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Coach's Corner: Are You Harvesting ALL the Low Hanging Fruit?

One of the first things that we should do when we try to assess our performance and determine where growth can come from is to make sure that we are capturing as much of our “low hanging fruit” as possible. However, I have found that businesses sometimes end up taking these opportunities for granted. They assume that they are getting the most from them, when in fact, they are not. We all know what happens when we assume or take things for granted, we usually end up forgetting about or neglecting them, thus failing to maximize our potential. So, I thought this month we would take a look at some of our “low hanging fruit”, to make sure we are doing all we can to harvest it, beginning with the biggest one, which is building a client base with after sale follow up and communication.

Build Your Client Base

As we wrote a few years ago: A customer is someone who purchases merchandise from your store.  The salesperson acts as a facilitator in the process, handling the details of the transaction. If no relationship has been established, the next time the customer needs furniture the odds are that she will not seek out that same salesperson. There is, in fact, substantial research to indicate that more than 75% of these people will not even shop your store.

A client, on the other hand, has established a relationship with a salesperson based on the customer’s belief that the salesperson truly cares about her need to create a beautiful home environment and about her level of satisfaction with what she buys.  These relationships take time to develop and involve active participation by both parties but mostly by the salesperson. When this customer is ready to make another purchase, she returns to that particular salesperson. It would not matter where the salesperson worked. People do not build relationships with stores -- they build them with people.

While the initial sales experience is critical, it is after the sale follow-up that really builds the trust necessary for the relationship to flourish. Customers want you to track and follow up on their orders after delivery. One of the issues that comes into play in all of the research we see, is that customers don’t think a sales person cares about them at all after the sale is made. For most furniture salespeople, there is ample evidence that this is true. Few send thank you notes, even to their biggest customers. Even fewer maintain contact with customers prior to delivery. In cases where there is contact, it is usually initiated by the customer. Professional salespeople act differently, and the results show in higher incomes and more satisfied, repeat customers. For them, following up with the client after the sale is the critical point where the relationship is cemented, and the consumer’s trust is verified.

Returning customers have a two to three times better chance of purchasing from you, than first time visitors. So, getting those that purchase from you to come back and do it again, presents arguably the greatest potential for business that we have. Are your sales people doing all they can to get the most out of everyone they sell?

Maximize Your Sales from Inquiries

Many sales people do not like handling phone or internet inquiries because they think they are a waste of their time. That could not be further from the truth. These customer contacts actually represent some of the most qualified leads your store receives and because of that qualify as low hanging fruit. However, managers need to make sure their staff members are on the same page and understand what a great potential source of business internet inquiries present. Here are the issues they will want to discuss:

  1. These are not just “tire-kickers” or “price-shoppers”. They are legitimate Ups and need to be treated as such. They have decided to buy something, done research online to narrow it down and now they are looking for a place to buy it. What better chance can you get? Research shows that those inquiries your staff gets have an extremely high purchasing rate when they do visit.
  2. For the most part these “inquiries” represent the best selling opportunities a sales person in a retail store will have on any given day because the customer is actually looking at a product and willing to tell you what they are interested in. How many of the people the salesperson approaches in the store each day do they even get that information from?
  3. These potential customers are normally in the final stages of making a purchase decision and are at a point where they are narrowing down what product they want, how much to pay for it and where to buy it. Therefore, if they ask for a price and you just give it to them, you have only addressed one part of their need and they may very well shop around and go elsewhere to buy, based solely on price. Your response must address all their needs and in doing so, give them a reason to buy from you.
  4. It is critical that sales management understands that most retail sales people are more comfortable working face-to-face with a customer so they can read body language and relate better to that person’s communication needs. Working with someone online is far different and might not be something every sales person is good at doing. The main point is that some sales people will be better at handling online inquiries. Find out which ones can do it and make sure they get the majority of these precious opportunities.


Use Referrals to Build Your Business

It is estimated that potential customers who are referred to a retailer or service provider by someone they know are highly likely to make a purchase at that store. If your staff is doing things right and building a client base, then one of the ways they can grow it even more, is to ask their clients to refer people they know to them. It is not hard to do, but for many reasons a lot of capable sales people do not bother to do it. Managers need to make sure their client development training program includes dialogs and coaching on how to properly request referrals from everyone they sell.

Partner with Outside Designers

I am going to steal the words to describe this opportunity from our editor’s note as it appeared in the February issue: “While the decline of brick and mortar retailers has been well documented, the number of designers has increased significantly. The majority of this increase is not with design firms employing more than 5 designers, but with individual practices. I hate to use the term ‘kitchen table designers’ because they are as well trained as graduates of major schools. What they are can be best described as personal shoppers. Willing to do the ‘needs analysis’ with the consumer and shop for the time-starved two household income family.”

Why not reach out to these service providers in your community and get them on your team by offering an easy way for them to use your store as their main product resource? It might not be the lowest hanging fruit, but it is sure ripe and available!

New and Existing Home Buyers and Apartment Renters

We all know that in general, people who have moved into a home or apartment recently are more likely to purchase home furnishing in the next few months than those that are staying put. Many retailers in our industry have a program to encourage real estate agents to refer clients. Some provide products for staging in rental units, in order to make a connection with those potential buyers. Unfortunately, I often see that over time these efforts are not always as robust or consistent as they should be. It takes energy and discipline to maintain these programs and make sure you are getting the most out of them, so sometimes they fall by the wayside. Owners need to make sure they hold management accountable for keeping customer recruitment processes like this rolling along. Monthly reports, weekly discussions and a reasonable goal process are ways to keep them top of mind.

I am certain that none of the above items are new to the reader. It is very possible you may not think of them as “low hanging fruit”, but in reality, they are just that. All it takes is a solid plan and a consistent effort to grow your business substantially. Even if you think you are doing all you can, I highly recommend you revisit your programs in these areas to make sure they are giving you the bountiful harvest you deserve.

Statistically Speaking: Furniture Spending Growth Outpaces Other Home Furnishings in 2018

Overall, personal consumption expenditures have risen 41.6 percent post-recession with the majority of consumer spending – roughly two-thirds – absorbed by services and the amount increases every year. According to the government’s Bureau of Economic Analysis (BEA), Healthcare costs now surpass total housing expenditures at $3.10 trillion versus $2.98 trillion in 2018. Combined healthcare and housing consume much of America’s paychecks. Although services will continue to eat away at consumer dollars with rising housing rents and mortgages, overall consumers are confident in the economy. Spending on durable goods is on the rise and has increased by 44 percent since 2009. Consumer spending on furniture alone has increased 7 percent over the last year to $114.6 billion in sales outpacing the growth other home furnishings products.

This article picks up from Home Furnishings Business July 2017 issues’ Statistically Speaking Consumer Spending Update. A comprehensive historical revision to Consumer Spending statistics in the second half of last year by the BEA confirmed what many furniture retailers tried to tell us all along. Specifically, that growth in furniture spending coming out of the Recession ending in 2009 was not as robust has first published (Table A). The Bureau of Economic Analysis lowered estimates of furniture spending beginning in 2011 and which has cumulated to an 8 percent correction that has carried through 2018.

Services, Durable, and Nondurable

Over the last five years, between 2013 and 2018, services have increased to 68.8 percent of consumer spending – from $7.6 trillion to $9.6 trillion in consumer dollars (Table B). Nondurables have declined as a percent of spending, down from 22.2 percent to 20.7 percent during the same time period. While spending for durable goods has not shifted as a percent of consumption since 2013 staying at 10.5 percent, total sales have increased by 22.7 percent.

As shown in Table C, both durable goods and nondurable goods lost tremendous ground from 2000 to 2009 as spending on services skyrocketed by 54.6 percent while consumer spending on housing and healthcare services steadily increased. On a positive note, in the years following the recession (2009 to 2018), durable goods have surpassed growth in services and nondurables, increasing 44.2 percent compared to 44.0 percent for services and 32.9 percent for nondurables.

Top Consumer Spending

Healthcare now exceeds total housing and home furnishings – accounting for 22.2 percent of consumer spending in 2018. The share for total housing and home furnishings has also increased slightly by 0.2 points, mainly due to rising rent and mortgage prices in a competitive housing market. Motor vehicles have dropped spending share by 1.2 points. Meanwhile Americans are eating out more, with corresponding spending on food/groceries consumed at home declining. In 2018, consumers were spending a greater share of expenditures on financial services – up 5.2 percent from 4.9 percent in 2013 (Table D).

Housing and Household Expenditures

Since the recession, renter-occupied housing has surged as the fastest growing housing expense – up 86.4 percent since 2007 (Table E). Both household insurance and owner-occupied housing expenditures have also grown at a fast pace, increasing by 40.8 percent and 47.5 percent respectively. Major household appliances have shown steady growth, while televisions have fallen flat and outpaced by other household spending. Surprisingly, tools and equipment for house and garden have skyrocketed the last few years – jumping 43 percent since 2012.

As Americans are staying put longer, household maintenance spending has grown an average of 4.8 percent a year from 2011 to 2016. 2016 to 2017 saw a dip (-0.8 percent) in housing maintenance but the numbers picked back up last year – growing 3.8 percent. Last year, rents and mortgages both saw a high growth of 4.5 percent and 4.4 percent as supply continues to tighten in many areas. Furniture has shown the most growth over the past year, rising 7 percent after an average yearly increase of 4.6 percent from 2011 to 2016.

Figure 1 itemizes the growth of housing and home furnishing expenditures five years 2011 to 2016 (CAGR), one year (2016 to 2017 and 2017 to 2018) and one year point change.

Furniture and Home Furnishings Products

In 2018 through November annualized, consumer spending on furniture alone totaled $114.6 billion dollars. Major household appliances is the second largest home furnishings spending category at $41.4 billion, followed by clocks, lamps, and lighting fixtures at $39 billion and televisions at $31.7 billion (Table G).

Although window coverings is the smallest of the home furnishings categories, it has experienced the largest post-recession surge in consumer spending – increasing 67.7 percent since 2007.

Table G depicts the decline of all the major furniture and home furnishing products from 2007 to 2009 and subsequent rise post-recession. Spending on carpets and other floor coverings, the most affected home furnishings category, has slowly increased since 2012 but still shy of 2007 expenditures. As of November 2018, spending on furniture is 13.7 percent higher than pre-recession amounts in 2007.

As depicted in Figure 2, all home furnishings categories except for televisions exceeded 3 percent average annual growth from 2011 to 2016. Spending on televisions had an average loss of (-0.2 percent) over five years but has rebounded slightly – increasing 4.3 percent last year. By far, furniture and window coverings have shown the most consistent growth from 2011 to 2018.

Table H shows the spending categories with highest increases and decreases from 2017 to 2018. Gasoline and other energy goods top the “winners” list at 13.4 percent growth, followed closely by truck leasing at 13.2 percent. More people are affording vacations and travel as passenger fares for foreign travel are up 12.0 percent. Entertainment is a big winner with motion picture theater ticket sales up 11.4 percent, video streaming and rentals growing by 9.2 percent and newspapers and periodicals increasing 9.0 percent last year.

New auto sales top the list of “losers”, posting a 9.5 percent decline with second place going to spectator sports. Not surprisingly, land-line telephone services have declined by 6.7 percent – placing the spending category third on the list.

The latest comprehensive revisions by the BEA to the U.S. National Accounts have several significant takeaways. First, personal income appears to have been under-reported for years, especially from small businesses. Secondly, the revised savings rate for individuals is no longer at historic lows and is about average to the levels seen since 1990. Also, the relationship between personal spending and income is no longer at historic highs. This all means that our economy may have even more room for expansion than originally thought which should bode well for the furniture and home furnishings industries.

What Sells: On This Happy Occasion

The category is broad and covers a range of items from coffee tables, bars, chairs, to small writing desks (think laptop tables in the digital age) and more. These pieces may only be used occasionally, but that hardly diminishes their importance in the home and on the sales floor.  It will come as no surprise that the category performs well for retailers, who have a wide range of options to choose from for their product assortment as manufacturers continue to ramp up their SKU count.

As the function of occasional pieces tend to be obvious, designers and manufacturers can afford to have a bit of fun in their product designs. Based on a FurnitureCore, Inc. industry model developed by Impact Consulting Services, parent company to Home Furnishings Business, it is clear that style and function are the yin and yang of the category. Those surveyed on their perception of the rank regarding style vs. function of occasional pieces reported a near 50/50 split between them (49.49% vs. 50.51%). BDI’s Bill Becker, CEO and Design Director, honed in on the importance of both the style and functionality of one of the company’s leading products, the Milo Laptop Table, saying, “While Milo is designed to serve a very functional purpose as a laptop table, it also incorporates architectural lines that make it a very beautiful design.”

Most often, the industry immediately thinks of the variety of tables in this product category. There is a traditional option for occasional tables that regularly serves as a great selling point for retailers: the three-pack table group. Manufacturers are able to bundle these tables and, in the end, customers walk away feeling satisfied that they got a great deal. While this is a useful strategy to utilize on the sales floor, only an average of 3.66% of consumers rated this selling point as “very important.” Clearly, it is a perk, but not a consumer demand.

The same survey honed in on what type of tables consumers most recently purchased. A majority of consumers purchased end tables at 50.51%, followed by coffee tables at 40.40%, sofa/console tables at 23.23%, and nesting tables (tables that provide additional seating) at just 7.07%. Multiple options were allowed.

Now that we have a better idea of the product type demand from a consumer perspective, we can dive deeper into the style directions that influence these purchases. By creating pieces that are available in multiple finishes to give the impression of a customizable product suitable to consumer tastes on an individual level, manufacturers can stay on trend and ahead of the curve. When asked about his company’s best-selling occasional pieces, Luke Simpson, President and CEO of Durham Furniture, said of the Cascata Collection, “The modern style and elegant finishes have proven to resonate well with consumers who stay on top of design trends, yet are looking to invest in timeless pieces they can appreciate for years to come.”

Consumers polled on their most recent occasional table style purchase reported the most popular selection was contemporary (35.35%) with traditional closely behind at 32.32%. Country/Rustic followed at 13.14% and Country/European at 11%. Mission/Shaker and Transitional trailed the pack, both with a reported 4.04%. There is truly a style (and finish) for everyone in this category.

Take 5: Mike Shelton

Shelton holds bachelors and master’s degrees from Furman University, and began his professional career as an assistant football coach there. He joined the textile industry in 1977 in sales with LaFrance Industries, rising to management as vice president of sales and marketing. Following a two-year stint with Doblin, he joined Valdese Weavers in 1988 as vice president of sales and marketing. After serving as COO, Shelton became only the fourth president of the company since 1935.

Shelton is currently chairman of the Fabrics Committee of the National Council of Textile Organization (NCTO). He is on the board of the American Home Furnishings Hall of Fame is past chairman of the National Textiles Association (NTA) and is past chairman of the upholstery committee of the American Textiles Manufacturers Institute (ATMI).

Shelton recently spoke with Home Furnishings Business about Valdese Weaver’s product offerings, the company’s secret to longevity and issues facing the industry.

Home Furnishings Business: How is the rapid growth of outdoor furnishings and consumer’s desire for performance fabrics impacting your business and what has the reception been to your Inside/Out line?

Mike Shelton: We have been on the forefront in leading the move toward high performance fabrics, primarily for indoor use. We have an exclusive license with Crypton Home in the residential market and we have built that into the initial core of our performance offering to the knit market and high end. It’s the best applied process to generate the most flexible product types and achieve high performance characteristics the market wants using Crypton Home.

We acquired Dicey Fabrics in 2015 and integrated it into our operations. And we have used the yarn manufacturing platform that was part of the acquisition to develop a new product category for our company that we named Sustain Performance Fabrics. That was the primary benefit along with the established business that Dicey had at that time. We were able to take the yarns that Dicey manufactured, and now that we manufacture, and develop this new proprietary yarn system that is the basis behind Sustain Fabrics.

We also have developed yarn systems since the Dicey acquisition that have allowed us to put added attributes into a yarn that we are branding fabrics by the name of Inside/Out performance fabrics. The additional benefit of this yarn system is that it has high UV resistance properties and is engineered and built for high use indoor applications, as well as appropriate for outdoor settings because of the UV properties. We consider it to be the best all-in-one performance story in the marketplace. The reception for the Inside/Out line has been fantastic. I can’t describe it in any more glowing terms. We’ve had tremendous launch the first year into the product. We have secured market placement with certain manufacturers and furniture retail and fabric distributors who are now putting this product in fully curated merchandise programs into the marketplace. Our relaunch of the product at December showtime and the upcoming High Point market in April will have a major impact.

HFB: How is the threat of increasing tariffs affecting your product development?

  • It really isn’t. We have a blended strategy of domestic manufactured products as well as fabrics from all over the world, primarily products that we don’t have the capability to make or that we decide not to make. A lot of what we develop offshore in Asia utilizes chenille, which has not been impacted by the tariffs. And we are working with customers and suppliers on other products to minimize the damage caused by tariffs. We see our customers buying more new products from domestic manufacturers as they go forward to minimize the risk.

HFB: What are you seeing internationally in terms of product demand, style, and directions? Are you seeing trends start there first?

  • The international marketplace has changed dramatically over the past 15 years. Goods manufactured in Asia, and in Turkey have changed the paradigm for most products. The net result has been a homogenization of sorts in style and color around the world. We are not really seeing as much dramatic difference from a stylistic and color standpoint that used to exist in different markets around the world. Our style and sense of fashion appeals to a very broad segment of the world. The conventional wisdom is that trends start internationally, however I don’t think it is altogether true as it might have once been. Some of the finest Italian fashions come from descendants of Italian companies that have located in the states such as Valdese Weavers. We work collaboratively with our customers to develop new fashion and style trends. Quite frankly, those concepts and ideas come from everywhere in the environment and not just geographically oriented perspective.
  • What should we look for from Valdese Weavers in the coming markets?
  • Our story in all of our residential categories is 100 percent built around performance. We have three performance brands, Crypton Home, Inside Out and Sustain. They have very different characteristics. The definition of f performance varies by manufacturers and the markets they serve. We have been on the forefront of this. The differentiator for the Inside Out fabric is that it was built for what we know is superior indoor every-day use, but it also has the unique ability to have high UV resistance as opposed to other brands that are really made for outdoor use and not for heavy, indoor everyday use that requires abrasion and pill resistant characteristics that all of our fabrics have built into them.
  • What has been the biggest change you have observed in the fabric manufacturing sector since you joined the industry and what are your biggest challenges today?
  • We are going through some of the biggest changes I have experienced in my 30 years right now. The definition of luxury products and the retail distribution of luxury products has changed dramatically. How you appeal to an upper end buyer has changed. The move toward performance characteristics and the sustainability factors has been a big change. The customers we appeal to have changed dramatically over the years. The natural fundamental of creative destruction has allowed some companies the opportunity to succeed and other have seen their demise. Those things have been accelerating during the past 10 years. The primary change has been tied to globalization. We have been able to survive and thrive in that environment. The challenges we met and how we attacked them has been the difference for us. We are as strong as we have ever been with record sales last year. We are extremely proud of the fact that we have been able to do that in a global environment.

The challenge with all industries for several years has been the supply and being able to attract and retain enough qualified people to run our operations. The unemployment rate in our area is extremely low. We spend a lot of our time and effort attracting labor to build upon the highly skilled artisans that we have. That’s the biggest issue we all face along with the uncertainty of the are always looking at the long-term viability of our markets and the value our products offer. Simultaneously, we are developing products and processes to become more efficient and effective so we can appeal to a broader segment of the market. We have been very successful in helping our customers differentiate themselves. That’s been the core of our strength and one that we have enhanced over the last 30 years.

What Sells: Rug of War

Based on a FurnitureCore, Inc. industry model developed by Impact Consulting Services, parent company to Home Furnishings Business, an unsurprising majority (85%) of consumers reported purchasing furniture and then a rug to pull the room together. Only 13% of consumers purchased a rug before purchasing furniture, and a meager 2% reported purchasing furniture and rugs at the same time. Consumers are clearly looking for pieces that will complete their design style through rug purchases.


With new product introduction cycles every season, rug manufacturers are pressed for fresh designs and methods to keep pace with the ever-evolving nature of consumer tastes and trending styles. They must remain relevant through brand building and by keeping the end goal in mind-—the consumer who will place their product proudly in their home-—all while guaranteeing quality products that can stand the test of time. According to Satya Tiwari, president of Surya, “Designing and bringing top selling rugs to market in a variety of styles and price points is the ethos of our business. Retailers are working with a wide variety of customer types and have to be able to satisfy all of their needs. We keep our edge and ability to bring top sellers to market by immersing ourselves in the design world at large, working side by side with our customers and analyzing our expansive internal data sources.”


But what exactly are these consumers searching for? Like all savvy consumers, they are looking for items that stand the test of time with versatility, quality, and most important, utility. According to Moe Samieian Jr. of Moe’s Home Collection, they create products for the person who wants to integrate luxury and utility. Speaking of his company’s Charleston rug he said, “The great thing about this rug is its change in texture. We love rugs that are made to last and can easily hide a stain. This rug does just that while seamlessly pairing with many of our favourite designs." 


Drilling down further into consumer tastes, the FurnitureCore study analyzed consumer preferences in color, design, and material composition. 51% of consumers reported that the dominant color of their most recent rug purchase was neutral (this includes black, white, and beige shades). Next was red at 18% followed by blue at 16%. Green was a popular selection as 9% of consumers chose this shade, with all other color options fading into the distance.


While hue is a clear frontrunner, selected design elements are spread more evenly amongst those that participated in the survey with solids leading the pack at 20%. Traditional, geometric, and floral prints are tied amongst consumers with each at a reported 18%, stripes at 11%, contemporary at 9%, and zig zag coming in last with 7%.


According to the same study, a surprising 29% of consumers reported that they were unsure of their most recent rug purchase’s composition. Natural fibers remain popular with 22% reporting wool, 7% cotton, and 20% a natural fiber blend. Synthetic fibers came in at 20% as well, and animal hide at just 2%.


With many different materials come many different manufacturer production methods. When surveyed, 38% of consumers reported that their most recent rug purchase was machine-made, followed by hand-made at 18%. A surprising 44% did not know the production method. To clear the ambiguity, Cameron Capel, president of sales and marketing at Capel Rugs, said, “We're starting to see more demand for our step-up, hand-knotted, and hand-woven designs. They offer retailers an opportunity for higher margins, while still delivering a strong value to consumers."

Some manufacturers are integrating machine-made and hand-made methods to produce unique, durable designs at a better margin. According to Larry Hedrick, VP of business development at Rizzy Home, “When we show our rugs to extremely experienced rug experts it is very common to hear them say, ‘this looks just like a hand knotted rug’. Artistry is the collection and Artistry is that good. See it, touch it, scratch it, and sniff it. It looks like the real thing but at a fraction of the cost.”

Consumers are willing to pay a wide range of amounts depending on what type of product they are searching for and for the length of time they expect to utilize it. Referring again to the FurnitureCore study, most consumers (36%) are spending $100-$399 for their purchase, followed by 22% at $400-$799. Only 16% reported their willingness to spend upwards of $800 for their rug purchase. 27% of consumers are willing to spend only $100 or less for their purchase.


Performance Groups
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