Furniture retailing is a people business, and many store owners — especially in smaller operations — tend to rely on their gut to tell them whether business is good, bad or somewhere in between.
While instinct is often a reliable guide, cold, calculating technology can help separate fact from fiction and help grow your business.
This month, we’re talking to retailers about how they are putting technology to use in their stores—not only to help run the numbers, but to assist in training, process improvement and enhance the customer experience.
Josh Hudson is president of Hudson's Furniture, based in Sanford, Fla. As Hudson’s almost doubled in size from nine to 17 stores, technology became even more important in managing the business—and Hudson brought a younger generation’s techno-savvy as he rose to leadership in the family business.
“Technology is such a critical part of increasing your effectiveness and staying on top of things,” he said. “I wasn’t (implementing) it to make things more complicated—it makes it so much simpler to manage the business and clarify goals.”
Simplifying access to the technology itself helped.
“We went to a cloud-based system, and we’re in the process of taking our (point of sale) to the cloud,” Hudson said. “Everyone should be able to access everything through the Web. Making it Web-based makes it so much simpler.”
In addition to serving as company president, Hudson also heads up the stores' information technology: “That’s how important it is.”
IMPROVING CUSTOMER EXPERIENCE San Diego-based Jerome’s Furniture is taking advantage of the proliferation of Web-friendly mobile technology to make shopping more convenient—wherever the customer’s touch point lies.
“We are working on providing access to Jerome’s wherever customers want to interact—their mobile phone, tablet, the Web,” said COO Phil Kenney. “They can now create online shopping lists, so when they come into the store, our associates can recall that information with the customer. We’re rolling out tablets to our sales team so they can pull that shopping list for them.
“The key here is that we’re centralizing all the data, because we look at it as a continuous shopping experience.”
Jerome’s started out by improving the customer’s ability to quickly get to the product she wants on the Web site.
“When we did that, our Web sales increased 10 to 15 percent,” Kenney said. “The next piece was that we wanted the customer to be able to create a shopping list on the Web site. When people come into a store with a list, those turn into orders two to two-and-a-half times the size of our average order.
Jerome's also uses e-mail, geo-targeting and in-store Wi-Fi to reach online customers.
“If they have their tablet or mobile and want to do their own research on the products they see,” Kenney said, “we say go for it.”
TRAFFIC SIGNALS Hudson’s tracks key performance indicators on all aspects of its business — including sales, inventory, profitability marketing, staffing and traffic count data.
Hudson’s uses the Flonomics traffic counting system to identify sales opportunities.
“Everything else we track — profit, inventory, marketing — shows how well we’re maximizing those opportunities,” Hudson said.
Using traffic data, instead of sales data, to determine staffing needs, has led Hudson's to a better shopping experience for clients and higher revenue per store.
“We guarantee every sales associate to have 140 customers a month,” Hudson said. “Better staffing allowed us to improve our customer experience.
“We use secret shoppers, and when we have a negative experience, it’s always some variable on, ‘I didn’t have the time to serve the customer and go through the steps you want me to cover with them.’”
Plotting traffic also helps manage store performance, he said.
“We found the No. 1 store we have (showed) double the sales performance of our lowest store—and in a much worse demographic area,” he said. “When you start measuring, it shows where you can improve.”
As a furniture retailer expands from one or two stores to three or more, the owner who might have eyed a lot of information in a single location can’t be in all the stores every day. Accurately counting information about sales, ratio measurements and traffic gets more difficult.
“At that point, gut instinct isn’t enough,” said Flonomics CEO Charles Von Thun.
Are you staffing according to sales peaks or traffic peaks? If you're staffing based on sales, you might be missing opportunities, and that’s why a number of retailers are using traffic-counting technology such as Flonomics.
“The idea is that furniture retailers have an experience they want every person walking through their door to enjoy,” Von Thun said. “There needs to be enough people with the right training and experience on the floor to deliver that brand experience.
“What we see with our furniture clients is that, historically, most don’t have traffic counting in place, or the data they do generate isn’t available quickly enough.”
That leads to staffing by sales instead of actual traffic, which has a couple of effects.
“First, they don’t know what they might be missing” in terms of lost sales due to inadequate service levels, Von Thun said. “Second, we asked for the typical length of the purchase experience, and a significant number said it’s more than an hour.
“If you open at 10 and have (a salesperson) coming in at 11, you might have lost an hour of sales experience with a customer.”
GET TO THE POINT Retailers also can use technology to develop customer relationships at the point of sale.
One key is capturing information. Not everyone makes a purchase on the first visit, so you need the ability to follow up. If they’re in your store, you know an opportunity exists.
“Fifty to 80 percent of people walking into a store walk out without buying,” said Kenney, Jerome’s COO. “Furniture is a big purchase—it’s the third-largest investment people make—and customers want to take their time and do research.
“We make sure our sales associates are, first, equipped with the tools to gather that information and, second, use an e-mail to follow up on the people they talk with and ideally get them to come back to the store” or make a purchase online.
Jerome’s also is investing in point-of-sale technology to enhance its “continuous shopping experience.”
“We have touch screens for credit applications now, and we’re moving to what we call assisted work stations around the store, so the customer doesn’t have to have a cashier to check out,” Kenney said. “Within a year, we’re going to make that tablet-based. We expect that to increase conversion rates.”
Meshing point of sale and point of purchase is another step Jerome’s is taking.
“That way the sales associate doesn’t need to leave the customer,” Kenney said. “We put technology in proximity to that customer’s purchase decision. We don’t … have them sit down and wait for a cashier to check them out, and we’ve seen an increase already in our conversion rates.
“The overriding thing with point of sale is that purchasing furniture—the research, the store visit, delivery—is a complicated process. You need to make technology available, but not intrusive.”
ONLINE POS As more and more retailers are selling furniture online, they can take a cue from some things e-commerce retail specialists are doing at this emerging point of sale.
Beyond Stores, a Davie, Fla.-based online retailer, credits a program called PriceWaiter for its 25.4 percent increase in sales and 22.8 percent increase in conversions over a three-month period—without cannibalizing existing revenue.
Beyond Stores has been using PriceWaiter—which allows a shopper to make an offer on items — since last summer.
“When you’re on an individual product page, you can go through the regular checkout process (which includes a coupon for a discount), or access PriceWaiter on the ‘make an offer’ button and tell us what you’re willing to pay for this item,” said Mark Ginsberg, marketing director at Beyond Stores.
“You can leave specific comments. The shopper puts in an e-mail and password, and that enters the offer and starts a discussion.”
The best thing about the program, he said, is that it engages customers in a dialogue with the retailer.
“It brings back some of the personal relationship and conversation to online shopping,” Ginsberg said. “It can also be used as a price-matching system.”
Say a customer comments that she found the same item at a lower price on another Web site. Beyond Stores makes sure to verify the price on its own before responding.
“If we accept the offer right away, the customer purchases the item immediately,” Ginsberg said. “We want to provide high quality home furnishings at discount prices where we can, and this allows us to work with the customer and engage in dialogue.”
Beyond Stores also asks for a customer's ZIP code, which enables it to factor in delivery costs.
“If they’re close by,” Ginsberg said, “it’s easier to push that discount over to the customers, and it helps the negotiating process.”
Another online retailer, Chattanooga, Tenn.-based Smart Furniture, uses PriceWaiter to sell high-ticket items — average retail price of around $700 — to price-sensitive consumers. The result of adding the PriceWaiter “Name Your Price” tool to its site was a 3 to 5 percent boost in conversions, and the average value of a PriceWaiter transaction increased to $1,100.
At 25 percent, PriceWaiter is Smart Furniture’s highest converting lead source — over catalog requests, newsletter sign-ups and e-mail campaigns.
Partnering up, Getting it Done:
Teaming up with a technology partner not as simple as flipping a switch.
The first step is to analyze what you need your system to do, and whether that system fits your business model.
“Every system says they’re easy to work with, but really they aren’t,” said Phil Kenney, COO of San Diego-based Jerome’s Furniture. “There’s a lot to learn. Jerome’s has 500 people, and if we make a change, that’s a very big job.”
Jerome’s uses a retail operating system from JDA Software Group.
“We’re trying to do some of our own things to tie around the operating system,” Kenney said. “One of the things we’re working on right now is to give the associates information about the customer, and about their performance, through business intelligence systems.
“You have to match your business model to that system, and make sure your model can run in that system. The system can’t dictate your business model—that’s what makes you unique. I think a lot of people forgot that for a while.”
The second step, Kenney said, is to assess the capabilities of both your technology and your operations team.
“Are you going to build on top of a system,” he said, “or rely solely on your vendor?”
Finally, you’ll have a lot of options to sift through. Be patient.
“There’s a lot of technology available,” Kenney said. “Work through your options, check who’s using it. This is very important.
“There’s a community of users around whatever you go with where you can get support.”
Cloud-based services such as Google Apps offer a lot of tools geared toward helping small businesses grow, said Josh Hudson, president of Sanford, Fla.-based Hudson’s Furniture. They also don’t cost as much as a lot of other options.
“You can get everyone on a common platform and move away from so many PC-based functions that drive up (the cost of) technology,” Hudson said. “A lot of the furniture-specific systems are going Web-based.”
IMPLEMENTATION ISSUES When implementing new technology, you can't just flip a switch and expect results.
Hudson's Furniture started using the Flonomics traffic-counting system three years ago.
“It’s been a push, with lots of one-on-one conversations,” Hudson said. “You have to explain why you’re doing it, and get buy-in from the team.”
Also, look before you leap.
“I don’t jump into anything without full research and testing,” Hudson said. “We started out with Flonomics at one store to see how it would work” before rolling it out to more locations.
Implementation of any technology requires a willingness to change, Flonomics CEO Charles Von Thun said.
If you’re used to having two or three people on the floor during the week and four or five on Saturday, real traffic numbers might indicate you need just one on Monday, but seven on Saturday.
“Once you get the right people on the floor at the right time … you can get a meaningful bump in conversions,” Von Thun said. “If your (conversion rate is) in the low 20s raising it a couple of points can mean a lot.”
Implementation has to come from the top. A manager or owner has to show buy-in to the new technology and follow through to make it stick with the sales team.
With Flonomics, Von Thun said, there’s a sequence to implementation.
“First, get the right people and number of staff on the floor at the right time,” he said. “Second, make sure they’re all delivering the experience you want. At that point you can start refining and fine-tuning — find where you can shave a couple of minutes off the process, use technology to improve the process.
“The last piece: We think this system works best when the numbers are out in the open. The sales manager should coach (the sales team) through it, say ‘Here’s an opportunity we missed.’”
It can take two to three months to get everyone up to speed.
More than a third of retail CIOs surveyed in a study from the National Retail Federation are considering a single consumer platform to manage transactions across channels.
The study, released earlier this year and titled “Digitizing the Store—the Next Wave of Online and Offline Convergence,” found that integrating store and online operations is a key focus for retailers as e-commerce capable solutions increasingly supplant traditional point-of-sale and mobile technologies.
NRF teamed with research partner University of Arizona and industry partner Demandware, a leader in digital commerce, to survey more than 200 retail business and technology executives in the United States and Europe to quantify the convergence of POS and e-commerce technology, and its impact on digitizing the store.
Some 35.8 percent of retailers surveyed said they’re thinking of using one platform to manage all consumer interactions and transactions, whether online or in the store.
“The future of retail will envelope business platforms that enhance the endless opportunities that new technologies offer, such as systems that allow retailers to provide seamless, relevant and personalized interactions for all of their customers,” said Tom Litchford, NRF vice president of retail technologies in the report. “In this consumer-led industry, retailers are working overtime to keep up with the expectations and demands of their savvy customers, and are intent on integrating the digital shopping experience like never before.”
Specifically, a single platform would consolidate and manage key data elements and functionalities that historically have lived in multiple disparate systems to provide customers with consistent, on-brand shopping experiences no matter how or where they choose to interact with a retailer.
A WORLD OF DIFFERENCE The study found that customer expectations are driving retailers to carefully examine their technology spend and investments. Over the next three years, 80 percent of retailers surveyed expect to maintain or increase store technology investments, and 70 percent say their organization is currently deploying or planning to refresh its existing software.
Additionally, while traditional point-of-sale software has been a mainstay for physical stores for decades, many retailers recognize e-commerce software as an emerging and logical approach to evolve and establish the sought-after single platform. According to the survey, nearly four in 10 (38 percent) surveyed plan to leverage an e-commerce software platform for their next generation store software—twice the number that plan to use traditional point-of-sale software.
“It’s no surprise that retailers are increasingly looking to leverage e-commerce technology as the single platform for all commerce,” said Rob Garf, Demandware vice president of industry strategy and insights. “This provides retailers a great opportunity to reduce costs, improve operational efficiencies, and enhance the overall customer shopping experience in a dynamic consumer environment.”
The retailers defined four priorities technology vendors should heed: improving efficiency; attracting and retaining new customers; reducing costs; and increasing enterprise growth.
IMPROVEMENT NEEDED Mobile-enabled consumers are dictating and controlling the shopping process, and the study found that existing technological infrastructure, architecture and applications are straining to keep up with shoppers’ expectations for instant gratification; and that legacy systems were implemented originally to solve specific problems for specific channels.
The number of channels through which consumers interact with retailers has therefore resulted in:
· Redundant data that increases the total cost of ownership from system maintenance and operations inefficiencies.
· Inaccurate customer information that shows up in order, payment and service miscues.
· Siloed systems (i.e., insulated management systems that don’t interact with other, related information systems) that stifle retailers’ ability to respond to market dynamics and execute growth initiatives.
Those barriers slow innovation, particularly at brick-and-mortar stores. Just 26 percent of surveyed retailers have capabilities to allow shoppers to interact and transact with their brand within the stores via their mobile devices. They’re farther ahead in Europe with such capabilities (31 percent of respondents there) than in the U.S. (22 percent).
The inefficiency of disparate technological environments within the same store risk customer dissatisfaction and lost revenue. That’s why so many retailers are considering a consolidated approach to their systems architecture to more effectively manage consumer engagement and transactions across all channels.
THE NEXT WAVE OF CONVERGENCE Forrester Research predicts e-commerce transactions will reach $371 billion—10 percent of all retail sales—by 2017 in the United States, an increase of 41.2 percent from 2013 levels. Forrester also estimates that the Internet already influences almost half, 49.5 percent, of total U.S. retail sales through some sort of shopping activity.
In addition, e-commerce functionality, architecture and extendibility designed for online shopping has surpassed in-store POS applications. The result is traditional POS, call center and mobile technologies touching the consumer are being supplanted by e-commerce to establish a single consumer transaction platform.
That’s why almost 40 percent of surveyed retailers are considering a single platform to manage all consumer interactions and transactions across all channels.
Because of its more modern and flexible architecture, the study found that e-commerce software is emerging as the most logical approach to establishing a single platform. They already are the backbone of many call centers and mobile-friendly sites.
The next frontier is traditional store-based POS, which while a longtime reliable and efficient tool in brick-and-mortar stores, is proving difficult to extend its functionality across multiple channels. Often, these systems are closed, require heavy customization and are designed for a single location.
Twice as many retailers surveyed plan to leverage e-commerce (38 percent) than traditional POS (19 percent) for their next-generation store software. Only 23 percent of U.S. retailers surveyed, 13 percent in Europe, are thinking about traditional POS for their next-generation POS software. While that trend varies by retail segment, it’s clear that something’s afoot in terms of direction.
THE GOOD NEWS Retailers already are extending e-commerce functionality into stores to give staff and customers the same product, order and customer data that’s used online for browsing purchasing and service.
Store associates armed with extensive customer intelligence are more effective ambassadors of the brands they represent. Retailers shouldn’t miss out on the opportunity to apply the sophisticated analytics found in the digital shopping experience in their physical locations.
Surveyed retailers also rated inventory search and store fulfillment as important digital functionality in stores—especially since consumers are browsing among channels during their shopping process and want access to the same information they found online once they’re inside the store. With that information ready to hand, a store’s sales associates can keep sales from walking by providing customers with inventory visibility across the enterprise and complete secure transactions on the sales floor.
The NRF report “Digitizing the Store” analyzed the next steps for retailers as they begin to take advantage of new technologies that help them understand and meet consumer demand.
· Understand the market and internal landscape.
Retailers should examine current technology solutions for both stores and e-commerce teams.
Two-thirds of retailers surveyed indicated that all of their district/regional managers and store managers will or already use mobile devices in the field over the next three years.
A key here is learning to navigate the vendor landscape. A third of retailers surveyed said they are hedging on a single platform playing a role in their technology strategy because of concerns about a nascent technology and risks related to organizational change. Their main worry about a single platform is that software vendors may not have a comprehensive, proven solution. Retailers should talk to vendors to understand their vision and make sure it aligns with their business model.
· Establish a technology roadmap.
This should define success, support business initiatives and identify a path with clear milestones.
This effort should include considering the cloud as a means to centrally manage consumer-facing systems. The survey found that three in 10 retail executives are currently considering cloud options for their point-of-sale software applications.
· Mobilize and empower store associates.
Even tech-savvy consumers still rely heavily on the physical store experience as part of the purchase process.
Retailers should arm store associates with the same information that consumers have, provide training and incentives, and empower them to leverage information capabilities as the store goes digital.
· Invest in wireless to leverage initiatives such as guided selling, “clientelling” and endless aisle.
While two-thirds of retailers surveyed indicated that management do use or will use mobile devices in the field over the next three years, only one-third said their sales associates had access to those devices.
Currently only half of retailers use smart phones and one-third use tablets to access POS software in the field. Adoption of such hardware, though, is pivotal in the transformation to a single consumer transaction platform.
· Drive continual innovation by creating a culture that allows employees to test and learn quickly.
Consumer demands are changing rapidly, so innovation and speed are not one-time events, but should be standard operating procedure.
· Extend capabilities to channels, devices and geographies so the business can innovate quickly.
Employees should have the chance to experiment quickly and extend capabilities without the traditional costs due to administrative and system complexity.
As part of this evolution, retail executives should drive speed into their business, accelerating the time from inception to delivery into live operation.
I’ve seen the future of furniture design, and it is very, very bright. Scorchingly so, I might add. On a recent, hot day last month, I joined 10 of my industry friends on the campus of High Point University to judge the annual Pinnacle Awards for the American Society of Furniture Designers. The makeup of the room is a good mix of retailers, designers, media and association executives.
We start early—first thing in the morning—and lock ourselves into a board room to pore over photos of products. Our goal: Select design winners in a number of categories. No one leaves until we’re done. It’s serious business. Much as I imagine the Academy of Motion Picture Arts and Sciences approaches voting for the Oscars.
OK. Perhaps I exaggerate a wee bit, but the day and the task involve deliberate work.
This year we went through 138 entries from 43 companies in 17 different categories. Categories include bedroom, dining room, upholstery, motion, leather upholstery lighting, decorative accessories and on and on. Each year the number of entries varies. This year was a pretty good year. Some years are lighter than we’d like. Often times, we find ourselves lamenting that some of the great design-leading companies haven’t entered pieces, collections or designs that we’ve all seen at a Market.
Consider this: You can’t win if you don’t enter. Know this: The judges choose the winners from the entries we have. Just because all 11 of us have seen your XYZ Collection and think it’s the best major collection out there since Broyhill’s Fontana, doesn’t mean you’ll get a Pinnacle come awards night.
Now, I’ll step off my soapbox and get back to the future of furniture design.
This year’s awards added a brand new category. A student design category to foster and encourage those college kids who are aspiring designers to build their portfolios and share their vision with the industry.
First year out of the gate, we welcomed 10 student entries from a number of colleges, including Appalachian State University, Kendall College of Art and Design, and Savannah College of Art and Design.
We reviewed the student category toward the end of the day, and you should have seen the faces and heard the comments from around the room. We all lit up as if someone had delivered a pitcher of cool lemonade at the end of a hot day. The kids — those youngsters who are eager to come into our industry and create beautiful furniture — blew away a roomful of seasoned, hardened professionals.
One by one, as we flipped through renderings and sketches, we commented on the talent headed our way.
Talented designers with a fresh eye on home furnishings and how they’re used in the home are headed straight for us. How refreshing!
Be sure to snag a ticket for the Pinnacle Awards gala during the High Point Market Monday, Oct. 20. Trust me, you won’t want to miss seeing the winners in all categories, and you’ll be eager to see what the future of furniture design holds for all of us.
The youth category of home furnishings is in a bit of turmoil of late with two leading vendors either exiting or looking to exit the business.
Stanley Furniture Co. announced plans in April to shutter its Young America line, and about a month later, La-Z-Boy said it was seeking a buyer for its Lea Inds. youth business.
Those two business decisions have other youth suppliers feeling optimistic about future business for that segment of their portfolios, as the landscape continues to change. Based on Home Furnishings Business’ latest consumer survey, the category continues to resonate with parents looking to outfit their kids’ rooms with furniture. After all, the little people in the house need a place to sleep, study and play.
Our panel consisted of 125 furniture-buying consumers who had all purchased furnishings for a child’s room within the last 18 months. Most of those buyers—76.2 percent—bought furniture for children who were older than 3. In other words, they were out of the crib and into a twin or perhaps, a full bed.
The kids who were old enough were given some input into how their rooms were furnished. Almost 43 percent of the consumers said the children were “moderately influential” in choosing the type and style of product bought. Another 23.8 percent said their children were “extremely influential” in the purchase decision.
The takeaway here? Designing—and buying—somewhat from a kid’s point of view could help sway purchase decisions, as long as the designs aren’t too over the top for Mom’s taste.
From our survey, it appears that parents (and to somewhat the kids) were swayed mostly by product in the traditional vein. Almost 48 percent bought traditionally styled goods, followed by 34.9 percent with contemporary designs. While those two style genres led the parade, mission (9.5 percent), rustic (4.8 percent) and cottage (3.2 percent) all made it on the board.
When it comes to paying for the goods, our consumers were pretty certain on the amount they wanted to (and did) spend. Nearly 78 percent said they paid between $500 and $2,500. Breaking it down a bit further, 20.6 percent said they paid between $1,501 and $2,000 for a complete room; and 19 percent paid between $751 and $1,000.
Parents have their eye set on future use when acquiring furniture for use in kids’ rooms. Longevity is key when it comes to purchasing.
Only 29 percent said the purchase would only be for use during childhood. Almost 32 percent said they made the purchase in hopes that one day the furniture could be used in a guest room. Another 32 percent said they hoped the child could use the furniture either during college or in a first apartment.
Along with future use plans, our consumers didn’t skimp on furnishings the space. Almost 78 percent said they furnished the room with “stylish, good quality furniture.” That holds in line with the plan to repurpose the furnishings. Only 14.8 percent said they had given other rooms in the house higher priority for furnishings.