July 11,
2019 by HFBusiness Staff in Business Strategy, Industry 
Recent studies show that Millennials aspire to executive roles just like previous generations, but they are seeking new ways to lead, which includes a less hierarchical approach. According to Forbes, “authoritarian leadership is out, and inclusive leadership is in.” An American Express survey backs that statement, finding that the core Millennial values of creativity, autonomy and reciprocity are the foundation to the future of business leadership success. That same survey says that seven in 10 American Millennial respondents believe that within 10 years, the CEO role will no longer be relevant in its current format. So, as we progress into the future, the question remains: How will Millennials transition into leadership roles within the industry? You’ll find some answers here— within the profiles below, and from some of our own industry experts throughout the issue.
As we introduce you to the Class of 2019 you will find the road to success is well travelled. There are up and comers, movers and shakers, director level doer’s and C-level champions looking to pave the road ahead as an opportunity to foster a balanced power structure to support workplaces that value fairness, integrity, teamwork and empathy – all in the name of moving their teams and brands forward. There is no doubt that demographics in the workplace are changing, with companies racing to adapt to these changes and to meet Millennial values and expectations. Millennials are hungry for growth, learning, and continuous development and they are eager to embrace innovation and new technologies. The Millennials selected for this year’s Forty Under 40 exhibit all of that, and more. Each of them carries a passion for the industry as they travel the road to success. With this new class comes new adventures on and off the road. We applaud you Class of 2019, and can’t wait to see where you go.
Dhyey Acharya, 31
Principal, Industrial Design Engineer
Purple Innovations LLC.
All those big words in Dhyey’s title still don't sum up everything he does at Purple. As lead industrial designer and product engineer, Dhyey is responsible for almost every aspect of Purple's product design, development and ideation. He is a talented engineer, industrial designer, product developer, inventor, and visionary thinker. Born and raised in India and now living in the U.S., Dhyey is a globally minded, philanthropic individual with high aspirations. Driven by passion, his honest approach and altruistic intention is the force behind everything he does. He consciously evaluates and deconstructs each design or product in painstaking detail to map out how it will elevate people’s lives and contribute to their well-being. His creations are not just aesthetically minded they are user minded and encompass the entire users ecosystem. Dhyey is described as a modern day "Renaissance Man" who is motivated, ingenious and wise beyond his years.
Melissa Alonso, 31
Public Relations Specialist
El Dorado Furniture
Melissa began her career at El Dorado Furniture as an event coordinator in 2013. She was responsible for all store related actives and customer events. Her attention to detail and sense of responsibility immediately got her the respect of her peers as well as management. She is now responsible for Internal and external public relations and communications. Using her fine tuned skills, Melissa represents the brand to mass audiences producing interview segments via broadcast media. She serves as Master of Ceremony’s at El Dorado’s internal events and as the external representative at community events. Using her writing skills to create content, she knows how to create awareness for El Dorado related to their purpose, mission and values, and publicly speaks on behalf of the retailer.
Among her many philanthropic endeavors for the company she leads the brand’s 50 Years/50 Families Community Relations Campaign. She also represented the store as a sponsor and a supporter for an organization whose mission is empowering children, youth, and families from the local Miami community.
Jana Angel, 30
Brand and Partnership Development Manager
UNITERS
FMG Buying Group Vendor Partner
Jana is an up and comer who jumped into the industry two years ago and has already been promoted at Uniters. In her initial position as Brand Ambassador, Jana served as the face of the company to build awareness. She created social media platforms, responded to online feedback and coordinated industry events. Under her watch Uniters became the first company to receive the Women’s Choice Award for Protection Plans in the history of the award. In her new role, she is creating a direction for the brand, assessing positioning and developing personality to stand out from competitors and ultimately build partnerships. Internally Jana is working to create a multichannel communication approach to streamline efforts and keep all of the brand’s North American locations connected. Jana was recently hand-picked to manage the company’s largest account. Uniters is a vendor partner
Jana sits on the Board of Directors for City of Hope and led the Pink Out effort in October 2018. She is also leading the charge to do it again in 2019. Passionate about giving back Jana is involved in various philanthropic efforts within her West Palm Beach community.
Eric Beiter, 33
General Manager
Beiter’s Home Center
FMG Buying Group Member
A third generation family member, Eric Beiter works on store leadership development, sales training, and technology deployment, although his job is not limited to a prescribed role. He started working at the store when he was 14 and continued to do so on and off through college. Officially joining the family business was something he was initially denied, but when he was finally asked to come aboard he was determined to exceed expectations. Before he was a member of the leadership team he was the top salesperson for five consecutive years. He has been a key player in the transition to move the company into the future and was an integral part of the technology team that prepared for the transition from a paper inventory system to a barcode system.
Eric is a graduate of Leadership Lycoming and the Emerson Project where he was paired with highly regarded business, academic, and non-profit executives who mentored him in preparation for his entry into a C-level position. He is a former board member of the Central Pennsylvania Food Bank.
Brad Bonham, 39
CEO
Walker Edison
At 39 years old Brad has already made his mark on the furniture industry as one of the founders of Walker Edison. He is an enthusiastic leader that gets the job done right. Before he finally felt confident enough to settle into the CEO position, like many entrepreneurs he worked as the receptionist, the janitor, and the entire marketing department, doing what needed to be done to get the company off the ground. Brad is a resilient businessman. He has learned from the inevitable adversity and challenges that all startups face, whether caused by external forces or by internal decisions. He does not back down from a challenge. He empowers his employees to make decisions and act as entrepreneurs in their own sphere.
Brad has been recognized several times as an EY Entrepreneur of the year Utah Region Finalist. He currently serves as the Chairman of the Board for Make-A-Wish Utah. Brad and his business partner, Matt Davis, created the Walker Edison Foundation in an effort to improve the lives of children around the world.
Cain Brodie, 37
Director of Marketing
International Market Centers
FMG Buying Group Industry Partner
A leader in the industry, Cain’s relationship building skills and marketing prowess have helped IMC build effective markets for the industry in both Las Vegas and High Point. His efforts have contributed to increased buyers at market and increased value offered to exhibitors. His many responsibilities include the development and execution of all marketing support, media planning and buying, and budget development. He is the leasing liaison that provides direct support to exhibitors. Cain also manages and executes exhibitor email campaigns, onsite product displays (including the trend program), and manages key events and initiatives for on campus and off-market events. He is tasked with working alongside management and tenants to create and grow the Las Vegas Design Center. Cain leads the Las Vegas off-market initiatives including a successful model for the Hospitality Link program, which is driving revenue for exhibitors.
As the lead on the Dining by Design event, Cain is an active participant in DIFFA and local design community organizations. In his downtime, Cain has volunteered as coach for his child’s soccer team.
Madison Bruns, 25
National Account Manager
Cozzia USA
Despite her job title, Madison has been involved in many different areas of Cozzia’s business. Her initial position with the company was social media director and her strategies to increase their content and social media presence were very successful. As part of her strategy, she created professional, original digital content, to produce a series of short informational videos called “A moment with Madison.” Each episode focuses on a single key feature of Cozzia’s massage chairs including assembly and operation. These videos have proven to be a valuable tool. Recently, Madison was promoted to national account manager. With her strong organizational skills and winning personality, she was immediately successful. She also took the initiative to evaluate and then improve employee satisfaction in the workplace, executing her plan with positive results.
Madison volunteers at her local church helping with programs to feed the homeless. She also volunteers at a local hospital.
Jay Bush, 34
Corporate Director of Project Management
HSM Solutions
A strategic thinker, Jay has driven a variety of operational improvements through lean manufacturing technologies and is responsible for developing the plan, scope, budget and schedule for a variety of complex projects. He is also responsible for recruiting, motivating and managing a team of functional managers, engineers, contractors and technicians for each project. Jay is passionate about perpetuating a culture of continuous improvement, and not afraid to explore uncharted territory if it can lead to improved operations. Part of the fourth generation of the family that founded HSM (formerally known as Hickory Springs Manufacturing), he leverages his engineering expertise and Six Sigma Black Belt abilities to help solve specific challenges. He is frequently trusted with the company’s most critical projects and company-wide strategic initiatives. In particular, he spearheaded a new manufacturing start-up that now generates significant annual revenue for the company.
Jay was a co-chair of Friends of Scouting, the fund-raising arm of the Boy Scout’s Lakeland District in Hickory, N.C. He was also a former assistant Boy Scout leader.
Will Carpenter, 28
Principal
Ecommerce Sales Partners
Will Carpenter was recently promoted from senior associate to principal at ESP. He joined the company in 2017 and helped drive exceptional sales growth for the lines represented with their largest Ecommerce dealers. He has achieved this with a clear-eyed understanding of their operation and technical requirements, promotional strategies and programs, while addressing enhanced merchandising and marketing standards. His work is lauded within the company. With Will’s background in IT consulting and project management, relationship management and marketing expertise, coupled with his technical skills he enhances ESP’s capabilities to help home furnishings vendors navigate this complex channel and maximize the growth opportunities it affords.
Will is a DC Rec League coach, a co-team lead for the Booz Allen Brians and Hearts campaign and raised money for St. Judes during DC Rock & Roll Half Marathon.
Gabriel Cohen, 38
CEO
Classy Art
FMG Buying Group Vendor Partner
Under his outstanding leadership abilities, Gabriel Cohen has grown Classy Art’s revenue by 1500% in 13 years while developing a brand that is widely recognized in the industry. He transformed a failing family business that had negative cash flow and over extended credit into a cash flush business with no debt. By re-engineering the company’s production process, his new systems allowed production to increase four times its previous level without increasing labor costs. Smart and savvy Gabriel placed 2nd, three times, at three different national business plan competitions. He is two-time recipient of the Cougar 100 Award, which is given to the 100 fastest growing companies owned by Alumni of the University of Houston. His work ethic is unparalleled.
Gabriel is an honest person with a huge heart. During the Harvey floods, though stranded himself, he spent countless hours connecting people that needed emergency evacuation with folks that had boats and trucks to help get them to safety. He raised over $5,000 for one of his staff members who suffered heavy losses from the flood, and gave every employee a $1,000 bonus to help with losses they may have experienced. He is high spirited and fun loving, and motivates everyone around him with his energy.
Jonathan Cohen, 36
CFO/COO
Classy Art
FMG Buying Group Vendor Partner
Jonathan Cohen has sustained operations and liquidity through 13 years of double-digit growth, including over 50% two years in a row. He streamlined the company’s production processes to correct inefficiencies, and increased inventory levels to accommodate growth and support for major accounts while still remaining cash flush. Through his financial prowess, Jonathan helped transform the family-owned business that had negative cash flow and overextended credit into a cash flush business with no debt. He is the recipient of the Cougar 100 award 2 years in a row, for being one of the fastest growing 100 University of Houston Alumni owned business. Jonathan is also a graduate of the Goldman Sachs 10,000 Small Business Program.
Jonthan is the co-founder of a non-profit called the Bellaire Men's Club that teaches high school students accountability, business skills, and philanthropy. He has collected and distributed over 5,000 wrapped toys for kids in need during the holidays, and collected over 10,000 lbs. of non-perishable food for the Houston Food Bank.
Rhett Crockett, 32
Sales Manager
Yuma Furniture Company
Rhett found his way into sales by selling steak and seafood out of a truck door to door an excelled immediately. He found his passion in sales and has built Yuma’s sales from $5 million in 2013 to $9 million in 2018. Rhett's most impressive achievement is increasing the company's mattress sales. His hard work paid off when he won a contest and a free trip from Tempurpedic for the highest sales increase. Overseeing a team of more than 10 Rhett conducts regular meetings to monitor individual goals and performance. He has a relentless passion for the business and is a morale-boosting expert. His main focus is persistently driving sales by training his team. As a result of his efforts, sales have increased 35% year-over-year resulting in being nominated three years in a row for the Ashley President's Award. He continues to self-improve by attending courses, listening to sales podcasts and passing on what he learns. He creates a positive and productive culture and his team knows they can depend on him for leadership.
Rhett's leads the planning for the store’s Hope To Dream event. He is very involved in the community and is known for his generous contributions.
Andrew Crone
CEO
Chaddock
Andrew Crone is a Servant Leader who motivates and inspires. His energy is infectious. He has created and implemented Chaddocks’ business plan and strategy to help develop products and services for a diverse blend of distribution channels for the brands’ custom crafted furniture. He has instituted creative merchandising programs to streamline the custom order process resulting in 92% complete and on time order fulfillment. He has attracted new talent to the industry and uses Chaddock College to offer designers and sales associates product knowledge and best business practices to help them be successful. His humility has allowed him to be responsive and accepting of new ideas. His sincerity allows him to gather support to bring ideas to reality quickly due to his ability to absorb, discern, and decide on paths forward that benefit the group.
Andrew is an active member of Greensboro F3 (Fitness, Fellowship, Faith), whose mission is “to plant, grow and serve small workout groups for men for the invigoration of male community leadership.” He also works with Community Housing Solutions to provide decent, safe and affordable housing to low-income families and has helped build Homes for Habitat for Humanity.
Ashley De Mara, 23
Customer Service Representative
Greenington Fine Bamboo
Ashley is a standout talent who can juggle a dizzying array of responsibilities without ever dropping a ball! She handles the toughest clients effortlessly, which is a skill that seems to comes naturally to her. She is a problem solver who takes a proactive approach to address challenges, making a dramatic difference in the productivity level of the Greenington team. Her outstanding product knowledge makes her an asset to the sales team. She offers improvements whenever she sees an opportunity, including developing an expedited shipping schedule; formatting a new QuickBooks layout for order confirmations/updates; and process improvements for container ordering, returns, claims, etc. With an excellent attendance record Ashley is truly dedicated.
Although Ashley works full time at Greenington, she also works part-time caring for her mother who suffers from a debilitating health condition. In fact Ashley is so dedicated to helping others she became a certified nurse’s assistant to care for her mother. She also volunteers her time to King County Lost Pets, and Nexxus Youth and Families.
Jackie DeRegis, 23
Ecommerce Sales Manager
Dunk and Bright Furniture
FMG Buying Group Member
Building an ecommerce department from scratch, Jackie DeRegis transformed how Dunk and Bright markets and sells online. She is responsible for managing all ecommerce operations including hiring, training, supervising and coaching ecommerce sales associates. She grows website, phone and store traffic by creating flash sales, email and text programs and social media promotions. Jackie and her team are also responsible for converting leads into customers using Livechat box and in-store showroom appointments allowing the retailer to compete in the digital age. Since Jackie's promotion to ecommerce sales manager, shopping cart sales are up 50% over last year. In addition to being promoted after only four months, she is one of our top sales associates and generates all of her sales through website and phone leads.
Jackie organized a Red Cross blood drive to be held at the Dunk and Bright store. She also volunteers at The Samaritan Center to help raise funds to end hunger for those in need. Jackie has volunteered at the Salvation Army soup kitchen for 15 years. LeMoyne College bestowed a community service scholarship to her for her dedication to the community.
Jordan Haws, 32
Global Logistics Manager
Malouf
The Malouf supply chain team moves 7.1 million products around the world annually. Jordan Haws is the director of that team, the backbone of Malouf’s wholesale goods distribution. Haws’s management style and depth of knowledge has helped Malouf grow into an industry leader. He coordinates hiring and training for the logistics department, manages international logistics for 2,100 product skus, oversees the purchasing process and forecasting demand for 50+ online partners and 12,000+ retail locations in 22 countries. In his four years at Malouf, he has successfully facilitated growth from over 1000 containers in 2015 to more than 6000 containers this year. Thanks to Haws and his team, the company has maintained a 98.5 in-stock percentage. With the new tariffs recently imposed, Haws and the product development team, successfully transitioned from Chinese factories to locations in seven new countries without any disruption to customers.
The Malouf Foundation’s flagship cause is to rescue and shelter sexually exploited and trafficked children. For four years, Haws has Haws has organized the event raising more than $200,000 at the final sale. He also makes monthly donations to Operation Underground Railroad and CAPSA, and participates in charity golf events that benefit their partners.
Bobby Huber, 33
Sales Manager
Oskar Huber Furniture & Design
Furniture First Buying Group Member
Bobby Huber is the sales manager for Oskar Huber’s Southampton, Pa. store. He is the 4th generation to work at the store. Growing up in the business, Bobby has worked in various departments including warehouse and delivery as well as on the dock. He has worked with the merchandising department learning how to create line up's and evaluate slow performers. He is currently transitioning from managing one store into a new position where he will shadow the 3rd generation as he is groomed to take the lead from his father and uncles. As a member of Furniture First, Bobby attends quarterly performance group meetings with his father Ron. He also attends the annual Furniture First Symposium and is a member of their "Next Gen" group.
Bobby looks to find ways to give back and help others including buying and delivering gifts for less fortunate families at Christmas-time. He is a supporter of the Bucks County Design House sponsored by the VIA whose mission is to financially support Doylestown Hospital.
Mark Kinsley, 37
President and CEO
Englander
High profile industry executive, Mark Kinsley brings a reinvigorated approach to the Englander brand. The newly appointed CEO (he was already president) is leading the development and execution of a dynamic growth strategy focusing on further developing the strength of the Top 10 bedding producer. At 37 years old, he is one of the youngest executives to lead a major bedding brand. Mark’s high profile is credited to his role as marketing VP at Leggett & Platt and being co-host of the mattress industry’s only podcast, Dos Marcos, with nearly 100 episodes under his belt. With his demonstrated knowledge and experience in marketing, branding, broadcasting and social media, he is blazing new trails for Englander, while setting an example for other leaders of brands.
A supporter of the Jr. Diabetes Research Foundation, Mark is also involved with the Trike Community Theater as well as Operation Jammies, whose mission is to make a childs stay in the hospital a little more comfortable.
Jessica Lee, 34
Content Strategist
FurnitureDealer.net
FMG Buying Group Vendor Partner
Jessica Lee is the senior most leader of the publishing team that builds, and manages the product catalogs for more than 300 suppliers at FurnitureDealer.net. She has set the standards and defined the way products are presented for the successful brand. She has played a large role in building the company. A quiet leader, Jessica is smart, talented and adept at training and mentoring new employees. Her work ethic and in-depth knowledge about furniture, furniture shopping, furniture consumers and the industry as a whole is the foundation for her success. She is credited with overseeing the entire product content library and the one person who has created the most products in the library as well as many of the best presentations. She is a “curious” problem solver, another characteristic that makes her so successful.
Brian Lundstrom, 28
Director of National Accounts
Spring Air International
Brian oversees Spring Air’s growing national account operations and logistics and works with the company’s 10 domestic licensees to develop and implement procedures to better service key retail partners. He also works with Spring Air’s product development committee to develop programs that coordinate product launches into these key retailers. During his first year on the job Brian successfully helped implement procedures that revamped the customer service operation at Spring Air headquarters. That success led to his promotion to director of national accounts earlier this year. Already his efforts have resulted in increased sales. He also added a variety of special events and promotions that have led to a boost in national account sales.
Brian strengthened Spring Air’s partnership with Love Your Melon, a longtime supporter of organizations working to eradicate pediatric cancer. He organized the distribution of Love Your Melon beanies to domestic licensees, who give them to consumers who purchased a mattress from its Hope Collection. He also successfully integrated the Hope Collection, which benefits pediatric cancer research, into the national product line made by all domestic licensees.
Samantha Meridieth, 30
VP, Branding & Business Development
R&A Marketing
Back in 2012, Samantha Meredieth fell in love with the home furnishings industry. She enjoyed listening to retailers tell their story’s and the moments of service where they go above and beyond for the people in their communities. For four years she enjoyed helping retailers grow their business, and now she is helping R&A grow theirs.
Samantha oversees the advertising planning and creative process for clients to ensure consistent messaging and image for their stores. She develops monthly advertising budgets, places media buys and ensures spends remain within budget. She keenly monitors sales results and advertising effectiveness as well as traffic generated via advertising (UPs per day and per month). Samantha genuinely cares about her clients and their success. She represents the best of what an advertising, branding and business development executive should be.
When she’s not working or “being a mom”, she serves on an Athletic Alumni Advisory Board for her alma mater. She enjoys playing competitive soccer occasionally.
Christina Naumann, 39
Sr. Director of Merchandising Operations
At Home Group
A seasoned member of the At Home team, Christina is responsible for shaping the merchandising fundamentals, processes and standardizations across all of At Home, to transform it into a high-growth retail concept by reshaping the product mix, transforming the store experience, and building an employee-centric culture. Christina manages all visual merchandising, visual strategies and the execution of all in-store programs. She works to ensure execution of projects, while also serving as a liaison to fulfill strategy obligations and ensure on-time execution of new product rollouts, vignettes and display items. She has played a critical role in developing and implementing reporting tools to measure success of in-store visual displays. An accomplished retail and design leader, she is a strategic thinker with a strong eye for trends, and a keen sense for analytics. She has an excellent understanding of global sourcing, merchandising management, purchasing, operations, and negotiations.
Christina is a local community supporter. She developed At Home’s sample sale program designed to offer extra inventory and older seasonal products for a discounted price to employees. At Home then donates all of the proceeds to a philanthropic organization.
Christina O’Brien
National Accounts Marketing Coordinator
Home Meridian International
WithIt Member
Christina oversees all marketing responsibilities for HMI’s National Accounts. She brings value to them through the creation of written and visual content. She manages and directs product imaging for accuracy, timeliness and budget with studios in the U.S., Vietnam, China, and Brazil. She helps create omnichannel marketing strategies and directs the creation of printed marketing materials including packaging, POP, hangtags, etc. She researches trends for relevant photography direction and showroom merchandising. An enthusiastic team player, Christina is constantly thinking of ways to offer better marketing assets to the consumer. She developed the ATHENA – Performance Fabrics for Surviving the Chaos brand to promote HMI’s upholstered performance products. Her efforts gained the attention of many multi-channel retailers. Last year she began managing all marketing needs for HMI’s largest customer – Costco and has transformed the way product is sold.
Christina is a member of WithIt and an HMI Community Outreach Committee Member. She has been a volunteer babysitter for children going through the foster program and helped with HMI’s “Puppy Love” campaign, which supports the Guilford County Animal Shelter.
Jonathan Payton, 35
General Store Manager
Walker Furniture
FMG Buying Group Member
At Walker Furniture, Jonathan is responsible for all store operations including staffing, scheduling, customer experience, and sales training development. He mentors the front line staff members. He is also in charge of managing the merchandising presentation, as well as P.O.P displays to support the store buyers. Jonathan is eager to develop his skills and often requests to be included in meetings regarding other departments even on his days off. He has impressed upper management with his desire to be exposed to parts of the business that he is not familiar with, so he can perform better and help the company succeed. He is dedicated, with a strong work ethic and is an asset to the store.
Jonathan is a dedicated husband and father. He volunteers at the San Diego County Homeless Shelter and Momma's Kitchen of San Diego helping to feed the homeless. He is also a Chula Vista Chamber of Commerce member.
Shaun Pennington, 38
President
Diamond Mattress
Shaun is leading a fourth-generation family-owned business that his grandparents began 80 years ago. He is the visionary behind Diamond’s rebrand from a manufacturing company to a sleep wellness brand that included an all-new merchandising strategy and core product lineup, website and comprehensive web-based RSA training program for retailers. Diamond is achieving strong double-digit growth under Shaun's leadership. He has built and inspired a team of seasoned experts in their fields. He is an insatiable reader, learner and thinker who channels his passion for health and wellness into the sleep industry, determined to leave a positive legacy through his work. He speaks about and lives his personal and professional values of Gratitude, Intention, Faith and Transformation (also the names of the new mattresses). These ideas are very new to how we, as an industry, talk about mattresses and sleep.
Humble Designs is a non-profit that helps families transitioning out of homelessness. Shaun has donated mattresses as well as his time to this cause. He is also a board member and donates to the Long Beach Meditation Center.
Gui Peres, 36
Director of Global Sales
Ergomotion
Gui oversees operations and sales activities on four continents for Ergomotion. Frequently working with distributors, he ensures the company’s products and marketing programs are tailored to the local market, and implements appropriate customer service strategies. He has opened multiple international markets for Ergomotion, which is now sold in more than 30 countries. The international business unit has become a key growth driver, helping the company weather downswings in the U.S. market. He opened international sales, operations and customer service offices on four continents, establishing multiple partnerships with key distributors in local markets. He also spearheaded the company’s largest customer acquisition in the past eight years.
Gui volunteers and financially supports Sports Outreach Institute International, a Christian non-profit that helps at-risk children in Africa and the Americas through sports, spiritual support and academics. He is also a children’s ministry volunteer at Santa Barbara Community Church and performs Volunteer work and provides financial support for Casa Hogar, a non-religious orphanage.
Michael Petersen, 27
Director of Sales
The Furniture Training Company
Michael is responsible for meeting potential customers, discovering their training needs, and proposing solutions to meet their needs. He maintains relationships with his customers to ensure their ongoing needs are addressed. He strives to learn everything he can about the industry and to understand why dealers sometimes struggle so he can help craft effective solutions for them. He is developing his leadership skills and continually demonstrates his ability to grow sales. Michael was instrumental in the development of products that address the sales management training needs of furniture dealers. He developed a new sales and marketing plan aimed at helping dealers who struggle to find resources to purchase training prorams for their sales associates. He was recently promoted to Director of Sales because of his abilities to effectively interact with clients and potential customers.
Michael put off his college education to be a full-time missionary in Argentina for two years. Since returning to the U.S. 10 years ago, he has been a Sunday School teacher at his church. He is also an accomplished pianist who is always happy to lift spirits through his piano playing.
Benjamin Pou, 33
Director of Supply Chain
W.S. Badcock Corporation (Badcock & More Home Furnishings)
A 5th generation owner, Ben is an up-and-coming leader at this 115 year-old family business. He was “born into the business" and exemplifies a work ethic that reflects leadership, dedication, and teamwork. He encourages the development of others through his challenge to "do it better than we currently do.” Ben is responsible for all aspects of quality assurance and quality control across the global supply chain. In 2011, Ben started the centralized collections program, which now includes two call centers and close to 60 team members. During that time, he continued to achieve the highest levels of certifications available including ACA international’s CCCO designation. Ben consulted with LIVEVOX on improving their call center software. They were so pleased with his work he was invited to speak at their annual conference last year. He is a graduate of Florida’s Retail Federation Retail Masters Program.
Ben serves on the board of directors for Ridge Art Association, a non-profit competition art gallery. Together with his wife Leigh-Anne they donate time and money to charities through the Junior League of Greater Winter Haven.
Doddy Rafieha, 33
Executive Vice President
Abbyson
Since 2008, Doddy has been part of the team that’s helped shape Abbyson into the brand it is today. There are very few positions that Doddy has not held, initially beginning with global manufacturing and supply chain, and over the years covering finance & banking, ecommerce operations & logistics, as well as overall strategic planning & leadership. He developed Abbyson's award winning drop-ship program.
His meticulous nature combined with his decisive leadership style makes Doddy a big part of why Abbyson has been thriving in the business world. He has a keen eye for detail that only allows excellence and quality to be the standard. Doddy’s hardworking and perceptive characteristics along with his sharp mind have been a transformative force in revolutionizing the ecommerce drop ship model within the home furnishings industry.
As an advocate for sustainability and the environment, Doddy has been involved with several sustainability committees in various capacities.
Robert Rosenberg, 39
President
Planned Furniture Promotions
As President of Planned Furniture Promotions, Rob oversees all aspects of the company, including client negotiations, merchandising, sales, team member recruiting and retention as well as all financial aspects of the company. He has successfully navigated the challenges of serving as president of one of the largest and most successful furniture high-impact event company’s in the country. Rob has been involved with PFP from a very young age. He worked his way up through the ranks, serving in virtually every position along the way, until finally taking over as President of the company, where his leadership has led to record-breaking results.
Co-founded Odies Orchard Hill dog rescue, Supports Jewish Family Services, Major donor and co-coordinator of one of the largest industry company based fundraisers in the U.S., raising millions of dollars to support children's charities, mostly those suffering from childhood cancer.
Denise Salcido, 37
Sales Support Manager
AICO
Denise Salcido is on track be an executive leader. She plays an important role in sales and overall operations for AICO. Although her title is sales support manager she takes on greater responsibilities as the executive assistant to the EVP, VP of sales and the president, and plays a supervisory role in the marketing department. Her decision-making skills are focused on what is best for the company to move sales and take care of customers. Through many promotions, Denise remains in tune to the importance of details, follow-up and leadership. Her professional approach is a winning strategy. She takes initiative and has the foresight to be proactive. She is a “go to” problem solver and has earned the respect of her fellow workers. Her biggest attribute is her ability to multitask and take on projects that are not being managed and then developing a team to drive those projects.
Denise has been recognized as Employee of the Year and earned the AICO Spirit of Excellence Award. She is a City of Hope Supporter, and a Chucks Ride for Hope Supporter.
Eric Sears, 37
Account Executive
PERQ
Tasked with increasing PERQ’s home furnishing retail customers and ensuring customer success, Eric Sears helps develop marketing, messaging, sales processes, partnership efforts, and forecasting for his clients. He provides hands-on consulting to help them bridge the gap between their digital presence and brick/mortar storefronts. He helps clients build digital relationships with buyers in their local marketplace, using AI-driven software. Eric is adept at creating well-rounded programs for clients, while making implementation easy. He has helped the company Increase their customer base including six furniture retailers on the top 100 list, finishing last year at 151% to goal and as PERQ’s number one revenue generator. What distinguishes Eric is that he comes from a retailing background giving him a unique insight. This fuels his passion to help make furniture retailers’ jobs easier and is laser focused on ways move their businesses forward.
In addition to over 10 years of volunteering in the infant room for Heartland Church, as well as for Vacation Bible School, Eric participates in the Ante 4 Autism Poker tournament, and supports several other volunteer organizations.
Carol Sham, 37
Director of Marketing
Coaster Company of America
FMG Buying Group Vendor Partner
As head of marketing for Coaster, Carol Sham is directly responsible for overseeing all of the company’s marketing activities, setting the direction for the digital, advertising and creative teams. Carol has also taken a lead role in shaping Coaster’s new strategic direction, which included a corporate rebrand and the creation of three new sub-brands. As Carol spearheaded the creation of Coaster’s new visual identity, she also oversaw the design of a new website, the development of B2B & B2C corporate marketing strategies and the implementation of an integrated marketing campaign. Since Carol joined Coaster, her efforts have led to their on-going success. She continues to provide Coaster with innovative ways to market and grow sales in an omni-channel environment. Her branding efforts have elevated brand perceptions of Coaster, and her digital media campaigns have increased visits to the new website by 70% in just one quarter. The passion she has for her job and her positive attitude is welcomed by everyone she encounters.
Carol is an active member at her local community church, and participates in their community outreach programs. She is also a City of Hope Supporter.
Ashley Shaw, 27
Manager, Client Services
ecUtopia
FMG Buying Group Vendor Partner
Ashley is a talented rising star who is influencing the way business is conducted for retailers and manufacturers in the home furnishings industry. When she joined ecUtopia in 2015 she had no knowledge of the industry, or supply chain management. Today she oversees all aspects of EDI transactions for the company and its’ clients, and manages and mentors the customer service team. Working with many of the Top 100 dealers in North America as well as many of the leading furniture manufacturers in the world, Ashley is driving improvements in supply chain services. She has successfully managed and delivered many impactful projects and continues to influence and drive efficiencies for retailers and manufacturers alike. She is a natural leader with a strong work ethic and a winning personality. She is well respected by her colleagues.
Growing up as a Pastors kid, Ashley has a charitable heart and gives back to the community in many ways including volunteering to feed and help the homeless at local shelters. She is an active member of WithIt and HFA’s Next Generation Now.
Alexandria Thompson, 33
Digital Account Manager
MicroD
Alex focuses on digital marketing services and website platform marketing capabilities. With her marketing and technical expertise, she is making sure her customers are successful. She has risen through the ranks at MicroD from a Technical Support Specialist to an Account Manager to her current role as a Digital Account Manager. She has helped to grow the online success of many of MicroD's most important clients. Alex has a passion for her clients, the industry, and the technology that moves furniture businesses forward. With her diverse skillset she has the ability to generate revenue for clients by executing an omnichannel approach. Many of her clients are seeing double-digit increases. Her desire to consistently evolve lends itself well to providing clients with the newest strategies for growth and helps keep MicroD on the cutting-edge of the home furnishings industry.
Alex is a team captain for Relay for Life, Catawba. She is also the founder of Ladies of Longview, a group that makes improvements to the town. She is a WithIt member, and was recognized by her peers at MicroD as a “Woman who has made a difference in their lives and empowers them.”
Miguel Valle, 35
General Sales Leader
El Dorado Furniture
At 22 years old MIguel started his career as a sales associate for El Dorado. His career path progressed to the position he holds today where he directs and supports all retail showrooms. He demonstrates integrity, professionalism, leadership abilities, and strength of character, and has been recognized by the company for his professional growth. He oversees general sales objectives for all showrooms, evaluates sales productivity, quality of customer service, and overall customer satisfaction based on company standards. He recruits, trains, schedules, and coaches employees in assigned districts. As the store administrator of the Cutler Bay showroom, he consistently led his team to become the most exemplary store in the company. Miquel achieved Certified Master Instructor status at the EL Dorado Furniture University and is an appointed captain of Eldorado’s Five Star Service initiative. He obtained his MBA degree in 2013.
Miguel represents El Dorado Furniture at local schools on career day to speak about the company’s history and expose students to the retail furniture industry. He has a kind heart and hosted less fortunate families at his store during El Dorado Furniture’s 50 years/50 families charity event.
Travis Wagner, 32
Sr. Vice President of Global Manufacturing
Ashley Furniture Industries
FMG Buying Group Vendor Partner
At 12 years old Travis started racing cars where he constantly asked questions about what could be tweaked to gain additional speed. He spent countless hours using the resources around him to gain an advantage, a trait that would serve him well in his future endeavors. At 16 he started working at Ashley, loading/unloading trailers and helping customers on the weekends. In 2009 he moved overseas to help with manufacturing operations in Asia. His abilities were quickly realized and he was promoted to operations manager responsible for Ashley's first factory in Vietnam. He went on to oversee the successful start-up of four additional factories. In 2018, He returned to Ashley’s North Carolina facility where he currently runs three plants in the U.S. and four in Vietnam. He earned his MBA while at the helm.
Todd is supportive of Ashley’s philanthropic efforts and supports medical research at The Mayo Clinic, City of Hope, and St. Jude’s Children’s Hospital to name a few. The statement “you must finish before you finish first” defines his philosophy in life, family and business.
Shannon Williams, 33
Home Furnishings Association
Director of Membership & Programs
FMG Buying Group Vendor Partner
Since landing at the HFA, Shannon has rebuilt the membership division and focused on growth and retention. Her efforts have led to a 300% increase in new members in Q4 2018 and 78% increase in Q1 of 2019— with 2018 being the best year for member retention in the history of the organization. In 2019 the HFA is on track to have the best year in the 99-year history of the HFA. Her primary responsibility is to oversee the membership and program departments. The membership department includes business development and customer service/retention specialists while the program department includes all vendor relationships and program/service offerings for retail members.
Shannon has been instrumental in shifting not only the direction and focus of the membership department, but the culture of the entire company. She is the spark HFA needed to progress within the industry.
When she’s not working Shannon volunteers with a non-profit teen program as a camp advisor to help teens work through the pressures of life. Over the past 15 years, she has volunteered more than 5,000 hours in Elementary Classrooms.
Jessica Wynn, 28
Director of Operations
High Point Market Authority
FMG Buying Group Industry Partner
Jessica is part of the team that manages, and executes top-level operations for the world’s largest home furnishings trade show. Her responsibilities include production of the Stars Under the Stars Concert Series, onsite collateral coordination, neighborhood activations and overall Market guest services. He role often includes tasks that can be overlooked, but are vital to the smooth execution of a successful event. Jessica has embraced her logistical role, moving from manager of special projects to director of operations, and looks for ways to improve processes and develop efficiencies. She is adept at idea activation and process organization and used those skills to bring depth to the markets’ sponsor program by assisting in its execution and developing new elements. With her go-getter attitude, team player mindset, and infectious enthusiasm, Jessica is always focused on growing professionally. Her work ethic and drive are worthy of recognition.
Jessica has a strong sense of civic duty and a hefty dose of community pride, leading her to be involved in a variety of ways in Greensboro, where she lives and in High Point where she works.
Michael Yarbrough, 37
Director of Digital Marketing
Lexington Home Brands
Mike has demonstrated exceptional leadership across a diverse set of responsibilities. He oversees all of Lexington's online properties across the company’s six brands as well as their Internet accounts. He also manages digital marketing for two company-owned trade showrooms, two retail stores, a factory outlet store, and works directly with the company’s 1,200 retail accounts on their traditional and digital marketing efforts.
Mike recently led the development and implementation of Lexington’s 3-D custom upholstery configuration program and Augmented Reality app, which is one of the most sophisticated in the industry. He also serves on the implementation team for a new multi-million dollar ERP system for the company.
Mike represents Lexington Home Brands, serving on the Board of Directors for United Way, Davidson County. Lexington was recently awarded the Donna H. Black Award of Excellence for having 85%+ employee participation in the United Way program. Mike has been a significant supporter of the City of Hope and involved with industry organizations such as Next Generation-NOW. He is currently enrolled in the MBA program at Wake Forest University, balancing a full-time graduate workload with his job responsibilities at Lexington.
A LOOK BACK
The best way to help Millennials grow as leaders is to teach them as much as possible. Give them the chance to lead and if they prove they can handle the responsibility, give them more. Millennials may need more direction than previous generations, but given the right support they can become the most valuable employees to any company.
The profiles you are about to read are those of individuals that have already received distinction in a previous class of the Forty Under 40 and have continued to succeed and advance in the industry. These individuals have become the future leaders we’ve talked about over the years. They are forging forward with new ideas, and new ways of conducting business to help sustain and continue to build the companies for whom they work. The continue to navigate the road to success.
Alana Stone Anderson, 32
Vice President of Marketing
BedMart Mattress Superstores
Alana has come a long way since jumping on mattresses in her family’s store at the age of 5. Today she is the future of BedMart whose footprint recently passed 47 stores in three states. We first featured Alana as part of the Class of 2015. Since then she has established herself as a leading mattress and furniture industry professional and is well respected. With a strong drive to excel, she leads her team with fresh ideas about advertising and merchandising to meet the challenges of the changing consumer market. She is a natural leader who knows how to capitalize on trends to help grow market share. She has developed training programs and revised BedMart’s vision and mission statements to more closely reflect company values. She continues to be the spokesperson of the company. With her bright spirit she leads a team dedicated to the growth of each other and the brand. She is clearly on the road to one day run the company herself.
Alana has worked hard to help the communities BedMart serves. She recently led the charge to provide mattresses to people whose homes where destroyed by lava during the recent volcanic eruption on the Big Island of Hawaii.
Greg Cattin, 34
Managing Partner
Gallatin Valley Furniture
Furniture First Buying Group Member
Since 2017, when Greg was featured in the Forty Under 40, the business has grown by 33% and does not show any signs of slowing down. He is credited with completing a significant remodel to update the facade and interior of the company’s 36,000 square foot showroom elevating the curb appeal of an outdated building. The growth is not only attributed to the remodel but also to the development of a robust trade program for local designers and the development of Gallatin’s own internal interior design team (GVDG). Greg successfully created a boutique retail environment in the form of an individual store brand instead of using manufacturers POP and marketing displays, which is helping to drive revenue for the brand. He has developed a terrific company culture and attributes the company’s success to his team of nearly 20 who have helped him and his brother, who is also his partner, as they transform a 4th generation family business into one of the leading fine furnishing retailers in the Northwest.
Greg continues to find ways to help local nonprofits and led efforts to have his entire staff donate hours for the United Way.
Kyle Doran, 34
President/CEO
R&A Marketing
Since we last featured Kyle four years ago, he continues to lead R&A Marketing, which is a 2nd generation full-service marketing agency. R&A has seen tremendous growth under Kyle’s leadership. In his role as president/CEO he is responsible for overseeing the strategy, direction and profitability for the company as well as the profitability of their client base. Kyle’s focus has always been to help the independent furniture retailer succeed and he continues this mission today. He ensures that marketing and sales activities are aligned and he fosters an environment where ideas come together to create positive outcomes for the company’s clients. He is adept at keeping the focus on combining different creative and strategic ideas into executable campaigns and stays engaged in the process from start to finish, working hand-in-hand with his team and their clients. Every CEO copes with a multitude of priorities, but Kyle puts the marketing team structure at the top of the list to make a significant difference in the quality and effectiveness of their efforts for their clients.
Jonathan Kashanian, 34
Vice President
FJ Kashanian
The Kashanian family has been creating area rugs long before Jonathan was born but the family business runs deep in his veins. Today Jonathan continues to help his father lead the company into the future. As designers and importers of area rugs from India and Pakistan Jonathan learned the trade from his parents and has inherited his keen eye for color and design from his mother Gilda who is the lead designer for the brand. Jonathan understands the trends of the market and has mastered his craft. His primary focus these days, is on sales and customer relations. He inherited his father’s dedicated work ethic and channels that into keeping his customers and his employees happy. His ability to do this is a strong contributor to the overall continued success of the business. Jonathan embodies the values of this family lifestyle brand and never loses sight of the team environment that is so much a part of the brand. He continues to earn the respect and trust of his customers for the way he conducts business.
Jay Lorenzo, 29
Sales Professional
AICO
As has become an accomplished sales professional. His work ethic and desire for greatness continues to evolve and he is now a leader on his team. Being selected to be the AICO sales professional in the central and northern part of Florida is an accomplishment in and of itself, as this is a critical territory for the company and one of the most important assignments. Jay is hungry to learn and grow in the art of selling and continues to move closer to his full potential. He has learned that good is the enemy of great. He understands that TRUST (not SALES) is the most important five letter word in business. Jay has received several prestigious awards from AICO including the "Rising Star" award and the "Spirit of Professionalism" award. He is just scratching the surface of what he can accomplish in this industry.
Jay is passionate about fitness and health and while coaching at a Crossfit gym he helped create events to promote awareness and fundraising for charities. He participated in three consecutive breast cancer events, and also has participated in Walk for MS.
The Millennial Toolbox: 3 Tips to Championing Next Gen Talent
If you're a millennial hoping to secure a place in the C-suite, whatever it may look like, here are some tips based on the findings of an American Express survey.
1. Put Employee Well Being First — Millennials care about feeling fulfilled in their work, and fulfillment goes beyond a paycheck or bottom line. A majority of survey respondents defined success as enjoying the work they do (62 percent) and also having a good work-life balance (58 percent) – and millennial leaders will try to engender these forms of success in others. This shifting definition of success encompasses not only individual career aspirations but the overall success of a business. To roughly three-quarters of respondents, a successful business "should be flexible and fluid in the face of volatile working environments and not enforce a rigid structure on employees" and "will need to support employees outside of work."
2. Set Clear Boundaries Around Technology — With the ubiquity of mobile technology, many workers never truly leave the office. Fifty percent of Millennials surveyed feel the pressure to be "always available." As digital natives, Millennials are uniquely equipped to establish best practices for the use of technology in the workplace. This can include restricting the use of email and other digital communication channels to office hours.
3. Emphasize Purpose-Driven Work — 68 percent of American Millennials surveyed "want to be known for making a positive difference in the world," and 81 percent say that, "a successful business will have a genuine purpose that resonates with people." Aspiring leaders should foreground corporate responsibility and create a standard of positive change, rather than simply following regulations and minimizing negative impact relative to your competitors. Nowadays, the public is savvy and often cynical. They can easily sniff out the difference between doing good and good PR.
Responsible Leadership: Tips for Successfully Guiding Those Who Have Chosen to Follow You
Whether you have stepped into your first ‘real job’ or you are a seasoned career veteran, and you have a passion for being an effective leader, there is one very important truth that needs to be understood: Leadership is a JOURNEY and not a DESTINATION, says Lorri Kelley, founder, Lorri Kelley Advisors. With over 30 years of experience in the industry Lorri is a coach and mentor to several young professionals on their career path journey. “You don’t simply arrive at the day when you can anoint yourself as an acclaimed and proficient leader. Each day should begin with a conscious effort to learn something new that will allow you the opportunity to grow and expand your leadership skills; first for the betterment of you, and then for the investment in those you lead.”
Kelley’s definition of great leadership starts with having a visionary mindset, a
courageous heart, a contagious mindset for all that is possible, and a sincere passion to actively participate in the success of others. "Having responsibility for the development of others you manage is not a designation to take lightly, she says. "How you lead your team will undoubtedly shape how THEY lead others that they will become responsible for in the future. So in reality, you hold THEIR ultimate success in YOUR hands!"
According to Kelley there are some common threads between those who truly lead and do it well. She offers seven proficiencies that are important to keep in mind as you consider your own leadership journey.
1. Great Leaders Inspire Others to Achieve More Than They Ever Thought Possible — Getting others to recognize their own strengths and passions is critical to helping them reach their full potential. I never assume that people know what their gifts are, so I make it a point to be observant and aware at all times.
2. Great Leadership is About Listening More Than Speaking— Most people love to talk! However, the more we listen to those we lead, the better the coach we will be. We must help them get to the result they want and not just simply tell them how and when to get there.
3. Great Leadership Begins With the Person and Not The Title — People want to follow successful and inspiring leaders regardless of what they do. Respect comes with, and is earned by, the person and not the position.
4. Great Leadership is About Wisdom and Not Education — Great leaders are ‘street smart’ to a stronger degree than they are ‘book smart’ and getting to that place comes with only opportunity and experience. While you can make an argument that respect can be earned through various degrees obtained, most of us look to the background and accomplishments that a leader has achieved, and that is ultimately who we want to follow.
5. Great Leaders First Become Great Followers — You can’t effectively lead if you haven’t first learned how to be led. We are all shaped in some way by our past and reflecting back on how we were managed at times during our careers helps to mold our own leadership style to be the best we can be and to have the greatest impact on others.
6. Great Leaders Demonstrate Stability While Driving Change — Leadership is hard. Difficult decisions need to be made every day, and exceptional leaders can provide a sense of calm and confidence while successfully guiding the team forward through growth and expansion.
7. Great Leaders Actively Look for the Next Great Leader — Perhaps one of the most
important responsibilities of any leader is ensuring that the next generation of leaders are in process and in place.
Along with leadership comes accountability. Being a great leader means setting clear expectations and managing your next generation leader to them. In doing this, you’ll create a next generation leader you can count on.
June 9,
2019 by HFBusiness Staff in Business Strategy, Industry
The retail climate for furniture has remained relatively steady over the last five years at 5.6 percent average growth according to Impact Consulting Services (parent to Home Furnishings Business) FurnitureCore.com industry model. Furniture stores overall took baby steps last year as these retailers slightly outperformed the industry total with 6.8 percent growth versus 6.6 percent for all channels. This growth was despite a slowing in the fourth quarter that continued through the first quarter of this year. Combined furniture and bedding industry sales grew only 1.8 percent in the first quarter versus the same quarter in 2018. Preliminary reports show furniture store first quarter sales appear to be down 2.5 percent. (Table A).
This is the sixth Home Furnishings Business report on Retail Metrics for Furniture Retailing providing a comprehensive look at financial performance in the home furnishings industry via comprehensive data collected throughout the year by Impact Consulting Services. This data is collected through Impact’s FurnitureCore application, Best Practices, which provides an ongoing monthly measure of a retailer’s performance. This subscription-based online application allows retailers to compare themselves to other home furnishings retailers and devise a plan to better manage store operations. No individual retailer’s numbers are shared, only composite percentage results. (See Methodology for additional criteria used in the Retail Metrics report.)
The focus of this article’s financial comparisons is two-fold. Results are provided for All Participants and reflect the performance of the entire sample compared to last year. In addition, the Top Quartile results are presented in three retailer size segments for performance comparisons based on revenues – Under $5 million, $5 million to $25 million, and Over $25 million. The Top Quartile includes the top 25 percent in performance. It should be noted that retailers participating in FurnitureCore’s Best Practices application are retailers focused on improving their company’s performance and does not reflect the industry in total.
The sales ranges not only reflect size of retailer, but in turn the differing operational characteristics the company size brings to profitability. The Under $5 million retailers are the surviving Mom and Pops who have developed niches and strategies for staying in business. Retailers with sales $5 million to $25 million have often emerged from Mom and Pop stores and are usually very owner-focused in operations. The larger “Over $25 million” retailers may also reflect similar ownership, but have also developed more tiered management operations adding professional managers, for example in warehousing/delivery functions. Depending on size, this top sales range may also have accounting practices that are driven by tax strategies.
The overall financial performance of All Participants is shown in Figure 1. Each portion is further compared to the Top Quartile in each size segment with more in depth analysis.
Overview of Key Performance Indicators
Higher operating costs tell the story of the decline in Net Operating Income from 6.4 percent in 2017 to 5.7 percent last year. Table 2 gives an overview of key indicators – Gross Profit, Sales Expense, General & Administrative Expense, Net Operating Income, and Credit Expense. Gross Profit of 48.7 percent was down from 48.9 percent in 2017 impacted by slight increases in Cost of Goods sold -- from 51.1 percent of revenues in 2017 to 51.3 percent last year.
The importance of controlling all facets of the business is reflected in the performance level of the Top Quartile retailers compared to All Participants, also shown in Figure 2. Small Mom and Pop retailers under $5 million in sales and their larger counterparts, $5 million to $25 million retailers, did a much better job at controlling Cost of Goods sold than much larger dealers over $25 million. Top performing retailers in all size ranges outperformed the total group at reducing Sales Expense, G&A costs. All Participants were surprisingly able to bring down Credit Expense. Sales Expense is comprised mostly of sales force compensation, advertising, and warehouse/delivery expense. The biggest chunks of G&A are Occupancy costs (rent/lease) and Administrative costs, primarily administrative and managerial salaries.
Each segment of financial performance is presented in more detail in the below. (Note: Historical 2017 data has been slightly revised from previous reports.)
Above the Line Income
Total Revenue encompasses merchandise sales as well as returns, sales of fabric/leather protection, and delivery income (Table B). Improvements in each component are detailed below.
Returns: Merchandise Returns (Table B) represent less than 1 percent of total revenue for the group, a significant improvement from 1.4 percent in 2017. However, smaller retailers tend to handle many of their returns outside of the tracking system with voided tickets and even exchanges which is reflected in the Top Quartile lower numbers for these retailers. Meanwhile larger firms are more likely to document these transactions negatively reflecting on their performance.
Merchandise Protection: Merchandise Protection (Table B) is often an important profitability component for traditional retailers, with the exception of upper to premium dealers, who often consider it a negative. This income usually represents around 3 percent of total revenue with its importance growing slightly higher among top performing retailers.
Delivery Income: Free delivery (Table B) has become the expectation of consumers in all retail outlets with revenues falling consistently every year. High performing smaller retailers in both sales range categories under $25 million are more likely to provide free delivery to their customers. Retailers are also experiencing a growth in customers who want to pick up their own purchases from the store.
Cost of Goods Sold
As tariff wars keep cropping up, the threat to a retailer’s Cost of Goods Sold becomes a never-ending crisis. An improvement in Cost of Goods Sold for the retailer is accomplished by either “buying better” or simply not having to discount its merchandise so heavily. The total group last year saw slight growth in COGS at 51.3 percent of revenue in 2018 compared to 51.1 percent the previous year. The two smallest Top Quartile groups, $25 million or less were able to best that percent usually performing in the 49 to 50 percent of revenue range. (Table C)
Gross Profit
With lack of improvement in Cost of Goods Sold, Gross Profit declined slightly as well for the total group. For All Participants, Gross Profit fell from 48.9 percent of revenue in 2017 to 48.7 percent in 2018. Again, Top Quartile performers in the two groups under $25 million sales reached Gross Profits between 50 percent and 51 percent in 2018. For the group over $25 million, the higher cost of Goods Sold is reflected in their lower 46.5 percent Gross Profit. (Table D)
The gross margins of the Furniture industry at 48 plus percent are the envy of virtually all other retail industries. And some vertical furniture retailers enjoy even higher margins due to their direct sourcing models. By comparison, according to the Census Bureau, in 2017 gross margins for electronics and appliance stores averaged 32.7 percent; warehouse clubs and superstores, 23.1 percent; department stores, 32.6 percent and pure electronic shopping retailers 41.2 percent. One of the paradox’s of the furniture industry is its high gross margins and small profits. With such healthy margins, why does the furniture industry make so little profit? Tracking how much of it the industry spends on selling the product and running the business brings these low profits into focus.
Selling Expense
After the cost of the goods, Selling Expense is the highest cost segment of the business (Table E). For several years this figure has remained relatively constant. Between 2014 and 2017 Selling Expense grew only 0.2 points from 23.8 percent of revenue to 24.0 percent. This past year the total group reported a 0.4 point jump in Selling Expenses, from 24.0 percent to 24.4 percent. This is the cost of attracting the consumer to the store (Advertising), converting that consumer to a purchaser by trained personnel (Sales) and successfully delivering that product to the consumer’s home (Warehouse/Delivery). All Selling Expense categories grew more costly in 2018 with the exception of Warehouse/Delivery/Service expense. Each category is discussed in more detail below.
Advertising Expense. Retailers are spending more to attract customers. The cost of promoting product experienced a big jump as retailers now have a smorgasbord of advertising choices, including the internet. Advertising costs increased from 5.6 percent of revenues in 2017 to 6.0 percent in 2018. (Table E). Advertising channels still differ by size of retailer where larger retailers will use more broadcast/air channels while smaller retailers may rely heavily on print mediums. And advertising on the internet is adding options for all retailers. Very small Mom and Pop retailers are increasingly required to spend more on advertising to attract customers. It is imperative that advertising’s effectiveness be measured on a weekly basis and the only measure is number of visits – or Ups – to the store or the website. (Table E)
Sales Expense: The largest component of selling expenses is the cost of the sales associates, along with the cost of managing and motivating of them. Included in Sales Expense (Table E) is the sales associates’ commission, as well as sales management, bonuses/contests and similar activities. Sales expense is increasing throughout all industries as retailers struggle to find motivated sales associates. Overall, Sales Expense was up 0.2 points from 9.4 percent of sales in 2017 to 9.6 percent last year. Small retailers under $5 million have the highest sales expense of the top performers at 10.3 percent of revenues.
Warehouse/Delivery/Service: The “after the sale” cost of Warehouse/Delivery/Service is also a significant expense to the retailer. Last year retailers made significant progress in controlling these expenses. As previously mentioned, many customers are choosing to pick up purchases from the store. Also, the low cost of gasoline throughout the year may be a contributing factor. Warehouse/Delivery/Service expenses fell from 7.3 percent of revenue in 2017 to 6.9 percent last year (Table E). For Top Quartile performers, the larger the company in our retailer group, the bigger the cost for all Warehouse, Delivery, and Service expense. Top performing retailers over $25 million in sales spent 9.4 percent of revenues in the category. Often a retailer’s upfront performance is negated by the backend if the retailer is unable to manage it correctly. Many mid-sized retailers are now outsourcing this function in an effort to bring this cost down.
Store Sales Expense: A small but important selling cost, Store Sales Expense, averages 1.9 percent of sales for the total group (Table E). Retail technologies exist to eliminate the sales counter which can cost one percent or more, but can negatively impact the consumer’s excitement for the furniture purchase.
General and Administrative Expense
The final piece to profitability is the control of General and Administrative Expenses which, for the most part, are fixed expenses and must be controlled relative to the potential volume. Primary components include Occupancy costs – the place to conduct business and the costs to keep it open, the cost of the management team that develops and executes a strategy, and finally the technology and information systems that are essential in controlling the process. These expenses can be as much as the Selling Expense in some cases and generally vary significantly by the size of the retailer. In 2018, G&A totaled 18.6 percent of revenue, the same as the previous year, an important feat considering this is the one part of operations that does not touch the selling process (Table F).
Information Systems: Technology costs are still well under 1 percent for the total group as well as the best performing retailers and are holding steady (Table F). Even smaller retailers are embracing the implementation and ongoing maintenance of systems necessary to run a business smoothly understanding these systems are critical to profitability. The larger retailers investing more in information systems have achieved an advantage in processing the customer order after the sale, often by transferring the process to sales associates.
Occupancy: Costs for keeping the doors open ran a significant 8.2 percent of revenue for the total group last year, up from last year’s 8 percent. The best performing companies in the under $5 million and $5 million to $25 million ranges enjoy Occupancy costs around 6 to 7 percent (Table F). Large retailers over $25 million spend less often having the upper hand with the ability to secure the best locations. But in many prime areas real estate rents are escalating. Nevertheless, consumers are increasingly placing a priority on location wanting to shop closer to home or visit retailers along their normal shopping routes. Many retailers are looking at ways to lower the size of their store footprints as a way to respond to the pressures from e-commerce retailers.
Administrative Expense: The largest chunk of Administrative Expense is management salaries along with bonuses, professional fees, and insurance. Overall Administrative fees for All Participants are down from 9.4 percent of revenue on average in 2017 to 9.1 percent in 2017, with total costs for management salaries as a percent of revenue holding steady. Top performing retailers regardless of size are keeping Administrative Expense in the 8 percent to 8.5 percent of revenue range (Table F). Spending money on managerial positions is often a difficult decision but can often produce big results with the proper personnel.
Credit Income and Expense
Retailers acting as credit houses continue to disappear and what was once a key area of profitability is now a crucial place to control costs. Net Credit Expense fell significantly in 2018 to 2.8 percent of revenue compared to 3.3 percent in 2017 for the All Participants. Top Quartile retailers had mixed performance with retailers over $25 million reporting Net Credit Expense higher at 3.5 percent (Table G). From our perspective, credit is a selling expense that originally emerged as a perceived necessity to generate consumer traffic. But in our experience, fewer and fewer consumers opt for offered credit promotions. Many consumers are instead opting for promotions from personal credit card companies as opposed to store credit promotions.
Net Income (% of Revenue)
Net Income finished at 3.5 percent of revenue last year, down from 3.6 percent in 2017 for the total group. For the Top Quartile in each size range, improvements in General and Administrative Expense, especially Occupancy costs, led the way to more than doubling the Net Income performance of All Participants. For the best performers, depending on the size of the company, Net Income ranged from 6.8 percent to 9.3 percent among the top 25 percent (Table H).
Summary
Collectively for the traditional retailers in our total group in 2018, keeping costs down proved to be difficult last year. Gaining as a percent of revenues were advertising costs, salaries in all areas, and rents, just to name a few. The strides made in Delivery/Warehouse/Service, despite the decline in Delivery Income, along with gains made at reducing Credit Expense were not enough to pull up final Net Income. For the two Top Quartile groups under $25 million, the progress made in Cost of Goods Sold, Occupancy, and Administrative costs, propelled them to more than double the performance of the total group. The largest Top Quartile, retailers over $25 million, also did better at controlling Occupancy and Administrative costs than the total group, but had much higher Cost of Goods Sold. Indications are that salaries and rents will continue to become more costly in the future forcing the retailer to look more closely at all areas of performance. HFB’s June issue article entitled Statistically Speaking addresses the increasing costs of wages.
Keep in mind our numbers are only guidelines to stimulate thought and discussion of how to profitably run a retail operation. We caution any specific retail figures, to be comparable, must be compiled to conform to these classifications.
We believe an ongoing focus on a company’s statistics is the path to high performance. It is not achieved in a month, but is part of a continuing process. Such a process is greatly enhanced with membership in a retail performance group that allows for open and frank discussion with peers of the barriers to achieve certain objectives.
The overall industry statistics reflect growth last year and many retailers are achieving exceptional results. We challenge you to be one of those. Home Furnishings Business is committed to providing input to your process.
May 13,
2019 by HFBusiness Staff in Business Strategy, Industry
Traditional retailers control 24.4% of the industry with sales on the uptick for regional chains. Unfortunately the Bureau of Labor Statistics is projecting 8,000 stores, which is about a third of the current count, to close. Mass merchants that absorbed the volume done by the national chains (Sears/Wards/JCP) has leveled out at 20%+/-. The internet continues to grow at 5.1%, but we believe this will level out at 20%+/- of furniture sold.
Our focus will be the total supply chain - not just the retailer to consumer - but also the supplier to the retailer. Facilitating the transfer of product from the designer’s sketch pad to the manufacturer to the retail buyer, forward to the retail sales associate, and finally to the consumer. A long communication channel to establish both knowledge and excitement about the product.
Step One: Selling the Retailer
Well, I guess I will touch the “third rail” and discuss the role of sales representatives in the furniture industry. Let me say before someone comes after us: we believe that sales representatives play an important role in the sales process. Our challenge is to better define that role.
While we believe the sales representative has an important role, we also believe that role is one of executing a sales strategy not defining the strategy.
Historically, the first step in launching a new company or a new product category was to line up the right sales team in every territory. Yes, there are still those individuals that can deliver the market. However, many are retiring along with the closing of many of the independent furniture retailers they served. A recent report by USB projects the loss of 8,000 stores by the end of 2020. Obviously, most of these are single store retailers.
However, the Regional Chains, those retailers that operate multiple stores in multiple states are expanding. There are sales representatives that have relationships with these retailers but more frequently, this relationship is the vendor’s vice president. Often, this is where the noise starts with the retailer “to give me the sales reps commission” and we will handle the training. Beware: this is a slippery slope.
But let’s return to the discussion of independent retailers served by independent sales representatives. The typical manufacturers develop additions to the merchandising lineup. Pricing is a function of maintaining a gross margin that satisfies the financial goals of the company, disregarding the significant value of the new design or more important, the merchandising price lineup in the industry.
The failure of many suppliers is pricing their product lineup above the market. The charge to the salesforce is to go forward and sell at least x% more because that is what we need. The “cat and mouse” game between sales managers and sales representatives is quite a kabuki dance.
For most manufacturers, there is no recognition of their marketshare in a particular market or for the most part, no recognition of those markets in which they have no presence.
What about those markets without sales — has the sales representative identified these opportunities? More important, has sales management? The point is: who is in charge of defining the strategy?
But most important, there is no expectation of service level. What is service level? Simply put, between major markets (High Point for most), how frequently do you want your sales representatives in front of the buyer? The most frequent response is “our sales rep knows.” It is the responsibility of the supplier to establish a specific strategy based upon performance or lack of performance of the retail account. If the account base performance is segmented into (3) segments: top performers, moderate performers, poor performers, it is the starting point of a sales strategy.
The next retort is: why would they want to meet? They will not change their assortment until next market. Talk with seasoned reps and they will recount those orders that they received by going through the door at the right time — when their competition is not delivering or sales have been declining for weeks. But, besides that spontaneous purchase, the buyer is constantly evaluating their merchandise assortment. Should the sales representative be proactive in changes? Seasoned sales representatives of the past “gridded” the retailer’s merchandise lineup, identifying missing price points and styles. Without a doubt, a time consuming effort, but it created a retailer ready to meet with a sales rep that provides sound input. With today’s analytics, it’s possible to provide that merchandise intelligence. What powerful information.
More important than the time in front of the retail buyer is the more immediate influencer of sales — the time in the store with the retail sales associate (RSA). Typically referred to as “training” it is more than that- it is establishing a relationship between the supplier and the sales floor. The fact is that people sell for people. The impact of the sales representatives recognizing that the retail sales associate’s performance when they visit the store is immeasurable. There are firms that prepare, online, product training for manufacturers which is very effective if executed. If the sales representative encourages the interface with incentives from the manufacturer during the visit, the sales representative can cover the major selling points for each product on the floor. That is what is needed by the RSA. It is more exciting and less boring than the technical details available online. Len Burke, VP of marketing at Klaussner Furniture says, “I have seen the work from the Furniture Training Company have positive impact on RSA’s and their retail sales.”
How often should they train? What should your training service level be? According to Impact Consulting Services (parent company to Home Furnishings Business), a firm that trains retail sales associates, the answer is at least every four to six weeks, and the focus should be on the newer associates. However, according to Mike Kua, senior consultant with the firm, the experienced sales associate should be encouraged to mentor the new associates, communicating the key selling points.
Does the sales representative have time to accomplish both meeting with the buyer and visiting the stores? Simply put, they cannot afford not to have the time. Based on experience shared by Kua, there is a direct correlation between time in the store and market share.
For a national salesforce with 19 to 20 sales representatives, travel time absorbs 50-60% of the sales representative’s day with the service levels defined below.
The salesforce is overbooked by 30% if they allocate 50 hours per week. This does not leave time for prospecting to cover the 70 markets in which the company does not have a dealer. What is the solution?
The first reaction is to rationalize the thought that “we don’t need to be in front of the buyer and in the store with that frequency.” You can make that decision, but with what impact on sales? Based on Kua’s experience, frequency of visit is a direct correlation to revenue. However, the major problem is that it is not the company management making that decision, but the sales representatives. The fear of territories being cut is what causes the sales rep to never mention lack of time.
What is the solution to reversing this dependence on the salesforce to determine strategy? The vendor needs to seize the responsibility by establishing some measures of performance.
Unlike the retailer, the typical vendor has no measure of performance other than volume produced. The equivalent of retailer close rate and average ticket is market share. What share of the potential market is your sales rep achieving? The table below illustrates.
The variance indicates the opportunity. The opportunity is achieved by more interaction with the buyer and more training time on the floor with the retail sales associates.
To begin the process requires an understanding of the territory performance by Geographic area (market) and dealers within that market. Sales management defines a service level. The computer establishes a detailed schedule for every day.
The immediate reaction is that it is impossible to have a strict schedule – which is true. However, the intent of the analysis is to confirm that it is possible to accomplish that level of service. If not possible, the alternative is to realign on sales territories and change the expectation. It can be the beginning of vendors reclaiming responsibility for sales strategy.
Passing the Baton to the Retailer
The pulse of the furniture retailer is the front door of the store. When the consumer breaks the counter beam… its game on. The culmination of the supplier’s effort to create product that excites the consumer’s imagination via advertising has brought the consumer through the door, and finally, the retailer’s presentation that created the best retail experience, all to create an opportunity to make a sale. So sell something! This is the frustration of the retailers. What are the barriers to securing the sale?
The most discussed factor for brick and mortar retailers is traffic or the lack thereof. The fact is that traffic was down slightly in 2018, leveling off from the trend of the past five years. According to data from (FurnitureCore, the research arm of Home Furnishings Business) it is not the same for all retailers. Smaller, independent retailers under $5M experienced a 6.2% decline while retailers over $50M experienced a 4% increase. While the popular reason for the decline in traffic has been ecommerce, which has contributed, the major reason is the reduction in stores shopped by the time-starved consumer. The major factor is the % of consumers that considered, not shopped. The graphic illustrates the results of a recent consumer survey documenting the results of their most recent purchase.
Obviously, this is a very competitive market with an average of 55% considering a retailer but 26% fail to shop. The decision by the consumer as to which retailers will be shopped illustrates the challenge. These seven retailers are the major traditional retailers of the total 88 traditional furniture retailers in this market.
If there is a positive in the decline in traffic it is that the consumer coming through the door has done their research and is ready to buy. In fact, in the past year our research shows that some consumers are shopping only one store. The attitude is, “If I had a good experience with my past purchase and the product is as represented on the website, why shop around?” This puts pressure on not only the retailer’s website, but the “final mile” in executing after the sale.
This well informed consumer coming through the door can be impatient. The expectation is that your retail sales associate can be as effective as the search function on your website in getting them to the product for which they are shopping.
Entering many of the furniture industry’s mammoth 100,000+ square foot stores can be daunting. The skill of the retail sales associates during the initial needs assessment step in the sales process is critical. Moving beyond product to style and then to price — while establishing rapport and understanding their unique household needs— while moving them to their lifestyle preference can be a challenge. This is especially true for Generation Xers (35-45) who are more attuned to lifestyle specialty stores that curate their merchandise assortment to a narrow target market. The lifestyle stores, such as Pottery Barn and RH (Restoration Hardware) have a distinct advantage with this consumer demographic. Ashley Home, which is a hybrid between a traditional furniture store and a lifestyle store, is very effective, serving a narrow (age) and deep (income range) target customer.
This more focused consumer is leading several retailers to experiment with stores with lifestyle store layouts. This allows the retail sales associate to get the consumer to the right area to begin the product presentation.
While in concept a good solution, it requires that the consumer with the retail sales associate identify their lifestyle. An assist that has been in use for several years is DesignCliq. It is a fun, picture driven quiz requiring only minutes on an iPad or screen to determine the users style preference. Analysis shows 89.1% agreement of “that’s my style.” The graphic illustrates the diversity of style today.
This well informed consumer has resulted in improved close rates and average tickets. For all retailers, the average close rate is 26%+/-. However, the larger retailers (100+) are achieving a more consistent 40% as can be seen from the graphic below.
Average tickets ($1,700+/-) with significant monthly variations can be seen from the graphic above.
Unfortunately, the cost to generate the opportunity (Ups) continues to increase. The challenge is to identify the best medium to attract the consumer. With the appeal of television declining among the emerging target consumer (Generation X), the industry is searching for alternative communication. But now the cost is averaging $27/Up. Unfortunately, the smaller the retailer the higher the cost. The graphic presents the performance for 2018.
Sales cost continues to increase approaching 10%, which will cause traditional retailers to consider other sales models besides the commission structure. Other distribution channels rely on hourly staffing with cost as a percentage of sales in the 4-5% range. The impact on sales revenue moving from a commission salesforce to a salary with bonus is the great unknown. There are $1M+ writers but the mode revenue level is less than half that amount. This consideration must be viewed in light of the ever increasing financing cost at the 3.0%+ level. What is motivating: the sale, lower prices, financing, or selling skills?
One obvious solution to cost is to produce more revenue per sales associates. Decades ago, training consultants impacted the industry profitability. With training programs, each with their own process - no matter five steps or seven steps – the programs produced results. Many of these programs have been brought in house, and in many instances, reduced results. Impacting the results is the acceptance by the new, younger retail sales associates of classroom training. There are still industry veterans, such as Profitability Consulting, JRM Consulting, and Impact Consulting, which still produce significant results. Bobby Infinger of Infinger Furniture in Charleston, SC says, “We set performance goals at the end of the year and Impact Consulting works with my staff to make sure we stay on track to our goal… it’s that simple… The outside perspective keeps me focused.”
Another alternative is online training from providers such as the Furniture Training Company. As with all processes, it requires constant follow up from management. However, if executed it will produce results. “We have been using the training for three years and it works!” said Sandy Howe, director of stores for Kittle’s Home Furnishings. “Not only has it been successful with our new hires, but it has been great for our veteran sales team. Because of FTC’s reporting services, I can easily manage the training in each of our 12 locations. I can’t think of training that has higher quality or is easier to use and manage than that of the Furniture Training Company.”
The most important element in improving sales performance is the sales manager. A full-time sales manager can more than justify the salary. For a $5M annual retailer with 12,500 Ups and a current close rate of 26%, an improvement of 1% would generate $200k in sales and $60k in contribution margin.
Many retailers make the store manager their part-time sales manager. This is a mistake. Where will the focus be? What about part-time for a senior RSA? It will not work. In the above example, the store should have six retail sales associates. The four to six hours per week of coaching will produce results.
There are retailers that have fully embraced sales management as an essential function. Many recognize that it is a profession, not just a job. To emphasize this recognition, they send their sales managers to a sales manager’s performance group where they share best ideas with other non-competing sales managers across the nation. When we interviewed several for this article, we received the following composite input:
- What is the single toughest part of your role?
- Managing and motivating people to give every customer they meet the shopping experience they seek.
- What numbers are most important for you to track and coach in order to drive sales performance improvement and how do you use them to do that?
- Close rate, average sale, revenue per Up, protection close rate, category mix, and house calls set up and sold are all important. These are used to drive improvement in total sales by coaching those that are below store average and/or performance agreement goal in each.
- How does or can your owner/GM support you and help you be more effective in your job?
- They support and reinforce what I do on the floor and meet with me weekly/monthly so we can work together on improving individual performance. We are a team that sends the same message to the staff and share the same vision for the store.
- What do you enjoy most about your job?
- The feeling of accomplishment I get when I help a staff member grow and develop into a successful professional sales person.
- What do you like least about your job?
- Dealing with sales people and customers that have unreasonable expectations or demands for issues they face.
April 1,
2019 by HFBusiness Staff in Business Strategy, Industry
Thoughts of the aftermath of the wave of acquisitions in the manufacturing sector that saw the transfer of ownership from family to nameless equity firms that had better ideas to wake up the stodgy furniture makers caused trepidation.
In the past year, the industry has watched as Bob’s Discount defied industry norms and skipped over the nation from Chicago to Los Angeles, opening multiple stores in the same week. And Art Van reorganized with significant personnel shifts and exits. At the same time, cornerstones of furniture retail such as Rooms To Go, Raymour & Flanigan, and Haverty’s keep their powder dry. What is in the wind?
In the business press, not just the industry press, the performance of the furniture retail sector has been the topic of much discussion. While the “pending” purchase explosion of the millennials will fuel the home furnishings industry, that is after they begin to furnish their first homes, and after they actually make that decision in light of college debt. The decisions may be ten years later than generations before.
But for now, Baby Boomers still have the highest number of households representing 34.4 percent of consumer units compared to 26.8 percent for Generation X and 25.1 percent for Millennials. While the Millennials are inching closer to Generation X in the percentage of consumer units, the percentage of consumer spending for furniture/bedding is still over eight percentage points (7.7 percent) higher for Gen Xers and almost ten points higher for Baby Boomers.
But even with this delayed race to purchase by both generations, the industry in 2018 totaled $106.33b- an increase of 6.8 percent over 2017. Furniture excluding bedding grew a healthy 7.6 percent to $90.2b and bedding increased 2.6 percent to $15.51b.
The generational terminology is tossed around much like our style trends. The table provides the commerce department definition unaltered from marketers that “bend” the definition to match their marketing campaigns.
At the end of 2017, the most current year of consumer expenditure data by generation, Millennials’ total $71.9m and range in age from 21-36 with an average age of 28.5.
The next, older Gen Xers at an average age of 44.3 are smaller in population at 65.7 million but will have the most current impact on the furniture industry.
Baby Boomers at the average age of 61.1 are rapidly retiring but are not showing signs of lessening their influence on the industry.
Why the discussion of demographic trends in an article about retail competition in the furniture industry? Simply put, it is the consumer that will influence the type of retailer that will prosper into the future, and therefore what the market demand will be for retail distribution types into the future. There have always been changes in distribution channels in the furniture retail landscape. Fifty years ago, over 50 percent of the furniture volume was delivered by national chains such as Montgomery Ward, Sears, and JC Penny with the balance of the market controlled by department stores and small mom & pop stores often specializing in weekly finance payments.
The ensuing fifty years has seen almost the final demise of the national chains and the growth of many mom & pop stores, losing the tag of “dirty window stores.” Emerging in the same period was the lifestyle stores, such as Restoration Hardware (RH) and Pottery Barn, and the verticals, dominated by Ashley Home that both produces and sells their own product. But most notable has been the internet or e-commerce retailers which began as entrepreneurial “pesks” policed by manufacturers that vowed not to sell them to major purchasers such as Wayfair that are pursued by manufacturers.
Traditional furniture retailing now controls 24.4 percent of the industry with sales on the uptick with regional chains but declines of 11.4 points with independents. The internet’s beginning with rogue retailers in the late 90’s captured 10.5 percent by 2011 and slowed to 15.6 percent in 2016- but has settled in at 18 percent plus today. Mass merchants (warehouse clubs and superstores) have grown only slightly in share 20.1 percent in 2011 to 20.4 percent in 2016. Everyone can remember the Costco scare that has faded into the past.
While each of these channels could be (and have been) the subject of a significant report we will focus on only the independents and the regional chains.
The consolidation of the industry continues after a cumulative loss of 19.8 percent of stores from its peak in 2007. The trend reversed in 2018 with a gain of 1.8 percent in store count.
As can be seen from the chart, there are almost 5,500 fewer furniture stores and an additional 500 stores in 2018.
Before getting excited, this does not mean a surge of new mom & pop stores. It is more a reflection of a trend that has been around in other retail segments that furniture retailing has avoided — a retail location on every corner. Furniture retailing has long been a destination location. However, with the time starved consumer, the need for a more convenient retail experience has lead retailers to more stores to serve the same markets. According to FurnitureCore, the sister company of Home Furnishings Business, the average household per store location for the Top 300 traditional furniture retailers is $212k households, down 10 percent in the last 5 years. The Top 300 retailers covered a range of $9m-$2.5b.
The demise of the mom & pop stores has been accelerated by the growth of regional chains.
Total furniture retailer sales of all products are estimated at $65.5b for last year. However, these retailers include retailers not classified as traditional furniture retailers. They also include lifestyle stores, such as Pottery Barn.
The Top 100 represented only traditional independents, large independent, and regional chains through consolidation and attribution. These retailers have increased sales by 66.1% percent since 2013 compared to the broader classification, which grew 10.6 percent.
Now, what should your strategy be if you are a traditional furniture retailer? No matter small independent, large independent (sales over $50m – one state), or regional chain with expansion of the mind, changes are coming.
First, let’s start with the “elephant in the room” or maybe we should say the large fish in the ocean. Specifically, those regional chains with national on their mind. Nothing motivates a furniture retailer to expand more than outside capital. With the acquisition of Bob’s Discount by Bain Capital and Art Van by HD Lee Partners, excitement was created in 2016/2017 that resulted in a 5.3 percent increase in market footprint for Art Van and 6.4% for Bob’s Discount. While Bob has expanded by opening new stores, Art Van has combined acquisitions with opening new stores.
Much more entrepreneurial has been Furniture Factory Outlet (FFO Home) with seven additional markets, and typically, in markets under $50min furniture/bedding sales. However, recently larger markets have been targeted.
American Freight, a quiet retailer out of Ohio with the low overhead but high value consumer experiences, continued to expand their market footprint into an additional eleven markets.
Anticipating an acquisition proposal or at least a deterrent to entering the markets, well managed regional chains are filling in their existing markets and moving into adjacent markets. No matter the motive, regional chains are taking advantage of the good market. Also stimulating this expansion is the availability of great real estate deals — catnip to furniture retailers.
Moving into a new environment, Big Sandy expanded into the Columbus market, joining Morris Home, the large independent.
Room Place expanded outside of the Chicago market into Peoria.
Steinhafels expanded its footprint into the outskirts of Chicago-Naperville-Arlington Heights market with a new store in Crystal Lake.
Living Spaces has continued its expansion strategy after San Diego into Austin and now into Las Vegas.
Cardi’s Furniture quietly expanded into New Hampshire in competition with Bob’s Discount.
While other regional chains have expanded into adjacent markets, many have been content to add presences within their existing markets. Surprisingly, the sleeping giants Rooms To Go, Haverty’s, and Raymour & Flanigan have been content to grow their marketshare and improve their performance. Many question the strategy. However, Rooms To Go’s acquisition of Carl’s Patio venturing into the outdoor category and Raymour’s accumulation of leases could indicate surprises to come.
As formidable as the regional chains are the large independents, often with more revenue than some regional chains, have been content to remain within their states and grow. While there is no state strategy, the fact is that some states are larger than some of the regional markets.
The major strategy with the large independents has been to create a dominance in each market to prevent other regional chains form considering invasion.
The major story has been about the Stevens Point-based Appliance & Appliance Mart as it is in an additional market and adding stores, including some free standing Ashley stores.
Jerome’s continues with its market expansion entering El Centro with free standing bedding stores and expanding store coverage.
City Furniture added an additional market (Sebastian-Vero Beach), plus expanded its store complement by six.
Johnny Janosik expanded into a neighboring market with expansion into Wilmington.
The centerfold map provides a visual perspective.
But what about the independent stores below $50m in revenue? An answer could be a franchise. Slumberland and WS Badcock have long provided a solution. The map indicated their coverage in the Midwest and South. The franchise fees are more than offset by the increased buying power and almost elimination of inventory. Assistance with advertising and store operation support are an added benefit.
Art Van has also supplemented their distribution in smaller markets with franchise operations.
As always, furniture will be sold. Enterprises will continue to find ways to satisfy the consumers’ demands. To survive retailers must be open to change- are you ready for the battle?
February 12,
2019 by HFBusiness Staff in Business Strategy, Industry
This growth, while positive for the industry, indicated performance was outstanding when compared to other retail sectors. Achieving the status of outstanding growth has caused the financial community to focus on what is happening in home furnishings. This has brought attention to the potential investment opportunities in the industry.
While much attention has been focused on the e-commerce sector of the industry, this juggernaut is slowing, achieving only a 13.1% growth in 2018.
This growth has been in total home furnishing and initially improved the performance of home furnishing stores (those that merchandise the total product) as compared to furniture stores that primarily sell furniture and bedding (70% by definition). However, this comparison has changed with furniture stores regaining the momentum.
But with all this clamoring, many furniture retailers are facing declining traffic and the resulting sales decline. The result is owners challenging their advertising strategy.
Let’s focus on what is the right advertising strategy. By definition, advertising is the attempt to influence the behavior of customers with a persuasive selling message about the product.
First, we must have receptive consumers. Based upon research, the industry has that. As is typical in a good economy, a quarter (29.74%) of the prime furniture purchases are on the sideline. Another 15% have just made a purchase. The remaining fifty percent plus are our targets.
Furniture is on the fringe of satisfying a basic human need. Home furnishings is not a necessity in terms of basic needs, but instead provides comfort and for some consumers, a sense of presence. Insight form FurnitureCore, the research arm of Home Furnishings Business provided some perspective.
From the research, we see that our advertising effort must be a dual focus, communicating prestige as well as practical need. Considering the current advertising effort by the traditional retailers, we skipped these messages and are addressing price and the ability to finance. In fairness to the industry, the manufacturer sector is typically involved in communicating prestige/need in the process of establishing brand. In today’s residential furniture arena there is a lack of established brands. The Broyhill, Thomasville, and Lane brands have been allowed to deteriorate. With consumers under 50 (Generation X) and definitely under 35 (Millennials), there is little brand awareness. There are some exceptions with Brown Jordan, Eckornes, and Stickley who have presence with the more affluent consumer.
Why are brands missing from today’s communication with the consumer? First and most immediate, there is little brand advertising. As an example, in the most recent issue of Southern Living (Feb 2019), there was no furniture advertised even though there were several home decorating articles. In fact, there were few “call outs” to the product shown—a true indication of the magazine publisher’s perspective of industry support. If we go past the immediate and ask manufacturers why the immediate response is lack of margin to support consumer advertising. This addresses a decades old question: Can the industry afford not to advertise directly to the consumers the reasons to buy furniture? Are we destined to race to the bottom in terms of price? When we compare the consumer price index of furniture to all other consumer products, we get the answer as illustrated in the graphic.
Even with bedding included, the industry is declining even in the good economy we have enjoyed since the 2008/2009 comeback. In fact, we are 12 basis points below where we were in 2008.
Should we consider again an industry program to promote furniture as was done in the 80s/90s with Haven Magazine? Where would the industry be if we had cooperated—manufacturers and retailers—in the effort? Only the manufacturer-verticals, such as Ashley and La-Z-Boy, have created a brand presence at the consumer level. Was that the strategy that should have been executed in the manufacturing sector?
It is not to say that the industry does not spend to attract/motivate the consumer. In fact, 56% of the gross margin dollars are spent doing so. However, only a portion is spent in pure advertising. The graphic illustrates.
The statistics shown in the Expenditures graphic is for traditional furniture stores. Obviously, these percentages vary by volume level and individual retailer strategy.
In the last decade, retailers have abandoned a real estate strategy (owned) and leased buildings within established shopping areas with higher occupancy costs. The assumption is that traffic would increase and therefore lower advertising costs. The result is where advertising in total would be 5-6%, now occupancy and advertising combined with the goal being 12-14%. Interestingly, Julius M. Feinblum, president of JMS Real Estate, Inc., a firm that specializes in real estate for the home furnishing industry, cautioned against the use of rigid guidelines, saying each situation is different. The decision to open an additional store should take into consideration the incremental revenue that would absorb existing fixed costs.
New distribution channels into furniture retailing take a different perspective. Lifestyle stores, such as Pottery Barn and Restoration Hardware, while selling all home furnishing products, relies on stores in proximity to the consumer and less on advertising. For this distribution channel, reliance is on more stores and targeted direct mail campaigns and catalogs. The table presents some statistics.
As can be seen from the table, lifestyle stores have 353 stores per thousand households. This compares to a third of that for FurnitureCore’s Top 100 regional chains/large independents/independents. Another approach is the fast growing e-commerce channels. E-tailers, for the most part, eliminated occupancy and minimal expenditure in presentation (except for online chat), a new financial model was created. However, this model has not been successful to date. Even with competitive pricing, the savings are not enough to offset increased delivery/returns expenses. While still less than 20% of total industry sales, the growth rate is significant. Recently, many of the e-commerce major players are exploring brick and mortar.
The major question in furniture retail is what should the message be? The predominance of messaging in traditional retailers is low price – long term financing. Research by FurnitureCore indicates other ways to break through, including product information and humor. A good example of humor is represented in a recent television commercial created for Bernie & Phyl’s in Boston.
Bernie & Phyl’s advertising agency, DeVito/Verde, had to address the iconic advertising platform that had served the retailer for decades to increase awareness.
Ellis Verdi, president of DeVito/Verdi explains. “We do talk about value in the campaign, but we’re doing it in a way that is far more memorable, and doesn’t look like typical category advertising. Humor is effectively used as a means to increase recall in a cluttered environment because like any good joke, we want people to remember it. Otherwise it’s a total waste of money. Secondly, we’re actively seeing more younger people, those who are inclined to appreciate a smart, witty humorous approach. We understand not everyone has a sense of humor because we’ve already received a few letters. They’re affected by the humor, but it seems they all want to talk to someone, which is great because when you speak with them they end up being convinced to visit the store, or at least they’re no longer as upset with the advertising. Also, we picked up increased engagement and interest from those who did find these campaigns funny.”
Verdi continued, “One challenge we had was to convince the owners not to be in their own commercials. It’s extremely difficult to take owners out of their own commercials. But the proof is in the pudding; they have been extremely successful. There is a competitor in Boston called Jordan’s that suffers from the disease of wanting to be the star of the ads. We measure success on comp store sales. Prior to our new campaign we were seeing negatives. Post: we’ve seen significant positive comps for the past several years.” The swing has been “substantial”, according to Verdi, “What made it so effective is that all the campaigns are inexpensive to produce, and allow us to have flexibility in messaging and maintain the disposable quality of production that the rest of the industry has fallen in love with. “
As important as the message is, the media used to communicate. According to FurnitureCore research, television for traditional retailers represents the largest share of advertising expenditure. The graphic illustrates the breakdown.
From a consumer perspective, the internet/email has the most influence on their intent to purchase as can be seen from the following graphic.
While the Internet is important even Wayfair, has turned to print. Bob Sherwin, Wayfair’s head of North American marketing confirms, “The [Wayfair] catalog offers an incredible opportunity to deliver a rich, tactile shopping experience to our customers. We send it to high-value target customers, people who have moved to certain neighborhoods—it’s for targeting prospects as well as existing customers.”
Home Furnishings Business’ custom publishing division has had similar success with their hybrid magalogs (magazine/ catalog format) when combined with consumer targeting. According to Bob George, publisher of Home Furnishings Business, and president of Impact Consulting, the parent company of HFB, a documented purchase of over 9% of a retailer’s customers and 4.5% of profiled customers has been achieved with this high quality content rich piece.
We know the consumer is attracted to digital and there are many vendors jumping on the opportunity. The retail experiences can be classified as extended reality (XR), virtual reality (VR), and augmented reality (AR). Augmented reality in the furniture industry has advanced the furthest.
According to Richard Sexton, chief product officer at MicroD, the focus is AR. “For our industry, let’s settle on AR, since this is the most simplest application and is defined by the mixing of digitized assets and some reflection of reality, such as a customer’s home scene.” Sexton says the biggest challenge right now is the degree of realism not meeting expectations. “You need significant computing power to use high polygon models in a dynamic environment, let’s say, pacing a sofa in a customer’s living room. You can do this on a desktop effectively, but its certainly not mobile, its not dynamic, and its not convenient. You can’t walk around the sofa to see how it looks, but you can generate a high quality rendering of the room scene. If you want to make it a mobile or tablet application, then you sacrifice quality of the image and degree of realism, and end up with a somewhat cartoonish experience due to the low poly count of the models. However, it is dynamic and you don’t need the use of markers to define the room dimensions, this is determined through the application itself.”
While many furniture retailers have announced AR applications over the last year, most have not resonated with the consumer. What does the future hold? Sexton says, “…as computing power continues to escalate and the native AR capabilities continue to evolve with ARKit and arCOre, we will definitely see new apps that better reflect mixed reality, there is no question. Virtual reality will certainly become more meaningful once the hardware is streamlined and the experience less jarring. You can imagine the in-store applications that will evolve with VR.” In the meantime, Sexton says, “hybrid solutions, such as out 2D/3D experience (360 spin with 4k resolution on 2D models) are the ideal gateway experience to bring customers into the 3D world. We will be deploying this platform over the next few months.”
While exciting in concept, neither AR/VR will replace advertising in the short term as a motivator to purchase.