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From Home Furnishing Business

Retail Details: Home Town Hero

The hilly country where Kentucky, Ohio and West Virginia meet consists mostly of small cities and towns. It’s fly-over country for a lot of people—and for a lot of national brands in home furnishings retailers—but it’s both home and opportunity, as in $165 million in sales last year, for Big Sandy Superstores. The 13-store-strong, Franklin Furnace, Ohio based mid-price retail brand for home furnishings, electronics and appliances filled in another space in the region last month when it opened a new location in Lancaster, Ohio.

 While Big Sandy serves many communities, most are located in a single television market, and that’s worked well, said Robert Van Hoose Jr., chairman of the retailer “Big Sandy has a competitive advantage in our local market based on sheer size,” he said. “Because most of our stores are located in one major television market, we are the number one advertiser for most of our media partners and typically buy around 2,000 gross rating points every week. “Most other competitors would struggle to get to 300 points per week.”


SERVING A REGION

The company was founded in 1953 by Van Hoose’s father, Robert Van Hoose Sr., who worked in the business until 1976.“At that time our total volume was $6 million, and since I had just graduated from college, my dad decided to retire at the age of 47 to move to Florida and focus on the Arabian Horse business,” the younger Van Hoose said. “He sold it to myself and my partner, John Stewart. That started a long journey to grow and expand in our market area leading to a 60 percent share of furniture shoppers in the Charleston-Huntington ADI (area of dominant influence).” Van Hoose and his team have watched what other retailers have done, and brought in ideas from outside the company.

“We have had a lot of outside influences over the years,” henoted. “Connie Post has designed several of our stores, including our newest location in Lancaster, Ohio. Kim Yost at Art Van has been an outside motivator with the way he has led his team with ‘Pumpitude.’ (Pumpitude is the Art Van CEO’s take on building performance through attitude.) “Our vendors have been great partners to support our expansion plans, and we have a great core group of associates that are starting to see the value of being employee-owned and focusing on creating a great customer experience in our stores, every customer,

every time. That is a big focus of ours in 2014.”

 

CUSTOMER EXPERIENCE

Employee ownership is a big part of getting buy in for improving customer experience throughout locations. “It is hard to be totally consistent, as the main ingredient is people and that is another area we are focusing on to make sure we create the same experience for every customer every time, but we have a ways to go to reach that goal,” Van Hoose said. “The merchandise is the same at all the locations, but the presentation can vary depending on when the store was last updated.” Big Sandy’s markets have struggled economically at times, and were particularly hard hit by the recession. Part of Big Sandy’s customer-experience story is offering customers a variety of financing options.

In addition to a standard third-party option through GE Capital, Big Sandy offers conventional financing through Lendmark for those who may have a blemish on their credit record, but still desire traditional, credit based financing. Cross Check is a no credit check, 90-day, same-as-cash, nocredit-check financing option that Big Sandy introduced in 2010. Cross Check allows customers to pay off purchases over 90 days without paying interest. RAC Acceptance is a finance option for customers in difficult credit situations that offer instant approval with long, flexible terms. Some internal changes made for difficulty beyond the economy. “2012 through the first half of 2013 was the toughest period in our history,” Van Hoose said. “We went through a very hard computer conversion that cost a lot more money than the original outlay,” Van Hoose said. “We have recovered from that by refocusing on the customer experience and developing compelling stories for the customer that sets us apart from the competition.” “We service what we sell” is a big part of Big Sandy’s appeal. In addition to service on manufacturers’ warranties, the store sells its own “Total Care Protection,” which provides three years of full parts and labor coverage. Customers have to clean and maintain the furniture according to the manufacturer’s standards; and recognize that damage caused by pets or animals is excluded from coverage. Customers have to clean and maintain the furniture according to the manufacturer’s standards; and recognize that damage caused by pets or animals is excluded from coverage.

 

When it comes to marketing, Big Sandy has three areas of focus. “Our biggest expenditure is color circulars, followed by network television, and social media, which is the fastest growing area of our marketing budget,” Van Hoose said. “We still use radio, but that is declining. We put a lot of effort into our Facebook page, which is approaching 18,000 fans and is a great way to connect with our customer base.” This summer, Van Hoose highlighted “Red, White and Free” tent sales for the Fourth of July period, “and we always add a lot of one-day sales and weekend promotions.”

A program that’s taken off of late at Big Sandy is “iAmerica.” The program highlights American-made sofas, loveseats, sectionals and recliners, all available in hundreds of leather or fabric options and available for delivery within 35 days. Amish-made bedroom and dining collections round out the assortment. “Our I-America story is really gaining a lot of traction and is a great tie-breaker

with the customer,” Van Hoose noted.

THE COMPETITIVE DIFFERENCE

Van Hoose said Big Sandy’s biggest advantage is that the company is blessed with a lot of people who have been with the retailer for 10, 15, 20 years and more. “I have learned when you tell your salespeople ‘the plan,’ that just starts the process and you have to follow up many times and ‘inspect what you expect,’” he said. “Accountability is a critical piece of the formula, and I have gone back

into our TV commercials … and adopted the positioning statement of ‘bigger and better’ and challenged our associates to deliver on that promise every day. “We have achieved size and scale in a market that most other national players don’t find that appealing, but to us it’s our home. We are currently posting some of the best same store sales growth in our history as a result of all these pieces

coming together.”


 

Pulling the Trigger

Midtown Furniture Superstore & Mattress Center has run some “wild and crazy” advertising over the years. The ads were attention getting, but Woody Whichard, president of the Madison, N.C., retailer, decided to try some new approaches over the past year. One, cutting back on the advertising budget, did not work. “Another is we called some of our customers and asked if they would like to come in and give a testimonial for a TV advertisement,” Whichard said. “We had quite a few to come in and do so. Instead of blasting price, wearing crazy costumes, and flying around on the TV, we let our customers speak for us.” Those ads generated positive comments from both new and existing customers at Midtown. “We shot the testimonials over 18 months ago and are still using them as we speak,” Whichard said. “They do not create the sense of urgency you look for in advertising, but it does plant a seed that we are the place to purchase furniture.”

INSPIRING A PURCHASE

Is a promotion the only way to get customers to a furniture store? How do retailers measure the effectiveness of their advertising? An effective way is to ask consumers if they considered the retailer and whether they shopped that retailer. Impact Consulting took a look at where consumers are shopping. (The results of this inquiry are shown by distribution channel in the accompanying graphic, “Most Recent Furniture Buys by Retail Channel.”) Another issue: Retailers must create a promotion that the consumer believes, and the graphic, also based on Impact’s research, “Believability Scale” indicates this is an area that needs a lot of work. And while Price (which is influenced by financing in terms of affordability) is important, Impact’s research indicates it is not the top factor in the furniture purchasing

process. (See accompanying graphic, “Purchase Motivators.”)

GAME TIME

One way more retailers are building excitement at their stores without highlighting price is through sports- related promotions, that offer refunds on purchases made during a certain time frame should a team win a pennant, return a kickoff for a touchdown, or score a specified number of points. Gallery Furniture in Houston ran two NFL-related promotions this year. Pig Skin Promotion No. 1 offered a full refund to customers buying $5,000 or more of furniture during the contest period. Those correctly picking the winners of the National Football League Conference Championship games received refunds.

That event led to around $800,000 in refunds after all was said and done, according to Jim McIngvale, Gallery owner. That was just a start, though. Pig Skin Promotion No. 2 promised free furniture to customers who bought $6,000 or more and picked the winner of the Super Bowl game between the Denver Broncos and Seattle Seahawks, won by the latter. Denver might be closer to Houston geographically, but apparently there wasn’t much loyalty in that regard: “80 percent of the people who participated picked the right team,” McIngvale said. That second promotion paid out around $7.2 million in free furniture, he noted. “After that first promotion, we said, what the heck let’s do it for the big games this year. Baseball Promotion No. 1 will fully refund the first 500 customers who spend $6,300 or more at Gallery Furniture if the Astros win 63 games in the regular season.

The magic number, 63, honors McIngvale, who turned 63 years old in February.“Some might think this promotion isover the top, and they are right,” he said.“We want to give our customers another reason to get excited about our Houston Astros this season and even more excited about coming in to Gallery Furniture.” Customers across the continental United States also can buy mattresses online at GalleryFurniture.com at a $6300 value or more, and have it delivered to their home within seven days. Boston-area retailer Jordan’s Furniture is no stranger to sports-related promotions. Boston is a fanatical sports town, and the store has run programs promising free furniture for titles from the National Hockey League Bruins and American League Red Sox. The retailer has insured each of the sports promotions.

This year, “The Monster Repeat” promotion commits to free furniture—of any purchase amount—starting April 2 if the Red Sox bring home another World Series title. There is no limit on the amount of furniture or the selection of furniture. With the Red Sox winning it all in 2004, 2007 and 2013, it’s a safe bet the promotion will generate no small activity on Jordan’s floors. To build interest, the retailer will display the Red Sox trophies in stores. It’s the 8th year Jordan’s has run the promotion. The 2007 title ended up with customers getting $30 million in furniture. “We bought insurance so we are rooting for the Red Sox to do a repeat performance of 2013 and hope that we can give away $50 million dollars’ worth of furniture this year,” said President Eliot Tatelman. Television, radio and online ads are promoting the offer at Jordan’s. We’ve been talking the big leagues so far, but the fact is sports-related promotions are a possibility for a huge number of retailers—how many stores aren’t in a market area served by a minor league baseball team? Still, retailers need to make sure such a promotion fits their image and customer base. “I am a huge fan of my Lions and Tigers, but it’s still a fact that my customer is a woman age 35 to 65,” noted Jeff Selik, president of highend contemporary furniture store Hillside Furniture in Bloomfield Hills, Mich. Not only that, such a promotion has to offer a fighting chance for a favorable team outcome: “For it to seem like an opportunity, there has to be a feasibility they’ll win a championship.”

STARS & STRIPES

Some retailers push the fact that they carry products made in America. If you’re one of those, that might be a natural for any Fourth of July promotions. Atlanta-based Imagine Advertising has developed a turn-key program to promote “Made in the U.S.A.” “The concept behind the promotion is for the dealer to be able to promote that they buy products from American manufacturers,” said Flora Stopher, Imagine Advertising owner. The circular Imagine developed for this event features augmented reality.“The customer will receive the ad in the mailbox, download an app on their phone and hover over the pictures on the circular to bring them to life,” she said. Customers can see other product features, other colors, view a store video and more. Stopher suggested American-themed BBQ aprons, BBQ utensils and flags, as instore giveaways to generate activity.

The Reality behind the Myth

Sometimes a myth is just a myth—a widely held but false belief or idea. Folks understand

it as such, and so it is. Other times, that long-held belief becomes so intertwined in a culture, community or business that it becomes a group’s reality. Over the last 20 years I’ve spent covering the furniture industry, there’s always been a story on the summer slump or the summer doldrums. The story is typically published after the Memorial Day sales have wrapped up. Retailers and vendors alike have always espoused the lack of furniture sales during the summer and more often than not attributed it to vacation season, kids being out of school and other activities

(and expenses) taking over consumers’ disposable income. The story line has become so intertwined into our vernacular that we’ve come to expect the drop in business. It’s part of who, we as an industry, have become. Remember, a big chunk of factories shutter during the first and sometimes the second weeks of July to account for the “slump”. That’s been going on forever, and this summer as it rolls in quickly, isn’t likely to be much different.   

Instead of setting out at the end of May to encourage and entice consumers to come in and redecorate, we’ve taken to treading water until the big fall selling season returns just in time for the holidays. Everyone knows that’s when everyone is entertaining and wants to prep their homes for the influx of family and friends.

Could it be that we’ve created the summer slump myth to soothe our fears? Perhaps, it has become an easy fall back. Our sales are off, but oh wait, look at the calendar, it’s July. Now it makes sense. Seem a little silly and thin? Hmmmmm, given that the impending slump has become our perceived reality, let’s take a look at the statistics behind the curtain. Figures from the U.S. Department of Commerce tracking furniture store sales month to month tell a different story than the one the furniture industry has been groomed to believe.

Take into consideration that in an eight-year period between 2005and 2013, the month to-month change in furniture sales is barely enough to register. It’s a pretty steady line graph, and surprise, in the months of June, July and August sales don’t fall into the pit of despair. Instead, sales for those months over the eight-year span actually creep up. If there’s a slump to be seen, it shows up in the month of April (blame it on Market), but even that stumble shouldn’t be too noticeable.

What does this non-myth mean for you? Well, if you’re seeing a significant drop in your summer sales, perhaps you need to look elsewhere for the cause. Maybe your promotions and advertising and marketing plans need an overhaul. Give her a reason to come shop your store. Trust me, she’s looking for something to do other than referee the latest argument over whose turn it is on the computer. The summer myth has been debunked, so now is the time to develop a new line. The summer slump story isn’t going to cut it anymore. Get ready, and take advantage of this time to arm your arsenal with smart, creative, effective messaging to pull the consumer into your store.


 

 

A Bird in Hand...

For the past decade or longer furniture retailing has been focused on promotions and, more specifically, finance promotions. Often referred to as “No, No, No” financing, the tone has decreased, but the message remains the same—Furniture is a deal! I won’t despair about the fact that the Consumer Price Index for furniture has been flat for the past five years while all other consumer products have increased nine points. Nor will I dwell on the fact that only about 30 percent to 35 percent of consumers take advantage of these promotions. However, I will discuss customer loyalty.

As an industry, many of us are stuck in a paradigm that believes on average, consumers purchase furniture every seven years and the purchases are influenced by different life stages—new household formations, first homes, downsizing seniors, birth of children and the list goes on. The fact is that people are continuously decorating their homes whether in major or minor ways. This destroys the myth that by the time they purchase furniture again, they will have forgotten their last shopping experience. The challenge for retailers is to become the consumers “retailer of choice” as they continue to furnish their homes. To meet this challenge the retailer must satisfy the returning customer through the buying process from the selection to the needs analysis by the sales associate to the successful closing and, finally, a great delivery experience.

 There are many opportunities to disappoint the customer or to wow her with excellent service. The fact is even with the best retailers, only about 35 percent of the consumers make it to the closing. However, the chances for closing to a prior customer are more than twice that of a new customer. You do the math. The returning customer represents a substantial part of a retailer’s sales. In our quest to discover the factors that identify the characteristics of high performance retailers we find one of the top five factors that identify these retailers is the percent of customers purchasing each quarter that purchased in the preceding eight quarters. This graphic illustrates. The challenge to maintaining the customer’s loyalty requires an ongoing commitment to making every customer a customer for life. This is not as easy as planning that one-time “blow-out” event. Just a thought.

A Magic Carpet Ride

Area rugs are to a room like jewelry is to a well-put-together outfit. They’re great at pulling other items into a coherent space. Rugs are an anchor for the area. They’re nearly magical in their ability to transform a room.

According to a Home Furnishings Business consumer survey last month, area rugs are gaining in momentum as the go-to accessory for dressing up a space. Sales in the category climbed more than 6.6 percent from 2012 to 2013, and the category is poised to make similar gains this year. No surprise, more than half of the rug purchases— 57.6 percent—were bought for either the living room or den. The bedroom followed at a distant 11.9 percent and the dining room at 8.5 percent.

Shape was a deciding factor for our consumer panel in rug selection. Nearly 73 percent chose rectangular shaped rugs, while at a distant second, 11.8 percent opted for the “other” shape. Beyond that, runners and square rugs were each chosen by 6.8 percent of the sample.

A wide range of sizes were bought by our panel of consumers ranging from the smallest 2x3 to the much larger 12x18 and every size in between. Consumers most often opted for either 5x7 foot rugs (18.6 percent) or 8x10 foot rugs (17 percent).

Nearly 65 percent spent between $100 and $1,499 on their most recent rug purchase. The largest cluster of rug purchases (45.8 percent) fell within the $100 to $399 price range. Much like the rug arena, our consumers bought a broad array of color and style families, but didn’t stray far from the strong neutral family. Neutrals led the color parade with more than 69 percent choosing black, white, beige or the like. Green, a strong player in the upholstery arena, followed with a distant 13.6 percent. Other colors that got a mention, include blue, pink, red and yellow.

Our consumers appear to like to play it safe when it comes to rugs. While the design elements were quite varied, the largest cluster of consumers (28.8 percent) played it safe and bought a solid rug. Florals and geometrics tied at 17 percent; traditional motifs, 13.8 percent; contemporary designs, 10.2 percent; and stripes, 6.8 percent. Zig-zag patterns and animal prints rounded out the balance.

Not surprisingly, most of our consumers (76.3 percent) bought their rug after making their furniture purchase. Only 8.5 percent bought the rug with their furniture purchase.

Our group of shoppers showed a penchant for buying their rugs from mass merchants, like Target or Walmart, (30.5 percent) or home improvement stores, Lowe’s or Home Depot. (25.4 percent). Traditional furniture stores (11.9 percent) ran neck and neck with rug only stores (11.9 percent) and the Internet (11.8 percent) as the channel consumers chose for their rug purchase.

What Retailers Say

Nourison’s Luster Wash CK10

“Because of the beautiful copper color, it works well in many of our contemporary desert living homes. Because of it’s subtle abstract design, it can be mixed with other patterned rugs. It’s also available in other colorways and sizes.” It’s part of the Calvin Klein collection.
Retails at $1,099 for a 5.6’x8’

Carol Bell
Contents Interiors
Tuscon, Ariz.
Retails at $699.99 for an 8x10.

Rizzy’s Napa Merlot

“An overall great value and style. This rug is hand-tufted in a New Zealand wool blend and features a heavy 10 millimeter loop pile.”
Vanessa Hunt
Jerome’s Furniture
San Diego

Company C’s Sheffield Stripes
“Company C is a very good vendor for us, and we do very well with the line. It’s not inexpensive and comes with an MRP so it doesn’t get kicked around for price.”
Retails at $2,055 for an 8x10.

Peggy Burns
Circle Furniture
Acton, Mass.


 

 

What Suppliers Say

 

Surya’s 3300 From the Banshee Collection

This rug offers a soft, plush texture with a lustrous sheen. Hand-tufted in India of 100 percent New Zealand wool with viscos accents, the organic design combines with earthy and deeply saturated hues of copper and slate for a sophisticated style.

Loloi’s Nyla

Nyla is designed and created to look like an antique, hand-made rug. It’s popularity lies in the design, and its affordable, power-loom price. Nyla is also available in a number of different colors.
Kevin O’Brien Tuscan Sun Bu Capel
This award-winning rug has a unique ombré look created with different shading throughout. Its extra-dense construction utilizing cut and look construction and texture from different yarn systems make this one of our best sellers.
Jaipur’s Garden Party from the Blue Collection
A welcoming blue ground offers the blossoming vine a cozy background. The livable design makes Jaipur’s Garden Party a winner among consumers.

Roses Rug from Company C
A whimsical rug with a botanical motif in wine, berry, and purple. The imagery portrays the vibrancy of English roses in full bloom against an evergreen ground. Carefully crafted with mottled green and black yarns the roses are tufted while the background has a loop pile for textural appeal in 100 percent wool.

Revival from Oriental Weavers.

A staple, day-in day-out top seller, the Revival collection meets the huge demand for over-dyeing The collection is made in the U.S., giving retailers a home-spun story to tell consumers.

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