After the insult for what they would pay if they would buy it, you realize that your furniture has not appreciated in value the way your home has in the last 35 years.
The lifestyle of the Baby Boomer while in their 30s was all about presenting the image of success and prosperity. That is as it is today, as indicated by the recent national research conducted by FurnitureCore, the research arm of Home Furnishings Business.
As can be seen from the table at the bottom of the page, by the time Baby Boomers reached retirement age, their attitude had diminished and had become more practical. The takeaway is, consumers have not changed when they are beginning to furnish their fi rst home. The fact is home furnishings is important, but just not the style or look of their parents.
The research indicated consumers are unfortunately stuck in I want to change my style. The research provides the most recent input.
Compared to last year, statistically there has been litt le change except cott age increased 9.44% to 13.2% and mid-century fell 8.15% to 5.0%. However, if we compare the older Millennials (25-34) we can see the coming tsunami.
The challenge for established retailers and manufacturers is how to serve the existing consumer base while addressing the taste of the consumers that are entering the market. This is the opportunity for the new manufacturer or retailer of a direct-toconsumer manufacturer to launch a new company. This opportunity is obvious from the research presented.
Obviously, contemporary and industrial will be the style of choice for the emerging consumer in their twenties.
Starting with the manufacturer that develops products to be sold by the retailer, it is diffi cult to translate a “style” term to a specific look beyond the very basics. In other words, style is in the eyes of the beholder. New styles evolve from the successes of the past 12 months.
The issue for the manufacturer is that they are two steps removed from the consumer. While the retailer’s web presence importance is well established, with 73% of consumers visiting the retailer’s website, the manufacturer’s web presence is not as integrated into the consumer’s buying process. What bett er way to obtain input on style from the consumer than from the manufacturer’s website? La-Z-Boy solicits input from the consumer by using a style quiz— specifically, DesignCliq, a proprietary product of FurnitureCore. After answering ten questions, the consumer receives an output that clarifies their style and offers La-Z-Boy products that represent the particular style designation. The consumer has an opportunity to agree or disagree — a surprising number (92%) concur. What better feedback for the manufacturer? If you have been in a La-ZBoy showroom recently, it is evident that the furniture is not reflective of the consumer’s parent’s product.
A more digital approach used by some manufacturers is social media. While receiving great input for the product development process, it also creates the opportunity to build brand. Houston-based Classy Art, a resource for wall art and décor, has been using an atypical strategic selection process for items that make entry into their product line. It is a three-step process for all items they are considering. “I got really sick of spending a large amount of valuable time and resources to unload items that were under performers, because it did an injustice to our customers and our warehouses,” says Gabriel Cohen, owner of Classy Art. The first step is to review the potential items with their major accounts to see how each item would fit into those programs both current and future. If an item does not fit, it is removed from potential consideration at that time. For the items that make it through this round, the company then turns to their consumer focus group for step two. Classy Art has nearly 1500 members that review the remaining items using Facebook. Each member reviews the overall style of each item and casts their votes using likes and comments. After the items have been reviewed by the focus group, they evaluate the exact number of likes that item received. After the second round of judging comes the final cut. If an item was well liked, however it did not carry the value of both size and cost that the market supports, then it is eliminated. By implementing this process Classy Art found that items hit the ground running faster and harder. In addition to the testing on the front side of launching an item, they also cut 20% of the bottom performers in each category, each quarter. Rarely are they promoting items that do not perform well, according to Cohen.
Another updated approach to focus groups is also handled online. FurnitureCore, a dynamic web application aimed at the furniture industry, has an online focus group application that can solicit input from the manufacturer’s targeted consumer receiving 400+ national completion.
These results can be drilled down to specific demographics. Additionally, with today’s AR/VR capabilities, the products can be viewed in 3D with illustrated functionality.
While the look is important, the price point is the next barrier. The manufacturer must understand where the new product price falls in the retail price curve. The positioning of the product is important. The graphic above presents only middle price points.
To enhance graphic presentation, the premium price point ($2,000+) has been excluded. These statistics were at retail based upon the manufacturer’s target margin/multiplier based upon distribution channel.
We should stress that the product design element of the merchandising process is very much an art inspired process. Note the comments sprinkled throughout this story from those in the industry that are involved in the process of merchandising their product lines.
According to Lisa Cody, vice president marketing at Twin Star Home, their product development process is fueled by a disciplined approach to understanding who their customers are, what makes them tick and what their unmet needs are. Consumer insights play a continuous role in product design and innovation and come from a variety of formal and informal sources. “We validate what we’re doing in terms of product design before, during and after a product launches. In order to develop products that are relevant to consumers, we use research to understand how they live in their homes, what their homes are like and what they need and desire to live in comfort. We capitalize on those insights to kick off our process and drive the form, function and features of any given product.”
Cody says once products are in the early stages of development, they check back in with the consumer to validate they are on the right track and use their feedback to make refinements. “After a product launches, we monitor consumer reviews, comments on social media and details gleaned from customer service calls to find out what consumers love…and don’t love about our products so we can implement refinements and improvements.” What they learn is shared and leveraged cross functionally so that everyone can take action on what was heard.
Michael Lawence, VP at Najarian Furniture says, “Our approach is to work closely with our retail partners and engage in dialog to ensure our finger stays on the pulse of what shoppers are looking for at retail and design accordingly. Our niche has always been, and continues to be, unique, classic, timeless designs. Though we incorporate trendy, transitional styles... classic, timeless designs are consistently our sweet-spot."
December 13,
2019 by HFBusiness Staff in Business Strategy, Industry
Growth in mass merchants/discount retailers, such as Target and Big Lots, have shown growth as they discover the contribution of gross margin per square foot of selling space that the furniture product category provides.
The emerging consumers that follow the Baby Boomers are choosing their preferred channel of distribution based upon retail experience off ered. A recent survey by FurnitureCore (the research arm of Home Furnishings Business) separated the choices by age group. As can be seen from the table at left, regional chains are emerging as a preference for the under 45 age group, showing less of a preference for the Internet. It should be stressed that this survey is for furniture purchases over $300. The younger consumer (25-44) was very satisfi ed on a scale of 1-5 with 5 being very positive. The table below divides the response by age group.
Both of these points are contrary to the noise around the decline of traditional retailing. POWER 50 — METHODOLOGY Market share is the most heavily weighted factor determining who makes the list, accounting for 46% of the total score. It is determined by dividing the retailer’s estimated sales by the estimated retail sales of furniture and bedding in each of the markets in which the company participates, whether it is a metropolitan statistical area, micro statistical area, or a rural area. Sales of electronics, appliances, and housewares are not included. To arrive at a list of home furnishings retailers with the strongest online engagement, we measure by 14 separate metrics. Sources include Alexa, Facebook, MOZ, Open SEO, Twitt er, and Pinterest. On Facebook, for example, the number of “check-ins” and “likes” were among the metrics, as were the number of Twitter followers, Pinterest “pins” and Google Page Rank, just to name a few.
From that data, we used a basic ranking methodology, assigning a numerical value to the ranked list of each metric. (For example, the retailer with the highest number of Twitt er followers received a “1,” and so on.)
Then, we arrived at 14 individual scores calculated for each metric. After dropping the two highest scores to eliminate any outliers, the statistical average of the 12 remaining scores was used to calculate the fi nal social engagement score.
The fi nal factor in the Power 50 ranking is retail expansion, which accounts for 15% of the total score. Using public records, it measured store expansion and expansion into new markets. In addition to the Power 50, HFB compiled separate lists that ranked regional chains, large independents, vertically integrated retailers, and independents with sales of less than $50 million in a single state.
November 14,
2019 by HFBusiness Staff in Business Strategy, Industry
As always, the furniture industry is greatly influenced by the population. As can be seen from the prime furniture buying population graphic, the Baby Boomers are fading away while Generation X is beginning to provide the growth until the much anticipated Millennials arrive.
While the prime furniture buying population has been diminishing, the amount of average household purchases has increased over 40% in the last five years, exceeding the growth of other home furnishings products. The consumer spending graphic presents the spending by product category. The consumer expenditure has resulted in a $300+ billion home furnishings industry of which furniture (consumer durables) represent 42% ($129.9b). Those other product categories typically not sold by traditional furniture retailers may become important in the future. Generation of traffic by these other products may be important to the more postponable furniture category.
There is an ongoing tug of war between furniture stores and home furnishing stores, but with both losing out to other distribution channels as can be seen from the graphic.
WHAT ABOUT YOUR CONSUMER?
The furniture consumer today is much more diverse as the Baby Boomers dominance has given way to Generation X and anticipating the much discussed Millennial.
The most important consumer is your consumer. In the last decade, what was a simple process of good/better/best has migrated to retail experience. The traditional furniture store is battling and trying to serve all consumers while lifestyle retailers, such as Restoration Hardware, are focused on a narrow band of consumers.
The first step is profiling the consumer that you are selling, or more important, those you are not selling. To do that we tap into FurnitureCore, the research arm of Home Furnishings Business. The graphic below provides the output from FurnitureCore’s consumer segmentation application illustrating the prime consumers.
To execute, this information must be drilled down to the market/store/product level.
The wide range of customer demographics can be bett er explained with an industry analysis of purchase price points. With all of this, it is understandable that the consumer has rushed to the bott om in terms of price. When almost 25% of all sofa (units) purchased this year were less than $399 at retail, we see the magnitude of the problem.
Lifestyle is important and is usually measured by psychographic cluster. Psychographics transcend demographics and focus on how the consumer lives and on the activities in their lives.
Using this concept in direct mail and email marketing can produce signifi cant results. The graphic from FurnitureCore – CONSUMER SEGMENTATION – illustrates the concept.
Beyond demographic diversity is ethnicity. While retailers have emerged that cater to certain ethnic groups, such as FAMSA, for the most part all groups are integrated into the total retail focus. However, a retailer should check their appeal to all groups. Business intelligence today allows a measure of ethnic concentration. FurnitureCore’s Consumer Segmentation application provides an ongoing measure on page 16.
What is the Consumer’s Buying Process? Solving the consumer conundrum often seems like searching for the Holy Grail for retailers. Opinions on consumer trends tend to be all over the map, but most observers agree that furniture purchases today involve much more study and research than in the past.
There are many demands on the household incomes that leave only a small portion of disposable income. The line blurs between needs and wants when it comes to expenditures, such as a car, computer, communication, leisure travel, and fi nally, furniture. This is where rationalization begins. The decider is the att itude that the consumer has toward decorating and home furnishing. The range is from “home furnishings are not a consideration” to “my home furnishings must communicate who I am and refl ect a sense of current style.” The fact is that more than 50% of consumers have a positive inclination towards home furnishings. The graphic on the next page illustrates.
There are many indicators that start the consumers on the road to the purchase. Some are life changing events, such as marriage or divorce. Others are life events like a recent move or the addition of a second home. Others, such as remodeling, redecorating, or desire for new furniture, are planned and anticipated. The fi nal indicator is replacement, which is a signifi cant number today (over 40%). The industry has created its own obsolesce factor in the last decade with a replacement factor 4x what it was 20 years ago to the chagrin of the Generation X population that complain of purchasing three sofas since their fi rst household while recalling the furniture of their childhood as being more substantial.
In a household, someone has to get the process started to buy new furniture. Based upon a new FurnitureCore national survey, it is still the female that has the inspiration. Having the idea is followed by the female performing the initial scouting trip to identify the retailer to shop.
However, after all the shopping and research on the internet, the purchase decision is a joint decision.
With the time starved consumer, the shopping process is fast with completion within two weeks for more than 50% of the purchases. Because of the research on the Internet, the number of stores shopped has been greatly reduced to just over two stores shopped per purchase. This change has caused signifi cant concern for the retailer — why is the traffi c down over 10% nationally in the past fi ve years? However, a more confi dent consumer produces higher close rate and larger average ticket.
The shopping process is very proactive, “visiting the store” or “research on the internet” are the fi rst two steps, equally distributed as number one and number two. This activity is followed by input from friends and research in printed materials. Far down the list is designers or advertisers.
The choice of retailers and corresponding retailer experience are extensive. However, for now the traditional furniture retailers’ single store and regional chains dominate, the Internet follows closely to being considered.
The furniture consumer has moved away from destination stores to stores closer to their homes. This change has resulted in more stores per households in a market, thus leading to smaller stores located in more expensive real estate areas. A signifi cant change in the furniture retailer business model is combining occupancy and advertising expense considerations.
The furniture retailers are doing a good job of accomplishing a positive experience for the consumer with all factors rated above average.
HOW OTHER RETAIL OBSERVERS PERCEIVE FURNITURE
Observers of consumer trends say the same disruptors affecting a broad range of retail purchasing decisions are also affecting furniture. These are affecting how people make decisions and how they shop.
Michael Solomon, a consumer behavior expert and thought leader in marketing and advertising, says would-be furniture buyers are doing much more research than in the past. This includes reading blogs or watching Joanna Gaines on HGTV’s remodeling show, “Fixer Upper.” The result is consumers are getting a lot of feedback in advance of making purchasing decisions.
“For 50 years or so there has been a tremendous amount of research on the steps that people go through when they make an important decision, which furnishings usually are,” Solomon says. “We know it is a linear sequence that people go through that begins when they recognize a need, all the way through the purchase itself, and then after the purchase, where they evaluate the quality of that decision, and how that affects future decisions. What we are seeing is that we are entering a period now where we have what some people call social selling, where a lot of these basic assumptions get turned on their heads.”
Solomon, who is also a professor of marketing at Saint Joseph’s University in Philadelphia, Pa. says, for example, people are doing a lot of research before the fact prior to making not only large purchases, but less important decisions such as where to eat.
“Traditionally, someone would decide that they want to buy a couch and you would shop a few stores, find what you like, and bring it home. Then if you like it and your friends tell you they like it, you will go back to the same store the next time. Mostly it was an individual decision or maybe a joint decision by a married couple. That’s not the case anymore. What we are seeing now is that people are working a lot harder, even though there are so many more choices, and so many timesaving apps and things like that. When you add it all up, more time is spent to research and look into decisions, to look into options, before they make the decision.”
Oracle Retail says consumers are increasingly open to whatever gets orders to their door the fastest, with more than 90% seeking free one-day delivery by whatever means is fastest, including drone, driverless car or a messenger. This is more than double (43%) the number of consumers who felt these delivery mechanisms would be “awesome” when asked just last year.
Most consumers recognize that furniture is not a “hamburger,” and it requires a little longer lead time. Per the FurnitureCore survey on the next page, more than 40% received delivery within a week, well within their desired time.
Solomon says it has been his experience that retailers are some of the most riskaverse people he’s ever met. “The ones who are dying in the retail apocalypse are the ones who are resisting change, who are not willing to take risks, because what they have to do is totally reframe their perspective to offer a customer experience that sells product,” he says.
Successful retailers are enhancing the shopping experience. As Solomon says, they have to give people a reason to get out of their pajamas and actually go to the stores. “Some people say brick and mortar is dead but I very much do not believe that,” he says. “But I do believe that a store is not just a place to inventory or display your furniture, your merchandise. A store should not just be treated like a warehouse. A store is an opportunity to create an experience. One of the biggest trends today is marketing as customer experience. It’s imperative to track the entire customer journey that starts well before you enter the store and finishes well after you’ve left the store. But that in-store experience is really crucial, especially with home furnishings. Being able to experience the product as you would experience it at home is a very important aspect.”
Solomon says consumers might post some photographs of furniture that they think they might want to buy, and wait to get reactions from their Facebook or other social network friends prior to making that decision. That represents a big departure from traditional wisdom about how consumers make decisions.
“It’s extremely important to retailers because when people go to a physical store to look at or order their furniture, they’ve already made up their mind prior to walking in the store,” Solomon says. “They are basing it on feedback they are gett ing from their social networks, or what bloggers are writing, reviews of various kinds. Some retailers are more aware of this than others. That doesn’t mean they can’t sway that decision, but the challenge for retail stores is very diff erent from what it used to be. They think they have a naïve shopper coming in who isn’t very knowledgeable about the furniture, and they think they are going to educate them on the options they have in their store.
They are going to be very sadly mistaken.” Sucharita Kodali, an analyst with Forrester, says in every retail category, more consumers are purchasing online. However, she says furniture is one of the least penetrated online, citing 2018 Forrester fi gures that had about 9% of furniture being sold online. She says the higher the price point, the more likely consumers are to buy in-store. “Looking online is a convenient way to fi nd what you are looking for,” Kodali says. “That’s why you see the percentage of online sales increasing.”
Solomon cites the example of mattress fi rm Casper, which allows customers to take a nap on the matt resses in the store. He says companies sell pillows, but people buy sleep.
“What that means is that a lot of companies still don’t seem to understand the fun damental difference between the attributes of a product and the benefits of a product,” he says. “They are selling the attributes but customers are buying the benefits.”
REI is another example. The outdoor retailer allows the customer to try products in the store and they even take customers on camping trips to show them how to use the products in a real environment. “That’s a very basic example of what I’m talking about. Understanding the customer experience is really key, and definitely understanding from the customer’s point of view, not from the salesperson’s or manager’s point of view. When you change the lens through which you view that kind of experience to focus on what if feels like to the customer, it’s a completely different perspective.”
So, what advice does Solomon offer furniture retailers? He suggests they get out of the “warehouse” business and move into the true retail business, which he says is about providing enough added value to motivate people to get off the Internet and actually come in to have a physical encounter.
Consumer Expectations and the Value-adds for Celebrity Designer Furniture Collections
Whether today’s consumer is buying food or furniture, fashion or accessories, there’s something singular they are seeking: authenticity. In the case of Rachael Ray Home by Legacy Classic Furniture, that authenticity is more apparent because of Rachael’s vibrant “whatyou-see-is-what-you-get” personality, said Don Essenberg, president of Legacy Classic. “Whether it’s a dinner Rachael is preparing, a TV interview she is doing or furniture she is designing, it reflects her personality and resonates with her fan base as authentic,” he said. Her design partner Michael Murray agrees. “Rachael Ray Home is Rachael telling her personal story of design through her furniture partners, Legacy Classic and Aria Upholstery. Those who know Rachael know she would never just slap her name on something. It has to be her truth.”
In truth, all the collection ideas begin with Rachael, and “she adds tremendous creative value because she is involved in every detail of the design,” said Essenberg. “She approves every sketch, every finish, every piece of hardware and even the hardware finish.” Rachael’s creative input has borne fruit, as Essenberg says. “Each collection we’ve introduced has been more successful than the one before. Rachael Ray Home, first introduced in 2016, is today stronger than ever.”
As an international television personality and author, Rachael has a tremendous consumer franchise, but addressing changing furniture design and lifestyle trends is more art than science and based more on her personal life and experience than on research or focus groups. “Rachael hears feedback from all walks of life and very much lives the same way her audience does,” Murray says. “Therefore, what works for her generally works for her audience.” Rachael puts it this way, “I like to design things that solve problems, whether it is an oval pasta pot or a USB port in the back of a nightstand.”
One of Legacy Classic’s top Rachael Ray Collections, Monteverdi, sprung out of Rachael’s love for the Tuscany region of Italy, relates Essenberg. “She’s in love with Tuscany. She got married there and visits a lot. So she came to us with the idea of a collection inspired by Tuscany. It became a rustic casual collection with planked tops and a sunbleached Cypress finish. It all began with her love of the region and the way it makes people feel.” Another appeal that comes with the Rachael Ray brand is her “approachable” point of view, Essenberg adds. “Her furniture is approachable, not stuffy. You could use her dining table for breakfast on a Wednesday or for the family Thanksgiving dinner.”
Her newest collection for Legacy Classic, Milano, is “fashion-forward and fearless,” Murray said. “It is fearless, but it keeps her most important (brand) promise. “My most important promise is, ‘You don’t have to be rich to live well,’” Rachael says.
That subliminal promise becomes a competitive edge on the retail sales floor as it attracts and draws in the consumer to experience an exceptional – yet accessible – life through Rachael Ray Home, said Essenberg.
October 15,
2019 by HFBusiness Staff in Business Strategy, Industry
Needless to say, the external factors, such as tariff s and ecommerce, and internal factors, such as aging owners retiring and young consumers looking at renting instead of buying (that is if they can ever aff ord a house) any forecast becomes a “SWAG.” For those that don’t know what that stands for, email me.
When developing this, Florida was threatened with a direct hit from Hurricane Dorian. Everyone’s att ention was glued to the television, watching the forecasted path. It occurred to us that we could create our own spaghett i presentation of models and measure the accuracy of each. With that much exposure, many in the industry would stop prognosticating. Seriously, there are so many factors that are considered in arriving at the forecast. We fi nd the consumers and incorporate into our model. Unfortunately, one deviation can cause a major change in direction. The table below presents last year’s forecast with what actually occurred along with the consensus forecast for this year. Note the deviations, such as housing starts.
That is what happens in forecasting. Just like Hurricane Dorian, Florida was spared a direct hit, but the entire East Coast felt the power and endured the destruction. Unfortunately, the furniture industry forecast is similar. A downturn will happen in the near future. Exactly when and what sectors cannot be precisely determined, but for sure find the storm shutters.
The following presents the statistics behind the forecast, followed by the perspectives of those on the front line, followed then by those on the sidelines. Just recognize the ultimate perspective of the consumers. If 60% of consumers believe we are going to have a recession, we are in a recession.
Our Perspective — Forecast Spending, both by consumers and the government, appears to be the driving force behind forecasted steady, but slowing, economic growth this year and in 2020. Holding back the economy, however, is business investment in equipment, weaker inventories and structures and forecast soft housing and exports. Global declining manufacturing activity in the world’s advanced economies is putting pressure on the U.S. expansion. And then there’s the upside-down yield curve. Most economists predict a recession in 2020 or 2021, though most feel it will be short-lived.
The Furniture Industry Industry sales are forecast to finish this year 3.2% growth, well behind last year’s increase of 6.6% the year. Depending on recession fears, growth should moderate again in 2020 to around 2.4%.
The Bedding industry, the fastest growing segment coming out of the last recession, faced stiff competition in 2018 from imports along with disruption from consolidation and an increased Internet presence. This year the Bedding industry began to recover and should expect growth of 3.1% while all other furniture is on track to increase 3.2%. Both furniture and bedding sales should slow further over the next two years to under 2.5% growth. (Table B)
Distribution Channels. Retail sales, excluding motor vehicles and gasoline, should experience around 3.9% growth this year, with much of that growth taken up by e-commerce, leaving only about 2.0% growth for in-store sales. Except for internet shopping, retail sales are forecast to slow or go negative this year for all other broad distribution channels, according to the Census Bureau (based on sales through July). For Furniture Stores, coming off good growth in 2018 at 6.3%, the first half of this year has been a sobering experience for many. Furniture Stores are on track for sales to fall about 1% this year based on performance. A more robust fourth quarter than last year could pull these numbers up some. Home Furnishings Stores are also experiencing flat or declining sales compared to the first two quarters of last year, down 1% second quarter year to date. Electronic Shopping and Mail-Order Houses continue to experience high growth, up 12% thus far in 2019 Q2 YTD. (Tables C and D)
Prime Furniture Buying Population. Millennials (ages 23 to 38 this year) are firmly entrenched in the 25 to 34 age group and continue to pour into the 35 to 44 age group, the fastest growing category under age 65. This group is expected to increase 1.3% this year and continue to accelerate over the next few years. The younger 25 to 34 group is also growing, but more slowly going forward. Many in this age group who delayed entering the workforce are finally finding jobs, though not necessarily the ones that match their educations. Meanwhile Gen-Xers in the 45 to 54 age group, continue to decline. Of particular concern to the furniture industry is this age group tends to be at peak earnings, and a decline in number could slow consumer spending somewhat. Baby Boomers are still impacting the industry as the older age groups continue to grow and downsize, although not necessarily to less expensive homes. (Table E)
The U.S. Economy Many economists feel that overall the economy is healthy and that the forecasted slowing of Gross Domestic Product to within the 2% range is consistent with an economy that is slowing down to a more moderate growth rate which is not necessarily unhealthy. Unemployment is forecast to continue at the natural rate. There isn’t too much inflation or deflation. So again, except for an unexpected major domestic or global event, a recession, if any this next year, should be short-lived.
The uncertainty regarding trade wars with China, is being blamed for at least some of the forecasted GDP slow down.
The Home Furnishings Business economic forecasts that follow are a compilation of predictions by leading government agencies and U.S. economists. Figure 1 provides the complete sources.
Real Gross Domestic Product. GDP, which measures the nation’s production output, should continue to slow to an estimated growth rate of 2.2% this year and slow further through 2021 (Table F). The economy barreled forward last year, but slightly lower than the anticipated 3.0% annual growth. After a dismal fourth quarter last year that experienced only 1.1% growth in GDP, the first quarter of 2019 posted a surprising 3.1% increase. The second quarter slowed to a 2.0% rate. According to the U.S. Bureau of Economic Analysis (BEA) the second quarter slowing in real GDP primarily reflected downturns in inventory investment, exports, and nonresidential fixed investment. These downturns were partly offset by accelerations in consumer spending and federal government spending. A large number of experts feel this historical expansion will continue to cool with a mild recession looming toward the end of 2020 or 2021. (Table F)
Payroll Employment and Unemployment Rate. Since the end of 2017 through the second quarter of this year, the U.S. added 3.7 million jobs. Employment growth slowed, however, beginning in the fourth quarter of last year and has continued to slow, with the second quarter of this year adding only 437,000 jobs. The number of non-farm workers is forecast to grow 1.6% this year compared to 1.7% in 2018 and slow further through 2021 to 0.5%. Job openings exceed new hires.
On the positive side, the Bureau of Labor Statistics reports wage growth for nonsupervisory workers ticked up through the first half of this year and the number of hours worked rose. The share of the population employed is the highest since 2008. On the negative side, retail establishments continue to shed workers as stores continue to close and the telecom sector continues to shrink. No doubt businesses will be looking for workers in the future. Tighter immigration laws may have a larger impact on specific industries, for example Agriculture, where undocumented workers have been heavily employed. (Table G)
Unemployment is forecast to continue at the natural rate rising slightly over the next two years. This year should average 3.7% unemployment and grow to 4.2% in 2020. The short-term unemployment rate (those unemployed for less than six months) is near its lowest level since the Korean War in 1953. (Table H)
Inflation. The Federal Reserve is predicated to hold inflation steady over the next two years with 2019 averaging 1.8% and the next two years at 2.0%. (Table I) Stock Market. The stock market continues to do its own thing – rapidly reacting to geo political conditions then shrugging them off just as quickly. The Dow Jones started the year around 23,000 and at press time in September was at 27,000. The average for the year is forecast at 26,000 and the average next year at over 27,000 or higher if a recession doesn’t occur. (Table J)
Consumer Prices. The furniture industry has struggled to get prices up. Prices began to rise in 2019, but not in the manner the industry had hoped. With new tariffs imposed and the threat of additional tariffs this Fall, furniture industry prices are forecast to grow 2.7% and 3.0% in 2020. Meanwhile all consumer goods prices are forecast to grow 1.7% this year and 1.8% in 2020. (Table K) Gasoline Prices. Barring any international incident that would disrupt the crude oil and gasoline industry, the U.S. Energy Information Administration predicts gasoline prices will remain stable through 2020, forecast at an average of $2.62 per gallon of regular this year and $2.71 in 2020. The government is sticking to its forecast that the United States — already the world’s biggest oil producer — will become a net exporter of crude and petroleum products in 2020. The good news for the economy is lower gas prices reduce the cost of transportation for food and every other consumer product resulting in raised profit margins. It also gives consumers more disposable income to spend. (Table L)
Consumer Confidence. While fickle, Consumer Confidence remains relatively stable despite trade rhetoric, recession threats, and political unrest. This year began with a Confidence Level of 120 (1982 = 100) in January following less than expected consumer spending in December 2018, but quickly jumped over 10 points the following month. Confidence is forecast to remain around 130 to 135 the rest of the year, barring any dramatic events. According to Lynn Franco, Senior Director of Economic Indicators at The Conference Board, regarding August 2019 level of 135.1, “Consumers’ assessment of current conditions improved further, and the Present Situation Index is now at its highest level in nearly 19 years. Expectations cooled moderately, but overall remain strong. While other parts of the economy may show some weakening, consumers have remained confident and willing to spend. However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers’ optimism regarding the short-term economic outlook.” (Table M)
Prime Interest Rate. This short-term interest rate is the most commonly used in the banking system. The average rate for the year should be at 5.2% following a rate cut in September to 5.0% by the Federal Open Market Committee (FOMC) of the Federal Reserve. Some economists predict another rate cut shortly to 4.75% where it is forecast to remain through 2020. The Prime Rate is generally increased if the FOMC determines that the pace of inflation within the U.S. economy is too high so as to bring inflation under control. (Table N)
The Housing Market 30-Year Mortgage Interest Rate. Interest rates for 30-year mortgages remain very low, forecast to average 4.0% this year and 3.7% next year. (Table O)
New and Existing Home Sales. New single-family home sales picked up this year and are expected to grow 7.7% thanks to good housing starts in 2018. However, new sales are forecast to slow to 3.2% growth in 2020. The industry’s main obstacle to ramping up construction is that it has become more expensive for builders to break ground on new projects. Meanwhile, existing home sales have been struggling lately to gain momentum because prices have risen beyond many buyers’ means. Sales of existing homes are forecast to decline again this year 1.1% but pick up slightly in 2020 to 3.4% growth. Low mortgage rates are giving existing-home sales a slight boost.(Table P)
Housing Starts. The boom to housing starts predicted for 2019 never occurred, leaving demand high and inventories low in many markets. The blame is being placed on scarce workers, high costs to break ground, and long permitting processes in many cities. Predictions are now that 2020 will make up the difference for single-family starts which are forecast to be down 0.7% this year, but rebound in 2020 to 7.0%. The growth in multi-family starts, however, is forecast to be slow – up 1.1% this year and down 0.5% in 2020. (Table Q)
Home Prices. In July this year, the Census Bureau reported the median price of a new home sold in the U.S. was $312,800 and an existing home sold, tracked by the National Association of Realtors (NAR) at $280,800. The price of new homes is forecast to be down 2.5% this year, but rise 1.5% in 2020. In July, almost half of new homes sold were priced below $300,000, reflecting a shift among home builders to building more-affordable homes. Meanwhile existing home sale prices should increase 4.0% this year and 3.3% in 2020. (Table R)
Recession Fears: Many economists believe that recession fears are overblown. Others say signs of a possible recession keep stacking up and at some point, it no longer makes sense to keep explaining them away. In the September Wall Street Journal monthly survey of 60 economists, the question was asked: When do you expect the next recession to start? Less than half, 42.5% thought a recession would occur next year and another 35.0% felt a recession would occur in 2021. And according to the Duke University/CFO Global Business Outlook survey released mid-September, 53% of chief financial officers expect the United States to enter a recession prior to the 2020 presidential election. And two-thirds predict a downturn by the end of next year. Finally, add climate change to the list of economic worries, which the insurance industry ranked as the top risk for 2019. It beat out concerns over cyber damages, financial instability, and terrorism. In 2017, insurance companies paid out $138 billion in damage claims from natural disasters such as hurricanes, floods, and wildfires.
And don’t forget 2020 is an election year, which oddly enough historically usually bodes well for the furniture industry.
September 3,
2019 by HFBusiness Staff in Business Strategy, Industry
While digital advertising has continued to be a component of most major newspaper’s revenue streams, it is not a major influencer for the consumer for durable purchases. The consumer has achieved, to a certain extent, freedom from being “sold to” until they are ready to consider purchasing.
Consumers today are well versed in the ways of the Internet, casually entering the name of the retailer and going directly to the retailer’s website, bypassing Google search. For an established retailer, 20-25% of a retailer’s unique visitors are direct.
Another 25-30% are captured via organic search, which is facilitated by basic SEO, by satisfying an ever-changing algorithm of Google — a topic that could be a feature article by itself.
Another 20-25% can be achieved by paid search at a cost of $1.25-$1.50 per click through either Google, social media, or another digital source.
Obviously, there are other sources, such as direct email, referrals, display, and others. Compared to newspaper, a retailer’s website can tell you a measure of “Is your message getting through?” A weekly/monthly analysis of Google Analytics is a must. The simplified snapshot is shown above from Impact Consulting’s (parent to Home Furnishings Business) FurnitureCore.com application.
Obviously, comparing costs each month is facilitated by this type of analysis. But this still leaves the question: Is my web presence delivering? Comparing your unique visitors to your site compared to traffic to your store provides that measure. The graphic below illustrates.
The dream of every retailer is having a place where consumers could be directed to view their merchandise and be exposed to their unique selling proposition. Depending upon the merchandise price point, 62-74% of all consumers visit the Internet before purchasing. Unfortunately, the consumer is exposed to the traditional furniture retailer’s major competitor – the etailer – and purchases 12-18% of the time. Don’t be surprised by the difference between unique visitors and store visitors. A 60-80% difference is most typical. Monitoring this difference between store traffic and web traffic is essential. Equally as important is knowing what is your cost for the web “Up” compared to the in-store occurrence.
For retailers, the major decision is when to let go of the old and fully embrace the new. The cost of advertising midyear is 5.91% of revenue with the Internet being a little more than 10%, which is in line with print. The table above breaks down advertising expense from FurnitureCore’s Best Practices application.
The next to decline is television. The popularity of streaming with the Millennials, and to some extent Generation X, is decreasing the importance of television. With the increasing scope of OTT (over the top) and CTV (television connected to the internet) traditional television will decline as an advertising medium.
There will always be brick-and-mortar furniture retailers. That seems to be the consensus in the industry. But as ecommerce continues to grow, just how many will be around in five, 10 or 20 years is the subject of much conjecture. Opinions vary widely. Some say the percentage of online purchases will level out at about 20%, while other say it could reach 50% or higher.
Research by consultancy Magid shows there is a definite generation gap when it comes to online furniture shopping preferences. Magid’s research shows 39% of Millennials buy furniture online, compared to 20% of baby boomers. Magid also found that 73% of consumers are likely to research furniture products online, second only to the consumer electronics category. Matt Sargent, Magid’s senior vice president of retail says, even when consumers do their digital research, most still want to come into the store and touch and feel products. “It’s important to see the product and how it will fit,” Sargent says. “That’s good for traditional furniture players. Many customers find a disconnect between the physical and digital experience.” There is a huge difference in numbers and shopping tendancies between Millennials, Baby Boomers and GenXers, Sargent notes. The millennial population is much larger than the GenX population. “Millennials are growing into the life stage where they are acquiring furniture. As Boomers, and to some degree GenXers, slow their acquisitions, Millennials become more important. Their size and the way they acquire things digitally will accelerate some of these issues for the furniture category.”
Rob Davis, chief client officer for Diakon Logistics, is in a good position to observe the evolution of furniture ecommerce. His firm plays an integral role in the success of the delivery of furniture purchased online. He notes that to be competitive, furniture retailers must meet consumers where they are. He offers a recent personal shopping experience as an example. “This summer my family and I were vacationing in Lake Winnipesaukee, New Hampshire,” Davis says. “During our trip we were planning for my daughter’s birthday party at our house, which was scheduled to take place the day after our return. While we were away, we decided that we really wanted to purchase new barstools, a chandelier, and a table to have in time for the party. Fortunately, we had already done the shopping, so it was just a matter of placing the order in time for it to arrive before the party. We ended up buying some items from a national retailer and some from a local retailer and both were able to complete the transaction with little effort. The order was placed from our mobile device, merchandise was delivered just in time for the party, our home looked beautiful, the party was amazing, guests were comfortable, our daughter created wonderful memories, and my wife was over the moon.” Davis says it is all about making it easy for customers to finalize and receive a sale. Retailers can’t be everything to everyone, but they have to be everything to customers in their market.
“I don’t ever see brick and mortar going away in our industry,” he says. “Customers will always come in to touch, feel, and experience. But if you don’t make it easy for them to complete and receive an order then they will end up at their second choice or not purchasing anything at all. Implementing an omnichannel solution that gives your customers options doesn’t have to be difficult.”
RETAIL SPACE DEMAND IS BRISK
While growth of furniture ecommerce business is robust, so too is the demand for retail space. America’s heartland offers a prime example, as furniture retailers have been filling up space vacated by big box retailers. Terry Ohnmeis, a director in the Cincinnati office of commercial real estate services firm Cushman & Wakefield, says demand is strong in Ohio for furniture retail space. He says the two largest categories seeking vacant back space are furniture and fitness. “We are seeing a connection in how people shop, as retailers are integrating how they design their stores and the number of stores.” He says it makes sense for furniture retailers to congregate in real estate markets because it makes it easier for shoppers to hit several locations on one trip. According to Ohnmeis this holds true whether the retailers sell high-end or discount-oriented products. Shopping convenience is the driver for consumers, he says. “We’ve noticed in Cincinnati a consolidation in its submarkets where furniture retailers tend to gravitate around each other. Although there has been a huge increase in online sales with companies like Wayfair, there is still a demand to see furniture in person. It’s also difficult to return those items purchased online. It’s still important to have a retail presence for customers to go try out furniture, double check the color and return it if they need to.”
A VARIETY OF APPROACHES
Retailers are taking a variety of approaches to ecommerce. What follows is a look at the strategies of some internet-savvy companies. Fort Lauderdale, Fla.-headquartered City Furniture has sold furniture online for about 10 years, but kicked that effort into high gear about three or four years ago, according to Andrew Koenig, president. He says City’s objective is to grow top-line sales, whether it’s online or in one of the firm’s stores. City is on track for another year of double-digit sales growth, which makes Koenig happy. He attributes much of the growth to City’s significant investment in technology.
Koenig’s perspective is that City is a retailer.
It doesn’t identify as an online store and it doesn’t identify as a traditional brick-andmortar store. He says retailers must sell where the customer wants to buy and City is trying to grow its top line, both in its stores and online. “Our website is the first showroom our customers shop before they go into the store,” Koenig says. “We still believe a lot of the customers want to touch and feel what they buy. These are $1,700 to $1,800 average tickets, and customers want to touch those kinds of orders. That’s real important.” Koenig praises City’s website team. They are pushed to grow top line sales first and website sales second. He says this helps align the customer’s shopping experience with what they see and feel in the story matching up with what they see online. He attributes City’s recent online success to its “absolute commitment” to being best in class online. “We want to give a fantastic shopping experience, whether it’s online or in the store,” Koenig says. Wherever they want to shop, that’s great. That requires all-in commitment, whether it’s resources, budget, technology, people—we’ve really put our money where our mouth is and it continues to produce major results for both the online customer and the omnichannel customer. It’s been a big win for our business.”
Koenig says City’s challenge is to prioritize its opportunities and to focus on continually improving its one-on-on experience, whether it’s on the site, or email marketing to direct the customer back to the site, or in the store. “The sales associates in the store can pull up the customer’s profile and see what they shopped for online, so that essentially we can continue that cart or wish list that they built online, right there in the store,” he says. “For example, they may have looked at mattresses and selected one, but want to come in and try it out, lie on it to see if it’s right. It might be a two-minute transaction, once they have tried it, just click purchase and they are good to go. All our sales associates have iPads to make this easier.”
What direction will City go in the future? Koenig says the way City is approaching is that its website and its stores will not compete with each other, but will become one. “The experiences that tie the two together will be very important,” he says. “Technology will continue to play a big role to make that happen. It will become a more personalized customer journey. The website will adapt itself to your personal experience. All of us retailers need to continue to invest in technology to automate more of the process, eventually incorporating artificial intelligence. We are just trying to improve the overall experience, not getting too caught up in one channel versus another.”
Koenig says City will continue to expand its technology team in its ongoing effort to become a technologically advanced company. “We want our ecommerce team and our IT team to respond to our customers’ demands of what they want in their shopping experience, both online and in store, so that we can develop that as fast as humanly possible, rather than be at the mercy of a third-party vendor. We have to control that experience. We are going to both buy technology and develop technology. If we see something that the customer needs that hasn’t been developed yet, we will develop it. If we see a great vendor that has a fantastic tool, we will buy it and integrate it as soon as possible.”
Koenig says he thinks customers do not see any difference today between online and in-store shopping. Retailers still need to offer both. He says online furniture sales will continue to grow, and brick-and-mortar retailers have to step up their online skills. “Furniture can be a very exciting purchase in the customer’s life, whether buying their first child’s crib, or furnishing a new home, or updating an older home, he says. “Whether you go online or to a store depends on the timing and the situation. That’s why you have to have a both a great website and a great store, to capture a greater market share.” Koenig says City’s sales team will have the ability to see what customers do online in-store on their iPads later this year.
Tony Mitchell, ecommerce director for Englewood, Colo.- based American Furniture Warehouse (AFW) says the retailer’s online presence has been an extension of its stores. Growth has been incremental. “It is meant to be an extension of our brand and an education for our customers before they come in,” he says. “I call it pre-commerce. It’s not like we are going to close all our stores and just go online and become Wayfair or something like that. It’s helping educate our customers before they come in, and getting them closer to buying decisions and also giving them the option to buy online. They can finance online or come into the store and shop and then go home and buy online. We are offering them the online shopping experience because customers are spending more and more there.” Mitchell says AFW’s online presence has somewhat contributed to its brick-andmortar growth. Simply selling furniture has never been the company’s goal. It’s more about selling it and executing it so the customer is happy with their purchase after they take delivery.
What’s next in furniture’s ecommerce evolution? Mitchell says there will be more acceptance of online purchases. He says there is a growing acceptance for buying things sight unseen. He predicts there will be more pure-play online furniture retailers. “I do see it evolving as a growing segment, and also the customer with the right tools can get better visuals of what the product will look like and how it will fit in their home. It’s fashion first—we want to make sure they get an idea of how it is going to fit in their lifestyle and with their personal style, and the fashion of their home.”
Mitchell says there will be an evolution in the speed of delivery, survivable delivery, and execution. “Technology will play a role in augmented reality, which we are working on now, and virtual reality which will have to be usable on every device. Technology is helping customers make visual decisions about making a large purchase, either sight unseen or to inspire them to go into the store, feel it, touch it, and then hopefully buy more than they intended to while they are here.”
Mitchell says AFW’s technical team is growing with staff who have worked in the company’s stores. They know the products and how to explain to customers the execution and delivery process. “We explain the inherent flaws of furniture, which doesn’t really get touched on in most websites and that overcomes some of the buyer’s remorse where people didn’t know what they were getting. We don’t take cheap items and photograph them so that they look better than they are. Educating customers is at our core, so there is nothing misunderstood.” He continues, “It does happen that customers will shop in the store and then purchase online, but it is more common for folks to research or browse online and start their purchase journey on our site, and then come in and shop in the store. It speeds up the process if they have already seen the item online. Then we can show them other lateral products in their price range, but they know where to start stylistically and price point. The customers are more prequalified to make a decision in the store when they have done their online research. They know our stock level, so it takes a lot of the sales questions out of the way.”
South Florida-based El Dorado Furniture was one of the first furniture retailers to have a working website, says Jesus Capo, the company’s chief information officer. “We have always had a presence online,” he says. “We saw that this was something that was going to happen and so we started originally with basically an online brochure just to have a presence. We were one of the first furniture retailers to have a purchase site. It’s grown ever since we learned from that model, and we’ve grown ever since. We learned from our mistakes, where we had one person in charge of everything, and really if we wanted to have a real full blown ecommerce site and web presence, we realized eventually we would have to start pouring more money into that department.”
El Dorado created and developed its ecommerce department. It now has about eight employees, including a store manager and a product manager. Capo says El Dorado learned it had to treat the department just like a store. It’s not something separate. “The merchandise that is available there is available in the stores,” Capo says. “Any customer that buys online is automatically an El Dorado customer. If you walk into the store, we have your product history from what you have bought online, so it is all one system. It’s now a big chunk of our business. The store feeds the website, and the website feeds the store, which is very interesting, because you can observe spikes in sales of certain products on the website and then that weekend you will notice a spike of the product in the store. Also, customers will sometimes come in and shop the store, but not make a decision, then go home and purchase online. When you notice a spike online, you can then feature the item in the store because you know the interest is there. We try to learn from each side.” There is still the desire among many customers to come see the furniture and measure it to see if it will fit in their home. That’s difficult to ascertain online, Capo says, because shoppers cannot get a sense of the true size of a couch or table and chairs. “So, now we have a feature that allows people to click on the item and it will compare the size relative to other items,” Capo explains. “This type of feature helps on the sales side. A lot of people talk about the possibility that the future technology perhaps will include artificial intelligence, for example, transmitting sensory experiences such as being able to get a sense of the feel of the wood or the leather at home.”
Capo says that while it’s obvious that online shopping for furniture is here to stay, there is also a trend of the return to the value of the communal experience of coming into a store and being able to see and touch the items. “Years ago, many people thought furniture could never be sold online because of that in person factor,” he says. “But we see that there is going to continue to be a balance in the future where we have both the stores and the online experience. We want to make sure the customer has the same experience on both ends. Online, it should be easy, and there should be suggestions of items based on previous purchases. In the store, we should have the same thing, and we have made our store a very exciting place to go to, laid out in boulevards and avenues, not your usual furniture store. We create a very pleasant experience. We try to accomplish the same thing online.”
Accessibility on mobile devices such as smart phones and iPads is essential today, Capo says, as consumers want to be able to shop on those devices. He says this is the future of ecommerce and stores that do not offer that capability will be left by the wayside. Capo says brickand- mortar stores will never disappear, but he believes there will be a point where all will have to change their way of thinking and also offer their products online. “One of the things that held some companies back is the fear of competition. If you put your prices online, everyone is going to know what your prices are then there is the danger of being undercut. We crossed that hurdle years ago, but some may still think that way. Eventually it will likely be 50-50 and the two sides will feed off each other, and work together to make a happy family.”
As for future trends, Capo says there has been talk about using voice search to find products online, but he says furniture is not an impulse purchase and requires thought and research. Since it is an expensive item, he says it is difficult to see how that would work. However, he says there is potential for the use of artificial intelligence and augmented reality to be used on websites to suggest colors and patterns and how furniture might look in the home.
Brian Woods, CEO of San Diego-based Jerome’s, says online sales will eventually plateau, but that plateau could be much higher than some think. “Online sales will continue to grow to a point of plateauing,” he says. “But what is that plateau? It could go as high as 60-40 online or 70-30 retail. It will take years to get to that point.” Woods says, “Technology is evolving exponentially and more and more people are figuring out how to adapt those technologies. My adoption of those tools is totally dependent on whether customers tell me that technology is a driver in their decision-making. Something can be really cool and give customers a different perspective, but if it’s not leading to conversion…if you give customers too much information, they start second guessing themselves.”
Woods says there is an incredible amount of ecommerce technology available, providing options to present a retailer’s products and experience, but it comes down to selection for which ones move the needle in terms of sales. Woods says his estimate of where ecommerce might plateau is about 30%. He based that on his study of data points and watching year-over-year trends in different categories. “The question is does that take five years or 30 years,” he says.
A MANUFACTURER’S PERSPECTIVE
Johne Albanese, marketing director for Martinsville, Va.-based Hooker Furniture says ecommerce continues to grow, but the overall pace is slowing. The biggest potential for growth continues to be with omnichannel retailers serving local markets. “Ultimately, the consumer is driving the process,” Albanese says. “Consumers still like to go to stores as long as it is an experience they enjoy. About 85% of them are still doing it that way, and the idea of the store declining is faulty logic.” Albanese says Hooker assists its retail customers by providing various types of data to make the process of getting products uploaded on multiple platforms easier. “Trying to get data in a managed way is the difficult part. We work to make that easier for our brands for our brick-and-mortar retailers. We can help with them consulting on the process with suppliers and digital advertising.”
Albanese believes there is a lot of “noise” in the technology space with retailers facing decisions about which providers to use, which ones not to use, and deciding if and how distribution should be limited. “We are of the belief that a locally-focused retailer has a true advantage if they have a store that people like to visit. Over the past few years, technology has gotten much more robust, and there are several good platforms available out there for people to add ecommerce to the mix, particularly if they are on some type of ERP system that has a module for it already. It’s definitely an investment, like adding another location.” He thinks that furniture ecommerce will probably top out at a plateau of 20 to 25% of overall sales, with the majority of that coming from omnichannel retailers rather than the pure play variety. “Ecommerce is another way for retailers to execute sales, but it’s a way that allows consumers to choose how they want to transact business.” According to Albanese, Hooker has been aggressively supporting its retailers in their ecommerce efforts for about six years. The greatest potential for ecommerce is in supporting local markets, he says. “We were pretty early adopters of what we thought was coming,” he says. “We have a staff of people who are experts at helping retailers doing that. The technology has gotten better over time.”
TECHNOLOGY EVOLUTION
MicroD’s chief product officer Richard Sexton says distribution issues are the primary impediments for ecommerce growth. He says marginal brickand- mortar retailers go out of business and pure play online will gain market share, but they will still have to solve the logistics issue. Sexton believes there will be incremental technological advances that will make online shopping a faster and easier experience. Perhaps farther down the road will be visualization advances as websites move to 3-D experiences with augmented reality. “That experiential technology will evolve, and other things will be different. There will be advances that facilitate convenience. It will be easier to purchase products with fewer clicks. The experience will be faster and device agnostic. There is still a problem moving between an Apple and an Android device, but we are seeing some convergence there. No one can absolutely say the difference maker will be artificial intelligence. It will help. A 3-D experience will also help, and standardization of browsers will help. What’s the next big thing? It could be a combination of those, but the changes will be subtle over time.”
Keystone Media International manages ad programs for home furnishings brands and retailers. Rick Harrison, sales director for home furnishings, says the firm’s banner ad technology offers a cost-effective method for firms to get their message out. He says the systems of running interactive banner ads across a network of designer sites offers an effective way of getting in front of highly desirable consumers. “What makes the ad technology special is that you can accomplish all of your brand’s goals at the point of contact and begin working a consumer through to the purchase funnel while they are still in the ad,” Harrison says. “It’s a much more efficient method of driving a consumer through to the purchase funnel.”Harrison says these types of banner ads allow the retailer or brand to tell their entire story and accomplish all of their ecommerce goals while the consumer is still in the ad. “We get more interaction with our ads, and it’s a much more efficient ad buy in terms of engagement levels. Consumers are being delivered through the product or purchase opportunity they already care about as opposed to clicking on the home page and starting the purchase funnel.”