Monthly Issue
From Home Furnishing Business
May 19,
2016 by in Advertising, Industry, Product, Recliner 
With the increasing demands of today’s overcommitted, technology-driven lifestyles, it’s no surprise consumers want to sit down and put their feet up. The motion upholstery category reflects this trend with 5.1 percent year to year growth from 2014 to 2015.
In 2015, total motion upholstery sales were $11.02 billion, with recliners’ share estimated at $4.74 billion. For the first quarter or 2016, the entire motion upholstery category is up 4.1 percent over first quarter of 2015.
While they’re looking for comfort, fashion and functionality are at the top of consumers’ shopping lists as well. Furniture designers have responded in a big way and are coming to market with a variety of styles, materials and options for every budget and décor style.
American Leather Comfort Recliner™
Featuring its best-selling arm style and a sleek tight back, the Fallon model shown here offers a variety of features and customization options including choice of chair size, arm and base, articulating headrest, and power or manual operation. Suggested retail is $2,999.
Bradington-Young’s Gallaway 3007
Offered in hundreds of cover options, the Gallaway 3-Way Lounger is shown here in an on-trend shade of gray (cover 9067-95) and is available in a variety of wood finishes with no upcharge. Suggested retail is $3295.
American Furniture’s 9930
Featuring a soft, tone-on-tone cover in Gazette Pewter, this timeless recliner continues to perform well on retail floors.
Flexsteel’s 1251 Brookings
This best-selling model is available as a handle-activated or power recliner and can be customized in a rainbow of leather or fabric choices. Suggested retail is $1,299.
Ashley Furniture’s 29501 Pranav
Consumers are responding to this updated twist on the traditional rocker recliner. The genuine leather model has sophisticated styling and contemporary flair.
Natuzzi’s ReVive
Designed to move with the user, this performance recliner intuitively responds to the body’s movement. Its innovative design ensures a seamless transition between body positions. Suggested retail is $2,500.
Craftmaster’s L361515
Classic never goes out of style, as seen with this top-performer from Craftmaster. Its rich brown leather cover is Galveston 08. Suggested retail is $1,199.
May 19,
2016 by in Business Strategy, Industry
Many of the articles you have read over the last decade in this magazine and others have carried a common message. That message has probably also been reinforced by every speaker you have heard at conferences and your own experience at your store. So by now, unless you have been in a cave somewhere, you have pretty much accepted the fact that the consumer has changed dramatically since the dawn of the 21st century. We know through research that the huge impact of increased color home furnishing advertising, home-focused cable TV channels/shows and particularly the internet, has both stimulated and educated our target customers so that they are much more product savvy and confident when they shop than they ever were.
As a result of their pre-shopping research, we know that they are visiting about half as many stores before buying. If we are making it onto their shorter list, then we should have a better chance of helping them find what they want and that has happened as we have seen an increase in closing rates over the past few years. However, as I stated in last month’s edition, even with all the research they do to select where they shop, we are still only satisfying about a third of those we see! So what do they tell researchers is the main reason for visiting a store and walking out without buying? According a Wharton Retailing Institute/Verde Group Retail Customer Dissatisfaction Study:
“Over-Cluttering,” combined with a sales associate’s inability to help in finding an item, are the top reasons for not making an intended purchase or simply going elsewhere.
So the biggest problem for all retail is:
• Confusion in store and lack of proper sales assistance!
Causing:
• The shopping Experience to not be what the new consumer wants
Therefore:
• Sales Person must be the problem because they failed to connect one-on-one and assist or direct the process in the store.
This has dramatically affected our industry, since many of our potential consumers actually anticipate a bad experience. As a result, as much as half of the home furnishings purchased in the USA this year will be bought through distribution channels that don’t involve salespeople as we know them in the process!
The truth of the matter is that if we have not properly trained our staff to deal with today’s customer by breaking through their fears and resistance to gain their trust, then we, the owners and managers, are really the ones at fault! Indeed, updated and effective Sales and Sales Management training is the answer for most retailers. So here are some ideas about how the Approach, Structure and Content of your program can provide the best training for your staff to deliver the impact you desire.
Approach
Historically, furniture stores that have consistently performed the best have also “trained” the best, from the top down. The best larger ones have invested in staff trainers and put in place continuous programs that keep the store management and sales staff informed and invigorated. This same type of effort is needed in any retail organization, no matter how big or small.
Unfortunately, most smaller stores tend to use “event based” training programs. In other words, someone comes to the store and holds a training seminar that usually gives good direction to the staff, sometimes actually reinvigorating or motivating them and as a result sales improve. The problem is that without the proper environment at the store, the improvement is not sustainable and a few weeks later the store’s business is flat again. Training is a journey, not an event!
In any successful performance oriented team, there is always a “coach” that drives the effort. Sometimes it is the owner, the general manager or sales manager who keeps the fires stoked. The truth of the matter is that everyone needs someone with the knowledge, the motivation and the courage to hug them when they need it and kick them in the butt when that is the appropriate action!
Therefore, you must make sure you have the proper “culture for success” in your store that will support and nurture all of the behaviors you train your sales staff to use. It is human nature to stop doing new things if they have not shown immediate results or are not yet a habit. Sales managers must hold their team accountable to provide the experience the store wants for each and every customer that visits, every time without fail. So the starting point for any sales program in your store needs to focus on first training management what to expect their people to do, how to teach it, track it, coach it and make it part of the store culture. Without that, whatever training you give the staff will just be treated like this month’s recommendation, not a way of life they need to embrace!
Once that is done, your sales training program should be focused on providing the service level and shopping experience that your target consumers want when they visit your store. There are many good ones available, but you need to make sure whatever one you choose has been updated and is focused on the needs of today’s customers, not the ones back in the 90’s and before!
Structure
The most successful programs utilize multiple types of training in an ongoing process that provides continuous improvement and development for their entire staff. This not only drives growth, but also creates an environment that the best people want to be a part of, which reduces turnover and helps you recruit/hire the most talented candidates available. Below is a list of some elements you can use to augment and enhance your manager led training efforts, plus a graphic that reflects the way each major part of a solid program can layer on to create the maximum improvement possible:
• Methods and Elements You Can Use to Enhance Your Results
– Natural or On-the-job Learning
– Individual Online and Video Self Learning
– In-Store Training Events and Seminars
– Management Training
– Performance Coaching for Managers and Sales Staff
Content
Management Training Program - Your strategy should be all about the customer, not the salesperson. It starts with creating management focus on coaching and needs to include the accurate measuring and reporting of your team’s individual performances. As has been discussed in previous columns, Total Sales = traffic X closing rate X average sale, so at the very least you need to have these numbers to study as you train, coach and manage your staff.
Your program should begin with the following important determinations and discussions:
• Defining the company’s vision
• Creating an understanding of your consumers:
– Their Lifestyles and Attitudes towards the home
– How they want to shop and be treated by your sales staff
• Instilling Principles of Business and a Belief system that works
It then needs to train the following Management and Coaching Functions:
• Measuring performance
• Recruiting - Hiring - Staffing - Scheduling
• Goal Setting & Management
• Training, Observation, Feedback and One-on-one coaching
• Motivating a Performance Team
• Managing Conflict
• Coaching the coach with ongoing support from upper management
Sales Training Program – All of your sales team’s efforts should be focused on providing the home furnishings shopping experience that your customer desires. Therefore, once you have the proper sales management organization and process in place, you need to train and coach your staff on how to provide a customer driven interaction that helps your visitors fulfill all of their wants and needs. It should include instilling behaviors that will deliver that result in the following critical areas:
• Preparation – Understanding your products and customers
• Greeting – How to break through “I’m just looking” and connect as a person
• Establishing trust – This is essential in order to maximize results
• Determining each customer’s Practical and Emotional needs by using the Sketch as an effective tool for gathering information – the problem is in the home, not the store!
• Presentation - Showing the right products, the right way
• Handling Objections - Techniques to enable the sale to continue
• Asking for the order/Gaining commitment - Timing and Techniques to help the customer make the right decision for their home
• Client Development and Follow Up – Creating Customers for life
Most retailers need some help putting a professional program like this together and there is plenty available. In the long run it is almost always quicker and more effective to hire someone who does this type of thing for a living! Talk with other retailers and find the provider that will make the right things happen in your store for you.
May 19,
2016 by in Economic News, Industry
Is an election year partly responsible for a healthy economy? Are furniture sales higher and unemployment rates lower? Looking back over the past 20 years and the elections those years encompassed yields interesting results. With the exception of the Great Recession in 2008, a possible heightened sense of confidence and hope for the future during election years may partly be responsible for higher furniture sales growth, consumer confidence, gross domestic product and lower unemployment rates.
Furniture Sales
In presidential elections over the last 20 years since 1997, the last year of each term with one exception, has produced the highest furniture industry sales growth of all four years of that presidency. The one exception was the second term of George W. Bush which ended during the Great Recession. The last year of each term is also the Election Year for next term, as the nation is experiencing now in 2016. If the pattern continues, 2016 should grow in excess of the 5.3% furniture sales growth of last year.
Table A shows the furniture industry growth by year over 20 years encompassing five presidential terms, including the current 2016 election. Note that the industry’s highest growth was in the last years of Bill Clinton’s second term and George Bush’s first term.
Consumer Confidence
Consumer Confidence was highest during the Clinton years – topping out at 139 during his last year in office (an election year). Taking a big dip post 9/11, Consumer Confidence dropped to 80 in 2003 before climbing back up to 96 during George W. Bush’s last year of his final term. During the Great Recession, Consumer Confidence hit its lowest at 45 during Barack Obama’s first term but grew 22 percentage points to 67 in the Election Year of 2012. Consumer Confidence has continued to grow over Barack Obama’s second term, but at 95 in March 2016, it is still below the 1985 base of 100.
Gross Domestic Product
The Gross Domestic Product or GDP is defined as the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. As Table C shows, the GDP has made its largest gains during election years with the exception of the Great Recession. In both Bill Clinton’s 2nd term and George W. Bush’s 1st term, the value of U.S. goods and services increased by more than 6.5 percent from the previous year. It remains to be seen whether 2016 will follow the same trajectory.
Unemployment Rate
Like the highs in Consumer Confidence, the Unemployment Rate was at its lowest during the Bill Clinton years (Table D). The Great Recession caused the unemployment rate to skyrocket near 10 percent, but by the election year of 2012, the rate has decreased to 8.1 percent and continues to fall almost a percentage point each year. Currently at 4.9, the Unemployment Rate looks to be continuing the trend of other election years with the lowest unemployment of the presidential term.
Election Year vs. the First Year in Office
While the majority of election years in recent times have ended on a positive economic note for the furniture industry, did the momentum carry over to the first year of a president’s new term? The continued upswing did occur in the 1980’s and 1990’s, but since the turn of the century, furniture industry growth during a president’s first year in office did not surpass the election year preceding it.
Table E shows that in the 80s and 90s, with the exception of Ronald Reagan’s second term, the first year of a president’s four-year term experienced higher furniture industry growth than the previous election year.
Unlike the 80’s and 90’s, in recent elections (Table F), the economic momentum of the election year did not carry over to the first year of a presidency. No president’s first year of the term exceeded the previous election year’s growth. If this trend continues into 2017, the Furniture Industry will not experience quite the growth of 2016.
With America facing what pundits are calling a polarizing election year, the hope is that the U.S. economy will follow tradition and industry growth will continue and consumer confidence grow.n
May 19,
2016 by in Business Strategy, Industry
Institutions, companies, and, yes, magazines evolve through stages of growth. Each stage addresses the needs of its constituency while pushing the boundaries of its mission. This is true of Home Furnishings Business. The founding editor and publisher of Home Furnishings Business identified a need for a voice for the traditional retailer in the home furnishings industry. It was not to be a newspaper for the industry. Instead it was a publication that addressed for retailers the issues that were at the forefront of their concerns.
Over the past decade the industry has undergone significant changes with alternative channels of distribution challenging the traditional independent retailers and the migration of manufacturing offshore. The results are a declining retailer base and the loss of many established manufacturing brands sought by consumers. Today the demarcation between manufacturing and retailing is blurring. The movement offshore and the subsequent savings have been passed along to the consumers often with a reduction in product quality. Some retailers have assumed the role of suppliers, some with mixed results, but, for the most part, reducing the traditional supplier’s role to that of an importer. The results are a sector of the industry that is driven by price overlooking the primary focus of the consumer which is to create a beautiful and functional environment.
In 2013 the magazine changed ownership with the acquisition by Impact Consulting Services/FurnitureCore. This added another dimension to the acquirer’s mission to utilize and apply information to create high performance retailers and manufacturers. Changing the magazine’s masthead to “The Strategy Magazine of the Furniture Industry” and increasing its scope to include manufacturers and service providers was the first change. However, more than the cosmetic change was the addition of more specific content to allow readers to visualize their own business and to identify areas for improvement.
The content was authored by subject matter experts within the ranks of Impact Consulting with “Strategically Speaking” and “Coaches Corner.” The intent of this change was to establish a “point of view” of Home Furnishings Business concerning the home furnishings industry and the direction forward.
We continue this next phase of the evolution of Home Furnishings Business. We plan to explore the issues that are critical to creating high performance retailers incorporating business intelligence and market research along with input of industry thought leaders. Our goal is to raise the performance of the industry with critical discussion.
This is just as the process of our Performance Groups where active sharing increases the performance of all members of the group. We want to work with the industry to create that same atmosphere of striving for excellence.
April 4,
2016 by in Industry
With the upcoming High Point Market, the furniture industry will focus on new products and services that will propel it forward into 2016.
As strategies are developed, it’s crucial that care is taken to understand we are subject to the echo-chamber effect. In other words, participants at the Market reinforce each other’s perceptions thus reinforcing the decisions that will guide retailers and vendors moving forward.
The danger lies in the fact that the majority of those attending Market represent less than 40 percent of the industry volume. As is illustrated in Graphic A, traditional channels that represented 85 percent of furniture sold 30 years ago have now diminished.
For the most part the traditional industry is focused on competition from each other—regional chains or the independent retailers and vice versa with department stores as the sleeping giant always holding the potential to impact. However, what about the alternative channels, such as the Internet and lifestyle stores? It is not that the traditional industry is oblivious to those channels’ existence, but they are not perceived to be the immediate competition. From the consumer’s perspective, however, they are.
We should note that the suppliers, without much fanfare, are serving alternative channels and obtaining significant volume from the Internet and, to some extent, lifestyle stores. However, these suppliers are inclined to ignore the fact that much of the products are sourced by the retailers themselves. This raises the question of a need for a more robust partnership between the traditional suppliers and the traditional retailers.
When the industry slid into the Great Recession, there was significant concern that this was the end of traditional furniture retailing, especially the Independent channel. The industry did lose a significant number of retailers between 2007 and the end of 2015. Graphic B illustrates.
The downturn ended in 2009, and this year the industry has climbed back to its peak of 2007, as noted in Graphic C.
The question is whether or not the traditional channels of distribution will continue to decline. This decline has impacted not only the furniture stores, but also the broader category of home furnishings stores that include more of the decorative categories. Graphic D illustrates this decline by region.
We have included the floor covering stores to illustrate the impact across all of the home furnishings categories, as well as to identify an opportunity for traditional furniture stores. As can be seen from the graphic the West was, in total, hit harder than the Northeast. This was influenced by the percentage of smaller markets in the West. Graphic E analyzes the impact of the downturn on size of the market.
These are the facts.
However, there were several underlying trends other than the economy that contributed to the industry’s decline. As is always the case, consumers rule and as his or her buying habits shift, retailers need to make adjustments to their game plan to remain competitive and relevant. In a national survey conducted by FurnitureCore, a sister company of Home Furnishings Business, consumers purchased from the channels shown in Graphic F. These statistics closely match the previous chart on sales by distribution channel, but it should be emphasized that this is percentage of purchasers, not purchases.
While much was gleaned from the study, the demographics were most interesting. As can be seen in Graphic G, the older the consumers, the more they preferred the independent furniture retailers. When we inquired as to the reason for this preference, we found that it was not price. It was service and reputation.
Analyzing the same data for those consumers who had purchased in regional chains, we found the retail segment had captured the prime furniture buying segment—the 35 to 44 age set. Graphic H illustrates. Selection and price were most important factors in why the bought where they bought.
If we look at the current enemy of the traditional retailer, the Internet, we find prime furniture buyers (35-44) in age as can be seen in Graphic I. The reasons for the Internet purchase were convenience and selection, especially in the smaller markets.
These findings could be the topic of a total article, but the point is that if the traditional channels are to survive, they must satisfy the needs of their customers.
The next trend is the expansion of the regional chains. As discussed in the October 2015 issue, the introduction of a regional chain into a market impacts the established local dominant furniture retailer capturing between 8 percent and 10 percent market share. This is not enough to destroy the retailer, but it is enough to impact significantly its financial performance. In the promotional to middle price points Rooms to Go and Bob’s Furniture continue to expand, especially Bob’s expansion into the Midwest. Likewise, Havertys Furniture and Raymour & Flanigan are expanding and competing in the middle to upper price segments. With consumers shopping fewer stores—two nationally last year—regional chains in the market usually secure a place on the short list.
The most important statistics for a retailer are illustrated in Graphic J. Was the retailer considered? If considered was the retailer shopped? If shopped, did the consumer make a purchase? The measurement can easily be accomplished.
The third point centers on the industry in total. Graphic K presents the industry’s share of the three consumer household durables. We should question ourselves as to why we have lost a significant amount of our position in the consumer expenditures race.
The Conclusion
Will traditional furniture retailers survive? The answer is yes, but we may not recognize them a decade from now. We are going through a watershed in our populations as can be seen in Graphic L. Embracing change has been and will always be required. However, the pace has tripled in the past 10 years. Is your organization ready for change?
