Looking back over the past year, the upholstery category has held steady at 33.2% of total Furniture and Bedding sales YTD according to a FurnitureCore, Inc. industry model developed by Impact Consulting Services, parent company to Home Furnishings Business. Though there has been buzz around the motion segment of the category regarding voice control, concealed USB chargers, and many other innovations, stationary furniture has seen some excitement as well. Performance fabrics for durability, modern designs that allow for style and comfort, and most importantly, customization, have lent this segment of the category a boost.
According to Luis Ruesga, Zuo Modern CEO, “2019 trends show, more than ever, people desire a stylish home but prioritize comfort. The current trends of 50s and 60s Pop prioritize layers and textures in upholstery— all the features that make a home more fun and comfier. Sofas and armchairs are overstuffed and more cushioned which allows for maximum comfort. We are at the age of Max Upholstered furniture. Zuo strives to make our furniture equally as comfortable as it is aesthetically pleasing. Our new upholstery furniture allows for both style and comfort. We wanted big and bold shapes, but also wanted to emphasize the softness and curves of good old comfy couch. So, we took a very Deco shape and made it plush.”
In line with Zuo’s stance regarding upholstery are the findings of the FurnitureCore industry model. When consumers were polled on which look they selected for their most recent upholstery furniture purchase, 55.71% selected plump, overstuffed sofas with deep seating compared to 44.29% who selected a sleek, tight body cover following the line of furniture.
Many manufacturers have boosted their ability for customization in their upholstery lines, driving business in the right direction for retailers who are able to retain a small footprint at retail. Take Bradington-Young’s Luxe for Living Collection for example. Cheryl Sigmon, director of merchandising, expands on this idea saying, “The Luxe for Living program is a best seller because it allows our retail partners to display a variety of SKU configurations within the motion and stationary categories in a small footprint on the retail sales floor. It can also be customized in a variety of covers including more than 150 leather selections and over 135 performance fabric selections. With customization being so important to consumers today, this is a key selling feature.”
Klaussner has the same mindset, bent on keeping the category from stagnation. “Klaussner Furniture offers our customers so many options, from special order to selecting the exact type of frame design the end consumer is looking for” says Jill Sprehe, director of stationary upholstery at Klaussner. “The importance of allowing the consumers’ choices ensures the industry stays fresh and relevant. A bland sea of sameness will get us all nowhere.”
Surprisingly, given today’s fast paced environment in the age of the Internet, consumers are willing to wait for these customized pieces. According to the same FurnitureCore study, consumers polled on the length of time they would be willing to wait for a customized sofa, 25.71% said they were willing to wait 1-3 months for their delivered purchase. The majority, 44.29%, were willing to wait up to one month, which is the most common anticipated manufacture timeframe. The remainder is identified on the adjacent page.
When consumers consider purchasing their next upholstery furniture piece they are largely placing them in their living rooms (71.43%) or family rooms (30.71%) based on the study. The remaining 4.28% place their purchase in the bedroom or another room. With the majority of these purchases being placed in high traffic areas, it is no small wonder that performance fabrics are in demand. Whether these pieces are in homes with small children, pets, or enthusiastic red wine drinkers, accidents happen! Performance fabrics ease consumers’ minds and boost confidence in their purchase.
Read on to see the manufactures’ best sellers and the myriad reasons why their products are a success.
While this approach is certainly a primary ingredient in sales performance improvement, most of the effort is focused on the selling process and the critical time that our salespeople spend face-to-face with a customer. This is indeed where the selling rubber meets the road and as a result must be the first part of the process we address. If they don’t know how to connect with consumers, find out what they each want as a result of their store visit and then help them make it happen, nothing else matters! However, there may be an area of opportunity that is neglected in many stores.
What I am saying is that we spend so much effort working directly with each salesperson on selling skills, product knowledge and other elements of the selling process, that we could be missing a chance to help them better manage their own time and positively direct it at making themselves (and the store) more successful. Truth be told, most of our staff members spend less than half of their in-store time working with customers. During the busy weekend days, they may be on the floor working with Ups 70% to 90% of the time, but during the week they will have many days with only a few opportunities. Therefore, the obvious question is: What are they doing to maximize their sales and selling abilities during the time they are NOT with customers, or as we often call it, salesperson downtime?
This point was brought to my attention a few months back when my Premier Owner Performance Group requested that I have the members of my Sales Managers Group come up with a list of what their salespeople should be doing during their time in the store away from customers. I had often developed lists like this for clients in the past and worked with individual managers on ways to include them in their sales management efforts on the floor. However, it had fallen off my radar a bit but was certainly worth revisiting to get my team of twenty plus sales management professionals input. So, at the next meeting we had a very meaningful discussion on the subject and created a rough list of tasks, plus kicked around some ideas about how to use it in their stores.
I recently combined the list that the Motivated Wise Guys Group and I developed with what I used in the past to put together a fairly complete, salesperson focused directory of tasks and activities that would help them improve their store presentation, increase customer happiness, build client loyalty, generate additional personal business and develop better skills to please more potential clients. Here is the final list, including my notes about each item, with the goal of helping us maximize the return the staff can achieve from their downtime in our stores:
Floor Maintenance and Improvement –
In essence, the selling floor is a salesperson’s office or workspace and as a result it is critical to their success or failure. Therefore, they should participate in maintaining it and contribute ideas about how to make it better. n Catalog updates, swatch maintenance and fabric drops/updates – By helping to maintain these sales tools, not only is their effectiveness improved, but so too is the salesperson’s product knowledge.
- Fluff and straighten pillows – The visual impact of your store’s display is critical to having a customer choose to buy. A cluttered and messy store does not build their confidence in working with your staff.
- Check selling aids for assigned vendors – This goes hand-in-hand with the first point but focuses more on samples and other POS materials provided by vendors or developed by the store.
- Walk the floor for new merchandise or clearance items – This should be the first thing every salesperson does each day before they start their shift, particularly after days off. Things change and they must be aware of what is happening on their selling floor before they work with their first Up of the day.
- Feedback on display – Let display/buying staff members know about any holes in vignettes, listen to new ideas they have, and be aware of accessories and area rugs that have been sold off or damaged.
- Check/replace/update tags – Many stores have salespeople do the tagging which is a good way to keep them familiar with what is happening on the floor. But even if they don’t actually tag the floor, they should still be responsible for checking the tags and getting any problems rectified before they impact a customer.
Active Client Follow Up –
This is an absolutely critical activity for all salespeople. Following up and staying in contact with people who bought from you is the best way to turn customers into clients. It makes them remember you and come back the next time they need anything.
- Check order status and call clients as needed – The number one customer complaint about the furniture buying experience is “why did I have to call them to find out my delivery was delayed?” Communicate promptly and all is usually forgiven.
- Checking open orders or quotes and call clients to gain commitments – Don’t let these potential sales dry up and blow away. Follow up and keep your order list current and complete. n Thank you notes to all who bought – If you think these don’t matter you are very wrong, they do and sending handwritten ones, the “old fashioned way”, is still best. It will separate you from the competition faster than an email or text! n Post-delivery calls for all deliveries each day – Show them you are excited about the new products they just received and want to share their joy. If there is an issue with the purchase, then you want to know immediately to have the best chance of fixing it.
- Upcoming appointment prep – Contact in-home clients before the visit to set the stage, make sure you have all the information you need and to get them excited about it.
Build Their Business on the Phone or Internet –
This is the most productive thing a salesperson can do when not working directly with a customer. It turns downtime into uptime!
- Contact people they haven’t heard from in a while – Go through your previous customer list weekly and reach out to them. The results will surprise you.
- Soliciting referrals from clients, family and friends – Call, text and/or email happy clients for names of people they know that you can also make happy.
- Develop positive reviews from previous clients – Reviews are one of the most powerful motivations for online shoppers to put you on their store visit list. Cultivate and build them by asking for them.
- Self-promote on social media – fast becoming a powerful way to build your business and possible the only way to reach certain potential clients. Do not ignore this very meaningful personal marketing opportunity.
Education and Training –
The most successful people in any field are constantly searching for ways to improve their knowledge and skills. Today there are more ways than ever to do this and every store should provide their staff with the ability to better themselves during their downtime.
- Go on company website – Many customers today enter a store knowing its website better than the person who greets them. Don’t let that be you.
- Shop competitive websites – No one likes surprises and knowing what your competitors are doing is the best way to eliminate them in the selling process and to gain a distinct advantage.
- Shop all competitors in the marketplace every six months - see point about shopping websites above.
- Create teams with assignments – Working together with others on the staff builds cooperation and greater awareness of what the store offers. Here are some suggested assignments for the teams.
- Develop good, better, best product stories by target customer n Develop good, better and best product stories by vendor
- Study vendors and develop strategies for each
- Practice sketching and room planning – Interesting that the most successful people in every field of endeavor are always the ones that practice the most and the hardest. Conversely, the least successful ones usually practice the least. Think there may be a lesson there?
- Research design trends and current hot products online and in magazines - The more current your knowledge and style awareness is, the more successful you will be. Besides, this is the fun part of our business, why not enjoy it?
- Learn more about adjustable base remotes, lift chair remotes, etc. – Duh, if you don’t know about it you can’t sell it.
- Research wood species, leather types, fabric types, etc. – see above point.
- Get questions answered from sales reps – Have reps help you develop FAQ sheets for each line then present them to the rest of the team in weekly meetings.
- Online training, such as what is provided by the Furniture Training Company – Online training is time well spent improving your sales technique and product knowledge. Even the pros improve after doing online training.
- Role play different selling scenarios and product categories – I know you hate it, but if you can’t do it with someone you know, how can you expect to be effective with a stranger? Just a thought.
- Meet with sales manager - Oh yes, downtime is when you have one-on-one meetings with managers and others to give and get feedback.
How you use this list is up to you. Every store culture is different and management’s ability to actually get their staff to do what they want varies greatly. I have some clients that will achieve positive results merely from having a meeting about it and posting the list in their sales office. Their people are professionals and they will just “get it”. In my experience though, most retailers will need to put together some sort of organized task/activity checklist and assign items to each staff member daily or weekly based on individual needs. Then to actually get the desired results, the sales managers will need to train, coach and hold people accountable to do as asked, which of course is why we have them. In a perfect world salespeople would do it because it makes so much sense. However, as we all know, retail is far from a perfect world. Good luck!
This month’s Statistically Speaking highlights the effects the current 25% tariffs have had on many furniture imports, using data from the U.S. International Trade in Goods and Services Report and the Bureau of Labor Statistics. For the consumer, trade wars elevate concerns about increases in furniture prices. Before this year, the Consumer Price Index for furniture fell gradually since 2012 from an average of 120.3 to 111.1 last year (1982 base year = 100). At press time, available data through August showed that furniture prices appeared to make a significant move upward in July facing the threat of increased tariffs then eased back in August as the international dance between the U.S. and China continued. The CPI for furniture climbed to 115.2 in July, then fell to 113.9 in August (Table A).
Prior to the Great Recession, U.S. imports peaked in 2007 at $41 billion for the broad import category that includes furniture (Table B). Since bottoming out at $30.1 billion in 2009, imports have grown to $67.1 billion in 2018 – a jump of 123%. However, in the first half of 2019, furniture and bedding imports are tracking to be lower this year. For the first and second quarter of 2019, imports were $31 billion compared to $32.4 billion in the first half of 2018. As shown in Table C, tariffs have historically hovered around 1.1% of furniture imports until 2018 when they increased to 2.3%. Since the first half of 2018, tariffs as a percent of furniture category imports climbed to 3.5% by the end of 2018 and up further to 5.7% in the second quarter of 2019.
Imports declined in the first half of this year compared to the same period last year for the first time since 2008 – falling 4.3% (Table D). Import growth had tapered down somewhat post-recovery from the recession before the dramatic drop this year. The first major increase in import tariffs began in 2018 – increasing from $660 million in 2017 to $1.5 billion in 2018. The big jump in tariff growth occurred between the first half of last year ($311 million) and the second half of this year ($1.8 billion) – a jump of 465.9%.
In 2018 the U.S. imported $67.1 billion in furniture and bedding goods and parts worldwide. Over half of those imports are from China, $34.8 billion in 2018, with Mexico, Vietnam and Canada trailing in the distance (Figure 1). Worldwide imports are on track to decrease in 2019 with imports from China taking the biggest hit. As of this year’s second quarter, imports from China are $14.3 billion compared to last year’s second quarter total of $16.5 billion. While imports from China decline, many companies are turning to Vietnam and Canada as alternate resources. Imports from Vietnam have increased from $2.3 billion in the first half of 2018 to $3 billion in the first half of 2019, while Canadian imports increased from $2.4 billion to $2.6 billion over the same period. Mexico import growth has stayed relatively flat.
As shown in Figure 2, the U.S. has mainly imported from China, followed by Mexico. Total Chinese tariff dollars for the first half of the year total $1.7 billion with trade agreements protecting many other countries, including Mexico who paid only $6.8 million.
Tariffs as a percentage of Chinese imports were consistently below 2% before reaching 4.2% in 2018. Beginning at 1.6% in the first half of 2018, tariffs on China’s good increased to 6.4% by the end of last year and by the second quarter of this year has reached 12% (Table E).
As shown in Figure 3, China has fallen from over 50% of total world imports in 2017 and 2018 to 46% in the first half of this year. Alongside China’s downturn in percentage of total imports, Mexico, Vietnam, and Canada have all increased their share of total world imports.
Import Sales by Product Type
Among the different types in the broad furniture import category, import sales of Household Furniture is highest at $48.4 billion in 2018, followed by Lamps and Lighting at $12 billion and Office Furniture at $2.6 billion (Table F). Import sales of Household Furniture slipped from the first half of 2018 to the first half of 2019 – dropping 5% and Lamps and Lighting decreased by 8.7%. Office Furniture import sales increased by 10% during the same time period. Household Furniture has consistently represented around 72% of the broad import category since 2002 (Table G). Lamps and Lighting have fallen in recent years— ending the first half of this year at 15.9%, while Office Furniture has gained a slightly larger share of 4.4%.
Currently, the most impactful is the ecommerce retailers that increase advertising spend (12%) and focus on digital (Internet) while providing free delivery (14%), eliminating the physical presence (store) for the consumer with a goal of making a profi t. For most, such as Wayfair, profi t is still in the future. While not yet profi table, Wayfair and etailers in total have taken 15-18% marketshare. The result, as with all category killers, is the loss of smaller furniture retailers and a fi nancial impact on larger retailers. Not only is the retail sector impacted by the disruptors, but also the supplier sector and they must change to accommodate this new player in the industry sector. They need to provide a different level of support, such as bett er collateral, as well as absorb some of the additional cost associated with a national distribution strategy, such as returns and additional packaging.
The retail disruptors create supplier disruptions that create a model just to serve their needs— a model without showrooms at market, or sales representatives to serve the retailer— becoming suppliers with an outstanding supply chain.
What should an established furniture retailer do? Establish a disruptor model. Typically, this strategy is not possible. However, an established retailer can migrate his model to refl ect the changing industry and to off set the industry. However, this will require the diffi cult decision to consider changing long held beliefs. For example, with this issue we have addressed the Internet and how it has matured into an important strategy to communicate with the consumer. If managed properly, it can be very cost eff ective, but it must be measured for eff ectiveness. With this accomplished, other media can be released such as newspaper, television, and circulars. You cannot have both. Advertising cost is declining — speed the process, release the old, and embrace the new. The new disruptor didn’t begin with the old approach to advertising.
Another example is real estate — own versus lease. The old adage of “let the store feed your family and real estate fund your retirement”… Disruptors do not want to be in real estate and therefore can expand faster into the key consumer shopping areas. Related to this is the size of stores. The productivity of 100,000 square foot stores compared to 50,000 square foot stores provides a distinct advantage. Not only is gross margin per square foot of selling space higher, but occupancy cost is lower. Additionally, the emerging consumers prefer the smaller footprint of curated merchandising. More traditional retailers are “twisting” themselves into pretzels to justify purchasing the closing big box stores in malls to capture a great real estate deal. Commercial retailers love it!
Of course same day delivery is considered a must. But the disruptors are pushing consumers out 2-4 weeks. Consider the reductions in inventory.
The message is not to create a new “disruptor” model, but to tweak your old model to more accurately refl ect today’s consumer and improve profi t at the same time. Consider the data below and get more from our June 2019 cover story “Retail Metrics for Furniture Retailing”.
While digital advertising has continued to be a component of most major newspaper’s revenue streams, it is not a major influencer for the consumer for durable purchases. The consumer has achieved, to a certain extent, freedom from being “sold to” until they are ready to consider purchasing.
Consumers today are well versed in the ways of the Internet, casually entering the name of the retailer and going directly to the retailer’s website, bypassing Google search. For an established retailer, 20-25% of a retailer’s unique visitors are direct.
Another 25-30% are captured via organic search, which is facilitated by basic SEO, by satisfying an ever-changing algorithm of Google — a topic that could be a feature article by itself.
Another 20-25% can be achieved by paid search at a cost of $1.25-$1.50 per click through either Google, social media, or another digital source.
Obviously, there are other sources, such as direct email, referrals, display, and others. Compared to newspaper, a retailer’s website can tell you a measure of “Is your message getting through?” A weekly/monthly analysis of Google Analytics is a must. The simplified snapshot is shown above from Impact Consulting’s (parent to Home Furnishings Business) FurnitureCore.com application.
Obviously, comparing costs each month is facilitated by this type of analysis. But this still leaves the question: Is my web presence delivering? Comparing your unique visitors to your site compared to traffic to your store provides that measure. The graphic below illustrates.
The dream of every retailer is having a place where consumers could be directed to view their merchandise and be exposed to their unique selling proposition. Depending upon the merchandise price point, 62-74% of all consumers visit the Internet before purchasing. Unfortunately, the consumer is exposed to the traditional furniture retailer’s major competitor – the etailer – and purchases 12-18% of the time. Don’t be surprised by the difference between unique visitors and store visitors. A 60-80% difference is most typical. Monitoring this difference between store traffic and web traffic is essential. Equally as important is knowing what is your cost for the web “Up” compared to the in-store occurrence.
For retailers, the major decision is when to let go of the old and fully embrace the new. The cost of advertising midyear is 5.91% of revenue with the Internet being a little more than 10%, which is in line with print. The table above breaks down advertising expense from FurnitureCore’s Best Practices application.
The next to decline is television. The popularity of streaming with the Millennials, and to some extent Generation X, is decreasing the importance of television. With the increasing scope of OTT (over the top) and CTV (television connected to the internet) traditional television will decline as an advertising medium.
There will always be brick-and-mortar furniture retailers. That seems to be the consensus in the industry. But as ecommerce continues to grow, just how many will be around in five, 10 or 20 years is the subject of much conjecture. Opinions vary widely. Some say the percentage of online purchases will level out at about 20%, while other say it could reach 50% or higher.
Research by consultancy Magid shows there is a definite generation gap when it comes to online furniture shopping preferences. Magid’s research shows 39% of Millennials buy furniture online, compared to 20% of baby boomers. Magid also found that 73% of consumers are likely to research furniture products online, second only to the consumer electronics category. Matt Sargent, Magid’s senior vice president of retail says, even when consumers do their digital research, most still want to come into the store and touch and feel products. “It’s important to see the product and how it will fit,” Sargent says. “That’s good for traditional furniture players. Many customers find a disconnect between the physical and digital experience.” There is a huge difference in numbers and shopping tendancies between Millennials, Baby Boomers and GenXers, Sargent notes. The millennial population is much larger than the GenX population. “Millennials are growing into the life stage where they are acquiring furniture. As Boomers, and to some degree GenXers, slow their acquisitions, Millennials become more important. Their size and the way they acquire things digitally will accelerate some of these issues for the furniture category.”
Rob Davis, chief client officer for Diakon Logistics, is in a good position to observe the evolution of furniture ecommerce. His firm plays an integral role in the success of the delivery of furniture purchased online. He notes that to be competitive, furniture retailers must meet consumers where they are. He offers a recent personal shopping experience as an example. “This summer my family and I were vacationing in Lake Winnipesaukee, New Hampshire,” Davis says. “During our trip we were planning for my daughter’s birthday party at our house, which was scheduled to take place the day after our return. While we were away, we decided that we really wanted to purchase new barstools, a chandelier, and a table to have in time for the party. Fortunately, we had already done the shopping, so it was just a matter of placing the order in time for it to arrive before the party. We ended up buying some items from a national retailer and some from a local retailer and both were able to complete the transaction with little effort. The order was placed from our mobile device, merchandise was delivered just in time for the party, our home looked beautiful, the party was amazing, guests were comfortable, our daughter created wonderful memories, and my wife was over the moon.” Davis says it is all about making it easy for customers to finalize and receive a sale. Retailers can’t be everything to everyone, but they have to be everything to customers in their market.
“I don’t ever see brick and mortar going away in our industry,” he says. “Customers will always come in to touch, feel, and experience. But if you don’t make it easy for them to complete and receive an order then they will end up at their second choice or not purchasing anything at all. Implementing an omnichannel solution that gives your customers options doesn’t have to be difficult.”
RETAIL SPACE DEMAND IS BRISK
While growth of furniture ecommerce business is robust, so too is the demand for retail space. America’s heartland offers a prime example, as furniture retailers have been filling up space vacated by big box retailers. Terry Ohnmeis, a director in the Cincinnati office of commercial real estate services firm Cushman & Wakefield, says demand is strong in Ohio for furniture retail space. He says the two largest categories seeking vacant back space are furniture and fitness. “We are seeing a connection in how people shop, as retailers are integrating how they design their stores and the number of stores.” He says it makes sense for furniture retailers to congregate in real estate markets because it makes it easier for shoppers to hit several locations on one trip. According to Ohnmeis this holds true whether the retailers sell high-end or discount-oriented products. Shopping convenience is the driver for consumers, he says. “We’ve noticed in Cincinnati a consolidation in its submarkets where furniture retailers tend to gravitate around each other. Although there has been a huge increase in online sales with companies like Wayfair, there is still a demand to see furniture in person. It’s also difficult to return those items purchased online. It’s still important to have a retail presence for customers to go try out furniture, double check the color and return it if they need to.”
A VARIETY OF APPROACHES
Retailers are taking a variety of approaches to ecommerce. What follows is a look at the strategies of some internet-savvy companies. Fort Lauderdale, Fla.-headquartered City Furniture has sold furniture online for about 10 years, but kicked that effort into high gear about three or four years ago, according to Andrew Koenig, president. He says City’s objective is to grow top-line sales, whether it’s online or in one of the firm’s stores. City is on track for another year of double-digit sales growth, which makes Koenig happy. He attributes much of the growth to City’s significant investment in technology.
Koenig’s perspective is that City is a retailer.
It doesn’t identify as an online store and it doesn’t identify as a traditional brick-andmortar store. He says retailers must sell where the customer wants to buy and City is trying to grow its top line, both in its stores and online. “Our website is the first showroom our customers shop before they go into the store,” Koenig says. “We still believe a lot of the customers want to touch and feel what they buy. These are $1,700 to $1,800 average tickets, and customers want to touch those kinds of orders. That’s real important.” Koenig praises City’s website team. They are pushed to grow top line sales first and website sales second. He says this helps align the customer’s shopping experience with what they see and feel in the story matching up with what they see online. He attributes City’s recent online success to its “absolute commitment” to being best in class online. “We want to give a fantastic shopping experience, whether it’s online or in the store,” Koenig says. Wherever they want to shop, that’s great. That requires all-in commitment, whether it’s resources, budget, technology, people—we’ve really put our money where our mouth is and it continues to produce major results for both the online customer and the omnichannel customer. It’s been a big win for our business.”
Koenig says City’s challenge is to prioritize its opportunities and to focus on continually improving its one-on-on experience, whether it’s on the site, or email marketing to direct the customer back to the site, or in the store. “The sales associates in the store can pull up the customer’s profile and see what they shopped for online, so that essentially we can continue that cart or wish list that they built online, right there in the store,” he says. “For example, they may have looked at mattresses and selected one, but want to come in and try it out, lie on it to see if it’s right. It might be a two-minute transaction, once they have tried it, just click purchase and they are good to go. All our sales associates have iPads to make this easier.”
What direction will City go in the future? Koenig says the way City is approaching is that its website and its stores will not compete with each other, but will become one. “The experiences that tie the two together will be very important,” he says. “Technology will continue to play a big role to make that happen. It will become a more personalized customer journey. The website will adapt itself to your personal experience. All of us retailers need to continue to invest in technology to automate more of the process, eventually incorporating artificial intelligence. We are just trying to improve the overall experience, not getting too caught up in one channel versus another.”
Koenig says City will continue to expand its technology team in its ongoing effort to become a technologically advanced company. “We want our ecommerce team and our IT team to respond to our customers’ demands of what they want in their shopping experience, both online and in store, so that we can develop that as fast as humanly possible, rather than be at the mercy of a third-party vendor. We have to control that experience. We are going to both buy technology and develop technology. If we see something that the customer needs that hasn’t been developed yet, we will develop it. If we see a great vendor that has a fantastic tool, we will buy it and integrate it as soon as possible.”
Koenig says he thinks customers do not see any difference today between online and in-store shopping. Retailers still need to offer both. He says online furniture sales will continue to grow, and brick-and-mortar retailers have to step up their online skills. “Furniture can be a very exciting purchase in the customer’s life, whether buying their first child’s crib, or furnishing a new home, or updating an older home, he says. “Whether you go online or to a store depends on the timing and the situation. That’s why you have to have a both a great website and a great store, to capture a greater market share.” Koenig says City’s sales team will have the ability to see what customers do online in-store on their iPads later this year.
Tony Mitchell, ecommerce director for Englewood, Colo.- based American Furniture Warehouse (AFW) says the retailer’s online presence has been an extension of its stores. Growth has been incremental. “It is meant to be an extension of our brand and an education for our customers before they come in,” he says. “I call it pre-commerce. It’s not like we are going to close all our stores and just go online and become Wayfair or something like that. It’s helping educate our customers before they come in, and getting them closer to buying decisions and also giving them the option to buy online. They can finance online or come into the store and shop and then go home and buy online. We are offering them the online shopping experience because customers are spending more and more there.” Mitchell says AFW’s online presence has somewhat contributed to its brick-andmortar growth. Simply selling furniture has never been the company’s goal. It’s more about selling it and executing it so the customer is happy with their purchase after they take delivery.
What’s next in furniture’s ecommerce evolution? Mitchell says there will be more acceptance of online purchases. He says there is a growing acceptance for buying things sight unseen. He predicts there will be more pure-play online furniture retailers. “I do see it evolving as a growing segment, and also the customer with the right tools can get better visuals of what the product will look like and how it will fit in their home. It’s fashion first—we want to make sure they get an idea of how it is going to fit in their lifestyle and with their personal style, and the fashion of their home.”
Mitchell says there will be an evolution in the speed of delivery, survivable delivery, and execution. “Technology will play a role in augmented reality, which we are working on now, and virtual reality which will have to be usable on every device. Technology is helping customers make visual decisions about making a large purchase, either sight unseen or to inspire them to go into the store, feel it, touch it, and then hopefully buy more than they intended to while they are here.”
Mitchell says AFW’s technical team is growing with staff who have worked in the company’s stores. They know the products and how to explain to customers the execution and delivery process. “We explain the inherent flaws of furniture, which doesn’t really get touched on in most websites and that overcomes some of the buyer’s remorse where people didn’t know what they were getting. We don’t take cheap items and photograph them so that they look better than they are. Educating customers is at our core, so there is nothing misunderstood.” He continues, “It does happen that customers will shop in the store and then purchase online, but it is more common for folks to research or browse online and start their purchase journey on our site, and then come in and shop in the store. It speeds up the process if they have already seen the item online. Then we can show them other lateral products in their price range, but they know where to start stylistically and price point. The customers are more prequalified to make a decision in the store when they have done their online research. They know our stock level, so it takes a lot of the sales questions out of the way.”
South Florida-based El Dorado Furniture was one of the first furniture retailers to have a working website, says Jesus Capo, the company’s chief information officer. “We have always had a presence online,” he says. “We saw that this was something that was going to happen and so we started originally with basically an online brochure just to have a presence. We were one of the first furniture retailers to have a purchase site. It’s grown ever since we learned from that model, and we’ve grown ever since. We learned from our mistakes, where we had one person in charge of everything, and really if we wanted to have a real full blown ecommerce site and web presence, we realized eventually we would have to start pouring more money into that department.”
El Dorado created and developed its ecommerce department. It now has about eight employees, including a store manager and a product manager. Capo says El Dorado learned it had to treat the department just like a store. It’s not something separate. “The merchandise that is available there is available in the stores,” Capo says. “Any customer that buys online is automatically an El Dorado customer. If you walk into the store, we have your product history from what you have bought online, so it is all one system. It’s now a big chunk of our business. The store feeds the website, and the website feeds the store, which is very interesting, because you can observe spikes in sales of certain products on the website and then that weekend you will notice a spike of the product in the store. Also, customers will sometimes come in and shop the store, but not make a decision, then go home and purchase online. When you notice a spike online, you can then feature the item in the store because you know the interest is there. We try to learn from each side.” There is still the desire among many customers to come see the furniture and measure it to see if it will fit in their home. That’s difficult to ascertain online, Capo says, because shoppers cannot get a sense of the true size of a couch or table and chairs. “So, now we have a feature that allows people to click on the item and it will compare the size relative to other items,” Capo explains. “This type of feature helps on the sales side. A lot of people talk about the possibility that the future technology perhaps will include artificial intelligence, for example, transmitting sensory experiences such as being able to get a sense of the feel of the wood or the leather at home.”
Capo says that while it’s obvious that online shopping for furniture is here to stay, there is also a trend of the return to the value of the communal experience of coming into a store and being able to see and touch the items. “Years ago, many people thought furniture could never be sold online because of that in person factor,” he says. “But we see that there is going to continue to be a balance in the future where we have both the stores and the online experience. We want to make sure the customer has the same experience on both ends. Online, it should be easy, and there should be suggestions of items based on previous purchases. In the store, we should have the same thing, and we have made our store a very exciting place to go to, laid out in boulevards and avenues, not your usual furniture store. We create a very pleasant experience. We try to accomplish the same thing online.”
Accessibility on mobile devices such as smart phones and iPads is essential today, Capo says, as consumers want to be able to shop on those devices. He says this is the future of ecommerce and stores that do not offer that capability will be left by the wayside. Capo says brickand- mortar stores will never disappear, but he believes there will be a point where all will have to change their way of thinking and also offer their products online. “One of the things that held some companies back is the fear of competition. If you put your prices online, everyone is going to know what your prices are then there is the danger of being undercut. We crossed that hurdle years ago, but some may still think that way. Eventually it will likely be 50-50 and the two sides will feed off each other, and work together to make a happy family.”
As for future trends, Capo says there has been talk about using voice search to find products online, but he says furniture is not an impulse purchase and requires thought and research. Since it is an expensive item, he says it is difficult to see how that would work. However, he says there is potential for the use of artificial intelligence and augmented reality to be used on websites to suggest colors and patterns and how furniture might look in the home.
Brian Woods, CEO of San Diego-based Jerome’s, says online sales will eventually plateau, but that plateau could be much higher than some think. “Online sales will continue to grow to a point of plateauing,” he says. “But what is that plateau? It could go as high as 60-40 online or 70-30 retail. It will take years to get to that point.” Woods says, “Technology is evolving exponentially and more and more people are figuring out how to adapt those technologies. My adoption of those tools is totally dependent on whether customers tell me that technology is a driver in their decision-making. Something can be really cool and give customers a different perspective, but if it’s not leading to conversion…if you give customers too much information, they start second guessing themselves.”
Woods says there is an incredible amount of ecommerce technology available, providing options to present a retailer’s products and experience, but it comes down to selection for which ones move the needle in terms of sales. Woods says his estimate of where ecommerce might plateau is about 30%. He based that on his study of data points and watching year-over-year trends in different categories. “The question is does that take five years or 30 years,” he says.
A MANUFACTURER’S PERSPECTIVE
Johne Albanese, marketing director for Martinsville, Va.-based Hooker Furniture says ecommerce continues to grow, but the overall pace is slowing. The biggest potential for growth continues to be with omnichannel retailers serving local markets. “Ultimately, the consumer is driving the process,” Albanese says. “Consumers still like to go to stores as long as it is an experience they enjoy. About 85% of them are still doing it that way, and the idea of the store declining is faulty logic.” Albanese says Hooker assists its retail customers by providing various types of data to make the process of getting products uploaded on multiple platforms easier. “Trying to get data in a managed way is the difficult part. We work to make that easier for our brands for our brick-and-mortar retailers. We can help with them consulting on the process with suppliers and digital advertising.”
Albanese believes there is a lot of “noise” in the technology space with retailers facing decisions about which providers to use, which ones not to use, and deciding if and how distribution should be limited. “We are of the belief that a locally-focused retailer has a true advantage if they have a store that people like to visit. Over the past few years, technology has gotten much more robust, and there are several good platforms available out there for people to add ecommerce to the mix, particularly if they are on some type of ERP system that has a module for it already. It’s definitely an investment, like adding another location.” He thinks that furniture ecommerce will probably top out at a plateau of 20 to 25% of overall sales, with the majority of that coming from omnichannel retailers rather than the pure play variety. “Ecommerce is another way for retailers to execute sales, but it’s a way that allows consumers to choose how they want to transact business.” According to Albanese, Hooker has been aggressively supporting its retailers in their ecommerce efforts for about six years. The greatest potential for ecommerce is in supporting local markets, he says. “We were pretty early adopters of what we thought was coming,” he says. “We have a staff of people who are experts at helping retailers doing that. The technology has gotten better over time.”
MicroD’s chief product officer Richard Sexton says distribution issues are the primary impediments for ecommerce growth. He says marginal brickand- mortar retailers go out of business and pure play online will gain market share, but they will still have to solve the logistics issue. Sexton believes there will be incremental technological advances that will make online shopping a faster and easier experience. Perhaps farther down the road will be visualization advances as websites move to 3-D experiences with augmented reality. “That experiential technology will evolve, and other things will be different. There will be advances that facilitate convenience. It will be easier to purchase products with fewer clicks. The experience will be faster and device agnostic. There is still a problem moving between an Apple and an Android device, but we are seeing some convergence there. No one can absolutely say the difference maker will be artificial intelligence. It will help. A 3-D experience will also help, and standardization of browsers will help. What’s the next big thing? It could be a combination of those, but the changes will be subtle over time.”
Keystone Media International manages ad programs for home furnishings brands and retailers. Rick Harrison, sales director for home furnishings, says the firm’s banner ad technology offers a cost-effective method for firms to get their message out. He says the systems of running interactive banner ads across a network of designer sites offers an effective way of getting in front of highly desirable consumers. “What makes the ad technology special is that you can accomplish all of your brand’s goals at the point of contact and begin working a consumer through to the purchase funnel while they are still in the ad,” Harrison says. “It’s a much more efficient method of driving a consumer through to the purchase funnel.”Harrison says these types of banner ads allow the retailer or brand to tell their entire story and accomplish all of their ecommerce goals while the consumer is still in the ad. “We get more interaction with our ads, and it’s a much more efficient ad buy in terms of engagement levels. Consumers are being delivered through the product or purchase opportunity they already care about as opposed to clicking on the home page and starting the purchase funnel.”