Monthly Issue
From Home Furnishing Business
January 12,
2016 by in Business Strategy, Industry 
By Sheila Long O’Mara
No other home furnishings item gets more use in the home than a mattress. Even if, as studies show, consumers are woefully sleep deprived, people spend more time in their beds than on any other piece of furniture.
Consumers are continually peppered with messages about the fact that they’re not getting enough sleep. Think drug companies, medical studies and more.
More than two-thirds of the consumers in the latest Home Furnishings Business survey said they get between six and eight hours of sleep a night. The latest research from the National Sleep Foundation recommends adults between the ages of 26 and 64 years od should get between seven and nine hours of shuteye nightly.
For that age group—prime mattress buying segment, by the way—the recommendations did not change. Our survey group is almost hitting the mark, however missing an hour consecutively over time can lead to sleep depravation.
Home furnishings and mattress retailers have a prime selling proposition of preaching a better night’s sleep through a new mattress.
About half of the consumers in the survey said they are not at all satisfied or dissatisfied with the amount of sleep they get daily. What a great conversation starter with a bedding consumer. How are you sleeping? Most are likely on the hunt for a new mattress to improve their sleep quality.
Most of our consumers bought mattresses for the master bedroom (84.1 percent) with guest bedrooms placing a distant second with 13.6 percent. Bedding consumers remain price conscious with more than 86 percent spending less than $2,000 for their mattress purchase.
The time spent with a mattress increases the importance to a consumer that they rest test the bed. Somewhat shockingly, 15.9 percent said they didn’t rest the mattress in the store. More than 36 percent spent 15 minutes or more testing out the bed. The same number that never tested the bed—15.9 percent—spent five minutes or less relaxing on the bed.
Perhaps consumers are uncomfortable in stretching out on a mattress in a retail store with a sales person hovering near by. Key things to keep in mind when designing mattress departments and in training sales associates on what to do and not to do when consumers are relaxing on a mattress. More than 75 percent said when they did try out the bed they curled into their regular sleeping position for a test drive.
Consumers are consistently turning to bedding specialty stores for their mattress purchases. According to the survey, 33.3 percent shopped a specialty store and 36.4 percent bought their mattress from a mattress specialty store. Slightly more than 21 percent shopped traditional furniture store for their new mattress. Other channels included the Internet and mass merchants (15.2 percent each), department store (9.1 percent) and a wholesale club (6.1 percent).
Overall, the surveyed consumers were pleased with their mattress shopping experience. On a five-point scale with one being not at all enjoyable and five being very enjoyable, 79.6 percent reported a four or a five. Drilling down to retail sales associates and their knowledge, consumers were pleased with what they encountered.
On a five-point scale with one being not at all satisfied and five being very satisfied, 75 percent said they were satisfied or very satisfied with the associate’s product knowledge.
Want More?
A more in-depth report on the bedding category is available for purchase via e-mail to LauraMcHan@ImpactConsultingServices.com or by calling (404) 961-3734.
$10.45 Billion
2015 mattress sales through 3Q
15.2%
Bedding’s percent of furniture sales through 3Q 2015
6.8%
Sales increase through 3Q 2015 over same period previous year
Retailers Say
Serta iSeries Merit Super Pillowtop
"Customers love the combination of specialty foam while still having the innerspring support system." Retail is $1,999 with two free specialty pillows.
Kyle Johansen
HOM Furniture
Coon Rapids, Minn.
Sleep to Live 600 Series
“It provides the ultimate comfort and more importantly — support comfort — that most other brands don’t have. Under the good, better, best categories, it’s in the better category offering the consumer a great night sleep without completely killing the budget.”
Retail is $2,399.
George Bruni
Art Van Pure Sleep
Warren, Mich.
Serta's iSeries Vantage
“Number one, it's made right here in Detroit. Second, Serta's done a great job providing two operations with iComfort and the iSeries.” Queen mattress retails for $1,074.
Jeff Selik
Hillside Furniture
Bloomfield Hills, Mich.
Vendors Say
Tommy Bahama Long Weekend from Therapedic
Part of Therapedic’s Tommy Bahama hybrid collection, Long Weekend offers a luxurious look and plush feel that are enhanced by floating foam. Using domestic materials, the mattress offers a relaxed, island-inspired look and feel. Suggested retail is $2,499 for a queen.
Serta’s iComfort Savant
Serta’s Savant from the iComfort lineup features the company’s premium dual action gel memory foam. The bed consistently receives positive consumer reviews and is a top-rated mattress with a leading consumer publication. Suggested retail is $1,799 for a standard queen.
EarthTerrene by OrganicPedic
The OrganicPedic EarthTerrene is made with certified organic cotton fabric, certified organic wool, and natural organic latex core to create a plush bed. The bed’s construction speaks to consumers looking for a toxin-free sleep surface. Suggested retail is $6,799.
Aireloom’s Preferred
The Aireloom Preferred combines zone support foam with ventilated latex for temperature control for a cooler sleep surface. The mattress is covered in Tencel multi-stretch knit panel combined with a mini-plaid pattern on the border. Suggested retail is $2,500-$4,500 for queen.
Gold Bond’s Smart Series
Part of the company’s first hybrid collection, Gold Bond’s Smart Series 3000 offers the support of an innerspring with the added comfort of a top layer of gel. The mattress is a winner because it provides the benefits of a hybrid at an affordable price. Suggested retail is $1,399 for queen.
Passions by Kingsdown
Kingsdown’s Passions mattress offers a gel-infused performance fabric and proprietary cushioning layer to support from wrapped innerspring coils, Passions mattresses combine technologies for healthy sleep. Suggested retail is $1,599-$4,999 for queen.
January 12,
2016 by in Business Strategy, Industry
Merchandising and showroom display requires much more than being able to plop furniture in a vignette and accessorize for a pretty look.
There a science behind the a merchandising strategy that requires much thought and planning. Much like the process an interior designer takes creates a beautiful room or home, showroom design requires the same precision on a much larger scale.
Think accessories, lighting and accents. Consider implementing a bit of humor and other surprises for a consumer-stopping tool.
Jena Hall, president of Jena Hall Designs, suggests retailers evaluate their strategy and determine their approach as to whether they interested in presenting product by category or lifestyle settings. Hall recommends the higher the price point goes the more likely it is that product should be showcased in lifestyle vignettes.
“Creating many mini-vignettes doesn’t require walls and they don’t require construction to be successful,” she said. “They do require a vehicle that allows the eye to come to a resting point so that the consumer can focus on the entire story.”
Hall suggests a hanging mirror or piece of art to break up the sight line. Other options include painting a wall a bright color for a bit of pop or simple clean drapery panel.
Other suggestions include wallpaper or expansive murals. “You can pick those up at Ikea and they don’t have to be custom painted,” she said. “They become the wall so that the eye stops.”
Hall is an advocate of themes and suggested using a coastal or urban theme depending on a retailer’s target consumer. At the Home Inspirations Thomasville store, a cityscape was used to highlight the feel of an urban loft.
“Retailers need to figure out how to emulate the features they see in interior design magazines,” she said, adding that done right, the displays are easily changeable to keep the store looking fresh.
The most inexpensive freshening up for a retailer to make comes from paint. Hall points out that many retailers are afraid of color for fear of getting it wrong. “A gallon of paint is cheap, and it’s easy to change,” she points out.
Grabbing the consumer is key in boosting sales, and the trick in grabbing them is through a consistent style teamed with consistent images and philosophy of design, Hall said.
“It is helpful to the consumer to create a vision for them,” she said. “We want them to be excited about furniture, and the only way to do that is to make a powerful visual statement.
“Encourage them to by the sofa plus the rug, plus the lamp,” Hall said. “There’s nothing new about this. It’s consistency. If I go into Anthropologie, I know exactly what I’m going to find every time.”
Hall encourages retailers to find their point of view—point of view in design philosophy, point of view in price point and vision. Once found, it’s imperative they stick with it and remain true. Otherwise, the message gets cluttered, and consumers no longer understand the vision.
Color Pop
Like Hall, Clive Daniel’s Kris Kolar is an advocate of adding color to liven up the joint. In the Naples, Fla., showroom, much of the sofas are white or very light. They live among walls painted in vivid colors, rugs in on-trend hues and pillows that add the perfect splash of panache.
“Those splashes of color are not only eye-catching, but give consumers the impression in our second-home market that it’s easy to play with color without breaking the bank,” she said.
Connie Post of Affordable Designs by Connie Post said the sea of brown, taupe and beige on furniture retail floors must be jazzed up. “I know retailers will do 6 percent of their business in neutrals and sage, but there has to be pops of color,” she said. “Otherwise, it’s boring.”
Cardi’s Furniture & Matress makes a point that every sofa vignette adjacent to its store’s main aisles and the circle are color coordinated and highlighted with color.
A Fresh Start
With the New Year and resolutions, Post encourages retailers to freshen up throughout the store. Now that the holiday decorations and displays have been packed away, it’s time for a new beginning.
Bedroom vignettes should be dressed with fresh sheets, beautiful, sumptuous comforters and fluffy pillows. Make sure they’re clean, Post said, adding that revamping the beds could add to sales.
“Go to HomeGoods or Target and pick up a complete duvet set,” she said. “Stuff that old, outdated comforter in the duvet for a completely new, fresh look. For less than $100, they can have a whole new look.”
Memorable focal points can leave a big impact with consumers, she said, adding that if you can’t afford to redo the entire department, invest in the most visible settings.
Post said consumers are looking for a little glamour and the truly want to be woed.
“Glam it up,” she said. “I’m talking about getting in her head and giving her an amazing experience in product presentation. There are girly girls, country girls, city girls and beach girls. Give them a presentation that speaks to someone’s heart. There should b moments for glam throughout the store. Give someone a reason to make a change. It’s about adding some details to your essentials. These are some little things that can be added for panache.
Marry Marketing with Display
An aspect of showroom design that is often overlooked is the marketing that generates consumer traffic into the store. Hall said the integration from the outside marketing to match what is happening on the showroom floor is crucial to setting the right tone.
“Integrate merchandising with your marketing,” she said. “It’s very important that the font is consistent at every touch point.”
Martin Roberts, principal of Martin Roberts Design has created a formula to help retailers determine how much space to allocate to various categories. More on the merchandising matrix can be found in Roberts’ column on page 54.
January 12,
2016 by in Business Strategy, Industry
People are again jumping into the housing market and that could spark furniture sales.
Nothing spurs a furniture purchase like a move to another home.
It can be young people renting a first apartment, first-time homebuyers, or individuals and families making life changes to new abodes. Now that housing mobility has begun to pick up after being stagnant for more than five years, people planning to move are faced with decisions whether to rent or buy an existing or new home or apartment. Included in these choices are decisions on the age and size of the structure and of course the cost.
Mobility Picks Up
During the Recession, people tabled moving plans. As the economy improved, mobility has slowly increased and more people are opting to move. As shown in Table A, 60.6 percent of total U.S. housing units were moved into since the year 2000 and 38.4 percent in the last five years.
Apartments are particularly transient with 70 percent of apartment units moved into within that same five-year period. As expected, owner-occupied housing units are more stable with 20 percent of these units moved into in the last five years, and 56.7 percent since 2000.
Aging Homes
Now that people are moving, what are the housing options? Consumers initially face the choice of purchasing or moving into a new or old property. With housing starts slow to recover from the Recession, people are increasingly faced with an aging housing industry. Table B illustrates the year current housing was built for all occupied housing units. (Note: Rental versus owner-occupied units is not shown separately as data showed no significant difference between the two.)
Particularly startling is that 28.7 percent of all housing is more than 55 years old and 55.4 percent is more than 35 years old. The majority of the housing inventory in 2014 (54.5 percent) was built between 1960 and 1999. Only 2.2 percent of housing units were built in the last four years and a total of 16.8 percent since 2000. Many current and potential homeowners are living in or considering older homes and face ongoing costs of renovations and repairs, which could potentially dip into new furniture expenditures.
Size Matters
One thing is clear, single-family houses keep getting bigger. As shown in Table C, the average size of a new single-family home has grown 17.2 percent since 2000 to 2,657 square feet.
Meanwhile new apartment construction, which peaked in 2008 at an average 1,300 square feet, is holding now at 1,151 square feet.
Housing Costs
The monthly mortgage paid by homeowners has actually fallen somewhat since 2009; however, rents have increased significantly (Table D).
Low interest rates over the last few years have made refinancing existing mortgages and new purchases attractive. In 2014, 18 percent of all owner-occupied housing units were paying more than $2,000 in monthly mortgage payments down from 21 percent in 2009. In contrast, renter-occupied housing units costing more than $1,000 a month grew from 33.4 percent of all units in 2009 to 41.7 percent in 2014.
What percent of household income is being spent on housing? And, what is the acceptable level? According to the Census Bureau, “The conventional public policy indicator of housing affordability in the United States is the percent of income spent on housing. Housing expenditures that exceed 30 percent of household income have historically been viewed as an indicator of a housing affordability problem.”
In all occupied housing units owned or rented (Table E), the percent of residents spending 30 percent or more of household income has fallen from 36.4 percent of all units 2009 to 33.4 percent in 2014, a healthy sign. In addition, monthly expenditures of 20 to 29 percent of household income have as also fallen from 23 percent of units in 2009 to 21.7 percent in 2014.
As shown in Table F,
homeowners spent a significantly less percentage of household income on housing over the last five years. Since 2009, the percent of owner-occupied units with owner’s spending more than 30 percent of their income has fallen significantly from 30.4 percent of houses to 24.8 percent.
Traditionally, renters spend significantly more of their income on housing than owners and the percentages have held steady between 2009 and 2014. In 2014, 47.9 percent of renters spent 30 percent or more of household income on rent, almost double the percent of owners.
January 12,
2016 by in Business Strategy, Industry
Knowing the value of a category can determine how much showroom space should be allocated to it.
By Martin Roberts
Last year, the team at Martin Roberts Design re-planned and re-merchandised more than one million square feet of retail space in 30 or so stores around the country. As a retail designer, I’ve helped hundreds of store owners rethink their showrooms.
When merchants ask me to revitalize their space, they frequently say it’s because it’s not living up to its sales potential. They’re convinced if they can learn the secrets to laying out the showroom more effectively, profits will soar.
I don’t dispute that the showroom layout is vitally important. But before you can configure your space, maximizing sales requires looking at the categories being sold and figuring out what percentage of sales come from each category. Why? Because the amount of merchandise displayed must correspond to the percentage of business done in each category.
In other words, if 55 percent of product sold is upholstery in a 100,000-square-foot store, a retailer should dedicate 55,000 square feet to the category.
The Merchandising Matrix
We use a simple tool called a Merchandising Matrix to help store owners determine how much square footage they devote to each product category. It’s not as complicated as one might think.
First, determine the room set size you use for a category, then multiply it by the number of room sets you display. So for example, if you currently use a 10-foot-by-15-foot room set size for stationary upholstery, and you have 28 room sets, that department takes up 4,600 square feet of floor space, excluding access aisles.
Once the square footage for each department is calculated, it’s time to analyze your sales figures. By determining the percentage of sales that come from stationary upholstery, you’ll be able to compare the amount of space to allot to that department versus the percentage that should be allotted. You may discover you have too much or not enough stationary upholstery in your product mix, and you’ll need to make adjustments. You’ll also determine that in some cases you were fairly accurate in estimating the amount of merchandise for a given category.
One of my home furnishings retail clients adopted the Merchandising Matrix, only to be surprised by the results. He realized that some of his guesstimates for how much product he should purchase were off the mark. In one instance, he thought he needed five or six sets in a department, only to discover that he really needed three. He already had two in the warehouse. In the first month after the store redesign, sales increased by 94 percent, a fair amount of which can be attributed to the new merchandising process.
The Merchandising Matrix chart allows us to give pride of place to products that are doing the lion’s share of the business. I am not exaggerating when I say that this method will radically improve your bottom line, enabling you to achieve higher dollars-per-square-foot.
Purchasing Pitfalls
Throughout my career, I’ve seen too many merchants, like cowboys in the Old West, shoot from the hip when making product purchases. Being strategic and disciplined in displaying the right amount of product per department goes hand in hand with purchasing.
Most retailers start with the best of intentions, shopping list in hand, when Market rolls around. Unfortunately, there are many ways to lose sight of the original plan and start buying emotionally. It’s easy to get caught up in the excitement of Market and make spur-of-the-moment purchases. Or you decide to take advantage of a special, or feel you owe a sales rep a generous order out of friendship.
Following the Merchandising Matrix approach results in well-thought-out purchases because you know exactly how many items will fit in each category of the showroom.
How you use the most valuable asset you have as a retailer—your square footage—can be crucial to your success. You air-condition it, heat it, light it, maintain it, and spend money on real estate, taxes and everything else. Why not adopt a strategy that helps you make the best and most profitable use of your investment?
January 12,
2016 by in Business Strategy, Industry
As a teacher and trainer I have learned over the years that breaking a targeted result down to its basic ingredients is a great way to teach a complicated subject.
For example, in a previous column I discussed ensuring the sales team understands their sales success is tied to a combination of three factors: the number of people they see; the number they sell something to and the amount they sell to each one. Traffic multiplied by the closing rate multiplied by average sale gives you total sales.
By starting out this way you can study each component and help sales associates maximize their results. You can help them understand the relationship between all three they need to develop in order to connect to the highest percentage of the people they see and create the rooms they want with all the products they need to do so.
As owners and management of retail furniture stores, there are basic relationships that we also to understand in order to give sales people the best opportunity to be successful. In most stores, management uses sales reports to analyze and judge the performance of sales associates, when in reality there are three that have an almost equal influence on sales results. They are: advertising, merchandising and in-store experience from display, point-of-sale and sales associate interaction. That said, we might praise or blame the sales staff too heavily for our results. Granted, it is their job to sell what the product to the consumers enticed to the store through advertising and marketing. However, they could be more successful if the product consumers come into the store to see is what they are actually looking for.
Most retailers I have worked with do a good job of flooring saleable products and bringing in consumers. Lifestyle specialists like Pottery Barn and Restoration Hardware have rewritten the retail book and are delivering the in-store visual and buying experience their targeted customers desire netting tremendous success with today’s consumers. Manufacturing verticals from our industry like La-Z-Boy Furniture Galleries and Ashley HomeStores are constantly analyzing and updating their stores’ product mix, floor display and sales experience to maximize success.
These retailers realize product truly drives the engine at retail. Consumers come in search of new furnishings, and how retailers treat product is critical to success. The way a store is laid out, the price points available and the product knowledge that sales associates provide is a major component in the process. You could, and probably do, have the products available to satisfy most customers who enter your store. Problems arise if they can’t find what they want; if a sales associate can’t lead them to what they want or answer their questions; or, if the store neglects to showcase product to in a manner worthy of the asking price. Many consumers will leave the store and go elsewhere to make their purchase, despite the fact they would prefer to get it done with you.
The marriage of merchandising and selling effort is key to success. A key issue that threatens this marriage is the same thing that ends up hurting other unions, a lack of communications between the parties.
Buyers buy, and sales people sell. Unfortunately, they seldom share vital information to help both sides succeed. Don’t make the assumption that the best designers and sales people totally understand what they have to sell and why you bought it. The merchandising team needs to share their wisdom about selected products to the sale team. The sales associates can then turn around and share it with customers. Here are some thoughts about how to do that and fire up your team:
- Have buyers lead the product training effort.
When I was a department store buyer, it was my responsibility to make sure sales associates in 18 stores knew how to use the products and why someone would want to own them. I was required to sell the sales people my products, and it should be your merchandising team’s responsibility to do so in your store. Some questions you need to give them the answers to:
o Why is it there? Why did you add it to your product assortment?
o Who is it for? Who is the target consumer?
o What makes it a value? Outline the price versus quality versus the competition model.
o How should they romance the products? What are the magic words to use when talking with consumers? Highlight new color names, style terms and lifestyle descriptions.
- Things to do to create excitement and understanding of your product assortment with the sales associates:
o Create an information sheet for each new product and/or vignette on the floor with answers to the above questions along with specifications for main products.
o Present and promote a good, better, best sales process throughout the lineup and across vendors. Be sure to discuss other options for customers to consider. Build a solid step-up program on the floor by positioning every vendor and major product within your quality and price point range.
o Celebrate the product. It should be the star of the show.
- Provide a slide show from market trips to generate excitement and anticipation by sharing discoveries with the team when you come home. Previewing trends and new items will not only educate the staff, it will help them better understand the store and its product mission.
- New product preview and rollout to generate excitement. If you are old enough, you will remember the buzz automobile makers generated each year prior to model introductions. It helped create a great deal of excitement and caused people to come into the showrooms even if they did not need a new car. Try to do that with new product. As an example, cover them with sheets and have a product introduction party with your team. Consider doing the same thing for consumers with a private sale.
- Vendor sales meetings for new product. Bring in vendor sales representatives and others to talk about the new products. Outside people tend to be listened to and will provide additional perspective. Be selective though, since some presenters are better than others. Remember it is your show, not theirs.
- Have your sales/design members participate to give their views, key words and selling tips to the rest of the team. Don’t leave your people out of this process. In many of the best stores, there is a sense of pride in the store and the sales team reflects it. They enjoy sharing what they know with each other and helping everyone succeed. Have them sell new products to each other to really get them involved.
- Featured vignette each month. Many retailers, including Nebraska Furniture Mart, have a special spot on the showroom floor where to highlight an exciting new look or lifestyle statement. They change it every month and it becomes a part of most customer visits.
The other critical connection between merchandising and the selling effort is the floor display.
While sales people provide answers and auditory stimulation, product display visually tells the story and answers consumers’ question about whether or not a store can provide the products and expertise to make their home look and feel the way they want it to. As a result, a sales team must understand how and why the floor is laid out and the best ways to use it to work with customers. It is after all their office and the most important selling tool available.
No matter how the showroom floor is laid out—lifestyle, product category or brand galleries—the merchandising and display team should take a role to ensure sales associates understand what has been done and why. They lead the discussion and provide the training on how to use it to sell. The most successful teams have great support people, and they win through communication with each other toward the same goal—making more consumers happy in their homes.