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From Home Furnishing Business

Summer Sizzle

The summer doldrums for furniture sales: We’ve all heard how business slows in summer as families concentrate on hitting the beach and find ways to keep the kids busy while they’re out of school. Malarkey. Take a look at the accompanying graphic of an 8-year analysis of furniture sales by month from the U.S. Department of Commerce. Comparing month-to-month furniture store sales as tracked by the U.S. Department of Commerce from 2005 through 2013, there’s little variance. The data shows a low of 7.9 percent for the months of January and April, and a high of 8.8 percent in December. Drill down further into the summer months of June through August, and we find 8.1 percent in June; 8.4 percent in July, and 8.7 percent in August. Mere blips, and an ever-slight increase through the summer. Rest assured, if you buy into the idea that summer is a down time for home furnishings retailers, your competitors are eating your lunch during those months.

Don’t blame the heat. Blame yourself for not giving potential customers a reason to come to your store. This month, Home Furnishings Business examines solutions for home furnishings retailers to break through the summer doldrums—whether myth or reality—and make their stores exciting places to get out of the heat.

 

REGIONAL, SEASONAL MENTALITY

It’s easy to develop a mindset that the weather, the season, is going to impact your sales. Has any retailer working on the southern Atlantic seaboard who bemoans the heat of summer keeping customers at home in the air conditioning ever thought about what it must be like during winter months in the upper Midwest? You never hear about the “winter doldrums.” “You get a forecast for eight inches of snow, stay home if you can, and that’s not good for any retail business,” said Jeff Selik, president of Hillside Furniture in Bloomfield Hills, Mich. “But we’re used to the snow. If we have a couple of inches and the roads are clear, that’s fine selling weather for us. “You have to have a promotion mix to bring people in at all times of the year. We don’t sell outdoor furniture, because it applies to such a small part of the year around here.”

Summer sales rest on three things, according to Britt Beemer, chairman of Charleston, S.C.-based America’s Research Group: Memorial Day, the Fourth of July and Labor Day. “If you miss out on that, it’s a long dry spell,” he said, adding that there are ways to build business outside those traditional high-traffic weekends. “A lot of people do a tent sale in the summer, and that’s one of the most successful that I’ve seen,” Beemer said. “Use it to clean out old, dead inventory. It gets the bargain hunter out to the store. “If you’re store’s in the right location, you don’t need to spend a lot on advertising, because that tent is your advertisement.” Try flipping the seasons.

“For a lot of retailers, Christmas in July is a big event,” Beemer said. “Decorate the store for Christmas, and run it for three weeks, following up to the Fourth of July. “If you’re having a warehouse sale, actually hold it in the warehouse. It creates a bargain atmosphere, and you’ll grab that same customer who shops tent sales."

 

GIVE A REASON TO SHOP

Generating business during the summer—or any season—is not rocket science. “Give the customer a good reason to shop,” said Alejandro Macias, vice president of Del Sol Furniture in Phoenix, Ariz. If any retailers have an excuse for dismal summer sales, it would be those in places such as the Sun Valley, where daily temperatures during those months regularly exceed 100 degrees. “I have come to the conclusion that there are no such things as (seasonal) slumps,” Macias said. “There are times when people naturally buy more, but we should be working just as hard those months, as the slower ones, working to give the customer a reason to shop.” July had traditionally been Del Sol’s worst month of the year for sales, but the retailer countered that with a “Midnight Madness Sale” to bring customers in after the sun went down. “After we did this sale, it became our No. 1 or No. 2 month of the year,” Macias said. “It became so good that we moved it to Tax Season.” After that move, the challenge became what to do in July to get people to buy. “Before this, we never did a 4th of July sale,” Macias said, since the thought was that holiday would not connect with Del Sol’s traditional Hispanic customer. “Well we focus on it now, make an event of it, advertise and we have a great weekend every time. “Last year we did the Smurferrific Sales Event with Ashley after the 4th (of July), and that also did well. It was a back to school/smurf-themed sale … during the time the “Smurfs 2” movie was being released. That event did great, too.

 

 A PLACE TO BE

This summer, sometimes characterized as slower by a lot of furniture retailers, Gallery Furniture Owner Jim McIngvale said the retailer will work hard to make the furniture store an exciting place to be for Houston-area consumers. “It’s all about making the store topical, making the store relevant,” he said. “During the summer, we’ll come out with lots of experiential events for customers so they don’t feel like they’re in a funeral home when they’re here.” Gallery paid out a pile of money on a sports-related promotion for this year’s NFL playoffs and Super Bowl (see accompanying story), and it’s betting again this summer with a free furniture promotion if the Houston Astros win 63 games this baseball season.

Do you have a remodeling project in the works? Build a sales event around it.

“Two years ago we had a huge liquidation event in July when we did three months business in one—it was our biggest sales month ever,” said Hillside’s Selik. “We had validation behind it because we were repainting the whole showroom. We were going to have to stick that furniture somewhere, so why not sell it off.” Think about “off the wall” promotions that generate excitement. Hillside played upon its multi-generational ownership with “Shh… Don’t Tell My Dad”—a play on the retailer’s father-son team of Jeff and Bruce Selik. “We do that every other year,” Jeff Selik said. “People I’ve never seen before but who recognize me from the commercials mention that to me at least every other week.

 

BEATING THE HEAT

The summer slump is a reality for Midtown Furniture Superstore & Mattress Center in Madison, N.C., said Woody Whichard, president. He’s dubious of the Commerce Department’s statistics regarding furniture sales over the last several years. “I do not trust the government or any of the figures they come up with, he said. “It is like an advertising salesman trying to sell me their product over their competition. Metrics can be changed to fit any situation. If you change the way you measure something

to your advantage, what is the real truth? Take unemployment rates today verses 10 years ago. This is the way I look at the government’s numbers. All markets and stores are different, but most of us would measure our sales the same, total sold for the month.” Whichard said Midtown’s month-to-month performance over the past five years has been unpredictable at best. “In 2008, we lost 40 percent in sales from May to June. In 2009 we gained 30 percent; 2010 we lost 50 percent; 2011 we lost 40 percent; 2012 we lost 50 percent, and 2013 we gained 3 percent,” he said.

 “I feel the doldrums. Unfortunately, the way we used to measure and budget has completely changed under the current administration. I feel that the consumers are just as confused as us retailers as to when to have confidence again.” It’s hard to depend on monthly historic patterns. “When I set our annual budget I lower the numbers for the summer months and budget for higher numbers in the spring and fall,” Whichard said. “So, yes, I do believe there are summer doldrums.”

That’s not to say Midtown doesn’t stand pat in summer. “We have tried to do our very best advertising to generate sales during this time,” Whichard said. “One of our most successful sales is the trade-in sale. We will take any furniture in any condition and donate it to a local charity. Not only does the consumer receive a discount for their worn out furniture, but they also leave with the feeling of helping someone less fortunate. We take any category, including mattresses, for trade in.” Make sure that any sort of promotion that brings a community benefit lives up to its promise. “As it says on the front page, ‘All furniture traded in will be donated to the Salvation Army’ and it was,” Whichard noted. “As in many things we do we look for a win-win. In this case it is a win-win win. The customer wins, getting rid of furniture they were wanting to throw away and getting a discount for doing so. The charity wins because they get so much to offer their customers, and we win with an increase in sales and goodwill in the community. “We also offer a partial discount to those that do not have anything to trade in. We have tried this sale at different times of the year and it seems to get the best response in May, June and July.” Whichard wasn’t the only retailer questioning the so-called summer furniture doldrums as a myth.

There’s “no real differentiation between what works in the summer versus other times,” said

Ronny Bensimon, president of Dearden’s in Los Angles. “Regardless of the promotion, the lift will be less in the summer. “You need to find out who is reporting those statistics, find out what they’re doing, and let me (and other furniture retailers in my circle) know what they are doing. Are you sure the retailers being queried are not south of the equator where the seasons are flipped?”

 

THINK SEASONAL

When considering summer promotions, think about what your consumers are doing during the season. Think they might be playing golf? Atlanta-based Imagine advertising showed up in Ashley’s showroom at the recent High Point Furniture Market with a full-on presentation for its “Sink Fore Savings” promotion, which included signage and a putting green. The promotion is scheduled to run Father’s Day through the U.S. Open, and is designed to create an exciting, fun event for sales people and your customers. Retailers would set up a putting green in-store and offer the customer discounts for every putt made. Creative will show men, women and family/kids golfing. For example: Make one 13-foot putt, get 10 percent off; make two 13-foot putts, get 20 percent off, etc. Retailers set the number of putts and discounts that work for their store. They can reinforce your message online and with in-store signage. “People out there in the market are ready to buy furniture at all times of the year. It’s a matter of reaching them,” said Hillside’s Selik. “I always hope they’re coming to Hillside because they’ll see furniture they won’t find anywhere else around here, but you still need to give them a reason.”

 

 

 

 

 


 

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.