March 7,
2016 by in Business Strategy, Industry 
The groundhog delivered a gift last month when he didn’t see his shadow predicting spring was on its way.
Despite tumultuous tornados across the Southeast and a few snowstorms in the Midwest since Feb. 2, it appears the rodent may have gotten right and milder weather is making its move. Consumer minds are turning toward outdoors and outdoor entertaining as they wake from hibernation.
Cabin fever and the desire for dining al fresco can deliver a bevy of sales for retailers in the casual furniture category—a category that continues to post steady growth.
Looking back over the last few years, the outdoor furniture industry has gone from $3.51 billion in 2013 to $3.79 billion in 2015. The category grew 5.36 percent from 2014 to 2015, and forecasts call for another 5.4 percent increase from this 2015 to 2016.
Not too shabby.
Consumers continue to turn to outdoor living spaces turning patios, porticos and poolside full extensions of their homes. The downside for furniture retailers is the channel consumers are choosing to buy their casual furniture.
According to the latest Home Furnishings Business survey of consumers who have recently purchased outdoor furniture, home improvement stores remain at the top of the list of distribution channels for consumers buying the category. Nearly 33 percent shopped Home Depot or Lowe’s for the category and 26.1 percent made their purchase at the chains. Outdoor furniture specialty stores came in second for consumers with 21.7 percent of the sample shopping at the specialty stores and the same number—26.1 percent—bought from the specialty store.
Compare those numbers to the 13 percent who said they shopped traditional furniture stores for their outdoor furniture. Slightly more than 21 percent (21.7 percent) made their purchase from a traditional furniture retailer.
Despite the lower percentage, there is good news in the numbers for traditional furniture retailers. The 21.7 percent is up significantly from the 6.6 percent of consumers who last year said they’d made their outdoor furniture purchase from a furniture retailer. Mass merchants like Target and Walmart were the losing channel. In last year’s survey, 23 percent of consumers said the discounters were their go-to location for their purchase. This year, that percentage dropped to 13 percent.
When it comes to cost, consumers are on the stingy side. Nearly 70 percent said they spent $999 or less for their recent casual furniture purchase. At the other end of the price spectrum, 13 percent said they spent $2,500 or more on their most recent purchase.
Twenty percent of those surveyed cited pricing being too high was a barrier in the process. Other issues they encountered included lack of selection in finding what they wanted (20 percent); inability to judge quality of the furniture (10 percent); available quality did not meet standards (5 percent); and salespeople who weren’t knowledgeable (2.5 percent).
The majority of the surveyed consumers have relatively long life expectancies for their purchases. They aren’t looking to replace their furniture next season. More than 56 percent (56.5) said they expect to use their purchase for between three and eight years. Nearly 22 percent think their furniture will last more than 10 years.
Want More?
A more in-depth report on the outdoor category is available for purchase by e-mailing Laura McHan at Laura@FurnitureCore.com
4.82%
Outdoor percentage of 2015 furniture sales
$3.79 Billion
2015 outdoor furniture sales
5.46%
Outdoor furniture 2015 sales growth
Suppliers Say
OW Lee’s Monterra
Featuring deep seating, OW Lee’s Monterra offers a cocoon setting. Signature side arm pillows and pillow-stuffed back cushions are highlighted by flat bar and rivet details. Retail starts at $1,525.
Kingsley Bate’s Sag Harbor
Made from all-weather wicker in natural colors, Sag Harbor consists of a range of items for different applications and configurations. The collection includes dining, deep seating, and sectional pieces.
Treasure Garden’s Veranda
The Veranda mounts directly to a wall without the need for a pole or base. Available in a 5’ x 10’ rectangle model, the umbrella pushes up and locks into place without cranks, cords or pulleys. Suggested retail $895 in Sunbrella or Outdura; $695, Obravia.
Palm Springs Rattan’s 4300
Designed to seat 8, the 4300 dining set is crafted of synthetic woven wicker and offers outdoor cushions. The contemporary dining table is of a baked on powder coating finish. Seating includes decorative cushions and high backs.
Pride Family Brands’ Park Place
The Park Place by Castelle from Pride Family Brands offers multi-configuration components that feature a modern aesthetic for patio, terrace or poolside. The Park Place is handcrafted with contemporary lines. Suggested retail $15,825 with pieces shown.
angleo:HOME by Walker Edison
The Coastal four-piece Wood Chat from angleo:HOME collection is made from solid, acacia wood in a vintage, weathered-gray finish. The deep-seated RTA design features wide, plush cushions. Suggested retail is $1,299 as shown.
Woodard’s Cortland
A blend of of cozy comfort and sophisticated style, Cortland combines design and on point fabrics with hefty welding. The collection features timeless details and a rust-proof aluminum frame. It is available in countless fabric and finish options to fit a variety of needs. Suggested retail is $1,392 per chair as shown; $2,425 for chat-height fire table with cast top.
Klaussner Outdoor’s Cascade
The two-piece Cascade sectional featuring a chaise and loveseat is ideal for areas smaller outdoor spaces. Designed with a traditional to contemporary feel, the collection features a slightly wider sloping arm for comfort with a bold look. Suggested retail is $2,699.
Kenzo by Tropitone Furniture Co.
Modern, sleek styling set the tone for Kenzo. The collection offers an array of cushion, woven, sling and padded sling seating options. Sleek lines give the group the ability to complement many outdoor spaces. Suggested retail for the group shown in an A grade fabric is $10,999.
Brown Jordan’s Pasadena
A nod to mid-century design and the birthplace of Brown Jordan Co., Pasadena’s sleek profile exudes understated sophistication. The collection frame features a smooth, flat aluminum extrusion in a gentle curvilinear. Sweeping lines seen on the arms and back legs highlight the beauty of the chair’s construction. Pasadena is available in both sling and padded sling styles. Suggested retail for sling lounge chair is $1,070; padded lounge chair is $1,225.
Opal Lounge Group by Jensen Leisure
The Opal Lounge Group offers comfort with transitional styling. Created in FSC Ipe timber by Swedish designer Dick Bjork, this group includes two lounges, a loveseat, side table and coffee table. Suggested retail as shown with cushions is $6,399.
Oxford Garden’s Tavira Collection
The Travira collection features a clean, contemporary and timeless design across a variety of products. The breadth of the line, combined with its low-maintenance material options, appeals to the varied preferences and needs of many customers.
Barlow Tyrie’s Aura
Aura offers an aluminum frame with teak accents for low maintenance. The table is available in various dining lengths and heights, and matching sun loungers are available in three frame colors. Slings are offered in four colors. Suggested retails begin at $532 per chair and $1,300 for the table.
Andalusia from Century Outdoor
Andalusia has always been a best-selling collection for Century Outdoor. Hence, the company added the swivel rocker lounge chair, which has become a top seller. Combined classic Mediterranean style in the comfort of a swivel rocker allows for luxurious outdoor living. Suggested retail is $3,765.
March 7,
2016 by in Business Strategy, Industry
Sometimes making the sale in the showroom is the simplest part of the furniture retail business.
After the consumer is sold on the product and the money exchanges hands, things in the business really start to get interesting. Delivering the sale into the consumer’s home can be the most intimate part of the process. She is inviting you into her home—her retreat if you will—where she hides away from the stresses of life.
Botch that process, and well, that $4,500 worth of furniture may just find its way back on the delivery truck headed for a return to the store’s discount room.
Everyone in the retail business knows things happen. Every delivery doesn’t go as planned without a glitch. The key is to be ready, willing and able to handle problems when they arise.
Picture this.
A two-piece sectional was sold to a consumer living the eighth floor of a New York City’s Bronx apartment. Home Inspirations Thomasville with its four stores in New Jersey is adept at maneuvering through the city for deliveries. However, this one was tricky.
Edward Massood, owner of the retailer, said the delivery crew arrived at the address to find an elevator too small to accommodate the sectional. That meant, the delivery had to be rescheduled because it required a walk-up, which requires additional time and preparation.
“We chalk it up to a miscommunication between the sales person and the customer,” Massood said. “The customer failed to tell us and we never asked about delivery challenges at the home.”
Fast forward to the new delivery day. The crew arrives prepared to haul the sectional up eight flights of stairs.
“They walk up the stairs, get the sectional into the home and they can’t make the turn out of the foyer and into the room,” Massood said. From there, the team had to carry the sectional back down the eight floors, reload it on the truck and reschedule yet another delivery day requiring disassembly of the sectional.
The third time was the charm, and the sectional made it into the apartment. Whether it will ever make it out remains a mystery; however, gathering all of the needed information early can net a much smoother delivery process.
“Thankfully, those stories are few and far between, but when they happen, they are real doozies,” Massood said. “It’s part of the scars that you get along the way. As good as we are, something will always get through the cracks. You live and learn.”
Furniture retailers can do everything right and still leave customers with a bad taste if they botch the delivery. Even as Massood said the screw-ups are rare, but when they do happen the key is correcting the problem and figuring out how to prevent the scenario from happening in the future. Those simple steps can go a long way in creating goodwill and retaining customers for life.
A satisfactory delivery means an efficient delivery, and smart retailers are always evaluating how to improve the process and maintain customer satisfaction. On average, a seamless delivery operation can account for about 2 percent of a retailer’s bottom line.
Keep it Clean
Miskelly Furniture in Jackson, Miss., offers same-day and next-day delivery on its sales. To ensure a clean, smooth delivery, the retailer has increased its efficiencies and limit damage to furniture by deluxing and prepping products in a staging area prior to loading it for delivery.
By examining all returns, frequency of same pieces and reasons for returns, the retailer determined about 15 percent of damaged items had been unpackaged prior to delivery. Now, the process calls for leaving those items—mostly dining tables, curios and paneled beds—in the original cartons for delivery. The shift shaved about 1 percent of daily damages and return deliveries.
The opposite was true for leather upholstery. Unpacking those pieces and inspecting them for damage sliced returns from surprises uncovered once an item was opened in the consumer’s home.
Home Inspirations Thomasville, which manages all aspects of its delivery until the moment the product lands in the back the delivery truck, takes the prep and deluxing process seriously.
“We preassemble everything in the store in lineup,” Massood said. “We preassemble beds, tables and occasional pieces. Our thinking is that if the delivery personnel can take something apart, they can put it back together in the customer’s house.”
Massood said the extra step also ensures all the parts—bolts, screws, legs—are included in the order. Mishaps happen, he said, and this extra step prevents an extra trip to the customer’s house for repairs or redeliveries.
Both of which lower the efficiency quotient, not to mention the annoyance to consumers who have high expectations for their entire furniture buying experience, including the delivery and in-home set up of their purchase.
Set Ground Rules
A lot of delivery problems track back to the point of sale. A detailed discussion during the sale can not only manage consumer expectations, but also uncover any potential challenges of maneuvering furniture into the home.
Zeroing in on details of where the furniture will go in the home can start to paint the picture of what the delivery process will look like once the truck arrives in the driveway. Ensuring sales associates are well-versed in which questions to ask, what information to share and other details will have a huge impact in ensuring success.
Whether the furniture is going on the first floor or in a basement or the second floor can impact the entire process. Stairs and turns can be tricky. Make sure the delivery person knows the landscape before they arrive.
Inquiring as to whether old furniture needs to be relocated or removed from the home is another key point to cover. Consumers may think nothing of asking delivery personnel to relocate an old bedroom suite to another room to make room for the new one purchased form a retailer. However, time is money on the delivery route, and staying on schedule is key.
Not explaining the process properly and what role delivery personnel will do and won’t do can net big problems. Specificity is imperative, and may require a checklist that sales associates can review with consumers.
Outlining the rules and expectations from the store’s standpoint and the consumer’s responsibilities in the process can save time, money and a lot of customer service nightmares.
To Outsource or Not?
In today’s fast-paced world, consumers are eager for product as soon as they make the transaction. They’ve likely put the purchase off for sometime, and most are ready to have it in their home immediately.
The hurry-up model set by Amazon and other retailers have set the standard for same-day delivery relatively high. In some markets, some products can be delivered within a few hours. Now, furniture is a bit different due to size and other features, but the expectation is there for immediate gratification.
Many retailers in the industry offer same-day delivery on purchases made before a certain time and sometimes there are limitations on product offered for the service. Of course, special orders are off the table.
Whatever the delivery time frame offered, managing the logistics of delivery can become overwhelming. Hence, some retailers opt to outsource the service to a third-party supplier like Cory 1st Choice Home Delivery, Zenith Global or Diakon Logistics. A number of vendors operate within the home furnishings industry, but the key for retailers is finding the right partner for your operation.
Rob Davis, vice president of client solutions for Diakon Logistics, said its imperative for retailers to partner with a delivery company who shares a similar culture and approach to customer service. Otherwise, the partnership isn’t likely to last.
“We like to work with retailers that have a similar way of working,” Davis said. “The partnership has to be a good match for them and for us. A lot of that comes down to understanding their processes before we ever take over. We have to have a good grasp of how they do things so that we can build on their successes and improve on their shortfalls.”
By understanding a retailer’s culture and customer service approach, a third-party company’s team can meld more seamlessly into the delivery operation and work hand in hand to service the consumer.
Davis said many furniture retailers started in the business with a passion for the industry and have included delivery as part of that service to their customers. Most of today’s larger furniture retailers outsource the delivery function, he said.
The economies of scale can help determine whether outsourcing is practical. Davis said a good rule of thumb is that if a retailer is running less than three trucks in its delivery fleet, it makes the most sense for them to continue the management of the process.
“Once they get into three to five trucks, there becomes a break even point when it makes sense for them to outsource the process,” Davis said. “A lot of retailers love selling furniture and building those customer relationships. Managing the back shop becomes a necessary evil. That’s when we see retailers consider outsourcing. Once they’re above five trucks, a dealer will see a big difference from outsourcing.”
Davis said Diakon Logistics works really hard to retain the hometown, local feel when they begin working with a retail partner, noting that trucks can be branded with the store logo and drivers and delivery personnel can wear branded uniforms.
“It really goes back to understanding the store’s culture,” he said, adding that often Diakon will take over a retailer’s existing delivery team. “We become a seamless extension of the retail brand.”
Outsourcing takes the burden of staying abreast of the rules and regulations (See companion story) governing drivers away from the retailer and places it on the logistics company. Hours on the road and other rules tend to change frequently, as do the requirements for background checks in hiring.
The finding and hiring of drivers can be a long, drawn-out process. Davis said finding quality, delivery teams can be challenging.
“We’re looking for an interesting group of people,” he said. “We want them to have customer service skills; we want them to look good; we want them to be kind; and we want them to be creative problem solvers. They have to be willing to move furniture, have a clean background check, be really strong, pass a drug screen and have a clean driving record. That can be tricky.”
Davis said consumers are welcoming a delivery team into their homes, and that’s a big deal.
“We’re usually met by a female who either bought the item or picked it out,” he said. “We don’t know anything else about her. Don’t know if there’s been a life changes, like a divorce or whatever. This is the only time we’re walking into her personal space, and spending a good deal of time in her home. We have to get it right and she has to feel at ease. It’s completely different than someone coming into a showroom.”
Home Inspirations uses a hybrid approach to its delivery operations. The retailer controls everything until the product lands on the delivery truck. From there, the home delivery portion is contracted with Cory.
“We manage the receipt, the scheduling, the product preparation, and then we have a dedicated team we contract with to deliver into our customers’ homes,” Massood said. “The piece from the dock to the home is the only part we don’t do. It gives us an accountability trail as well. The signed signature from the customer gives us the completion, and if anything happens, we can tell where the process went wrong.”
Massood recommends retailers considering outsourcing to do their homework to uncover the right partner for their operation. Every good retailer should compare internal costs to an outsource provider, he said.
“A key indicator and good question when they’re looking for a partner is which other companies they deliver for,” Massood said. “If you’re selling higher-end goods, you’d want a delivery company that works with other higher-end retailers. Their personnel, the way they manage receipt of goods and the like should be up to the standard of the product you’re selling. You want them to have the same ilk of customer.”
He emphasized the importance that the home delivery team needs to be similar in nature to the customer to whom they deliver.
“Our partners are an extension of our store and our brand,” Massood said. “Because they are extensions of our team, if there is a delivery concern, we’re immediately dealing with the customer to calm them and make the problem better.”
City Furniture’s Fleet Goes Green
City Furniture has invested big in its delivery fleet as it pursues its aggressive, multi-year expansion throughout Florida.
The Tamarac, Fla.-based retailer with its 16 City Furniture and 11 Ashley HomeStore locations has invested $4.5 million in creating and running a green delivery fleet. The retailer has built its own compressed natural gas (CNG) station and converted most of its 100-truck fleet to run on the fuel. City Furniture sees the strategy as essential to its growth plans. The firm plans to have its entire fleet converted to CNG-powered vehicles by end of this year.
“We’re ready to expand our brand,” said Keith Koenig, City Furniture president, when he announced plans for two Orlando-area stores. Construction on the stores will begin this year. Plans for either two or three showrooms in Miami-Dade County are on the books for 2017, and the retailer plans to open its first Tampa-area store in 2018.
Koenig estimates that in the next three years, the new stores will add about 175 jobs to the company’s current workforce of more than 1,300 associates.
“We’re seeing double-digit same store sales growth for 2015 and remain confident in Florida’s long-term economic future,” he said. “That confidence led us to make a well researched bet in the last few years that clean, U.S.-produced CNG would be the best approach to the millions of delivery miles we log annually. We’ve recouped the investment in less than two years through fuel savings. That helps us live our ongoing environmental commitment, while continuing to provide customers with exceptional value at a great price.”
City Furniture already travels about 5 million miles a year to deliver online orders and serve its current showrooms in Southeast and Southwest Florida and The Villages. The $1.5 million CNG service station is located at the company’s 909,000-square-foot corporate headquarters and distribution facility.
“We’ve converted the majority of our fleet to bi-fuel trucks that run on CNG or gas, and we covered about 3 million miles this year using CNG,” said Andrew Koenig, vice president of operations for the retailer. “With just half the emissions, those CNG miles ran far cleaner, and at 60 percent lower fuel cost, than gasoline.”
The bi-fuel trucks allow the company to take advantage of lower prices for the miles run on gasoline.
“As we expand in Central Florida and Tampa Bay, CNG use is a key infrastructure strategy,” he said. “CNG fleets are still unusual for Florida retailers, based on the up-front investment and need for easy access to fueling stations. Clean Cities Coalitions throughout Florida are helping to simplify the fleet conversion process, and with the number of CNG filling stations in Florida at 21 and growing, other retailers may want to consider a switch.”
The company’s eco-friendly fleet won honors in the national Green Fleet Awards this fall. Ranked 14th among the Top 50 Green Fleets, City Furniture was one of two private companies on the list of honorees that included the City of New York, the State of California and the U.S. Air Force Vehicle and Equipment Management Support Office.
City Furniture is achieving significant financial savings and environmental benefits, while sending a positive message to the public,” said Christine Heshmati, coordinator for Southeast Florida Clean Cities Coalition. “After intensive research to find the right alternative fuel for their specific needs, the company made a bold move that has already proved its value.”
Southeast Florida Clean Cities Coalition assisted City Furniture with the private and public sector networking to create its alternative fuel program, and is a starting point for companies considering a fleet conversion.
Tips to Consider
Seamless deliveries don’t just happen. The process requires planning, coordination and skill. Here’s a checklist to help get set deliveries on the path to success.
1. Educate the Customer
Make sure the delivery team explains the delivery process carefully. A brochure can be helpful to outline every step.
2. Educate your Team
Make sure the sales staff gets all needed information about the location the delivery team needs for a successful installation. Knowing things like entrance, mobility limits, stairs, even pets at home can go a long way in making for a smooth process.
3. Deluxe at the Store
Prep and deluxe the product prior to taking it away from the store. Identify products that typically need more care before delivery so that every detail is perfect.
4. Get in Shape
Think of ways to ensure the delivery teams are up to the demands of their job.
5. Flight Check
Before delivery, check products that will be assembled in the home to ensure all parts are available.
6. Right Equipment
Do drivers have the necessary equipment on hand to complete the installation? Create a checklist of tools and equipment that go out on every stop along with protectors like pads and mats.
7. Phone Early, Often
You may have verified a delivery time window the day prior, make a habit of calling again 30 minutes to an hour before arrival. People forget things.
8. Impressions Matter
Make sure the delivery team is mannerly, neatly dressed and well groomed.
9. Time Wisely
Analyze deliveries to make flexible scheduling slots instead of allotting specific number of minutes per stop.
Checklist for Outsourcing
Retailers trying to decide whether to continue managing their own delivery operations or farm it out to an external company, need to consider several things. Here’s a checklist recommended by Diakon Logistics’ Rob Davis that may make the exercise a bit easier.
1. Analyze volume to determine if there’s enough to outsource.
2. Consider expansion plans. Are you looking at new markets or a new distribution center? Important to figure out how you’ll fund the expansion. Outsourcing could be a way to free up capital.
3. Identify companies that you’d feel comfortable working with. Find someone you can work with through challenges.
4. Research the history of the delivery company, as well as the future of the company. Mergers and acquisitions happen frequently. Make sure you know about long-term plans.
5. Ensure the delivery company is up to date on the latest regulations regarding sourcing teams, fleets, etc. Do they really doing background checks and play by the rules? Make sure they’re not cutting corners.
6. Know what your delivery metrics are. How many incomplete deliveries are there? How many delivery miles are logged within a certain period? How many deliveries were missed because a customer wasn’t home? Those things can help determine if it’s time to outsource the service.
Keep Consumers Happy
When it comes to consumers and their happiness with a furniture purchase, deliveries lie at the root of complaints against furniture retailers.
While the Better Business Bureau doesn’t maintain statistics on furniture deliveries alone, the organization offers overall numbers for the retail furniture industry. Each year, between 13,000 and 14,000 complaints are filed against furniture retailers. The complaints vary from broken furniture, quality of goods, deposits taken and furniture not delivered, and damage done during delivery.
Overall, about 22 percent of consumer complaints to the Better Business Bureau regarding furniture stores are categorized under “delivery issues”. It’s possible that complaints filed under other categories were the result of a poor delivery. A wall was dinged when furniture was taken up the stairs or down a narrow hallway. Or, a delivery time was inordinately late.
The best advice from the Better Business Bureau in dealing with consumer issues is to be responsive and continue the conversation. Most of the time, responsiveness will abate the problem and consumers won’t turn to the Bureau or to the Internet to lambast a company.
March 7,
2016 by in Business Strategy, Industry
In the five-year period between 2007 and 2012, the home furnishings retail landscape took a pounding and lost a major chunk of its storefronts.
To get an in-depth picture of how the furniture industry is rebounding post-recession it important to understand how home furnishings stores were hit across the country. Newly released, detailed geography data from the Economic Census conducted by the U.S. Department of Commerce throughout 2012 shows that all types of home furnishing establishments closed a multitude of stores between 2007 and 2012.
No area of the country was unscathed.
As a whole the furniture and home furnishings business lost 18 percent of its stores, and data from the Commerce Department’s Bureau of Labor Statistics shows the number of employees falling 23.6 percent and average hourly earnings decreasing 0.9 percent
(Table A).
Since 2012, the total industry has seen another 3.6 percent loss in store count. However, both employment and hourly wages have improved, 6.1 percent and 9.3 percent respectively, signaling an ever-so-slow rebound.
Table B shows the rapid reduction of stores during the recession with the total furniture and home furnishings industry dropping from almost 61,000 stores to 48,000 between 2007 and 2015.
Despite the continued loss of stores, Table C shows that hiring is picking up. Although not back to pre-recession levels, the number of employees has increased since 2012 climbing 6.1 percent in 2015. In 2015 the industry employed 465,000 workers, down from 574,000 in 2007.
While average hourly earnings dropped 0.9 percent from 2007 to 2012 (Table D), wages increased 9.3 percent since 2012 to $19.37in 2015 and now exceeds pre-recession (2007) average earnings.
Furniture was one of the hardest hit industries during the recession due to the collapse of the housing market and the high unemployment rate. It has also been one of the slowest to dig out.
While current data is maintained by the Bureau of Labor Statistics for the broad home furnishings category, data from the recent geography release from the 2012 Economic Census shows the impact of the recession on the store types—furniture stores, home furnishings stores, and floor covering stores (Table E).
The data shows that for furniture and floor covering stores, not only were the store closures significant, but remaining locations also cut back on employees. Furniture stores lost 18 percent of their locations, home furnishings stores 23.8 percent and floor covering stores 21.7 percent.
The net result of the five-year period was as a loss of more than 13,000 stores, 133,000 employees, and $3.4 billion dollars removed from the economy (Table F).
Regions
Although store closing were systemic across the country, the Northeastern and the Western states were the hardest hit (Table G). Compared to a loss of 13.4 percent of furniture stores in the South, the West almost doubled that percentage closing 26.2 percent of stores. Meanwhile, floor covering stores closed the most doors in the Midwest, 26.7 percent.
Cuts by Market Size
Metropolitan Statistical Areas (MSA), Micropolitan Statistical Areas (Micro SA), and rural areas all experienced widespread store closures, employee reductions, and decreases in annual payroll from 2007 to 2012.
Looking at the impact of store closings on markets by industry size, mid-sized markets (under $100 million) tended to fare only slightly better than large markets with more than $100 million in industry sales or small Micropolitan Statistical Areas (Table H).
Furniture store closings were the least impacted with mid-sized markets faring the best, but still closing 16.1 percent of stores during the 2007 to 2012 period. Meanwhile, more than 27 percent of floor covering stores closed in Micropolitan Statistical Areas.
Furniture stores were forced to cut almost 30 percent of their employees across all markets from 2007 to 2012 (Table I). Floor covering stores had the highest percentage of employee cutbacks—the largest occurring in Micropolitan Statistical Areas with a 38.1 percent drop. Home furnishing stores suffered the least amount of employee loss—most likely due to a wider variety of non-furniture merchandise as well as typically smaller store sizes.
The furniture and home furnishings industry has slowed, but not completely stopped, the bleeding. Although an additional 3.6 percent of storefronts have closed since 2012, those left standing are contributing to steadily rising industry sales. Hiring is up 6.1percent over the last three years, and wages are increasing.
The slow sales rebound will be the subject of next month’s Statistically Speaking.
March 7,
2016 by in Business Strategy, Industry
In this column we like to address topics or issues you face in your retail businesses and offer direct answers about what to do and how to do it.
Understanding that many dynamics in your business like competitive situation, store culture, price points, services offered and other things will impact the exact way you end up handling each improvement opportunity. We also must accept that trying to give a complete solution that will work for everyone in a short format is rather difficult, if not impossible.
Such is the case with this month’s topic that follows the issue’s theme of delivering the sale. I am sure you could Google “delivering furniture” and get many links to articles about how to stage the trucks, load them and bring product into the customer’s house. There are also great systems like Dispatch Track, to help set up, schedule and communicate about the delivery. Some programs allow consumers the ability to track the truck on delivery day so they know when it will arrive. These are all resources you should consider to make your delivery operation more efficient. However, that is not what we are going to address. Instead, we are going to look at delivery as part of the sale and the selling process.
Since the delivery is the completion of the sale—the final touch so to speak—selling it and/or adding value to it, is something that should be part of the sales process. You are not merely delivering the product to the customer, you are also delivering on an inherent commitment you made during the selling experience to make sure the customer is happy with the outcome. That promise may have been overt or assumed, but nonetheless it was made or they would not have purchased from you. Here are some points to consider:
To charge or not to charge? While I believe that the majority of big-ticket retailers currently do charge for delivery, many home furnishings stores do not. There are many reasons for this, but the most critical have to do with competitive pressures in the market place and store culture. Collecting a fee for delivery is good for your bottom line, so if you don’t and are struggling with profit, this might be a good place to consider a change. However, if competitors don’t charge or you have built free delivery into your marketing and store culture over a period of time, then charging for delivery may be a difficult thing to add.
Whatever you do, get credit for it. We often make the assumption our customers understand everything that goes into delivering furniture. That is not the case. To them it is a simple matter of throwing it on a truck and bringing it to them. They have no concept of what it takes to unpack, assemble, detail, blanket wrap, load the truck, drive to the home, take the products inside and set them up. Often consumers expect the crew to move existing furniture to another room before placing the new furniture. This is the most labor intensive and costly service provided, yet when it is given away, retailers do not get the credit for the move.
Change the perception about delivery at your store. The best recommendation for improving the delivery process and customer satisfaction is ensuring you set the right expectations for it on the sales floor and with the delivery crew. Delivery should be a value-added service that leaves customers with a great feeling about the experience with your store. Chris Cooley of Michael Alan Furniture & Design of Havasu City, Ariz., empowers her delivery crew with the title director of final impressions on their uniform shirts. That says it all. No wonder she won NAHFA Retailer of the Year honors last year. Even without that title, the delivery staff and sales people need to understand the importance delivery is to changing a one-time customer into a long-term client.
Here are some other suggestions to improve your delivery performance:
· Marketing—Brand your delivery service, make it something of which you are proud.
o Create a name for it like Sample Furniture’s Final Touch Delivery or Red Carpet Service or White Glove Fulfilment
o Consider offering multiple levels of service options for customers and create handouts and instore graphics promoting them. Some rough examples:
§ Free Customer Pick Up—product is ready in carton for customer to load onto their own transportation, must bring back for warranty service or pay service pick up fee
§ Basic (Low Cost)—Product is delivered to customer in its shipping carton, with no existing furniture movement and any subsequent warranty service pickup is on a reduced charge basis
§ Premium (Higher Cost)—Product is prepped, detailed and delivered to customer. In house set up is included along with minimal movement of existing furniture. Any subsequent warranty pickup visits are free.
· Sales Training and front end support is very critical to having the proper sell-in for your delivery process.
o Often salespeople never mention delivery process to the customer, either because they don’t want to or don’t know what to say. We recommend developing dialogs for salespeople to use to discuss the delivery so that they sell each customer what they need and forecast what to expect when the truck arrives. This process should be supported with POS materials and printed details on the consumer contract.
o The best way to help the sales team better understand what goes into a delivery is to have them experience the process. They should spend a day in the warehouse helping or observing how the deliveries are staged and trucks loaded. They should then go out on the truck for a day to greet customers and observe what happens on deliveries.
o Many salespeople do not like to expend the effort selling delivery since they feel they are not paid for it. However, the bottom line is that they are paid to provide customer satisfaction and delivery is a big part of that. The better the customer understands what to expect, the more likely they are to be happy with the end results
· Back-end training and support will help bring the delivery team into the selling process so that they better understand how important their role is in it.
o Put your delivery crews through as basic version of your sales training so that they know what the sales person does that results in the delivery of goods to the customer. Focus on information about what the customer wants and how they approach shopping for the home.
o Many retail stores have a huge disconnect between the sales floor and the office and by default, the delivery department. I often hear complaints from each about the other and when I ask for details, they don’t have any. In fact, sometimes they have never even met the person they are angry or upset with! Involve your delivery crew in meetings with the sales and office teams at least once a moth, weekly if possible. Invite them to company events with the sole purpose of having everyone get to know each other – it will do wonders for your morale and reduce interdepartmental squabbling.
o Conduct follow up phone or email surveys right after each delivery to get customer feedback about their experience. Set perfect delivery goals for your teams and pay bonuses for achievement of goals. Make a satisfied customer the goal for each team member, not just the number of pieces delivered.
o Celebrate your successful delivery efforts with the sales team. Your goal should be to create a team mentality that delivers customer satisfaction beyond expectations from the sales floor to the customer’s home.
You are probably doing many of these things already, but might be missing the one piece that will take you to the next level. The biggest thing you can do is make sure everyone understands they are all in it together and will succeed or fail together. The more they help each other and the better they communicate, the higher their chance to be a winning team.