From Home Furnishing Business
What Does Your Store Sell? Furniture, or Solutions That Meet Your Shoppers' Aspirations?
Merchandising is an art. It’s also a vital function of a retail store’s profitability.
How well does a store blend eye-catching floor appeal with a product mix that brings dollars to the bottom line?
Home furnishings retailers can blend aesthetics with dollars and cents to boost the bottom line.
The execution of merchandising covers a broad range of disciplines including what stores display from a style and price point perspective to how it is displayed. The starting point is determining how much of the selling space is allocated to a product category.
The accompanying graphic shows FurnitureCore participants’ floor allotments through this year’s first quarter, excluding bedding. The point is, analytics will never make a poor merchant great, but they can allow an average merchant to approach that threshold.
UPHOLSTERY RULES IN FURNITURE
At stores reporting to FurnitureCore, upholstery accounts for more than 51 percent of furniture sales; case goods almost 42 percent; and occasional, almost 9.5 percent. Accessories and outdoor furniture have 3.5 percent and 3.4 percent, respectively.
We asked some retailers about their hottest categories, and their responses lined up pretty well with those overall numbers.
“Upholstery is what is working right now and we are devoting more floor space to upholstery,” said Peggy Burns, queen bee at Circle Furniture in Acton, Mass.
“For us, it’s stationary upholstery, then bedroom and bedding on account of the extra activity with power bases,” said Dorian Sims, president of Stacy Furniture & Design in Grapevine, Texas.
Sims is expanding its reach in the category, as well.
“In upholstery, we’re introducing different lifestyles and concentrating on more fashion at our price points—a little more color, a little cleaner lines than what we’ve traditionally done in the Texas market,” Sims said.
Within the designated product areas, an allocation must be made to both price points and styles. If a retailer focuses on one price point, it is simpler.
As an example, a middle-price retailer might display fabric sofas at retail price points between $399 and $899, which addresses more than 50 percent industry sales. The decision to venture into upper price points—sofas ranging to $2,000, for example—might target another 25 percent-plus of industry sales.
The question here: Can the retailer allocate 25 percent to 35 percent of the department to provide a proper selection?
At the next level of detail is the percent of slots by price point. Instead of relying on a “feel,” take a look at industry sales—look at the accompanying graphic for percentage by units and dollars of middle price points.
This retailer’s sales, we should note, are skewed to the $599 price point at the expense of the higher price points. The following graphic compares the hypothetical retailer’s slot allocation to the industry average.
“Obviously, with more than 47 percent of the floor assortment allocated to $500 to 599, that is where the majority of the sales occur,” said Bob George, CEO of Impact Consulting the parent company of FurnitureCore. “Would allocating more slots to higher price points improve overall sales? We believe so.”
Sometimes smaller footprint stores perform better than the 200,000-square-foot behemoth. Why?
In a smaller, say 45,000-square-foot space, retailers have be more judicious in product selection. It requires them to really know their customers' tastes—a rifle versus shotgun approach, let’s say.
Circle Furniture’s stores fit that smaller category in terms of footprint.
“We tend to use a broader range of bold color than most stores and we are known for our floors using color,” Burns said. “Of course, not everyone can relate, as they would prefer a neutral pallet, as it is easier to envision it in their home.
“We have really terrific designers who will work with the customer and create a beautiful room in the customers vision.”
Stacy Furniture & Design has two 90,000-plus-square-foot stores, along with a 42,000-square-foot location. The latter has a distinct merchandising scheme.
“Our strategy there has been flooring our best-sellers for the most part, but we rotate items in and out faster” than in the larger locations, Sims said. “That floor space is too valuable to leave product out a long time for testing.”
Making a major vendor change in categories you floor is a challenge when it comes to merchandising. Beyond the training and advertising issues involved, re-structuring the showroom floor can make for headaches.
Circle Furniture is pretty lucky in that regard, Burns said.
“It is a major undertaking to add a new upholstery vendor because of all the fabric samples,” she said. “We are very fortunate right now that we have some great vendor partners, and we don’t need to add another vendor today. We would have to have a very specific need to add a major vendor today.”
At Stacy Furniture, Sims said they have a predicament when it comes to flooring new vendors.
“In the bigger stores, what works for me in bringing in a new vendor is going big,” Sims said. “If I haven’t dedicated six or eight new slots, it’s not a compelling enough opportunity for (customers) to learn more.
“And the larger the launch, it shows my commitment to the manufacturer. A lot of people cherry pick lines, and when I go big, I would hope that would help us when distribution issues come up. If I do it the right way, I should have a little more protection.”
She added that the cost of an unsuccessful buy seems much greater these days, especially when business is inconsistent.
“When I launch, I want to give it every opportunity to be successful from the beginning,” Sims said.
Smaller dealers should make the decision to stand for something as opposed to try being all things to every customer, said retail design specialist Connie Post of Connie Post International.
“By this I mean look at where the most return business is, and use more floor space to have a good selection to appear dominant in that category,” she said.
BOTTOM LINE: SALES PER SQUARE FOOT
What are retailers doing to improve sales per square foot when it comes to merchandising, especially when they don’t have as much square footage to work with than big boxes?
It’s not rocket science: Look at product turns.
“We have very small footprints so it is important that what is on our floors is selling and earning the rent,” said Circle’s Burns. “If something isn’t working out we will take it our fairly quickly and try something new. We are constantly trying to ferret out the new best seller. We pay close attention to what customers are asking for should there be a need we cannot meet.”
Sims at Stacy Furniture & Design said it’s a must for product to prove itself on the floor at the retailer’s smaller store. Otherwise, the product is tossed from the merchandising mix quickly.
That particular store’s space is too valuable to allow a lengthy merchandise test.
Don’t forget supplementary sales, and the role merchandising plays there
“It’s all about accessorization and making each vignette its own unique story,” Sims said. “Adding the accessories and the rugs for easier add-on sales that build tickets.”
In smaller stores, retailers have be more judicious in product selection.
It’s indeed harder for a smaller footprint store to be “everything to everybody,” said Tom Zollar, practice manager for Impact Consulting. This requires retailers to really know and target their consumer’s wants and needs.
“The most successful small retailers do this with a combination of research, experience and what I call ‘customer intuition,’” he said. “Basically they watch what is happening in their market, they track what is selling in the store, they ask their customers questions and they listen to their answers. Salespeople, local reps, in-store events aimed at product feedback will all help you focus your merchandising decisions and increase your success rate.
“It all starts with knowing your market through quality research and analysis, then tracking and studying your results. But a consistently accurate ‘gut feel’ for what they want can be huge.”
DO SOME SURGERY
Bob Phibbs, the “Retail Doctor”, suggests going through a retailer’s product selection and doing some serious cutting.
“Cut your SKUs by 20 percent and give your displays some space,” Phibbs said. “The days of doing furniture like a department store are history.
“The consumer already has too much choice. The idea that you line up four brown recliners, maybe in a slightly different shade is old.”
Take a chance.
“Car dealers will find the most outlandish color, and that’s the first car off the lot,” Phibbs said. “Why not a turquoise sofa with a yellow pillow? Make some bold choices and stand by it—don’t discount it.
Appealing to various shopping demographics can be tricky. Different generations tend to prefer different styles and different store layouts.
Drilling down and really examining the different segments can make a difference in a retailer’s success—or failure.
Who's your customer? Who are you trying to sell? Does it matter for most retailers, and do they know the difference?
Do shoppers want a big selection of like product, or lifestyle vignettes? How do you make the call, and are there particular categories that lend themselves to the different approaches?
Target specific products to specific consumer groups. While typically 50 percent of a retailer’s assortment sells to all consumers, the other half is preferred by certain segments. Tailoring the store’s assortment to the store’s demographics is the next frontier for the traditional retailer.
First, do you know your best-selling frames? Do you know this by age and income of the consumer?
There’s often been an assumption that younger shoppers like lifestyle presentations, and older shoppers like categories lined up like soldiers to better compare. You’d best think before making that assumption.
Bob Phibbs, the “Retail Doctor,” disagrees that older shoppers like a line of like product. More than that, he believes the idea that you can sell to all generations is “a little off.”
“Who still controls most disposable income?” he asked. “The millenials are getting used furniture. Highlight the boomer audience and encourage it to take something home today.”
Tom Zollar of Impact Consulting also doesn’t agree that older customers prefer commodity products lined up like soldiers.
“If so we might as well be Walmart,” he said. “However, in many cases, displaying product by category can simplify the shopping experience for your consumer and that does have some merit.
“If you feel the need to lay out your floor in this manner, then the best thing to do is to create small lifestyle pods or mini-galleries within each category. Whatever path you chose, it is extremely important for both your customer and your sales staff, that the flow of product throughout your store makes sense and is visually exciting—tough, but doable if you think it through and plan it out in a war room first.”
Stacy Furniture is still figuring out how to sell home furnishings to various age groups, and President Dorian Sims said she has bigger fish to fry, particularly with the addition of Nebraska Furniture Market to an already crowded Dallas, Texas-area market.
“I’m trying to separate myself from my competition versus speaking to a specific audience and their buying habits,” she said. “My typical customer does tend to be older. When we expand to appeal to younger customers, I think they’ll be attracted more to a lifestyle experience. That’s what they’re seeing with catalogs and online.
“Lifestyle is the best way for us to go. Even if millenials have done their research and know what they want, they’re so used to (drilling) down on their computer that a huge amount of product in rows is overwhelming.”
Acton, Mass-based Circle Furniture doesn’t discriminate among customers.
“Our customer is anyone with disposable income who wants and needs new furniture,” said Peggy Burns. “Generally they are older, as our price points tend to be higher and furniture has not yet become an important purchase for the younger crowd. We do our display in more of a lifestyle vignette and space is tight, so it is often more crammed than I would like. I don’t like a lot of accessories, I prefer to have the furniture be the focus.”
Retail design specialist Connie Post of Connie Post International said the new rebranding of home décor retailer Garden Ridge to At Home is an excellent example of appealing to multiple generations.
“Special vignettes show products that are cross merchandised, while some areas are still racked and stacked to show dominance in categories,” she said. “This is not typically how big boxes handle their displays.”
Within the newly formatted stores, the retailer shows completely decorated room displays.
“These displays show consumers how to bring it all together inviting and stimulating guests to buy more,” Post said.
In the furniture industry, we have a title that doesn’t appear on any organizational chart, but that title is understood in the daily course of business. That title is merchant. Everyone understands and respects that title. Often the success or failure of an organization is dependent upon the ability of this individual or team of individuals.
Just who is this person, and what do they do? Such a person exists at both retail and manufacturing and, simply put, this particular person sets the strategic direction of the company with regard to the product consumers expect from a company. Deviate from that expectation and declining sales creep in. Thus, merchandising not only drives the top line in terms of sales, but also impacts product discounts and markdowns. Current data shows our loss in markdowns and closeouts exceeds our industry profit by four times.
The question then becomes Where have all the merchants gone? When retailing was smaller, buyers actually envisioned who their customers were and bought goods to satisfy those tastes. It was a time when we saw merchant and customer more closely connected; much to the benefit of each side. Now, however, retailing is larger, and we’ve undergone an industrywide consolidation.
The consolidation has made it more difficult for merchants to stay in touch with consumers. In today’s business, management’s days are consumed with everything—except for knowing who their consumer is. Both merchant and customer may have felt some pain. A myriad of new technology and analytical tools are now available to allow us to connect with often-frustrated consumers. How do we use those new tools?
Why should we be concerned? Herein lies the strategic advantage non-traditional retailers are using to gain market share. It is not that the young product managers with fewer than five years of experience successfully selecting product are more talented. Rather it is that they have access to more analytical tools. In the future, the organization with the best data — or insight — wins.
While analytics will never replace interaction with consumers, it can provide valuable insight for the retailer and manufacturer. It can also be the first step to connecting or re-connecting with the shopper. The ability to segment your customer demographically and compare your information with the industry will provide insight into who you are selling, but more important those consumers you are not selling based on your merchandising price point. In addition, the ability to compare your sales to the industry in terms of product category and price points provides a benchmark against which to measure your product lineup.
Analytical tools will never make a person a merchant. However, if we give these tools to that person with talent, a great merchant is a possibility.
Summertime is here, and that can only mean one thing—movies! Well, really more than that, but in our house we make a lot of runs to the cinema for movie watching this time of the year.
Tons of kid-friendly movies are released, dark theaters offer a cool retreat from South Carolina’s often oppressive humidity and of course, that gargantuan bucket of popcorn to share.
A recent outing landed one parental unit in the outlandishly long snack line and the other in the theater with the boys. Time was ticking, and the 761 previews were winding down. The popcorn line was unyielding.
Dan rushes into the darkened theater, arms overflowing with sugar, salt and, what should have been buttery goodness. Once settled, he mentions that due to the recent redesign of the local Regal’s lobby and concession stand the popcorn butter is no longer self-serve. This, of course, means my sack of corn is missing an important component.
Apparently, with the redesign, the management saw fit to streamline popcorn service so that associates add the liquid goo behind the counter. I’m completely OK with the change; I prefer being waited on and pampered!
We’d just missed out on the information that the process had changed.
With sack in hand, I fly out of the theater to the concession stand to fetch the butter. All’s good, there’s yet another preview rolling; I’ve got time.
Or, that’s what I thought until I see the line snaking to and fro in the rope barriers. Just as I’m about to forego the butter stuff, a guy named Jeremy—my new best Regal friend—appears at the counter of straws, napkins and hot dog condiments.
I ask where I could find the butter pump; he explains the change. I glance at the line, look back and him and jokingly say “It’s not worth it.”
He, with all of his 16-year-old wisdom, serves up a bigger-than-life smile and responds, “Oh, yes ma’am it is. Hang on one second.”
My new favorite Regal ambassador, sets down his broom and bag, goes behind the counter, washes his hands, and reaches for my bag filled with flourescent yellow fluffiness. “We’ve got this,” he says.
Wow! That small, two-minute gesture made my day—and my popcorn. A customer service homerun in an unexpected venue that made me feel important. A gesture that moved me two hours later to seek out management and share Jeremy’s extraordinary customer service.
Simple acts of wowing customers—and disappointing them—can be found in all aspects of retail. Let’s hope your stores are filled with the extraordinary blockbusters that leave consumers in awe.
Standard Furniture Keeps Moving Forward in Its Second Century of Business.
Jacob Shevin took over to represent the fourth generation of his family to serve as president of the company, which now counts 13 stores in Alabama and Tennessee, and employs 100 people. While he’s continued a tradition of customer service and budget-friendly prices passed from down from his great-grandfather, grandfather and father, Jacob is making his own mark.
Recent activities include a new customer feedback process based on Standard’s Web site, and surveys the retailer began e-mailing to customers and conducting in the store in early May; and a formal sales training process that Shevin says should constantly raise performance standards as everyone improves their skills.
FINGER ON THE PULSE
“Everyone says they try to give good customer service, but we are constantly seeking feedback now, and most of it’s very good,” Shevin said. “We have a place on our Web site now for that; and 30 days ago we started sending out surveys asking customers to give us very honest feedback— we do that in the store, too.”
The store’s overall positive rate from customers is 99 percent, and exceptions get instant attention.
“I track that daily—I have it up on my computer all day, and if we receive negative feedback, I’ll check into it immediately. We like for the manager to handle it, because they’re the one who’s in the community.”
The Web site feedback process has proved particularly useful.
“Customers don’t always want to tell you something (in person), they’d rather say it on line,” Shevin said. One store manager reconciled a customer’s problem after she complained on Standard’s feedback site, and Shevin says she’s a customer for life now.
“She was amazed that a store responded and did something about it,” he said. “She thought she was just telling the world about a problem, but we read it, too.”
RAISING THE BAR FOR SALES
After a strong year in 2007, Standard, like many furniture retailers, ran into tough times: “We hit the same wall the rest of the world did,” Shevin said. After an uptick that began in early 2010, the retailer saw steep increases in sales the next two years. The last couple of years, though, have been fairly flat, with only small sales gains.
Shevin expects that to continue, and is taking steps to offset the trend.
“I’m not seeing any reason for sales having huge increases in our business,” he said, adding that the economic recovery hasn’t reached many in Standard’s budget-conscious demographic.
“When people talk about the recovery, a lot just look at how the stock market’s doing. “People that were rich before (the recession) are rich again, but the increase in the stock market hasn’t really helped the working class shopper.”
A major focus at Standard, therefore, is expense control, but the retailer also instituted programs to earn shoppers’ business and make the most of every sales opportunity that does arise.
“We’ve instituted a formal sales training process, which has been well accepted by the staff,” Shevin said. “We’re doing daily, weekly and monthly performance measurement. We can coach the underperformers so they’re improving, and then you increase the overall averages.
“We track their performance daily—tracking average sale and closing rate its one of the most important things we can do to help the top line.”
PUTTING THE WEB TO WORK
Standard is tweaking its Web site in a number of ways—the feedback function is just one example. Standard is working on offering an online credit application to the site. That plays to a vital part of the store’s business model. “In –house financing is very important to us and something that attracts a lot of customers.”
Shevin said. “We write our own paper, and that gives us a good source of repeat business. People with an open account here are more likely to come back when they need something else.”
Another finance related tool is automatic payments on customer accounts, which Standard currently has in live testing with customers. “Pelham is our test market for that,” Shevin said.
Standard also spends a lot of time, money and effort to maintain an in-stock position for the merchandise on its floors, and fast delivery is another differentiator from much of its competition.
Standard developed its store operating system in conjunction with a local vendor and wants to integrate some of its information power into the Web site.
“We invested a lot of money in our inventory system,” Shevin noted. “We had to build the system ourselves because of the uniqueness of our installment credit system.”
Currently, Standard is working on putting that inventory information to work on the Web site, allowing customers to immediately check on whether a product is in stock. “Our Web site is a tool not only for customers browsing at home, but also a tool we’re using with shoppers in the stores for quick access to things such as materials in the furniture and product dimensions,” Shevin said. “It’s also an opportunity for special orders on something that might not be at a particular store right then.”
Standard has 13 stores, and no two are exactly alike in terms of setting and merchandising.
Locations range from its downtown Birmingham store, housed in a multi-level historic street front, to strip shopping center spaces. “We do not have a cookie-cutter format for the stores,” Shevin said. “My goal is for customers to see something new, so we change the floors up more often than others might. Even if it’s product you’ve been carrying, people see it differently.” Bedding gets a lot of attention—Standard’s target is to make bedding 20 percent of sales, which it hit last year—and Shevin credits the category with helping the retailer make it through the recession.
“That didn’t seem to get affected as much by the downturn,” he said. “We fight hard for that business. Any print advertising we do includes bedding.”
Bedding is prominent on Standard’s floors. A category display is the first thing that customers see, for example, when they walk into the Center Point, Ala., showroom and clearance center.
The downtown store features a dedicated bedding space within the showroom, the “Mattress Loft.” Right now, Standard has the concept in four other stores. The feel in the downtown store’s bedding department is cool and calm, and in addition to mattresses, displays related accessories for a complete store-within-a-store experience.
Standard’s biggest advertising spend is for television.
“It’s about item and price for the most part, or big promotions like a clearance sale,” Shevin said. “That’s what draws our customers in.”
Standard has a social media presence, but Shevin says that doesn’t play a major role at this point.
“We use (Facebook) to do things like post new items, but we haven’t figured out how to place a value on it yet,” he noted.
Advertising’s one thing, but a key part of Standard’s mind share with consumers is involvement in the communities it serves. Birmingham is a large metropolitan area, but the retailer also serves small, close-knit towns.
Shevin has a lot of outside activities (see accompanying story “Free Time”) and he likes store managers to do the same.
“Each store has its own community—I’m active in the Birmingham community, and I encourage store managers to do the same,” he said. “Some have been city council members, and it runs all the way down to buying the logos on T-ball shirts. We contribute to organizations like United Way, Red Cross and Salvation Army that help in those communities.
“We don’t want to be perceived as a furniture chain in a small town, so the managers choose where they’ll help in that town. Someone in Moulton, Ala., doesn’t relate to what we’re doing in Birmingham.”
In his spare time Standard Furniture President Jacob Shevin enjoys getting outdoors.
“I love to go to Lake Martin,” he said. “Me and some buddies have a cabin down there, and it’s just a great place to get away and relax. “I also like to get out and play golf when I get the time.”
Shevin also is involved in the community and industry. That includes serving on the Alabama Retail Association board of directors; the Next Generation Now networking group for up-and-coming home furnishings executives; and membership in the 2013 Leadership UAB Class, a group of community advisors made up of young professionals and volunteers supporting the University of Alabama-Birmingham.
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.