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From Home Furnishing Business

Evolution Theory

A focus on full design service, strong partnerships—social and businesswise—in the community and a search for products nobody else carries have Contents Interiors primed to reap the benefits of a rebounding economy.

Owners Carol Bell, president, and Tamara Scott-Anderson, vice president, built on a strong foundation after acquiring the store 13 years ago, and developed it from a furniture store into a soup-to-nuts design center for contemporary and traditional southwest home owners.

Bell had worked as store manager for Contents furniture 10 years, when the previous owners, Linda and Ken Smalley, decided they were ready to retire. The decision was unexpected, because construction on a new showroom for the store was well under way.

In October 2001, the Smalleys made an offer to Carol to buy the business. Carol was faced with looking for a new job or taking over a business that she new well and loved.

 

BUILDING ON STRENGTH Her choice to accept the offer was a no-brainer—the challenge was pulling together the resources and talent she needed on short notice. Bell called a previous employee of Contents, Tamara Scott-Anderson, and offered a partnership in the business. Scott-Anderson had worked for the company eight years as an interior designer and home furnishing sales associate before leaving on good terms in 1995. An ASID member, she had moved on to expand her expertise in the construction side of interior design.

Scott-Anderson was ready for the change and the challenge. The new owners formed a business plan, found financing and started building their staff in a very short amount of time. The new showroom opened with new owners in March 2002.

“We were fortunate to buy an established business with a good reputation,” Bell said. “When people ask what the best decision we’ve made is, I said it was to say ‘yes’ to the offer.”

In addition to a good name locally, Bell and Scott-Anderson benefited from years of networking in the Contemporary Design Group, of which Contents Interiors was an early member.

The partners have divvied up responsibilities: Bell is chief buyer and runs the business side of the operation; Scott-Anderson is lead designer and manages the showroom floor and a staff of five design professionals.

 

A NEW SPIN While Bell and Scott-Anderson bought an established business, they had their own ideas of where they wanted to take it. They expanded on selling quality home furnishing to include more interior design services. Contents Interiors is one of the few local retail interior design/furniture showrooms in Tucson to hold an Arizona Contractors license; and is licensed and bonded to do non-structural interior design work both residentially and commercially.

“When I was working for (the Smalleys) we were a furniture store with accessories,” Scott-Anderson said. “When Carol and I took over we decided we wanted to offer more services and products—window coverings, wall-to-wall carpeting or tile.

“We got our contractors license. … That’s one of the things that makes us different from a lot of other stores. … I can help pick out lighting, plumbing and other fixtures, and work with another licensed contractor (for installation).”

The partners also set aside part of the showroom to showcase resources and work on projects in a 400-square-foot design resource center.

“Selling furniture is still what pays the bills for us,” Bell said, “but a lot of the people who buy furniture come back to us when they have a design project; and we have a nice relationship with several builders.”

 

MAXIMUM MERCHANDISING When it comes to the floor, Contents creates a lot to look at.

“People tell us we don’t look like a lot of furniture stores,” Bell said. “We’ll change things out: One year we focused on ‘contemporary Southwest.’

“We have what we call our ‘Tucson traditional,’ It’s a hacienda feel with a touch of Tuscan. The front of the store is where we keep the contemporary and softer traditional looks. We do a lot of what we call ‘organic contemporary’ with reclaimed woods.”

Contents doesn’t sell on the Internet, but it’s Web site is very useful in giving shoppers a sense of what they need to look for in the showroom through an online “style test.” The detailed quiz helps customers drill down to which lifestyle sections in the store are most simpatico with their sensibilities. From general styles of casual, contemporary, traditional, eclectic and southwestern, the shopper’s responses steer her toward the store’s “contemporary,” “comfortable desert living” or “Tucson traditional” settings.

“People can go to the Web site and pick their look,” Bell said. “They can take the test and feel confident saying ‘I’m Tucson traditional.’”

The key is creating an impressive visual display of products customers might not see anywhere else in the market while avoiding clutter.

 “It’s packed full of accessories and artwork,” Scott-Anderson said. “We have at least three items on each table; and we showcase local artists on a regular basis. We have an art show of Arizona artists, and the ones who sell, we’ll show year round.”

“It’s our way of staying in touch with the local arts scene, and it’s good business,” Bell added. “The showroom always looks fresh. If something doesn’t move, the artist always is ready to trade out for a different work. We also have a strong stock in production art work as well.”

“People say there’s so much to see that you have to walk around two or three times to take it all in,” Scott-Anderson said. “We like to be on the cutting edge, even if Tucson is sometimes a little behind the latest colors and trends.

“We carry lines that offer a lot of customization for special ordering, and we blend that in with container lines. Those always look better mixed in with the (customizable) furniture.”

 

MIXED AD CHANNELS When it comes to promoting the store, a mix of advertising and promotional vehicles is working best at Contents Interiors.

“Direct mail has been most popular,” Bell said. “Because we’re more design-oriented than some stores, we do the local shelter magazines. We do newspaper ads for sales events.

“We have a great community of retirees here, and they still read the newspapers. We also have several publications targeted at high-end neighborhoods, and this year we’re back on television with ads.”

For added personality, Scott-Anderson’s dog, Freeway, is an important element of the store’s Facebook persona.

Other new advertising vehicles are under consideration: “Someone should create a new magazine for iPad,” Bell said. “Digital is becoming more important, and we’re figuring out how we want to handle that.”

New this year is a custom-published magalog through Contemporary Design Group that Contents Interiors will send out as a direct-mail piece.

“In addition to this opportunity, there are lots of other benefits” to CDG membership, Scott-Anderson noted. “The previous owners were among the original members. Over the last few years, (CDG) has been more like a performance group.”

 

THE CONTENTS DIFFERENCE What else makes Contents Interiors different from other home furnishings retailers in the Tucson market?

Contents Interiors’ “master plan,” sort of a house call on steroids, is big differentiator for the store.

“It’s not just a house call, we do an extensive interview to pin down likes and dislikes, the customer’s goals for the home,” Scott-Anderson said. “We have a graphic artist who produces floor plans to scale with rugs and furniture included, and we deliver that in a formal presentation.

“We’re about being professional designers and giving people a program they’ll be happy with, that fits their home, and avoids buying mistakes.”

That tailored approach has the partners feeling good about a rebounding market for home furnishings, especially at better price points.

The store didn’t have any debt going into the recession, and during slow times, events such as art shows and design seminars kept people coming through the doors even if their buying appetites weren’t as strong as before the real estate bubble burst back in 2008.

“We’re on Fort Lowell street, where there were eight furniture stores,” before the recession, Scott-Anderson recalled. “We’d advertise together as the Fort Lowell Furniture District. There are three left.”

For the past 11 months, business has been very good, Bell said.

“We held our breath for five years, but now homes and subdivisions are building again—Tucson had a huge housing bubble,” she noted. “We’ve initiated a realtor program where we sign up realtors and give them a gift certificate for new home owners to come shop with us. Who sees a homeowner sooner than the realtor? That is proving very successful in getting new customers, and we include it as part of our advertising program.”

The program really took off after the partners hired Lee Goodrum as realtor program director.

“He goes to open houses and realtor meetings for presentations,” Scott Anderson said. “The fact we have someone managing that program is what made it successful. Carol and I had been doing it in our spare time, but there’s too much going on in the market for us to get the most out of it and run the store at the same time.”

 

CRYSTAL BALLING Looking ahead, the partners believe technology will have the biggest impact on how furniture retailers operate. They are exploring ways to utilize technology to enhance brick-and-mortar stores’ competitive position vis à vis online retailers.

“I’m not an Internet shopper yet, but I find myself going online a lot because it’s so easy,” Bell said. “When I see some of the Web sites like Joss & Main, they’re doing a fabulous job with room presentations. Brick-and-mortar stores need to do more to bring technology into our environment.”

That doesn’t necessarily mean selling online.

“It’s not who we are,” Scott-Anderson said. “Our business model is having a professional designer help people outfit their homes.”

One of the vendors with which Contents Interiors’ has an exclusive in Tucson, Lee Inds., has partnered with an online magazine, RestyleSource.com. It’s an example of the sort of technology the store wants to pursue.

“If you like something in one of the articles there, you can find out who carries it,” Bell said. “If you click on our store, it shows the Lee product we carry and a presentation of what we do. This is a Web site that’s all about getting people into brick-and-mortar stores.”

Along with market exclusives from the likes of Lee and American Leather, Contents also focuses on private labeling in order to combat showrooming.

“And when they say they saw an item in the store online, we coach our staff to explain the service level we offer,” Bell said. “We tell them to read the fine print on shipping, ask if the (online dealer) handles warranty problems or damage in transit. They might not bring the furniture inside the home, un-box it and set it up.

“What if there’s a problem down the road? We come to the house to make sure it’s right.”

 

GENDER GAP For the most part, Bell and Scott-Anderson, find advantages in running a women-owned business. Still, furniture remains a boys’ club in some ways.

“The one thing that comes up to this day is if we walk into a new showroom at market, they want to know if we’re independent designers or have a showroom,” Bell said. “I guarantee you a husband-and-wife team doesn’t get that question.”

That’s why the Contents partners put a photograph of their store on the back of their business cards: “It gets us past that quickly,” Bell said.

Scott-Anderson believes that two women bosses create a different—in many ways better—culture in the store.

 

“I believe we’ve built a company that’s like a family,” she said. “Of our 10 employees, half have been with us for eight years or longer.

“I believe it’s helped create a nurturing environment for our employees.”

“We knew she was wonderful, just not how wonderful,” Bell said. “We’re on our fourth bookkeeper so far this year. Losing a person, especially in bookkeeping, has been a challenge.”

Unreasonable customers—fortunately a rarity at Contents—account for most of Vice President Tamara Scott-Anderson’s sleep deprivation.

“The customer is not always right,” she said. “I can deal with angry customers who are reasonable. It’s the ones who have unrealistic expectations that are hard to handle.”


Publisher's Letter: A Blessing or Curse?

The benefit of a historical perspective of the Internet in our industry could provide some insight into the question of whether or not the Internet is a blessing or a curse. Some may remember the dotcom start-up FurnitureFan, a portal that allowed consumers to search for great pieces of furniture by style or room or manufacturer.

Subsequently, the consumer was directed to a retailer in the area where he or she lived. While conceptualized by industry insiders with venture capital funds, it did not result in success during these dotcom years. I became personally involved at the end attempting to restructure an idea that was before its time.

In the summer of 1992 at the American Home Furnishings Alliance marketing meeting in Hilton Head, S.C., I presented consumer research reporting only 2 percent of consumers visited the Internet before shopping for furniture. Luckily, I said we would continue to monitor it since we believed it would increase. We did, and the most recent statistics show that 73 percent of consumers now visit the Internet as a first step to shopping for furniture.

The logical expansion of the Internet into e-commerce led to the next challenge for the furniture industry. This development allowed industry outsiders, such as Wayfair (formerly CNN Stores) to bypass the slow-to-adapt industry and go directly to the consumer. I am sure that if we check the DNA of Wayfair we will find some kinship to FurnitureFan, both of which are Boston-based.

This is not to say all of the industry ignored the potential of the Internet or e-commerce technology. Unfortunately several early adopters, recognized retailers, adopted the e-tailer strategy and ultimately failed. Now another group of well-established retailers are pursuing the same opportunity. The results are too early to report. This stroll down Memory Lane is relevant only to say that the Internet is no different from any other technology that emerges and is embraced by the consumers we serve.

We are not encouraging furniture retailers and suppliers to change their business strategy to an Internet strategy. The preceding has illustrated the pitfalls of following approaches without the technical expertise or capital to succeed. Rather it is to encourage retailers and suppliers to address the reasons consumers are embracing the Internet and to understand how their business models can be modified to deliver the same experience. Consider addressing these reasons.

 

·         The consumers’ ease of finding what they are looking for — 26 percent of consumers will leave a brick-and-mortar store because they can’t find the desired product.

 

·         No selling pressure, only information — the younger consumers under the age of 35 dislike pressure selling. Just give them the facts.

 

·         A total home furnishings solution, not merely the major products — consumers are looking for a lifestyle solution, not just a sofa.

 

In conclusion, the Internet is not a new distribution channel, but it is the way a growing number of consumers want to purchase furniture. What is the solution for traditional brick and mortar retailers who do not want to become e-tailers? Make your in-store retail experience appeal to the needs and the desires of that consumer who walks in your door.

Marching On

E-commerce’s impact on the furniture sector shows no signs of slowing—and that affects all retailers, whether or not they sell furniture online. Based upon FurnitureCore's national consumer surveys conducted last year, of the consumers who purchased furniture, 17 percent purchased in on the Internet. 

Of all consumers purchasing, 40 percent did not consider the Internet for the transaction, but that left 60 percent who did.  Of the 60 percent who considered, 12 percent did not shop; 31 percent shopped, but did not buy.  Still, that left a significant 17 percent who did purchase online.

To compare how the above consumers fared with independent furniture retailers, check out the accompanying “National Market Performance” graph from FurnitureCore.

Of all consumers purchasing, 48 percent did not consider an independent furniture retailer (excluding regional chains); 21 percent considered, but did not shop; 22 percent shopped, but did not buy; and only 10 percent purchased from an independent store—neither regional chains nor department stores.

 

NOT STANDING STILL There’s plenty of action among furniture stores moving into the online channel.

Take a look at Blueport Commerce, whose customers include brick-and-mortar retailers who want to extend their reach into e-commerce. Blueport recently announced that its sales are up more than 150 percent through 2014’s first two quarters compared with the first half of 2013. Sales for its Furniture.com e-commerce Web site are up more than 400 percent, comparing the same periods.

Part of the growth is attributable to a number of big name retailers who have joined the platform.

This year,  $1.3 billion Canadian retailer The Brick signed up. Seffner, Fla.-based Rooms To Go has joined Furniture.com, and Ontario-based Leon’s plans to invest in Furniture.com and extend its Blueport contract for another seven years.

Those are just a few examples of how the big boys in furniture retailing are making moves. Such investments in time and money speak volumes about the present and future potential of the e-commerce channel for furniture.

 

FIRST STEPS Andy Bernstein, founder of Internet marketing and Web site services vendor FurnitureDealer.net, has seen growth in e-commerce’s importance in furniture retailing as consumers grow more accustomed to making online purchases.

In its business, Furnituredealer.net is focusing on two aspects to help clients address e-commerce: First, making it easy for consumers to use the site and buy online with a pure shopping experience; and second, communicating to consumers why they should buy from their client versus an online retail specialist.

“Ease of use means less clicking, easier navigation,” Bernstein said. “Second, is getting prices on the site.”

Regarding pricing online, retailers need to consider two aspects: inventoried product and special orders.

Manually pricing products is labor intensive. Bernstein pushes his clients to create Web sites that feature seamless access to price information through a store’s operating system.

“Forty percent of our clients (have sites) that are hand-shaking with their inventory management system,” he said. “It allows them to: one, communicate (to consumers) which products are in stock or in the store to see; second, it allows them to price it out” for special orders.

The hard part is up front, getting the Web site data set to match the store system’s data. Bernstein gave an example of the issues involved: If you’re selling a three-piece sectional or a seven-piece dining room, the shopper sees that as one “item,” while your store system sees an assortment of SKUs.

If a retailer is using photography from manufacturers online, it should match what is being sold. For instance, a vendor’s dining room image might show seven chairs, while a retailer sells dining groups with five chairs.

“Once you put a price on it with a picture, it gets tricky to make sure you get it right,” Bernstein said.

Custom orders pose a particular pricing issue for selling online, but progress is being made there, as well.

“We’ve been working hard on publishing manufacturer price lists that retailers can go to and put on a multiplier to get a price,” Bernstein said.

Manoj Nigam, president and CEO of Charlotte, N.C.-based Internet marketing and services vendor MicroD, believes a time will come when e-commerce won't be an option for furniture retailers, but a necessity.

"It's not a question of if, it's a question of when," he said. "E-commerce in our industry is in the same spot where Web sites were some years ago. Today, nobody questions the need for a Web site that shows your location, the products you carry, the services you provide."

Other retail sectors have created new online expectations for consumers that furniture stores must eventually match.

"The consumer expectations today are 'I can see it anywhere' and 'I can buy it anywhere,'" Nigam said. "When you are serving customers in any retail environment, you need to do it in an omni-channel way. That means the customer can see products in the store, go home an make a decision and purchase online; or find the product online and then come to the store to see and feel it, and make the purchase there."

Take a look at what other retail sectors are doing on line. Electronics, apparel and a host of others are meeting consumers' "see it anywhere, buy it anywhere" expectations.

"If you’re are going to be a retailer of any size, protect your market share, and come across as a company that's keeping up with the times, it's almost a requirement that you provide a click-and-mortar model," Nigam said.

Nigam does believe traditional furniture stores bring some advantages to the table.

"The online retailers' ticket size is typically smaller than that of brick-and-mortar retailers—for now," he said. "If you notice, Amazon is not in furniture in as big a way as appliances and other categories. Furniture is still one of the unique categories where consumers want to touch and feel, and that's a brick-and-mortar advantage.

"Big online retailers have created an awareness and expectation in consumers' minds. What (brick-and-mortar) retailers need to do to compete is to advertise and market in the channels people expect them to be like Google and social media, and promote their advantages" over online-only retailers.

For example, an online retailer can't hold in-store consumer events, and doesn't have a physical store where shoppers can experience the products in person. Retailers should tout their service stance and immediate, local recourse for consumers should problems arise.

"If you look at what's selling online (in furniture), it's mostly simple case goods, and not much in the high end," Nigam said. "If retailers sell specialized (custom order) upholstery, they need to promote that, along with the validation in the showroom of what shoppers see online. It's a huge advantage.

"Whether you sell online or not, advertise the fact that you're local and that you service what you sell."

How can retailers translate their store merchandising for a more impactful Web presence? Nigam had some suggestions. First, instead of single products, why not use a high-quality photograph of showroom vignettes? The items should could be sold as a package, but also allow shoppers to add individual items to their cart. This calls for a Web site robust enough to provide all the necessary information with a click.

"If you merchandise a group setting online with accompanying accessories and rugs, most sophisticated Web sites allow you to not only show that photo, but also have information on the individual items in the group," Nigam said. "We just launched a program with Havertys that allows you to slide in another rug and add that to the shopping cart. … The key is having a Web site robust enough to support your in-store merchandising and create a bridge to online merchandising."

Don't expect an immediate increase in sales once you step into e-commerce.

"I would say that having an online e-commerce presence is insurance in preserving your market share," Nigam said. "You might not have a lot of immediate sales, but not having the (online purchase) option is detrimental in customers' eyes. Hayneedle is selling every day in your market, and if you don't have the presence, you aren't even in the game."

And remember that a Web site with a shopping cart isn't the whole store for e-commerce. Your organization has to support inventory, delivery and after-sale service on items ordered online.

And while average tickets for online furniture purchases might not meet those of brick-and-mortar stores, expect that gap to shrink as consumers become more comfortable with big-ticket purchases via the Internet. MicroD manages Bassett's and Ethan Allen's online custom-order upholstery package.

"We've seen a steady increase in that sort of order online, and volume has steadily increased," Nigam said. He didn't give an exact figure, but the increase "is enough to where they've continued to support the channel."

 

THINK MOBILE An e-commerce Web site is more than a sales vehicle, it is today’s most valuable digital channel for driving traffic in to a physical store, according to Lance Hanish, co-founding partner of SOPHIS Integrated Marketing Innovations.

In developing that site, make sure to incorporate mobile-friendliness.

“Did you know that mothers turn to mobile when in store to save money?” Hanish asked.

If a retail site isn’t mobile friendly, consumers aren’t going to stay in the store long when browsing on the phone.

With e-commerce becoming more important, consumers have more ways to buy. If they use their phones in your store, make sure your mobile presence stacks up well with the competition.

“Today, everyone has a smart phone,” Bernstein said. “Every product has hundreds, if not thousands, of companies who can deliver it to (consumers), and they are operating inside your four walls through peoples’ smart phones.”

Suzy Teele, COO of Snap Retail, which has 2,500 retail clients across the United States and also works with designers and vendors, noted that starting last year, more online sales came over phones than computers.

“Does your product look good on the phone?” she said. “Use an app for mobile, or build a Web site that’s responsive, that readjusts its size automatically to fit the screen it’s appearing on.”

 

RETAILER RELEVANCE One way traditional retailers looking to take on e-commerce to compete with pure e-tailers is to do what they do best—talk to customers.

Bernstein is big on a full-service “assisted” shopping cart process.

“We see assistance from the retail associate as the most important part for the local retailers we deal with,” Bernstein said. “Our focus is not on the national-shipping part of e-commerce, but helping retailers do business better in the local market.”

That said, national shipping e-commerce players are a major competitive problem for retailers.

“Amazon wants to be the place where people buy everything,” Bernstein said, adding that a company such as home furnishings retailer Wayfair has the reach to get manufacturers to store product in their warehouses.

“The key is how do we communicate (online) why people should do business with our clients? What are your values, beliefs, services, community involvement? It requires a mind shift for us, because most of that information today resides in people’s heads, it’s not always published,” Bernstein said.

Most retailers tout their great service and knowledgeable, helpful people, along with selection or pricing, as reasons for consumers to shop and buy from an establishment.

“Get into the specific types of services you offer, the types of sales you do that differentiate, the types of financing you offer,” Bernstein said. “And tell them (online) why that matters to them.

“The Internet is going to commoditize a lot of products, and we have to communicate what value the retailer brings.”

Retailers should endeavor to build relationships and trust online. Retailers strive to do that in stores already?

“There’s going to be a huge need for retail salespeople and designers who can listen and help people solve problems online,” Bernstein said. “These people need to become experts at assisting customers over the phone and via chat and must have the tools they need to do that available.”

 

DEDICATING RESOURCES Do online shoppers browsing an e-commerce site see just the store’s telephone number, or are they directed to a dedicated call center when they want to buy or learn more?

The latter may be the better option. Think about it. Will a potential online customer wanting assistance call the store or go to the store?

Retailers showing particular online sales growth have established dedicated call centers for that segment. That way, the customer doesn’t get put on hold when she calls while the operator looks for the right person to field the inquiry.

“If you talk to the customer, that’s the moment of truth, and some of the best salespeople aren’t comfortable with the technology,” Bernstein noted. To compete with pure e-tailers, “our clients need to try to get people to talk.”

Del Sol Furniture in Phoenix decided to create a dedicated call center for its online sales, which the retailer started last year.

Alex Macias, vice president, had decided to spend time taking Web site-generated calls himself and realized how important they are. After the first day, he realized Del Sol needed to invest in an online sales team and service department.

“Those customers who come to our Web site are as valuable as those who come into the store,” he said. “If your Web site is an online store, today’s online customers have a high expectation of service.”

The first key to staffing such a call center is finding someone on your sales force that truly understands your company. It could be someone who isn’t doing that well on the showroom floor. That person might thrive in an online sales environment.

“Your best sales associates on the floor aren’t always the ones who have the skill for online sales support,” Macias said. “It’s a different skill set.”

 

A NEW CUSTOMER “There are a lot of people who have nice Web sites who don’t do e-commerce,” Macias said. “We consider our Web site to be our online store, 24-7, where the customers start the process.”

As it began selling online late last year, Del Sol had to make some adjustments. The store had catered traditionally to the Hispanic community with an emphasis on credit.

“That’s not the customer who comes to our Web site,” Macias said. While that traditional customer still leans toward in-store shopping, the online store attracted a much wider variety.

“Furniture retailers either get (e-commerce) or they don’t,” Macias believes. “Is your Web site just a Web site to you, or is it your online store?”

Even if you don’t sell online, it’s still a store.

“Look at leads coming in from the site. If they still think it’s just a Web site, they don’t get it,” he said.

 

ADDING VALUE ONLINE Furniture retailers have a depth of product knowledge sometimes lacking among pure e-tailers, and they need to make that resource available to online shoppers.

That’s one reason Sam's Furniture & Appliances in Ft. Worth, Texas, incorporates a live chat function on its e-commerce site.

“It's a great tool and gives customers another way to make contact with our stores when they have questions,” said Seth Weisblatt, vice president.

Consider incorporating e-mail marketing into your e-commerce strategy.

“I'm not talking about just e-blasts with promotions,” Weisblatt said. “We've started using prospect lead generation and it has had a great success. A customer provides their information to us via a pop up on the item page they are on, we will then follow up with targeted promotions for the products they were browsing for.”

Sam’s is constantly updating its Web site.

“From graphics, to product catalog, making sure every item has a price and stock availability,” Weisblatt said. “The ‘mission statement’ of our Web site is to provide customers the information they need to select Sam's Furniture as their place to shop.”

It’s all part of the retailer’s seamless shopping experience, whether the customer is in the store, on her computer, or using her smartphone or tablet.

“The more information we can provide customers the better our success will be online and in the store,” Weisblatt said.

 

SAVING THE DAY Goedeker’s, a furniture and appliance retailer in St. Louis, stepped into e-commerce after the recession hit in 2008 and crippled its business.

Owner Steve Goedeker said he launched e-commerce not as a grand strategy, but to keep the business afloat.

After starting e-commerce with 15 brands and around 4,000 products, the retailer now has more than 200 brands and a selection of more than 180,000 available items.

“We were just at the beginning of the recession in 2008 and were looking for a way to survive the challenges,” he said. “We started with a single table with two people, one who would answer the phone and one who worked on the Web site” adding and removing products.

As online sales increased, the Web site team went from two people seated at a table in the showroom to a separate, walled-off room with about a dozen people. The department moved upstairs when the online-employee count surpassed 20.

“Eventually we had to completely redo our building to accommodate more staff and inventory,” Goedeker said

Business grew to the point that two years ago, Goedeker’s converted 45,000 square feet of its 50,000-square-foot showroom into warehouse space and the hub of its online operations.

Selling online involved a tremendous cultural shift at Goedeker’s, with an explosion of information and an intimidating learning curve.

“It’s like starting all over again,” Goedeker said.

The Goedekers had no shipping experience and minimal knowledge of marketing.

“The challenges have been many,” Goedeker said. “From not knowing anything about how to start advertising, how to ship, how to deal with damages, hiring and training people. We literally were learning as we went along.”

There were also control issues. Along with delivery companies handling fulfillment came the need to hand over part of the business to an outside party.

 

SHOULD YOU SELL ONLINE? E-commerce represented 6.2 percent of total retail sales in first-quarter 2014, according to Snap Retail’s Teele, and is up 12 percent over the same period last year.

If there’s a single compelling reason to online for sales, she believes it’s that someone selling at least some of the product you offer is doing so online.

“A competitor might be supplying online the same item or service you do,” Teele said. “It might be a big-box retailer’s online (store) or an e-tailer with online sales only.”

She added that e-commerce is the No. 1 channel for electronics; No. 2 for apparel and accessories; and No. 3 for consumer packaged goods.

“It’s never flattening,” Teele said.

 

 

 


Looking Good, Making Money

What are the elements for blending eye appeal and a profitable product mix on your floor?

“Non-traditional” competitors for consumers’ disposable income for home furnishings such as Arhaus, Crate and Barrel and Pottery Barn, perform quite well on much smaller product assortments shown than in the traditional home furnishings retail store.

How do you stack up against that competition?

Naples, Fla., retailer Clive Daniel Home’s floor is decidedly large at 85,000 square feet. Management decided early on that its merchandising scheme, which might not work for a lot of retailers, would have definite appeal for its high-end clientele.

The strategy requires an abundance of attention from the retailer’s merchandising team. Attention that the owners feel is warranted and with a big floor, there are lessons here for other retailers when it comes to creating their own, distinct space. 

“Out of the gate, what we continued to do is have a very eclectic approach—we’ll mix and match manufacturers on the floor, show one’s table with another’s chairs,” said CEO Daniel Lubner. “That’s difficult to do, but we have an exceptional merchandising team, and Clive (Lubner) to this day is the greatest visionary in the business.

“We took (eclecticism) a step further by putting architectural salvage and vintage furniture on the floor. We have a lot of single-turn items—once they’re sold, they’re gone. For managing the showroom it makes merchandising much more difficult, but it gives the client a one-of-a-kind feel and design. It just feels right for us.”

 

POINTS OF INTEREST Retail consultant Bob Phibbs said the furniture industry in general doesn’t do a very good job of engaging shoppers from a product standpoint on showroom floors.

“Too often, (vignettes) look like a model home where nobody lives,” he said, “or it’s a boring line-up of brown.”

That’s one reason Dallas, Texas-area retailer Stacy Furniture & Design has been shaking things up of late, adding more color and cleaner lines in a market that’s traditionally been geared toward safe looks.

“We create points of interest, and we try to do a better job featuring individual items,” said Dorian Sims, president.

 

IMMEDIATE IMPACT 

What are some tips for merchandising for visual impact, encouraging consumers to actually buy, creating aspiration?

“You have to mix it up,” Phibbs. “Choose a bold piece that gets someone talking, maybe smaller groups, a chair with a table, not as many whole rooms.”

Phibbs is a bit contrarian when it comes to the idea of retailers creating aspiration on their floors: “There’s no one size fits all. If I walk in the door I’m aspirational, I’m looking for something.”

One of the biggest issues furniture retailers face is a failure to connect the consumer’s purchase of the products they sell to the most important result or benefit they get from those products—greater happiness with both their home and lifestyle, according to Tom Zollar, practice manager with Impact Consulting.

“Next to family, the home is the most important thing in most of our customer’s lives and our mission is to deliver the style, comfort and livability that they,” he said. “Therefore, the better we merchandise and display our products in our stores to help the consumer visualize the result in her home, the more successful we will be at helping them fulfill their aspirations and thus deliver on our mission.

“To do this, our store must be visually exciting and inspire them to fulfill their dreams—it is absolutely critical.”

 

WHAT’S YOUR SIGN? 

Phibbs said in-store signage is an area where a lot of furniture retailers fall woefully short. He described many of his experiences in the furniture universe as boring and drab.

“You need compelling signage,” he said. “Signage is one of the most overlooked things in furniture retailing.”

Why not step up your point-of-sale messages with messages along these lines? Say you’re selling recliners: “Can you see yourself watching television in this?”

Do you have an intimate vignette, say a comfortable chair and table? How about: “Can you see yourself reading a book by the fire here?”

 

FIRE UP YOUR STAFF 

As if inspiring you customers isn’t enough, eye-catching merchandising can help excite your staff about what they’re selling.

“You look at some of these stores and it’s no wonder (employees are) bored,” Phibbs said. “The merchandise can’t do the heavy lifting—it can only catch the eye. If you have some guy standing there with a calculator that’s not going to inspire customers.”

Try using a color scheme throughout particular vignettes, said retail consultant Connie Post, CEO of Connie Post International and Affordable Design Solutions.

“Bedroom and dining presented in a color-block story is a great way to get attention,” she said. “Color blocking is using one color through out the vignette ... It simply creates a ‘wow,’ and it is also an opportunity for smaller dealers to appear on trend.”

What Does "Wow" Mean?

Retail consultant Rick Segel thinks retailers constantly on the prowl for interesting and different products may overrate their reaction to the goods.

What if they've already seen them at another store or online? It's no longer a "wow" to the customer.

"When it comes to exceeding expectations, we tend to think there’s this line—above it lies 'wow' and below it lies disappointment," Segel said. "We treat meeting expectations like there's no middle ground. We feel that we’ve either exceeded expectations or failed them completely.”

Segel, principal of Rick Segel & Associates, said customers sometimes have neutral attitudes to furniture—neither impressed nor disappointed.

"Obviously, we strive to constantly create that wow factor, but we if don’t, that doesn’t mean we’ve failed,” he said. “All it means is that the customer has seen our new product elsewhere. It’s still a good thing that we carry the product."

Disappointment is often out of the retailer's control, but one way to create "wow" is to leverage the element of surprise.

"The element of surprise works on everyone because there are no expectations involved," Segel said. "For example, if a young lady’s boyfriend buys her a one-carat diamond ring she wasn’t expecting, you better believe she’ll be wowed. However, if she’s been dating her boyfriend for two years and is expecting a diamond ring, that same one-carat ring probably won’t wow her. She expected a bigger diamond. She expected more."

Rather than seeking to exceed customers’ expectations, Segel suggests focusing on surprising the customer.

"Do things differently than you have in the past—and different than your competition."

 

 

What Sells: On the Move

Before Jim Muffi put the motion into sofas, consumers were forced to argue over the one or two bubba recliners in their family rooms when watching television.

Prior to Muffi’s 1979 founding of PeopLounger in Mississippi, sofas, sectionals and loveseats did little other than offer a place to sit. Today, 35 years later, motion upholstery has transformed the way many families congregate to watch movies, play games and become all out sofa spuds.

The category has come a long way since those early days, and today’s offerings boast gadgets, power reclining mechanisms, massage options and storage space, not to mention improved styling and design across the spectrum.

While hitting middle age, the category continues to resonate with consumers.

Total motion upholstery sales for 2013 were $10.02 billion, 14 percent of all furniture sales. When broken down and considering only upholstery sales, motion upholstery accounted for 36.4 percent of sales in 2013. For the first quarter of 2014, those percentages remained steady.

Home Furnishings Business and its parent company Impact Consulting Services/FurnitureCore recently conducted a consumer survey of 259 people who had bought motion upholstery within the last 18 months. The survey revealed relatively pleased customers when it came to their purchases.

Of our consumer panel most (61.4 percent) bought a reclining sofa and or a loveseat, and 82.3 percent of them fell in the range of five to seven. The scale ranged from one to seven with seven being “very satisfied” and one being “not at all satisfied”.

While in the industry we’ve seen quite a bit of improvement in motion upholstery design, our consumers see more room for improvement in styling. More than half — 57.6 percent — said the style of motion is an inhibitor to purchasing. Keep in mind however, that our group all bought some piece of motion upholstery so they must have found something they liked well enough. It only says motion designers could spiff things up a bit in the eyes of consumers.

Despite the focus of manufacturers and retailers to gravitate toward power merchanisms for reclining in higher-end models, consumers in our panel say they prefer the hand-operated style. More than 52 percent preferred lever mechanisms, while 28.7 percent opted for power recline and another 19 percent chose press-back reclining.

Speaking of those power mechanisms. Consumers are pretty tight-fisted on their willingness to cover the cost of them. Almost 70 percent (70.6 percent) said they’d only pay $100 or less to get power recline in their motion sofa or sectional. Forty-one percent said they’d be willing to pay only $50 more for a power mechanism.

Ensuring the product lasts and doesn’t breakdown, consumers are adamant on warranty options for motion upholstery. Nearly 70 percent said they have a warranty on their furniture. When asked of the importance of warranties, 75.2 percent scored them a five or higher on our one-to-seven scale with one being “not at all important” and seven being “very important”.

 

Want More?

A more indepth report on motion upholstery is available for purchase at FurnitureCore.com—Industry Info—Industry Reports—Motion Upholstery, or by calling Natalia Hurd at (404) 390-1535.

 

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