Monthly Issue
From Home Furnishing Business
December 4,
2015 by in Business Strategy, Industry 
By Tom Zollar
In each of the Coach’s Corner columns, I have touched on many of the things a sales team coach must do and why they should be done. Game planning, goal setting and training—each is critical to the coaching process.
This month I am addressing one of the most important tools a sales manager has to determine what needs to be done on the floor with the sales people to drive sales performance improvement. Unfortunately, much like the goal setting process, this is also one of the most underused aspects of the coaching process.
I say this because of my experience in hundreds of furniture stores where, invariably, the sales manager spends more time in his or her office than on the selling floor where all the action is. The reason given for this is always the same: “I don’t have time.” As stated in previous articles, in order to maximize performance, a sales manager should have time for little else than those things related to high-quality leadership of the sales team. To do that, they must know what is happening when each team member interacts with customers, and there is only one truly reliable way to do that—observation.
The term coaching and the practice of observation go hand-in-hand in any discipline where skills are definable and teachable. The sports analogies are limitless; using them can provide insight into the kind of coaching needed for furniture stores. Imagine a gymnastics or golf coach trying to improve or teach the basic skills to an athlete without watching them perform. How would they know where to start or what to cover without knowing where the person is at in the learning and development process? It simply is not possible.
Yet that is often what happens in furniture stores. The coaches are usually somewhere else doing other “important” things instead of watching the most important action of all. Business is dependent upon the individual skills of salespeople in the process of personal selling. Much of this activity takes place totally outside the view or direct area of influence of a coach. Few ever get to see players in action. This is why the kinds of performance variances exist in stores and tend to surprise us.
When a coach watches an athlete perform, there is usually a game plan in place. Everyone knows their job and the role of the other players. Perhaps one reason that observation for coaching purposes has been so little used in the furniture industry is that there isn’t a game plan in place. That missing game plan could outline how to observe and things to look for.
I have discussed the need to create a game plan and what it should include in previous issues. The plan begins with measurements and understanding the use of them to establish standards of performance in areas like close ratio and average sale. Revenue per up should be used to measure overall effectiveness and efficiency. This information demonstrates who to look at and in many cases what to look for—things like poor opening or closing skills or weak needs analysis.
These numbers are the result of how staff interacts with customers on the floor. In order to improve performance, the part of the game plan that really needs to be focused on when we observe, are the steps sales people are trained to use in the selling process. These behaviors will help them succeed. Are they playing the game by established rules or making up their own with each customer? Observing their actions allows us to provide the coaching, advice, counseling and additional training each person needs to be more effective at helping our customers create the rooms they want to live in.
Here are a few recommendations as starting points in establishing observation strategies:
How to Observe—Two Main Methods
1. Scheduled Time Observation—This gives the manager and the salesperson scheduled one-on-one time and should be used by managers whenever possible, especially with new hires. The salesperson should introduce the manager as an observer who will tag along. Be sure to ask the customer’s permission. If the customer knows who the manager is, all questions will be directed to manager, putting the salesperson in the observer’s role. Ensure the sales person remains the leader of selling process.
2. Ad Hoc Observation for Specific Skills—This method allows the manager to listen for specific things, like greetings, from one or more salespeople. It is a good idea to limit the scope to one or two behaviors at a time, concentrating on a key area of the selling process. This is useful when sales managers are already on the floor doing other things. This method allows managers to observe a lot of people, who are supposed to be doing the same thing in a prescribed manner, in different situations.
Additional Recommendations
· Other than with new hires, the sales manager’s role is to observe, not participate. Sometimes the most difficult thing to do during an observation is to remain silent. Sales people are totally on their own, as they would be if the sales manager weren’t present. This is an opportunity to view the world as it really is. A sales person will likely change some of their behavior with the presence of a sales manager. That’s OK. It helps them learn.
· Never use observation to punish or criticize a salesperson. This should be viewed as a learning exercise during which both the sales manager and salesperson can measure the results against all of the principles and standards of performance you have agreed to in the performance agreement.
· To motivate people, catch them doing something right and let them know it. Positive reinforcement of the right behaviors is extremely effective. If possible, try to have two positive comments for every negative one.
· Schedule at least one observation with each salesperson once per month. People consistently performing below expectations must be scheduled weekly, and new hires require daily observation.
· Provide feedback. Record observations and provide each person with feedback immediately after his or her customer contact ends. Begin the session by asking the sales person for their assessment on what went well and where improvement can be made. Then offer your observations. Always base comments on things that have been taught and are mutually understood. Do not ask for behaviors that have not yet been taught or that are not part of the retailer’s selling process.
· Get out on the floor. Customers like seeing managers and owners on the sales floor showing an interest in what is going on and offering friendly greetings and assistance. On busy days, managers should act as the greeter, meeting as many overflow customers as possible and determining where to send the next available salesperson.
Some managers will walk the floor, meeting as many customers as possible and providing support for salespeople. Simply stopping by and sitting with a salesperson who is working with a customer and being casually introduced by the salesperson can have a tremendous effect on customers. Offering a few supportive words can be a great topper for the salesperson.
This is also a great way to observe what is going on and to be a closer part of the action on the floor. When sales people are accustomed to having a sales manager on the floor a larger portion of the time observing standards of performance set forth in selling strategies, improvement will come.
What to Look For
To know what to observe, simply look for the steps in your store’s selling process. It is all there. Here is a checklist:
Attitude What does the salesperson bring to the door with them? How is their body language? Did they smile? Are they enthusiastic?
Greeting Did they use a proper greeting?
Social Was the salesperson more a person than a salesperson?
Lookers Did the salesperson handle “I’m just looking” properly?
Offer of Assistance Did the salesperson use the proper dialog at the right time?
Establish Trust What dialog was used? Does the salesperson get it?
Sketching Yes, or no?
Presentation Did the salesperson use the sketch? Did he understand product?
Objections Did they use positive reinforcement?
Close Did the salesperson ask of the sale then remain silent?
Client Development Did they forecast follow-up?
December 4,
2015 by in Business Strategy, Industry
It’s time to take stock of 2015 and lay the foundation for next year’s success.
Our mission is to help you visualize what can be done, analyze what you are doing, and finally realize your objective
For most companies, the end of the calendar year is the end of the business year. It is time to take stock of the business or department that you are charged with to see if you have moved the needle.
The most basic measure is whether or not the company was profitable. It’s better to analyze that before the accountants do their magic in navigating tax laws to minimize what is expected to be your share of what’s required to run this great country. This number reflects the actions taken this year along with those made in years past. For the most part that number is silent, not commenting good or bad. Yes, if it is a loss that is not good. However, is it the best that could be done under your business circumstances?
The focus of this issue offers you a time to reflect. For the year the total industry—furniture and bedding sales—will be a positive 5 percent. Of course, specific markets could have varied from this number significantly. The forecast for next year indicates a similar growth.
As we all know our economic recovery has been sluggish to say the least. While unemployment is showing positive signs, median incomes of the industry’s primary consumers continue to be in a free fall as it has been for a decade. We, along with other retail sectors, are being tested. However, at the same time, we face other challenges. For the most part, the industry has adjusted to offshore production for the majority of our product. Unfortunately, we have passed all of these reductions on to the consumer.
The Consumer Price Index continues to fall for furniture. The greatest challenges today are the emerging distribution channels. We discuss at length the e-commerce channel. However, we need to consider vertical retailers, those retailers that are designing, producing, and marketing proprietary unique products. These retailers don’t have to concern themselves with distribution as traditional retailers do.
The Home Furnishings Business Power 50 ranking measures in the short term individual retailers against their unique situation in terms of market share and social engagement. Revenue and industry involvement reflect actions from the past.
In short, what it gets down to is measuring on an ongoing basis how you are doing based on your unique situation. Understanding key performance indicators (KPI) and recognizing what can realistically be accomplish is what is important. Armed with this information you can focus on doing what is necessary.
Our mission is to help you visualize what can be done, analyze what you are doing, and finally realize your objective. Just like a Fitbit, each day is a new day, measured against yesterday.
November 13,
2015 by in Business Strategy, Industry
By Tom Zollar
At the beginning of virtually every sales training session, I ask the participants the same question: Have the consumers coming into your stores today changed from the ones that came in 20, 10 or even five years ago? Those that have been selling that long always answer that they have most certainly changed a great deal.
We all approach the shopping and buying process very differently than we did 10 or even five years ago. If that is the case, doesn’t it make sense that we may need to change the way we sell in order to be more successful at helping consumers?
Obviously the answer is yes, but how do we change and what do we do differently to adjust? In order to answer those questions it might help if we understand how they have changed and why.
Before the late 1990s, shoppers learned about products, trends and decorating ideas through very limited means when compared to today’s standards. There were less than 250 high quality magazines available and less than a dozen of them provided ideas for the home. Most of these like Better Home and Gardens, Metropolitan Home and House Beautiful, targeted higher income consumers and the masses only saw them in waiting rooms at doctors’ or dentists’ offices.
In addition, since production of color advertising was cost prohibitive, retailers relied on black and white print media, which didn’t make much of an impression on consumers seeking style guidance. Few if any television shows at that time offered quality information about the topic either. For the most part, consumers were on their own when it came to getting ideas for homes and personal lifestyles. Local stores were the best places to go for style ideas and furnishings ideas. For many, the stores were the only options.
In the late 1990s, technology reduced the cost of creating and producing high quality color print advertisements. In the early 2000s there were about 2,400 print magazines being published and about half of them included ideas and recommendations about life and style for readers. Many of these were focused on the home and the myriad of options available to consumers. During this timeframe, retailers began using weekly color ads. Consumers were more stimulated and excited about style options in all aspects of their lives, particularly their homes. It made it much easier to dream about home environment they wanted to create. However, it was only the beginning of the journey considering print media is somewhat limited in what it can provide.
Around this time, the Home Furnishings Council, led by industry manufacturing and retail giants, partnered with House & Garden magazine to create an effort to reach out to consumers and educate them about available home furnishings products. The result was a new channel on the fledgling cable TV network called HGTV. Over the next decade, HGTV along with network shows like “Extreme Makeover: Home Edition”, helped stimulate consumers’ desire for style in their home than all the shelter magazines combined. In addition, it did one other important thing—the movement started educating consumers about what was available as well as showing them how put it together to create their dream home.
The Internet was the real game changer that began to evolve at this time. While there was a huge increase in the importance of style in many consumers’ decision making for their homes from the stimulation and education the magazines, color advertising and cable TV provided, the Web provided the opportunity for consumers to research style trends, products, services and pricing. The Internet created a library where consumers could uncover anything they wanted to know about home furnishings. We know at least 80 percent of consumers take advantage of the Internet for information before visiting a retail store. Occasionally, they decide not to go to the store.
Our parents and grandparents never had this type of stimulation and education available. When they were shopping for home furnishings, they visited five to seven stores to uncover ideas for their homes, find the product they wanted and pay the price they could afford. Today, consumers make many decisions before they shop, including what store to visit first. Many now forego the store completely and buy online. Those that do shop in a brick and mortar store typically end up visiting slightly more than two locations before making a purchase.
As a result of the availability of ideas, the home furnishings consumer has changed in two major ways. First, they have a better picture of what they want and find the answers to most of their questions before entering a store. Our research from the last 20 years indicates that style has become more important to today’s consumer when they shop for their home. In many markets as many as two-thirds of those surveyed say it is a primary consideration, versus roughly 20 percent before the change began. In addition, because of the ability to educate themselves, consumers much more confident shoppers than consumers in the 1990s. About three to four times as many consumers today say they feel somewhat to very confident about their ability to make decisions for their home.
The biggest issue for home furnishings retailers is that the more confident consumers feel about selecting products for their home, the less they think they need the help of a sales person.
Many of those that are certain in their choices opt to do business where there is no sales person. Between 20 percent and 30 percent are now buying home furnishings from channels with no sales people in the process. Even more important to note is that when today’s customers visit home furnishings stores, they are more inclined to say “I’m just looking”. Experienced sales people say it is about three times more likely to happen than it was a couple decades ago.
The important difference to understand is that many of those who say they are just looking are looking for something. They are armed with research and have a clear picture in their mind about what they want. As a result, they push salespeople away so they can browse. The disconnect is that they think home furnishings retailers are like Walmart or a grocery store where if they can walk through and see all there is to offer. In most home furnishings stores, that’s not the case.
Even if it was, research shows that people only “see” about 15 percent to 20 percent of what is in a store when they visit. It is quite possible that a large share of potential sales that walk out of stores are the result of not making the extra effort to connect to resistant customers who really want to buy but don’t give retailers the chance to help them find what they are seeking.
Perhaps the most important element in the selling process is the opening or greeting. It is absolutely imperative for your staff to make every effort to connect to all customers that come into the store, including those who push them away. Make sure sales people use a greeting that breaks through to the customer and encourages them to engage. Body language and enthusiasm are critical; almost more so than the words used. In addition, many sales people tell the consumer to go ahead and browse, ensuring them they will check in with them later address any questions. The successful ones are not eager to leave a potential client and have creative ways of getting consumers to engage.
Be sure the selling process and sales training includes manners to break through to these potential buyers so they don’t walk through your store and leave. They are the low hanging fruit and a retailer’s greatest potential for growth—they are already in your store and want to buy from you.
November 13,
2015 by in Business Strategy, Industry
Consumer confidence is on the rise and with it the demand for consumer products, especially durable goods.
With an array of spending choices, the furniture industry has its eye on these more confident consumers. Several factors may finally be coming together to push home furnishings products ahead of other key consumer goods. The surge in new automobile sales may be slowing as consumers increase the length of car ownership. Also, consumer spending on home electronics has flattened. Combine these trends with a surge in housing starts, and it may just be the furniture industry’s time to shine.
About 70 percent of the gross national product consists of consumer spending, and one of the prime drivers of spending is consumer confidence. The Consumer Confidence Index increased to 103.0 in September, up from the 2015 low in July of 91. The all-time low in confidence occurred in February 2009 when it fell to a recession low of 25.3, according to The Conference Board.
As shown in Table A, consumer confidence took a nosedive after a high of 103.4 in 2007—dropping to an average of 45.4 in 2009. Since the Great Recession, confidence in the economy has steadily increased a yearly average of nine index points—resulting in a total jump of 53.3 points from 2009 to 2015 year to date based on an annual average.
Consumer confidence, measured monthly by The Conference Board, is an economic barometer of the health of the U.S. economy from the consumer’s perspective. The survey asks consumers how they feel about the current and six-month future business climate, including the health of the local job market, and whether they see incomes rising or falling going forward. When the Consumer Confidence Index is released at the end of the month, stock markets can be impacted, as well as decisions made by the U.S. government concerning whether or not to raise interest rates.
A monthly look at consumer confidence over the last three years (Table B) shows the swings in consumer attitudes.
The dip in confidence in July to 91 was a result of “the less optimistic outlook for the labor market, and perhaps the uncertainty and volatility in financial markets prompted by the (economic) situation in Greece and China,” according to The Conference Board.
Confidence and Employment
In a sense, the Consumer Confidence Index is a lagging indicator in response to several economic catalysts, among them the health of the U.S. jobs market, growth in wages, and the overall global political and financial climate.
Confidence tends to fluctuate more strongly than actual economic data. Table C graphs these economic catalysts.
More than any other indicator, consumer confidence tends to mirror the growth in personal income with the Consumer Confidence Index responding more sharply to economic downturns.
Employment bottomed out in 2010 at an index of 94.4—6 percent below 2007. (2007 = 100) Since then, the number of employed workers has increased by 8 percent and is currently at an index of 102.5. Personal Income stayed flat during the recession but quickly gained momentum after 2009 and has increased to 126.8 index, an increase of 26 percent.
Confidence and Personal Consumption
Consumer confidence is perhaps the prime external driver of consumer spending. Population and household formations form the base for growth in spending; however, consumer confidence drives demand, especially when it comes to durable goods. Table D shows the indexed growth of selected products.
New car sales follow a similar trajectory as consumer confidence with personal consumption dropping dramatically from 2007 to 2009, posting a decline of 29 percent, before climbing an average of 8 percent to a 2015 year-to-date index of 119.
Consumption of furniture and home furnishings followed a similar cycle. Home furnishings dropped 15.8 points in 2009, compared to 29 points for new cars. Home furnishings rebounded by 23 percent from 2009 to year-to-date 2015.
After peaking in 2008, the video and audio equipment industry experienced a slight downturn due to the recession but overall has been flat for the past eight years.
Confidence has a lesser impact on non-durable goods, like food and clothing, which tend to avoid the peaks and valleys of confidence swings more so than durable goods.
As shown in Table E, consumers may slow non-durable purchases but only significantly during periods of extremely low confidence.
Confidence and Housing
The other piece of the consumer spending pie is housing, especially new home sales. Economic conditions drive the homebuilding industry and once building slows, it takes a while for housing starts to catch up once the consumer starts to regain confidence.
New home sales plummeted alongside consumer confidence as the housing industry went bust during the Recession taking almost two years to bottom out after the confidence began to recover.
Table F shows a drop of 61 percent in new home sales from 2007 to 2011. As the confidence in the economy picked up, housing starts ignited and new home sales are now growing at a steady pace—posting gains of 68 percent from 2011 but still only reaching a 66.2 index in year-to-date 2015. Existing home sales also felt the effects of the drop in consumer confidence—declining to 74.1 index in 2010. Existing home sales were quicker to recover due to an already present housing inventory.
A high confidence level of 103 in September gives insight into the attitudes of consumers today.
Despite a volatile stock market and concerns about the stability of the global political and economic climate, consumer confidence continues to grow thanks primarily to an improving U.S. jobs market. The consumer is not easily scared, but once uneasiness sets in, consumer spending quickly becomes the victim.
November 13,
2015 by in Business Strategy, Industry
By Sheila Long O’Mara
Much like the comfort from a broken-in leather jacket or the warmth provided by favorite go-to leather boots, leather upholstery creates a welcoming, comfortable place to land.
There’s something timeless about a leather sofa or chair no matter the style family.
Leather upholstery sales for the first half of the year are at $2.77 billion. That’s 7.2 percent of the furniture industry’s overall sales, excluding mattresses. In 2014, leather sales totaled $5.37 billion. For the first half of 2014, leather upholstery sales were $2.63 billion.
In the latest Home Furnishings Business consumer survey, more than 100 consumers who recently shopped for and bought leather upholstery in the last year shared their insight on leather upholstery pricing and preferences.
By its nature, leather upholstery is one of the more technical categories furniture retailers sell. Varying leather grades, the plethora of bonded leather in the market, and the general wear and aging of leather can leave consumers’ minds spinning with questions.
Most consumers begin their shopping online before stepping into a store, and the Internet offers a ton of information—some good, some not so good. That leaves retail sales associates in the perfect position to help clear up any misconceptions.
To be able to do that, they require training that delves deep into product and then have the ability to answer questions with authority and set straight the myths consumers bring through the door with them.
Let’s start with the bonded leather term.
Consumers have no idea what that means or even what it is. Heck, many in the industry aren’t even sure what it is. Only 6.7 percent of our surveyed consumers said it bonded leather wasn’t real leather. More than half—53.3 percent— thought bonded leather was real leather processed to improve the performance of the leather. Another 40 percent said they had no idea what the term meant.
For the record, bonded leather is a covering made from fiber or paper, pulp from shredded leather scraps and a polyurethane coating. It’s not leather, but unfortunately some retailers still sell it as such. It’s a deceitful strategy that misleads consumers into believing they’re buying something that they aren’t.
The Price Struggle
Inside the industry, retailers and manufacturers tend to understand the craftsmanship and detail required for creating a quality, top-end leather sofa or chair. Consumers haven’t quite embraced that craftsmanship and may not yet be ready to pay for it.
When asked how much more they would be willing to pay for all-leather seating as opposed to a leather-vinyl or leather-fabric combination, only 21.4 percent said they would pay more than $200. Another 28.6 percent said they would pay $200 more, and 14.3 percent said they would be willing to stretch only $150 more. The same number—14.3 percent—said it wouldn’t be worth more than $100 upcharge for them.
Drilling down to those popular brass tacks, the majority of our surveyed consumers—57.1 percent— said they would pay between $1,000 and $1,999 for a good quality leather sofa. Another 17.9 percent breached the $2,000 mark. Twenty-five percent said they would pay between $300 and $999 for a quality leather sofa.
When we asked about leather chairs, all of the surveyed consumers said they would be willing to pay between $600 and $999 for an item. Looking at pricing for leather sectionals, consumers split 50-50 between willingness to pay between $600 and $999 and paying between $1,000 and $1,999.
Want More?
A more in-depth report on the leather upholstery business is available for purchase via e-mail to robin@furniturecore.com or by calling (404) 961-3734.
CALLOUTS
$2.77 Billion
2015 YTD leather sales
7.2%
Leather’s percent of industry sales through 2Q 2015
5.3%
Sales increase through first half of 2015 over same period last year
Suppliers Say
Bernhardt Interiors’ Kingston Chair
The Kingston from Bernhardt Interiors offers an updated take on the classic wing chair for a powerful design statement. The chair can be dressed in a variety of leather or fabric options spanning from very traditional to uber modern. Suggested retail is $2,700.
Craftmaster’s Paramour
A winning design in Craftmaster’s leather upholstery lineup for several years, the Paramour silhouette blurs the lines between transitional and traditional. Wrapped in a hand-wiped leather and crafted in a perfect scale, the sofa is at home in any environment. Retail is $1,499 in eight-way hand-tied seating with down blend coil cushions.
Port Royal by Flexsteel
Clean lines and classic tailoring are part of the DNA of Port Royal from Flexsteel. The versatile frame offers deep seating and is accented with an abundance of down-filled throw pillows. A track arm and base rail are lined with nail heads. The collection includes a sofa, sectional, love seat, chair and ottoman and a cocktail ottoman. Suggested retail for the sectional is $3,999.
Four Hands’ Maxx Swivel Chair
The Maxx Swivel Chair from Four Hands is a modernized interpretation of a classic library chair. Covered in distressed black top-grain leather and mounted on a swivel base of weather oak, Maxx sports comfort and function. Suggested retail is $1,595.
HTL International’s RS-10717
The HTL International’s spirit shines through in the RS-10717 motion sectional. Packed with function, the sectional features power motion with pillow-top arms, a curvy shape, and adjustable head rests. The frames sets atop tapered wood block legs. Suggested retail in leather-vinyl combination is $3,500 (leather/vinyl)
La-Z-Boy’s Rave
From La-Z-Boy’s Urban Attitudes collection, Rave’s consumer appeal is based on the need for comfort teamed with a on-trend, design statement. The sofa’s angled wood base, flared arm and a slight tufting create a retro feel. Suggested retail is $2,199.
Klaussner’s Roseboro
The Roseboro leather collection from Klaussner shows off decorative nail head trim along the accent wings, shaped track arms and banded front border. Three-over-three welted seat and back cushions fit perfectly inside the back wings. Accent fabric throw pillows pull the look together. Suggested retail is $2,399.
Natuzzi’s Dorian
Designed by Manzoni and Tapinassi, the Dorian sectional from Natuzzi is named for author Oscar Wilde’s Dorian Gray. Part of the Natuzzi Italia line, the sectional’s sophisticated design exudes luxury. Thick leathers and subtle memory foam team with down filling for comfort. Suggested retail is between $8,000 and $18,000 depending on leather grade.
NicolettiCalia’s Flamingo
Flamingo from NicolettiCalia offers a sleek design with a wide track arm bolstered by clean tailoring and stitching. The design sits atop angled stainless steel legs for a mid-century modern feel. The seat features memory foam for comfort. Suggested retail is $1,999.
Simon Li’s Camden
The Camden leather collection from Simon Li appeals to consumers seeking a dramatic combination of color, exquisite shape and luxurious comfort. Accent pillows and accent chairs add to the group’s appeal. Suggested retail for the sofa is between $1,199 and $1,599 depending on leather grade.
Vanguard Furniture’s Syms Swivel
Shown in Moorland Bayou leather, the Syms Swivel chair from Vanguard is available with optional box quilting on the outside arms and back. The chair’s classic shape works in a range of settings and offers a fluted wood. Syms is also available as a stationery chair with casters and can also be paired with the matching Syms ottoman. Retail starts at $3,315.