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From Home Furnishing Business

Coach's Corner: Get Credit for the Problem-Solving Services Your Staff Provides

This is the same whether it is a store where what you see is what you can get or one that features endless customization of the products it has available. Granted, the task is more involved in the latter situation, but the basic function is the same – determine the need and provide a solution for it that fits the customer’s look, feel and budgetary considerations.

In essence, we must be problem solvers first and then use our selling/design skills to put the package together. It just does not work to do it the other way around, because if we start selling without first knowing what issues our customer is trying to solve, we will usually fail. Therefore, while most of us look at what we do as primarily a product sales function, in reality we are very much in the business of selling a much-needed service that uses our products to provide the final solutions to our customer’s needs and wants for their home. We need to understand that the act of problem solving is a service, not a product.

The reason this is important is that even though they are similar, product-based businesses are different from service-based businesses in some very important ways. Certainly, both involve customer interaction as part of a process that delivers a result the individual is looking for. However, a product business sells something that the customer can see, feel and touch. I am referring to tangible, physical items that when encountered by the customer can greatly influence the buying decision. We make a great effort in our stores and online to present our products in a way that enables the consumer to visualize them in their own house, which encourages our visitors to want to own them.

We also present features and benefits to answer questions the customer may have to help them better understand the product and assist them in their buying decision. In a service business, the “product” is the value provided by the intangible skills, expertise and time the provider spends delivering the results a buyer wants. In order to sell a service, it is critical that the target audience understands what makes that service valuable to them and why your staff is able to consistently provide it. In many cases, selling a service also requires a somewhat more trusting relationship with prospective clients than selling products does. Being able to get the point across clearly that one size does not fit all, and that each person gets individual, customized solutions adds a great deal of value.

Another difference is that products are mostly viewed as returnable if they don’t satisfy, while services are seen as “non-returnable”. You may get a refund, but the time and effort spent has basically been wasted. Therefore, when someone buys a service, it is the expectation of getting the results they want that really closes the deal. Since a person buying a service is paying for a desired outcome, it is critical to focus on the result of the effort in our selling process!

Both of these businesses actually have the same goal of customer gratification they just use different vehicles to get there. In a furniture store it is absolutely critical that they work hand-in-hand on the sales floor. The issue I see is that we often focus heavily on the product selling side of what we do in many important areas of our daily activities and business planning processes. Certainly, any selling system we use in our stores should be aimed at ultimately providing the problem-solving service addressed above, since that is the desired result we need to have for that critical aspect of our business.

In addition, most stores work hard to maintain delivery and customer care departments that solve problems every day for their customers. However, I believe that many furniture stores could do a better job understanding the value of the problem-solving service they provide to customers and find ways to improve how they sell and market it to their target audience.

Here are a few ideas that may help get you started thinking about better ways to sell and market the valuable problem-solving service you provide in your store:

  • In a service-based business, your people and what they do are the product. So, it makes sense to sell them and the importance of their contribution, as much as you sell the value of your actual merchandise. You should develop a features and benefits story to tell about your staff, from your salespeople through the delivery staff. Potential customers need to view them as reliable and trustworthy in order to want to do business with your store.
  • As stated earlier, service businesses are very relationship based. Therefore, it is important to let people get to know your staff and build some initial rapport with them. It is really common sense, but whatever you can do to connect your target audience to your staff such as online biographies and picture boards at the entrance will enhance your ability to make them want to work with you.
  • Since you are providing solutions for your customer’s needs, it is important to show that you understand what their needs are and that you can offer solutions to solve their problems. Prospects should see you as a resource they can rely on to deliver the total results they seek. Testimonials from clients, design articles/essays from staff members and picture boards of successful projects are a great way to get this point across on your sales floor and website.
  • Keep in mind it is not the actual service that the customer really cares about, it is the result it delivers when completed that truly matters. What is going to happen is more important than how it will happen and the way the effort will help them is really the critical issue. So, emphasize the results you can deliver more than the process to get them. Showing them how much their life can be improved as a result of being happier with their home is a great way to do this.
  • Remember that the service you are providing a client is intangible. It can’t be returned and their investment in time cannot be reimbursed. Emphasizing that your design assistance is complementary and part of the total package you provide with the products they purchase can eliminate these issues by reducing any perceived risk involved.
  • Your advertising, marketing and online efforts should strive to create an experience that reflects what your service will provide to the client. You need to identify the issues they expect to run into while creating their dream room and show that your service will solve their problems.
  • Many of your competitors do not offer the services you provide, so use this as an advantage in your market. Online venders, membership warehouses, many discount stores and major chains like Target or Ikea for the most part do not have staff to deliver the total experience you can. Take advantage of this in all of your marketing efforts to separate yourself from the pack and add value to the relationship you offer prospective customers!
  • Make sure all of your efforts answer the important questions your target audience will have, like: What services do you offer? Why are they important to me? What potential problems will they solve? What other benefits will they provide? What does it cost and what should I expect?
  • Be sure to emphasize that you provide one-stop shopping for your products. Using the services you offer, customers will save time and money by not having to get outside help to complete their projects. Your staff members are experts on the merchandise you carry, and they will provide all the assistance needed to create solutions to any problems.
  • Most service companies have found that email, website and social media marketing efforts work best to generate interest from their targeted consumer segments. Having your design staff post pictures of completed projects and testimonials from highly satisfied clients, creates a very powerful message about your ability to solve problems and deliver results. It is also extremely important to gather and post positive Facebook, Google and Yelp reviews both online and in your ads, since this provides support for your “we can do it” message!

Don’t take what your staff does and the valuable services they provide to your customers for granted. Make them a focal point for some of your marketing efforts and get credit for the difference they can make in your customers total experience with your company. I hope this helps you get started.

Statistically Speaking: Furniture Industry Could Feel Lasting Impact of Population Slowdown and Shifts

In 2019, natural increase (births minus deaths) fell to 957,000, marking the first time in decades that it declined below one million, forecasting a trend toward fewer births and more deaths. While birth rates are at historical lows, death rates are rising as Baby Boomers are retiring and aging.

Paired with dropping natural increase rates, international migration to the U.S. (immigration) has decreased to 595,000 people from 2018 to 2019, almost half the amount in 2016 of 1.05 million. Using data from the U.S. Census Bureau, this month’s Statistically Speaking details the factors in the country’s declining population growth by region alongside the impact on the future of the economy and furniture industry.

Population Changes
The annual net increase in the U.S. population peaked in 1992 when the U.S. added 3.53 million people to the population either through natural increase (births minus deaths) or net international migration (immigration) (Table A). Since 2015, when the U.S. added 2.3 million people, the growth rate has fallen to its lowest level in 80 years – reaching less than 1.6 million net change in 2019.

While total population increased only 2.4% in the last four years, births decreased 5% alongside a 5% increase in deaths. Once an offset in the rising low birth rates, immigration dropped 42.8% during the same fouryear period. Figure 1 breaks down the components of population from 2015 to 2019.

Many analysts believe the immigration restrictions started in 2016 combined with a perception that the U.S. has fewer economic opportunities than it did before the Great Recession has caused the decline. These components combined added 1.55 million to the population in 2019 compared to 2.33 million in 2015 – a decline of 6.6%. Economists worry because the growth rate of the economy is traditionally determined by the income growth per capita and population growth. While the impact of slowing population growth can hurt the entire U.S., some regions are already experiencing a decrease in population. As shown in Table B, the Northeast has decreased in population size over the past 2 years – dropping by 0.11% from 2018 to 2019. Overall 10 states decreased in population with West Virginia, Alaska, Illinois and New York topping the list in percent of population lost. Eleven states increased in population over 1%. Idaho, Nevada, Arizona, Utah and Texas were in the top five – with four of those in the West region. Idaho was the only state to reach a growth above 2%. Of the top five states gaining the most people, three of the states are in the South – Texas, Florida, and North Carolina.

Birth Rates

Birth rates continue to decrease every year – down to a rate of 11.6 births per 1,000 population in 2019 from 12.8 in 2011 (Table C). According to the Centers for Disease Control, this is the lowest level since the 1980s, despite an improving economy. Many people are finding it increasingly difficult to afford children. Rising maternity fees, childcare costs, and increasing debt mixed with a static wage growth are causing many people to delay having children and/or having fewer children. Many Millennials claim they have delayed child birth, not by choice, but by economic necessity.

With birth rates at historical lows, only eight states had more births in 2019 than 2018. The top four states with the highest numerical increases were in the Northwest – Utah, North Dakota, Alaska and South Dakota. The lowest birth rates in 2019 occurred in New Hampshire, Vermont, Maine, Connecticut, and Rhode Island – all in the Northeast. But only one state in the nation, Vermont, a low birth rate state, increased its birth rate from 2018 to 2019, but only by 0.8%.

Death Rates

While the birth rate is decreasing in the U.S., the death rate is ramping up – increasing from 8.1 deaths per 1,000 population in 2011 to 8.7 in 2019 (Table D). This rate will increase as more Baby Boomers enter old age. They are projected to make up 20% of the population by 2029, less than 10 years away. As more Baby Boomers head to retirement, the impact on the labor force and consumer spending will increase as employed Boomers have traditionally been high consumers of furniture products. However, retirees produce and contribute less to the economy, and also spend less than younger working consumers.

West Virginia, Alabama, Maine, Mississippi and Pennsylvania had the highest rates of deaths in 2019 – all above 10.4 per 1,000 population. The states with the lowest death rates were Utah, Alaska, Colorado, Texas and California. Utah has half the number of deaths per 1,000 population as West Virginia and Alabama, reflecting the much younger demographic.

Natural Increase

In 2019, natural increase (births minus deaths) fell below 1 million for the first time in decades, due to the aging population of the Baby Boomers. As shown in Table E, the natural increase rate has declined an average of 6% per year since 2011. The majority of states decreased their natural increase rate with only 10 states showing a slight natural increase in population per 1,000 persons from 2018 to 2019. Not surprisingly, younger populated states - Utah, Alaska, Texas – had the highest rates of natural increase.

International Migration

U.S. net immigration levels peaked in 2016 at 1.05 million just as tougher immigration laws were being enacted and have fallen consistently to just over 595,000 in 2019. Over 40 percent of all immigrants in 2019 settled in Southern states, consistent with historical trends (Figure 2).

The total international migration rate dropped 15.2% to 1.8 immigrants per 1,000 population 2018 to 2019 – the lowest level in more than a decade (Table F). With the decline in natural increase, population growth has become more dependent on immigration and the dependency is expected to increase over the next decade. Low immigration paired with falling natural population increase rates point to growing labor shortages and a weakening economy.

Of the 17 states with international migration over 10,000 persons in 2019, only two states received more immigrants than the previous year – California (increasing 3.8%) and Washington state (up 2.1%).

Domestic Migration

The final missing piece to understanding the shifting population demographics is “domestic migration,” the net number of current U.S. residents moving into a state versus the number moving out of state.

Data shows that the percentage of Americans changing residence is at a post-World War II low of 10.1% — less than half the rate the U.S. had in the 1950s and lower than in 1990s. The domestic migration rate continues its negative trends in the Northeast and Midwest, while the South and West attract the highest mobility rates (Table G). For example, in Idaho, for every 1,000 residents, 15.3 moved into Idaho in 2019 – the highest domestic migration rate within the U.S. Nevada, Arizona, South Carolina and Delaware completed the list of the top five states with highest domestic migration rates. Conversely, in the Northeast, in 2019 for every 1,000 population, a net of 5.3 people left the region. In the Midwest, the net domestic migration was -2.4 persons per 1,000. The impact of negative domestic migration on some states discussed here may seem insignificant, but compounded over time and coupled with low birth rates, high death rates, and low immigration can have large economic consequences in the future. Note that city migration rates will not be available from the Census Bureau for a few months.

Editors Letter: What Drives the Industry?

While there are some interesting trends that give the industry pause, such as the increasing tendency of households to value free time more than income and the consideration of leasing instead of purchasing, they are a direct contradiction of our acquisitive society. From a merchandising perspective, the industry creates the “it” product that awakens the need to acquire and own.

From a historical perspective, writers have broken time into periods of homes, furnishings, transportation, and clothing that defi ne the extravagance of civilization. In the last decade, the possession of “devices” of communication captured the imagination of the populous. The result was everything Apple became an instant must-have. However, now that has begun to fade as the thing to possess.

Now, the defi nition of “must-have” is travel to that unique destination that will fuel social media content for months, even though the resulting photography never matches those used in the advertising that motivates the consumer to delay their furniture purchases for fun on distant shores.

The fi rst chart below is a list of fi ve areas in which consumers might make major purchases. Ranked from 1 to 5, with 1 being most important and 5 being least important, the graph tells the story.

Note closely that it is the younger consumer that is focusing on furniture while still preferring travel.

These observations all point to the fact that it is not the consumer, but the industry that is failing to entice the consumer to purchase.

As for merchandising, design and quality are the most important to both young and old consumers as can be seen from recent research in the chart below. The second chart is a list of motivators that infl uence a purchaser of furniture. Consumers were asked to rank each in its importance with 1 being “most important” and 6 being “least important.” Again, the data tells the story.

Therefore it is in your hands, merchandisers, to drive the industry. Please note that it is not about price.

On another note, we are pleased to announce our newest feature, Bedding Boardroom. Each quarter we will dive into the matt ress/bedding category to bring you insight backed with current research refl ecting shopper behavior. This month we explore why bedding product has underperformed furniture in the last fi ve years. Here's a hint: The failure to develop and diff erentiate new product is a factor.

Cover Story: Escaping the ‘Not My Parent’s Furniture’ Conundrum

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."

What sells: No Counting Sheep, Just Better Sleep

Based on Consumer research conducted by FurnitureCore, Inc., the research arm of Home Furnishings Business, consumers were asked ‘how long did you shop before making a matt ress purchase.’ The study found that only 36.36% of consumers made a matt ress purchase in less than a week, while 54.54% of consumers made their purchase in under a month. 9.09% of consumers pondered their options before their purchase for up to 3 months! Clearly, this purchase decision came with a lot of thought. Bearing in mind that there are endless options in the category, from manufacturers promoting organic product to hybrid solutions and beyond, there is a lot to consider.

Manufacturers are aware of the time consumers spend assessing their matt ress purchases and are actively working toward solutions for quality rest at varying price points. Says Jon Stowe, managing director at E.S. Kluft & Company, “Consumer awareness of the role sleep plays in well-being continues to grow and with that, so does interest in high-end bedding. We see consumer interest in quality craftsmanship, innovation and exceptional materials continuing to grow in 2020. That’s good news for consumers and also for retailers who have the opportunity to boost their profi t margins if they have more luxury product on their floors.”

While off ering luxury items is appealing to some consumers, Onney Crawley, Serta’s vice president of marketing, advises against alienating other consumers by instead off ering a wide range of options to the sales fl oor. She says, “The matt ress category is a rapidly evolving and competitive space, with both traditional manufacturers and direct-to-consumer brands competing to understand consumer’s needs. It’s important now more than ever that matt ress retailers adopt a consumer-centric business model in order to deliver innovative products that appeal to a broad range of people.” This mattress merchandising strategy is sure to bring customers to the sales floor to test the product variations; however, retailers will use varying strategies based on their targeted markets.

In a time in the industry where traffic counts are not what they used to be, boosting profit margins at every available opportunity should be seized. For this reason, Eric Holmstead, national sales manager at Malouf, believes, “The mattress category is the most important in the industry. It gets the highest average ticket price, creates the most noticeable improvement in your customer’s sleep, and allows for high margins. A real opportunity comes from attaching product like adjustable bases and accessories to the purchase.” Higher average tickets will make up for fewer customers shopping in stores.

In this highly competitive category, manufacturers are working hard to create solutions for consumers of every body type, preference, and price point. Read on to see the creative solutions sure to satisfy your customer’s need to stop counting sheep and drift off to sleep.

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