Monthly Issue
From Home Furnishing Business
October 16,
2015 by in Business Strategy, Industry 
Bedding specialists are marching faster and farther with their expansion plans that furniture retailers.
No question that the mattress segment is one of the industry’s most profitable beasts.
It makes sense that bedding retail would continue to grow, and the powerhouse bedding retailers have been busy over the last couple of years.
In addition to the giant movers and shakers in the category, keep in mind, traditional furniture retailers are looking to hold tight to this prime bit of business by opening dedicated bedding stores. Think Art Van Furniture’s PureSleep model. Others are bolstering their sleep departments in their current footprint.
The freestanding bedding store concept has exploded satisfying consumers who want quick service. Often they perceive the specialty store format as the place to find selection, expertise, and, by the way, a location within 10 miles of their homes, according to Bob George, managing partner of Impact Consulting Services.
Unlike the emerging national furniture retailers, bedding specialists are focused on all markets—large and small.
When maps showing store locations for four key bedding retailers are examined, this segment of retailing seems to be outpacing furniture retailers in the race for U.S. domination. Three of the four examined have a presence in the majority of key markets across the U.S.
Out in front by store count, Houston-based Mattress Firm operates more than 2,000 stores dotted across much of the U.S. landscape in 279 markets. Sleepy’s, the privately held sleep chain based in Hicksville, N.Y., falls in line behind Mattress Firm and holds more than 1,050 stores in 97 different U.S. markets.
From Sleepy’s, the next chain with the most stores is publicly traded, Minneapolis-based Select Comfort with its more than 470 stores across 212 markets. The specialty sleep surface retailer sells its proprietary Sleep Number line in its sleep shops most often found in heavily trafficked retail centers. American’s Mattress, the franchised bedding retailer by Serta International, has more than 238 stores in 123 key markets.
Impact’s George points out that Mattress Firm has the largest market share—in excess of 50 percent in its market footprint of more than 60 percent of the total market. Meanwhile, Select Comfort has a presence in more than 75 percent of the total market, but holds less than 10 percent market share, George said.
Another observation: While Mattress Firm has used acquisitions to fuel its expansion, Sleepy’s, for the most part, has relied on opening new stores to grow its footprint to more than 25 percent of the total U.S. market, George said.
Overall, all the giants’ stores combined command slightly more than 30 percent of the total market share, George said.
While the giants come into a market carrying with them heavy marketing budgets with which to roar, local retailers can be giant slayers if they place their bets wisely, George said.
“Combining the retail experience of the bedding specialty store with the reputation of a regional furniture store, such as Steinhafel’s or Cardi’s, makes for a formidable competitor to the large retail chains,” he said.
Be mindful of the manufacturer-direct channel of bedding retailers. Those companies, like California-based Banner Mattress and Murmaid Mattress, based in Chattanooga, Tenn., offer national bedding brands along with their own, homegrown product, George said.
Each of the four chains mentioned specifically has plans to grow either by adding to its store mix through acquisitions or good, old-fashioned store openings.
Here’s a look at where each of the chains stands to gain and a bit about how they could get to U.S. domination in the bedding retail segment.
Leader of the Pack
Mattress Firm has been on an acquisition tear, gobbling up smaller regional chains, like Sleep Train on the West Coast and Back to Bed in Indiana, Illinois and Wisconsin on its way to becoming a national mattress retailing brand.
With more than $2.2 billion in sales during the last 12 months, and 2,300 company-operated and franchised stores in 41 states, the retailer is a force with which to be reckoned. Mattress Firm currently has stores under the Mattress Firm moniker, of course, but it also held onto the Sleep Train name following the acquisition of that well-established and well-branded West Coast chain.
The retailer has aggressively built up its sales base in recent years through nationwide acquisitions, including the Sleep Train acquisition. The Sleep Train buy caused a shuffle of the Mattress Firm executive deck, giving the retailer a boost to its management team.
Rob Killgore, who had been with Sleep Train since 1986, has been promoted COO of Mattress Firm as Ken Murphy was promoted to president.
Murphy is now responsibility for all sales functions of the company, including store operations and distribution, marketing, merchandising and e-commerce.
“Ken has been instrumental in driving the growth of Mattress Firm into the nation’s largest specialty mattress retailer,” said Steve Stagner, CEO of Mattress Firm. “I’m equally excited to leverage Rob Killgore’s vast industry experience, strategic thinking and analytical mind by expanding his role as sole chief operating officer.”
Killgore joined Mattress Firm last year as part of the Sleep Train acquisition. He held various positions prior to COO of Sleep Train, including senior executive vice president.
“These management transitions represent a natural evolution as part of the plan we put in place at the time of the transformational acquisitions we completed last year, and are designed to position our organization for continued growth,” Stagner said.
Despite Mattress Firms fairly recent acquisitions of Sleep Train and Back to Bed, Stagner has said the retailer has an appetite for more albeit perhaps smaller ones.
The company’s overall goal is to build a national presence from coast to coast.
While some acquisitions will be transformed to the Mattress Firm brand, Stagner reminds us that Sleep Train has a strong brand on the West Coast.
“We’re comfortable with their experience operating a multi-brand company,” Stagner said. “We feel the market can sustain multiple brands.”
The company acquired Back to Bed, M World Mattress, MCStores and TBE Orlando, which collectively operate Back to Bed and Bedding Experts retail stores in Illinois, Indiana and Wisconsin and Bedding Experts and Mattress Barn retail stores in Florida. It included approximately 131 mattress specialty retail stores primarily in the Chicago and Orlando, Fla., metropolitan areas, for an aggregate purchase price of approximately $64.5 million. The rebranding of the acquired retail stores in the Chicago market was substantially completed in May.
Mattress Firm delivered net sales growth for its eighth consecutive quarter in the second quarter of 2015.
Mattress Firm opened 71 new stores and closed 11 stores in the second quarter of 2015, bringing the total number of company-operated stores to 2,223 as of the end of the second fiscal quarter.
Anything But Sleepy
Family owned Sleepy’s has been moving south opening stores in North Carolina and has moved into South Carolina, too. Its expansion has gotten as far west as Chicago.
Relatively quiet, the bedding chain offers nationwide delivery to consumers who buy via phone or online. The retailer’s network of 10 distribution centers, six of which are corporately owned. The other four—Dallas, Oakland, Calif., Pompano Beach, Fla., and Santa Fe, California— provide the retailer with coast-to-coast reach.
Sleepy’s digital commerce strategy is its way for furthering its geographical reach. Through its planned omni-channel strategy, the chain is creating a more personalized shopping experience for consumers.
The retailer has said despite its brick-and-mortar heritage, it realizes that consumers are more connected now than ever and are shopping through different outlets. Staying connected and accessible to those consumers is key.
Site Selection
Dedicated Sleep Number retailer Select Comfort has stores in all 47 states in the contiguous U.S. Back in 2004, the company forged a strategic alliance with both C.S. Wo & Sons in Hawaii and Furniture Enterprises of Alaska for those retail operations to sell the Sleep Number beds. Both retailers still sell the line in their stores giving the Sleep Number brand distribution in all 50 states.
With its more than 470 branded stores, e-commerce site, direct marketing and through its telephone sales, the company’s name holds cachet and brand recognition with consumers. The company’s plan for 2015 included capital expenditures of about $80 million, including investments in information technology and new, relocated and remodeled stores.
Earlier this year, a corporate shareholder kicked off a proxy battle prior to the company’s annual meeting. The shareholder later backed down, but not before some serious accusations were lobbed against management.
Shelly Ibach, president and CEO of Select Comfort, outlined the company’s in-progress growth strategy in an open letter to shareholders that pointed out plans to build the Sleep Number brand into a consumer lifestyle brand, grow its consumer base by four times, and advance its national footprint while keeping markets locally focused and profitable.
The company plans to stick to its consistent annual new store growth of 5 percent to 7 percent while keeping from cannibalizing its existing sales in key markets. Select Comfort’s formula targets one store per trading area with a population between 35,000 and 500,000 people. Its target consumer is between 30 and 54 years old with a household income of more than $75,000.
The company’s strategy appears to be working.
In its latest financial report for the second quarter of its fiscal year, Select Comfort sales increased 17 percent to $275 million and same-store sales were up 13 percent. Net income climbed more than 29 percent to $11 million in the quarter from $8.5 million in the second quarter of last year.
The retailer is big into having its national footprint while maintaining its local market development. The local market development requires it to be on pointe with its site selection process to ensure the stores are visible, convenient and economically priced. Site selection includes mall and off-mall placements depending on a market’s consumer traffic flow.
America’s Brand
Serta’s America’s Mattress retail franchise program says nearly 400 stores in 123 U.S. markets in 39 states, including Alaska. The retailer sells all of the Serta and iComfort brands, and puts ownership in the hands of local, community-minded people.
The America’s Mattress concept creates a network of independently owned mattress stores. According to the retailer’s website, the company is looking for franchisees who have a successful business management background. For a single-store, the retailer recommends a minimum of $75,000 in liquid capital.
Impact’s George said the manufacturer franchise, once a super hot concept, remains viable.
“The America’s Mattress franchise has a market footprint of more than 30 percent of the total market,” he said. “Combining buying power with local ownership can be a winner. Bed Mart of Portland (featured in the August issue of Home Furnishings Business) is a strong, successful example.”
October 16,
2015 by in Business Strategy, Industry
China’s devaluation of the yuan earlier this year was done in hopes of stabilizing the country’s shaky economy. The impact such a move could have on the U.S. furniture industry remains unclear and opinions vary from expert to expert.
Although economists differ on the depth of the impact, China hopes to prevent its economy from slowing further by making its exports less expensive. China currently dominates 60.8 percent of household furniture imports to the U.S. and cheaper imports could strengthen that hold.
The world totals of both U.S. imports and exports in the household furniture industry have been on the rise since the recession (Table A). In 2014 imports totaled $23.8 billion at wholesale or about 74 percent of U.S. furniture and bedding consumption. This compares to 62 percent in 2007, as reported in the April issue of Home Furnishings Business.
Imports to the U.S. experienced high growth of 53.6 percent from 2002 to 2007 before plummeting 24.3 percent by 2009. Since 2009, furniture imports increased to 53.1 percent in 2014—growing an additional 10.9 percent from the second quarter of 2014 to the second quarter of this year to date. While U.S. exports total just a fraction of imports, exports of furniture have been steadily increasing since the peak of the recession in 2009. Up 50.1 percent since dropping 5.9 percent in 2009, the furniture export industry has increased from $1.5 billion in 2002 to $3.5 billion in 2014—a jump of 141 percent.
Imports by Country
China’s exports to the U.S. have grown to more than 60 percent of total U.S. imports—up 20.6 points from 2002 to the second quarter of this year (Table B). Since the peak of the recession in 2009, the value of imports from China has grown 52.4 percent to $14 billion.
Canada’s decline alongside Vietnam’s rise is quite noticeable. Vietnam jumped from a half percent to more than 10 percent of U.S. imports in the past 13 years while Canada has dropped from 18.3 percent in 2002 down to 5.5 percent in the second quarter of thie year—a decline of 12.8 points. As the fourth largest importer, Mexico accounted for 4.8 percent of total imports in the second quarter of this year— 0.8 points shy of 2002.
Major Furniture Imports
Wood household furniture is the largest imported furniture product, but in 2014 the category had not yet reached pre-recession import levels. Conversely both upholstery and metal have been increasing at a high rate, and combined, now account for more than 50 percent of total furniture imports (Table C).
Purchases of upholstery and metal household furniture from around the world have increased more than 29 percent since 2007. The smallest imported product category is bedding. At $464 million in 2014, the category is a small fraction the total. However, bedding has increased by 140 percent from 2009 to 2014 and more than 20 percent in the first six months of 2015 compared to the same period last year.
Current 2015 second quarter year-to-date performance for all broad categories shows that Metal is the only category not experiencing double-digit growth this year (Table D).
Wood household furniture imports totaled $9.8 billion in 2014 and are up 10 percent in the second quarter of this year compared to 2014 (Table E). China still owns the wood category at $3.7 billion wholesale in 2014, but has lost significant share over the last 10 years to Vietnam.
Vietnam’s 2014 imports have increased to $2.2 billion, up from $60 million in 2002. Through the second quarter of this year, China’s wood imports have grown 7 percent compared to Vietnam’s 23.9 percent, closing the gap even further. Malaysia and Indonesia continue their steady wood niches but control less than 6 percent of wood imports each.
Unlike the wood category, China has virtually no competitors in upholstered goods in the U.S. marketplace (Table F).
In the early 2000s, China began to make its move with upholstery imports of only $543 million in 2002 and grew to $3.9 billion by 2014. Essentially, China has taken market share from U.S. producers as the secondary countries—Mexico and Canada—have struggled to maintain shipment levels. Through the second quarter of this year, China upholstery imports are up another 15.2 percent over the same period last year. Vietnam has slowly tried to enter the U.S. upholstery market, but only grew to $293 million in 2014.
Even more so than upholstery, China has a stronghold on metal furniture—accounting for 78 percent of all metal furniture imported into the U.S. in 2015 at mid-year (Table G).
China increased from $1.7 billion in 2002 to $4.7 billion in 2014—a jump of 172 percent in 12 years. While imports from Canada, Taiwan and Mexico have grown since the bottom of the recession in 2009, they continue to lose U.S. market share to China.
Exports by Country
Although the U.S. exports a fraction of furniture compared to imported goods, exports have continued to rise since 2009 and surpass the peak highs of 2007 (Table H). More than half of the $3.4 billion in U.S. exports are to Canada.
Although exports have been growing, they are not approaching the growth in imports being fueled by China. While the furniture industry in China has been threatened over the last few years due to rising labor costs and labor shortages, U.S imports continue to increase from China alongside a growing Vietnam Wwood manufacturing presence. The recent devaluing of the yuan could go a long way to strengthen China’s hold on U.S.
Methodology: Household furniture imports and exports are compiled by the U.S. Census Bureau, Foreign Trade Division from more than 200 countries by product type and material.
October 16,
2015 by in Business Strategy, Industry
Dunk & Bright builds on its long-storied foundation to secure its future.
By Daniel Beaird
When Bill Dunk and Bill Bright founded Dunk & Bright in 1927 on South Salina Street in the Brighton neighborhood of Syracuse, N.Y., they likely didn’t imagine the furniture showroom growing into New York State’s largest 88 years later. But today it’s considered just that at nearly 100,000 square feet, according to Jim Bright, grandson of Bill Bright and current owner of Dunk & Bright.
A furniture salesman from Bridgeport, Conn., co-founder Bill Bright moved to Syracuse with the dream of opening his own business. That’s where he met and served co-founder Bill Dunk and his wife on the floor of Brown, Curtis & Brown, a furniture store in downtown Syracuse.
Dunk, an Englishman who moved to the United States as a teenager and worked up to production manager at H.H. Franklin, a car company in Syracuse, was so impressed with Bright that he encouraged him to go into business for himself and agreed to back the furniture store.
And Dunk & Bright was born.
Bright ultimately paid Dunk $5,000 for his share of the business, and owned and operated the store until his death in 1939. Bright’s brother-in-law John Monahan took over the business until his death in 1952, and Bright’s son, Pat Bright, then became president, running the store for 41 years.
A New Generation
Pat’s son, Jim Bright, returned from a successful business career in Washington, D.C., and New York City, worked for his father for three years and in 1993, purchased Dunk & Bright from him. He still operates the store today.
“I went to the bank, borrowed money and purchased it from him,” Bright said. “There are four other siblings, and he wanted it to be a fair transaction for the rest of the family.”
The store now encompasses the entire corner of South Salina Street and Brighton Avenue in Syracuse after a total of 50,000 square feet of additions from 1991 to 2006. Dunk & Bright also operates a 1 million-cubic-foot distribution center in Liverpool, N.Y.
The South Side Innovation Center (SSIC) was also born and sponsored by Syracuse University in 2006 in Dunk & Bright’s building across the parking lot from its main store.
“It is supporting an entrepreneurial renaissance in a neighborhood with untapped potential,” Bright said. “It holds more than 13,000 square feet of usable space for shared business services, the WISE Center and a large classroom for training and teaching.”
Community Outreach
SSIC was created by the nationally ranked Entrepreneurship and Emerging Enterprises (EEE) Program at the Syracuse University’s Whitman School of Management, and it aims to accomplish its mission through its resident programs.
Access to these programs include the Entrepreneurial Assistance Program (EAP), supporting clients and tenants of SSIC; the WISE Women’s Business Center for women seeking to start or grow a business; the Syracuse Community Test Kitchen (COMTEK) to help food entrepreneurs launch businesses; and the Start-Up NY/Program for Investment in Micro-entrepreneurs (PRIME) supporting disabled and low-income entrepreneurs with training and assistance.
Dunk & Bright’s space accommodating SSIC includes reception and administration; 27 offices with furniture, computers, Internet and telephone access; two conference rooms with whiteboards and audio-visual setups; a large meeting event area; a 30-seat classroom and training room; a 500-square-foot kitchen; a resource room for mail, fax and copies; mail receipt; free parking; 24-hour availability and access; and 24-hour security and surveillance.
Dunk & Bright’s involvement in the Syracuse community helps it reach the 75-mile radius it uses to promote the store.
“We continue to use most media channels, deploying traditional media as well as digital advertising and social media,” Bright said. “Offline seems to drive online.”
Bright added that the furniture store’s new e-commerce division has contributed to its sales growth this year.
“We are willing to try any and all digital platforms to test their effectiveness,” Bright said. “These are changes that help us run our business better and reach new customers and geo-target and target certain demographics in a less expensive way. You can try things to create a new advertising campaign, and in the digital age it’s much less expensive than television where you have the cost of production.
“We want customers to know about us, even if they’re more than 10 to 15 miles away,” Bright said. “We can market to Ithaca (N.Y.), for example, with Google AdWords and it’s a pittance to opening a second store there.”
Bright says they want to enhance what it does without disturbing their core, however, which lies in its selection and interior design services.
Building on Bedding
Dunk & Bright has recently expanded that core in its bedding department. Its new, in-store Mattress Shoppe has its own identity, its own entrance, its own advertising and a stronger focus on the mattress category, working with key vendor Serta to feature iComfort, iSeries, and Perfect Sleeper.
Jim Bright was recognized for his leadership in supporting the creation of the Mattress Shoppe with an award from an industry publication earlier this year. Erin Donaghy, Dunk & Bright’s marketing director, was also honored at the conference for a music video saluting Serta’s adjustable bedding.
“Opening the Mattress Shoppe in store [this past] January has been a success,” Bright said. “Our market has been solid and stable the last few years, and this year we are enjoying a nice double-digit percentage growth bump.”
Bright added that the store’s breadth of product selection, both in store and online, and its in-home interior design and custom order expertise sets it apart from other home furnishings retailers in its market.
“Our large display and selection gives us the opportunity to merchandise ‘good, better, best,’ and generally, we have a goal of stocking everything that we display,” Bright said. “We have one store with a lot of selection.”
Dunk & Bright’s management team talks about its cost of inventory regularly given such a large store.
“There’s been an evolution in the furniture industry of imported furniture,” Bright said. “Because of our selection, we carry domestically made furniture that you can custom order. There’s a starting price point in furniture. There’s a median price point and there’s expensive. We try to have that range.”
The trend toward offshore sourcing during the past decade means buying containers of furniture for Dunk & Bright.
“They’re very good value,” Bright said. “But we need to purchase a whole container of bedrooms, for example. We give the consumer choices of super-value container imports and of domestically made furniture. So, that leads to very high inventory.”
Design at Your Service
Meanwhile, half of Dunk & Bright’s sales staff is comprised of experienced interior designers.
“We offer this complimentary service,” Bright said. “We go to the home. We do a floor plan. We help put fabrics and finishes together. We have the ancillary categories that complement a completed room, like window and wall treatments, blinds and floor coverings. It doesn’t cost the customer anything. The customer doesn’t have to purchase everything, or anything for that matter.”
Bright thinks the decision to focus the retailer’s attention and investment on interior design services approximately five years ago was a big one.
“A lot of furniture stores have abandoned those aspects of the business,” Bright said. “They might have had a carpet department and got out of it because it’s a different selling process. You need installers, and you need to go to the home and measure carpet. You can’t just sell it like a sofa in the store.”
Bright says the same thing happens with window treatments.
“Hiring interior designers and encouraging them to do in-home floor plans for customers,” Bright said. “There’s an investment associated with that. For one thing, they’re out of your store and you have staffing issues. You need to think of that. When designers are out of the store, you have to have coverage.”
But Bright adds that his management team is under one roof, so when there is a problem or an opportunity, they can bring in their buyer or their specific manager.
“We’re all on the floor,” Bright said. “We’re all communicating constantly with customers. It’s very important to make sure the customer has had a good experience, especially in today’s social media environment. It’s more important what your customer says about your business than what you say about your business.”
Dunk & Bright
Headquarters: Syracuse, N.Y.
Year Founded: 1927
Footprint: A nearly 100,000-square-foot store in Syracuse, N.Y., and a 1 million-cubic-foot, high-bay modern distribution center in Liverpool, N.Y.
Employees: 85
Key Vendors: Ashley Furniture, England, Flexsteel, Harden Furniture, Serta and Smith Brothers
Retail Revenue Range: $10 to $15 million
Key Management Personnel: Jim Bright, owner; Bill Flansburg, merchandising manager; Erin Donaghy, marketing director; Gary Cleveland, sales manager; and John Beaudry, distribution center manager
Website: DunkAndBright.com
October 16,
2015 by in Business Strategy, Industry
One of the most powerful tools a performance driven sales organization has to motivate people and drive growth are goals.
By Tom Zollar
Yet, goals could be one of the least understood, and therefore most underused weapons in a store’s arsenal. In order to have the desired effect and power, goals must be at the front of everyone’s mind—particularly the sales manager’s—every day. Goals, and each individual’s commitment to them, are the driving force behind performance improvement.
Basically, everyone has goals but few people have structured, disciplined plans on how to achieve them. Too often, goals become wishes or daydreams as people go about their daily work and allow themselves to become distracted from the pursuit of their goals. Unless a goal is so important to a person that they are willing to commit themselves totally to achievement, the goal will be meaningless and will unlikely be reached.
It is often difficult to get a salesperson to commit to a goal for sales volume set exclusively by management, yet that is how most retailers create them. Other than the fear of losing one’s job, there is no internal, personal connection with an owner- or manager-based goal. A goal can be the motivating factor behind an individual’s performance only if a direct connection between the result and some personal need or want of the employee exists. It is, therefore, as important to know why a person wants a certain result as it is to know that they want it.
We often think that it is all about the money, but it is not. Employees are motivated by different things, not only income. Even though people have changed and various generations have different priorities, the following main motivational factors have consistently been cited throughout the last 50 years.
Fear—Sometimes the fear of losing one’s job pushes a person to strive harder to achieve a goal. Another person may be more afraid of failing as a blow to their self-esteem. Fear of being considered a failure by friends and family can be a powerful motivation to succeed.
Recognition—Many people like to be No. 1; the best at what they do. That need drives their performance. These people often grasp new ways and better methods faster than others because they see them as tools to be used to remain on top. Other people want to feel the internal pleasure of being told they have done a good job, have met their goals, and are valued employees.
Belonging—Some people thrive on teamwork and being part of a high-performance team. They like having a hand in setting their own goals, knowing management and their peers will respect them. These people respond to group celebrations for achieving group or team goals whether or not they have achieved their own.
Achievement—High achievers will always strive for more, often as much for their own personal gratification as for being recognized as leaders. Care must be taken in setting goals with these people so that they do not set them too high and doom themselves to failure, which is the last thing they want.
Aside from financial, these are the four top job satisfaction factors that motivate individuals. Therefore, to be consistently successful in gaining each individual’s commitment to a goal, managers must be aware of which factors play a part in each person’s mindset, and provide the opportunity for them to be rewarded in those areas of need.
That said, the strongest factor we directly control is that we pay them for how they perform. We can coach people toward goals better when we understand the underlying factors in play but we will always have sales volume as our primary target.
Before beginning the goal development process with individual salespeople, management must have an understanding of what the store potential should be. The simplest way is to multiply the store’s average revenue per up from the last 12 months times the most intelligent estimate you have for the coming year’s total traffic—Ups x Revenue/Up = Revenue. Then, look at what improvement the sales management efforts can honestly be expected to achieve in the staff’s performance. Take the estimated new revenue per up and multiply it by the traffic estimate to get a target for next year’s sales volume.
From a business management standpoint, this is a great way to determine where you think you can go in the coming year and also to get a handle on how much of an increase you want from your staff. In most cases, traffic will not increase much so growth will have to come from the sales team’s performance improvement. However, some stores may need to add staff in order to handle increase traffic. Either way, you need to know where your growth will come from and for what part of it to hold your staff accountable.
As much as the business manager needs to know this to plan for a store’s growth, it is not something that will motivate most staff. While they may be totally devoted to you and that could help motivate them, for the most part your goals are your goals. What you need to determine together is what their goals are.
Salesperson-Based Sales Goals are the most meaningful and therefore powerful ones you can have. So let’s look at a few things you can do to develop them with your staff members.
Goal setting should start with a one-on-one meeting between the sales manager and the employee. The meeting allows the salesperson to set a goal that the sales manager understands and to which the salesperson can be committed. Ensure the salesperson fully understands all of the implications of the goal. Help them relate the goal to their current level of performance in the three critical areas: traffic, close ratio and average sale. Finally, clearly spell out what has to be done by them and by you, in order to insure that the goal will be achieved.
You will basically use the same process we used for the store goal above, starting with where they are now. Show them how multiplying ups by their closing rate and average sales equals total sales. Then, how multiplying that by the commission percentage determines the majority of their income (less spiffs, bonuses, protection, etc.). The purpose is to connect the dots so they come away understanding how the numbers work together, because if they do, it will make buying into a performance goal easier for them.
Once they understand how income is tied to what they do, you can ask them where they want to go with it. How much do they need to grow their income in order to do the things they want to do in life? Many people have never really thought about what they want to earn, living check to check thinking that the new car or house they want is beyond their reach. If you can find out what they want and tie that to selling more, then they will be more willing to take ownership of the sales goal and move closer toward their dreams.
Ask each person what they want to earn during the next year and help them come up with an income target that you both feel is achievable. Divide that amount by their historic effective commission rate (total previous income/total previous sales) to come up with what they will need to sell in order to earn it to create their sales goal. Drive home the point that this is their goal for themselves, but you share responsibility and will work hard to help them achieve it. If your store is properly staffed, most often the sales teams sales goals will exceed management’s target.
Reality is that many salespeople are not aware that the way in which they perform impacts outcome. Many consider their results to be a matter of customers’ likes or dislikes, the products a store offers, poor or ineffective advertising and promotions, or a dozen other reasons, all of which lie outside of their control.
The goal-setting process is the right time for the manager to discuss this issue and set the stage to work with them each month toward their mutual goal of income growth.
October 16,
2015 by in Business Strategy, Industry
The face of furniture retailing continues to evolve. What will it look like in the future?
By Bob George
This is not a new concept. In fact, for decades the expansion of air travel, the exploration of foreign countries by National Geographic, and the impact of the Internet have made us truly a world community.
Now, social media and the vast content of the Internet will, at the very least, allow people to be there in spirit. Furthermore, today international flights are departing from relativity small airports thus making it possible for the general public to get there easily.
What does this have to do with the furniture industry? Obviously, in the manufacturing sector, the production has and continues to move offshore. (See the current Statistically Speaking article.) However, what about the retail sector? In the not too distant past furniture retailing was local with a family name above the door and a reputation in the community that facilitated the consumer purchase.
Yes, there are many regional chains personified by local ownership remain on the retail landscape. Nevertheless, like restaurants, that local great place to eat has been joined by national chains offering good food and acceptable service. While the consumer encounter is good, this location offers neither the local flair nor the exceptional experience.
Will furniture retailing evolve to several national chains offering consistent service of a commodity product designed to satisfy the blended taste of a national consumer?
All of this leads to this question. Will furniture retailing evolve to several national chains offering consistent service of a commodity product designed to satisfy the blended taste of a national consumer?
Does economy of scale dictate that a 500-plus store chain only deliver the experience demanded by the consumer? Obviously two stores have the advantage over one but, if continued to increase, when does the point of diminishing returns come into play? And what gets lost in the process?
The challenge for local retailers is to truly differentiate themselves from the faceless larger chains that are gradually moving into their markets. This is documented in our feature article. From a consumer’s perspective of what is important, being No. 1 across the board is a necessity. What is your consumer DNA?
Sometimes it is not just about price or an extensive selection. The larger retailer will focus on one or two factors, such as price, selection, and the like, expecting the consumer to accept less than great on the others. Local retailers cannot let the consumer settle. If you communicate your differences, they won’t.