Plug into Power

December 4, 2015   by in Business Strategy, Industry   

Welcome to the fifth annual Home Furnishings Business Power 50 retail ranking. The ranking — our take on how furniture retailers should be ranked — takes into account retail sales volume, social engagement and market share and industry involvement.

In an effort to continually improve, this year we made several changes in our methodology, especially in the social engagement component of the scoring. We have also eliminated the corporate entities from the individual retailers in the vertical manufacturers category.

Here’s the insider’s look at how we sliced and diced scores to develop the 2015 Power 50 ranking.

Revenue, of course, is important because it provides the retailer with the foundation to accomplish specific objectives.  However, market share measures how a retailer performed based on the potential of the markets in which it has a presence.

Social engagement is a debated topic; however, without the consumer there is no business.  While many will debate the short-term impact of social engagement, in the long-term building a retailer brand is critical to performance.

Industry involvement is key in achieving top-tier performance. The demand of immediate needs of business often eliminates the need to give back. The frequently used phrase, “You need to work on your business, not in your business,” is the foundation for creating high performance companies.

The key methodology looks like this:

Market Share — 46 percent

The estimated industry sales from various published sources for each retailer is divided by the estimated retail volume for furniture and bedding sales in each of the markets in which they participate whether Metropolitan Statistical Area, Micro Statistical Area or Rural.  Sales of appliances, electronics and housewares are excluded.

Revenue — 20 percent

This category is based on estimated industry sales for each retailer based upon public published records or estimates based on certain retail parameters.

Industry Involvement — 9 percent

Participation in industry associations and buying groups are considered to improve performance.  Rosters of each of these organizations are used to measure involvement.

Social Engagement — 25 percent

This year’s index considers social signals, website metrics, and third party scoring platforms to arrive at a ranked list of home furnishings retailers with the strongest online engagement.

First, we pulled data from Alexa, Facebook, Klout, MOZ, OpenSEO, and Twitter for the retailers in our database. The following table shows specific measurements.

Source                     Metric

Alexa                         US

Facebook                 Check Ins, Likes, Talking about

Klout                         Score

MOZ                         DomAuth, External Links, MozRank

OpenSEO                 Google BackLinks, Google Page Rank, Google+ Likes

Twitter                      Followers, Likes, Tweets

From that data, we used a basic ranking methodology, assigning a numerical value to the ranked list of each metric.  We assigned a one for each record within a specific metric, with one being the “best” score for the highest number of Twitter followers or the highest number of backlinks or the highest Klout score.

For all measurements except Alexa, the highest values resulted in a lower score, i.e. the highest Google Page Rank would result in the lowest score.  Alexa ranks websites globally and nationally based on estimated website traffic, and the lower the score, the more popular the site.

Thus, we arrived at 14 individual scores calculated for each metric. The highest two scores for each retailer were dropped to eliminate any outliers and then, we took the statistical average of those 12 scores. Ranking the scores from lowest to highest created the Power 50 Online Engagement Index for 2015.

Enjoy the lists.

Independent Rule

Independent retailers are the lifeblood of the furniture retail landscape. Well-known in their communities, owners, employees and their stores take active roles in the towns in which they operate. Here’s how independent retailers — those with less than $50 million in annual sales and operating within one state — rank.

Kings of the Jungle

Large independent furniture retailers rule the roost — all while operating in one state and generating annual sales in excess of $50 million. Consumers know these retail names, and the retailers reap the rewards of owning the lion’s share of the furniture market.

Killer Instincts

Regional chains are powerful forces in their markets. For our ranking, we define regional chains as retailers that operate stores in states other than their home state. Retailers like Rooms To Go and Art Van Furniture; the players who boast strong name recognition while stepping outside of their base to broaden their reach.

Upward Momentum

Manufacturing. Retailing. Retailing. Manufacturing. Those lines continue to blur, and vertical retailers are getting louder and louder in the marketplace. Vendors like the ability to control brand messaging and presentation. Retailers like Williams-Sonoma reap similar rewards for its stable of brands.

Here’s our list for manufacturers who cross into retailing, and for retailers who step over the line as vendor.

Holiday Wishes

December 4, 2015   by in Business Strategy, Industry   

The most wonderful time of the year brings with it a heightened sense of what’s to come.

by Sheila Long O’mara

Each year as we race toward the finish line of the year, things kick into overdrive.

Deadlines are tightened to accommodate vacations, holidays and celebrations. To do lists—both for family and for work—grow to unbelievable lengths.

Days become filled with work, errands, parties, plays and caroling. Baking, stories and toasts fill evenings. It’s the most wonderful time of the year!

Many folks feel hurried and rushed as they cook for Thanksgiving. (It’s Thanksgiving Eve here, and multitudes of chopped vegetables and bread for stuffing sit waiting on the kitchen counter.) Once Thanksgiving passes, family time is taken over by holiday shopping, celebrations and more cooking followed by more eating and more family time.

As crazy as we all seem to feel during the month of December, within the blink of an eye, the celebrations are gone, and we toast in a New Year. The beginning of a new season brings with it hope and all that can be.

Before we slide into full-blown holiday shopping—and for retailers all-out selling—season, it’s important to take stock of where we stand. Planning to close the books on 2015 is an important part to welcoming a successful 2016.

In lieu of waxing poetic and sharing with you all the things I think you should put on your to-do lists, I figured I’d share a seasonal wish lists of sorts. I realize, of course, that none of you asked so if you’re not interested, skip to the last two paragraphs for a cheerful send off through the rest of the issue.

Here’s my official wish list in no particular order.

1. I hope all furniture retailers hear the sweet proverbial sound of cash registers ringing through the end of the year as consumers buy rooms full of furniture.

2. I hope those ringing registers translate into a multitude of orders for my manufacturing and vendor friends.

3. Here’s wishing you all safe, calm
travels—business or otherwise—wherever you may go.

4. Here’s to quiet, serene evenings by a warm fire in cold climates and under clear starry skies in warmer locations.

5. May all your aspirations, dreams and needs­—personal and otherwise—be fulfilled to your highest expectations.

6. For all of us, a big dose of peace and love as we navigate through the uncertainty of the world.

7. May your family forever be close and the love you share for one another be deep.

8. Here’s to sticky finger hugs from the littlest ones in your midst and the patience to see the holiday lights through all the wonder those littles hold.

9. I wish health and happiness for each of you.

10. May your cups forever be filled.

Here’s to a wonderful holiday season and a beautiful New Year.

Peace.

Keen Observations

December 4, 2015   by in Business Strategy, Industry   

By Tom Zollar

In each of the Coach’s Corner columns, I have touched on many of the things a sales team coach must do and why they should be done. Game planning, goal setting and training—each is critical to the coaching process.

This month I am addressing one of the most important tools a sales manager has to determine what needs to be done on the floor with the sales people to drive sales performance improvement. Unfortunately, much like the goal setting process, this is also one of the most underused aspects of the coaching process.

I say this because of my experience in hundreds of furniture stores where, invariably, the sales manager spends more time in his or her office than on the selling floor where all the action is. The reason given for this is always the same: “I don’t have time.” As stated in previous articles, in order to maximize performance, a sales manager should have time for little else than those things related to high-quality leadership of the sales team. To do that, they must know what is happening when each team member interacts with customers, and there is only one truly reliable way to do that—observation.

The term coaching and the practice of observation go hand-in-hand in any discipline where skills are definable and teachable. The sports analogies are limitless; using them can provide insight into the kind of coaching needed for furniture stores. Imagine a gymnastics or golf coach trying to improve or teach the basic skills to an athlete without watching them perform. How would they know where to start or what to cover without knowing where the person is at in the learning and development process? It simply is not possible.

Yet that is often what happens in furniture stores. The coaches are usually somewhere else doing other “important” things instead of watching the most important action of all. Business is dependent upon the individual skills of salespeople in the process of personal selling. Much of this activity takes place totally outside the view or direct area of influence of a coach. Few ever get to see players in action. This is why the kinds of performance variances exist in stores and tend to surprise us.

When a coach watches an athlete perform, there is usually a game plan in place. Everyone knows their job and the role of the other players. Perhaps one reason that observation for coaching purposes has been so little used in the furniture industry is that there isn’t a game plan in place. That missing game plan could outline how to observe and things to look for.

I have discussed the need to create a game plan and what it should include in previous issues. The plan begins with measurements and understanding the use of them to establish standards of performance in areas like close ratio and average sale. Revenue per up should be used to measure overall effectiveness and efficiency. This information demonstrates who to look at and in many cases what to look for—things like poor opening or closing skills or weak needs analysis.

These numbers are the result of how staff interacts with customers on the floor. In order to improve performance, the part of the game plan that really needs to be focused on when we observe, are the steps sales people are trained to use in the selling process. These behaviors will help them succeed. Are they playing the game by established rules or making up their own with each customer? Observing their actions allows us to provide the coaching, advice, counseling and additional training each person needs to be more effective at helping our customers create the rooms they want to live in.

Here are a few recommendations as starting points in establishing observation strategies:

How to Observe—Two Main Methods

1. Scheduled Time Observation—This gives the manager and the salesperson scheduled one-on-one time and should be used by managers whenever possible, especially with new hires. The salesperson should introduce the manager as an observer who will tag along. Be sure to ask the customer’s permission. If the customer knows who the manager is, all questions will be directed to manager, putting the salesperson in the observer’s role. Ensure the sales person remains the leader of selling process.

2. Ad Hoc Observation for Specific Skills—This method allows the manager to listen for specific things, like greetings, from one or more salespeople. It is a good idea to limit the scope to one or two behaviors at a time, concentrating on a key area of the selling process. This is useful when sales managers are already on the floor doing other things. This method allows managers to observe a lot of people, who are supposed to be doing the same thing in a prescribed manner, in different situations.

Additional Recommendations

·         Other than with new hires, the sales manager’s role is to observe, not participate. Sometimes the most difficult thing to do during an observation is to remain silent. Sales people are totally on their own, as they would be if the sales manager weren’t present. This is an opportunity to view the world as it really is. A sales person will likely change some of their behavior with the presence of a sales manager. That’s OK. It helps them learn.

·         Never use observation to punish or criticize a salesperson. This should be viewed as a learning exercise during which both the sales manager and salesperson can measure the results against all of the principles and standards of performance you have agreed to in the performance agreement.

·         To motivate people, catch them doing something right and let them know it. Positive reinforcement of the right behaviors is extremely effective. If possible, try to have two positive comments for every negative one.

·         Schedule at least one observation with each salesperson once per month. People consistently performing below expectations must be scheduled weekly, and new hires require daily observation.

·         Provide feedback. Record observations and provide each person with feedback immediately after his or her customer contact ends. Begin the session by asking the sales person for their assessment on what went well and where improvement can be made. Then offer your observations. Always base comments on things that have been taught and are mutually understood. Do not ask for behaviors that have not yet been taught or that are not part of the retailer’s selling process.

·         Get out on the floor. Customers like seeing managers and owners on the sales floor showing an interest in what is going on and offering friendly greetings and assistance. On busy days, managers should act as the greeter, meeting as many overflow customers as possible and determining where to send the next available salesperson.

Some managers will walk the floor, meeting as many customers as possible and providing support for salespeople. Simply stopping by and sitting with a salesperson who is working with a customer and being casually introduced by the salesperson can have a tremendous effect on customers. Offering a few supportive words can be a great topper for the salesperson.

This is also a great way to observe what is going on and to be a closer part of the action on the floor. When sales people are accustomed to having a sales manager on the floor a larger portion of the time observing standards of performance set forth in selling strategies, improvement will come.

What to Look For

To know what to observe, simply look for the steps in your store’s selling process. It is all there. Here is a checklist:

Attitude                      What does the salesperson bring to the door with them? How is their body language? Did they smile? Are they enthusiastic?

Greeting                     Did they use a proper greeting?

Social                          Was the salesperson more a person than a salesperson?

Lookers                      Did the salesperson handle “I’m just looking” properly?

Offer of Assistance    Did the salesperson use the proper dialog at the right time?

Establish Trust          What dialog was used? Does the salesperson get it?

Sketching                   Yes, or no?

Presentation               Did the salesperson use the sketch? Did he understand product?

Objections                  Did they use positive reinforcement?

Close                           Did the salesperson ask of the sale then remain silent?

Client Development   Did they forecast follow-up?

Another Year

December 4, 2015   by in Business Strategy, Industry   

It’s time to take stock of 2015 and lay the foundation for next year’s success.

Our mission is to help you visualize what can be done, analyze what you are doing, and finally realize your objective

For most companies, the end of the calendar year is the end of the business year. It is time to take stock of the business or department that you are charged with to see if you have moved the needle.

The most basic measure is whether or not the company was profitable. It’s better to analyze that before the accountants do their magic in navigating tax laws to minimize what is expected to be your share of what’s required to run this great country. This number reflects the actions taken this year along with those made in years past. For the most part that number is silent, not commenting good or bad. Yes, if it is a loss that is not good. However, is it the best that could be done under your business circumstances?

The focus of this issue offers you a time to reflect. For the year the total industry—furniture and bedding sales—will be a positive 5 percent. Of course, specific markets could have varied from this number significantly. The forecast for next year indicates a similar growth.

As we all know our economic recovery has been sluggish to say the least. While unemployment is showing positive signs, median incomes of the industry’s primary consumers continue to be in a free fall as it has been for a decade. We, along with other retail sectors, are being tested. However, at the same time, we face other challenges. For the most part, the industry has adjusted to offshore production for the majority of our product. Unfortunately, we have passed all of these reductions on to the consumer.

The Consumer Price Index continues to fall for furniture. The greatest challenges today are the emerging distribution channels. We discuss at length the e-commerce channel. However, we need to consider vertical retailers, those retailers that are designing, producing, and marketing proprietary unique products. These retailers don’t have to concern themselves with distribution as traditional retailers do.

The Home Furnishings Business Power 50 ranking measures in the short term individual retailers against their unique situation in terms of market share and social engagement. Revenue and industry involvement reflect actions from the past.

In short, what it gets down to is measuring on an ongoing basis how you are doing based on your unique situation. Understanding key performance indicators (KPI) and recognizing what can realistically be accomplish is what is important. Armed with this information you can focus on doing what is necessary.

Our mission is to help you visualize what can be done, analyze what you are doing, and finally realize your objective. Just like a Fitbit, each day is a new day, measured against yesterday.

The Consumer Evolution

November 13, 2015   by in Business Strategy, Industry   

By Tom Zollar

At the beginning of virtually every sales training session, I ask the participants the same question: Have the consumers coming into your stores today changed from the ones that came in 20, 10 or even five years ago? Those that have been selling that long always answer that they have most certainly changed a great deal.

We all approach the shopping and buying process very differently than we did 10 or even five years ago. If that is the case, doesn’t it make sense that we may need to change the way we sell in order to be more successful at helping consumers?

Obviously the answer is yes, but how do we change and what do we do differently to adjust? In order to answer those questions it might help if we understand how they have changed and why.

Before the late 1990s, shoppers learned about products, trends and decorating ideas through very limited means when compared to today’s standards. There were less than 250 high quality magazines available and less than a dozen of them provided ideas for the home. Most of these like Better Home and Gardens, Metropolitan Home and House Beautiful, targeted higher income consumers and the masses only saw them in waiting rooms at doctors’ or dentists’ offices.

In addition, since production of color advertising was cost prohibitive, retailers relied on black and white print media, which didn’t make much of an impression on consumers seeking style guidance. Few if any television shows at that time offered quality information about the topic either. For the most part, consumers were on their own when it came to getting ideas for homes and personal lifestyles. Local stores were the best places to go for style ideas and furnishings ideas. For many, the stores were the only options.

In the late 1990s, technology reduced the cost of creating and producing high quality color print advertisements. In the early 2000s there were about 2,400 print magazines being published and about half of them included ideas and recommendations about life and style for readers. Many of these were focused on the home and the myriad of options available to consumers. During this timeframe, retailers began using weekly color ads. Consumers were more stimulated and excited about style options in all aspects of their lives, particularly their homes. It made it much easier to dream about home environment they wanted to create. However, it was only the beginning of the journey considering print media is somewhat limited in what it can provide.

Around this time, the Home Furnishings Council, led by industry manufacturing and retail giants, partnered with House & Garden magazine to create an effort to reach out to consumers and educate them about available home furnishings products. The result was a new channel on the fledgling cable TV network called HGTV. Over the next decade, HGTV along with network shows like “Extreme Makeover: Home Edition”, helped stimulate consumers’ desire for style in their home than all the shelter magazines combined. In addition, it did one other important thing—the movement started educating consumers about what was available as well as showing them how put it together to create their dream home.

The Internet was the real game changer that began to evolve at this time. While there was a huge increase in the importance of style in many consumers’ decision making for their homes from the stimulation and education the magazines, color advertising and cable TV provided, the Web provided the opportunity for consumers to research style trends, products, services and pricing. The Internet created a library where consumers could uncover anything they wanted to know about home furnishings. We know at least 80 percent of consumers take advantage of the Internet for information before visiting a retail store. Occasionally, they decide not to go to the store.

Our parents and grandparents never had this type of stimulation and education available. When they were shopping for home furnishings, they visited five to seven stores to uncover ideas for their homes, find the product they wanted and pay the price they could afford. Today, consumers make many decisions before they shop, including what store to visit first. Many now forego the store completely and buy online. Those that do shop in a brick and mortar store typically end up visiting slightly more than two locations before making a purchase.

As a result of the availability of ideas, the home furnishings consumer has changed in two major ways. First, they have a better picture of what they want and find the answers to most of their questions before entering a store. Our research from the last 20 years indicates that style has become more important to today’s consumer when they shop for their home. In many markets as many as two-thirds of those surveyed say it is a primary consideration, versus roughly 20 percent before the change began. In addition, because of the ability to educate themselves, consumers much more confident shoppers than consumers in the 1990s. About three to four times as many consumers today say they feel somewhat to very confident about their ability to make decisions for their home.

The biggest issue for home furnishings retailers is that the more confident consumers feel about selecting products for their home, the less they think they need the help of a sales person.

Many of those that are certain in their choices opt to do business where there is no sales person. Between 20 percent and 30 percent are now buying home furnishings from channels with no sales people in the process. Even more important to note is that when today’s customers visit home furnishings stores, they are more inclined to say “I’m just looking”. Experienced sales people say it is about three times more likely to happen than it was a couple decades ago.

The important difference to understand is that many of those who say they are just looking are looking for something. They are armed with research and have a clear picture in their mind about what they want. As a result, they push salespeople away so they can browse. The disconnect is that they think home furnishings retailers are like Walmart or a grocery store where if they can walk through and see all there is to offer. In most home furnishings stores, that’s not the case.

Even if it was, research shows that people only “see” about 15 percent to 20 percent of what is in a store when they visit. It is quite possible that a large share of potential sales that walk out of stores are the result of not making the extra effort to connect to resistant customers who really want to buy but don’t give retailers the chance to help them find what they are seeking.

Perhaps the most important element in the selling process is the opening or greeting. It is absolutely imperative for your staff to make every effort to connect to all customers that come into the store, including those who push them away. Make sure sales people use a greeting that breaks through to the customer and encourages them to engage. Body language and enthusiasm are critical; almost more so than the words used. In addition, many sales people tell the consumer to go ahead and browse, ensuring them they will check in with them later address any questions. The successful ones are not eager to leave a potential client and have creative ways of getting consumers to engage.

Be sure the selling process and sales training includes manners to break through to these potential buyers so they don’t walk through your store and leave. They are the low hanging fruit and a retailer’s greatest potential for growth—they are already in your store and want to buy from you.