May 19,
2015 by in Business Strategy, Industry 
Upholstery supplier American Leather turns 25 this year and the company remains solidly committed to its founding roots of domestic, just-in-time manufacturing that turns an order in 20 days. That said, Bruce Birnbach, president and CEO for the last nine years, is always looking to push toward innovation.
Key elements to the company’s future are remaining true to those founding principles along with operating with integrity in all aspects of the business, including employee relations, customer relations and supplier relations.
Respect begins at home, and American Leather’s Dallas home includes 496 diverse employees who are included in company celebrations, fun days and as Birnbach says, “are treated the way people should be treated.”
Home Furnishings Business: Founded in 1990, American Leather turns 25 this year. What has been the key to the company’s success over the years?
Bruce Birnbach: We continue to grow double digits every year by listening to our customers and operating with integrity in all that we do. That has truly been the keys to our success. We’re also always looking toward innovation and trying to be more innovative in every aspect of the business.
When I say operating with integrity that means respecting our employees and the people we work with. At the very core, we have to have a great foundation or the other parts won’t hold together. As an example, there’s a flag in our cafeteria for every nationality represented in our employee team. It’s about showing respect and being respectful to everyone.
Then, it’s about how you deal with your customers—keeping your word and listening to them. It’s about doing what you say you’re going to do.
Integrity is a big deal to us.
HFB: The company was founded on a speedy, just-in-time manufacturing model. How has that model been improved upon?
Birnbach: The model that we grew on was just in time. Today, it’s not so much about improving our speed as it is about executing the promise. We’re always looking to improve on all that we do, but it’s really important that our customers know we’re reliable. That we’ll do what we say we’re going to do and will meet our promises.
The company was built on speed, and it’s always that. Continuing to execute on our promise of a 20-day turnaround is at the forefront.
HFB: Domestic manufacturing is at the core of what makes American Leather who it is. In an industry that sees a lot of off-shore production, how have you guys continued to maintain that platform?
Birnbach: One of the most important things to us is being made in America and having a diverse workforce from all over the world. We have a true international flavor here in our diversity, and it makes us have fun. It’s invigorating.
Within our domestic platform we are unmatched in our speed and the breadth of customization that we offer. Everything can be customized from the leather, the fabrics, even COM covers. Each of our frames have an abundance of configurations to meet a variety of needs. There really is no limit.
HFB: Looking ahead, what innovations can we expect to see from the American Leather in the future?
Birnbach: You will see us continue to innovate and look to create more proprietary products in the future; things that the furniture industry hasn’t seen before. We really want to bring innovation into an industry that I think is starved for it. Leveraging our core competencies of of engineering and product design and brining them together. Looking at our future, we have a lot of great things to look forward to.
HFB: What would you say is the biggest challenge facing American Leather?
Birnbach: Growth. The challenge is how to manage our growth and how to hire the people we need to help us grow. Our business is good. We’re growing a much more rapid pace than the industry.
Finding the right people to fit in with our culture is key. Then, training, training and more training will remain at the forefront to help us move into the coming years.
May 19,
2015 by in Business Strategy, Industry
In 2002, furniture and home furnishings stores were by far the primary channels for furniture distribution—accounting for almost three-fourths of furniture purchases.
In the last 12 years, distribution channels have shifted and while furniture and home furnishings stores continue to lead the pack in furniture sales, electronic shopping—e-commerce—has gained momentum and many consumers are turning toward the Internet to meet their furniture needs.
General merchandise stores and warehouse clubs and supercenters like Sam’s and Costco have also increased their share of furniture distribution while other smaller furniture distributers, department stores, discount department stores, and building material stores, have decreased in furniture sales since 2002.
Note: Figures reflect data from the U.S. Census of Retail Trade issued every five years—2002, 2007 and 2012. Figures for 2014 have been estimated by Impact Consulting Services’ furniture industry model. These Census estimates capture only sales from retail establishments, exclusive of sales taxes, and do not include any additional sales hand-to-hand or furniture resales. Internet sales from online retailers are also included. These channels are summarized based on the NAICS code issued by the Department of Commerce. For example, furniture stores include all retailers “primarily engaged in retailing new furniture, such as household furniture and outdoor furniture …” Examples include traditional furniture stores, mattress stores, specialty stores like Pottery Barn, and other establishments where furniture is the primary source of sales. Business models range from manufacturing and retail verticals, national and regional chains, and mom-and-pop dealers. Sales of furniture within home furnishings stores are included in the broad distribution channel and represent 6 percent of the category.
As shown in Table A, furniture and home furnishings stores are at the heart of furniture distribution, accounting for more than two-thirds of the industry. This channel includes traditional furniture stores, specialty furniture retailers, mattress stores, and other retail outlets where furniture is the primary source of sales. Of course, many different business models drive this category, including manufacturing and retail verticals—national and regional—national chains and mom-and-pop dealers.
This broad channel reflects the ups and downs of the economy from 2002 to 2014 with performance varying among the store types. From 2002 to 2007, furniture and home furnishings stores rose 13.6 percent in sales before falling 10.6 percent—followed by an overall increase of 1.5 percent in 2014.
The most noteworthy changes occur in electronic shopping as the online distribution of furniture has made great strides despite the most recent recession. Over the course of 12 years, electronic shopping has jumped 627.2 percent—increasing 201.3 percent the first five years during the peak furniture industry sales years and 141.3 percent the latter seven years. Internet retail furniture sales grew from $1.8 billion in 2002 to $13.0 billion in 2014.
Both general merchandise stores and warehouse club and supercenters grew in importance from 2002 to 2014. General merchandise stores increased by 27.3 percent from 2002 to 2007 and 47.5 percent from 2007 to 2014—with a total growth of 87.8 percent. While warehouse club and supercenters had just a slight increase of 2.9 percent from 2007 to 2014, they posted an overall jump of 24.3 percent over 12 years.
All other distribution channels showed substantial declines through the 12-year span. With the exception of discount department stores showing growth of 8.8 percent from 2007 to 2014 after a drop in the first five years, the remaining channels decreased both time increments.
Electronic Shopping Grows Share
Online shopping has increased its share of furniture sales as furniture and home furnishings stores have decreased its share of the furniture sales pie.
Table B explores the changes of the percent of total distribution by each channel during the selected years of 2002, 2007 and 2014. A more detailed look at each channel follows.
Furniture and Home Furnishings Stores
As shown in Table C, furniture and home furnishings stores are still the primary source of furniture sales. This traditional distribution channel has decreased share of furniture and bedding sales by 8.1 percent from 2002 to 2014—down to 64.5 percent in 2014 from 72.6 percent in 2002.
Electronic Shopping
While furniture and home furnishing stores have decreased their hold on the furniture industry, electronic shopping—the Internet—(Table D) has steadily gained traction as a major distribution channel. Jumping from 2.8 percent in 2002 to 7.3 percent in 2007, online shopping finished out 2014 with 17.8 percent of the total distribution.
Warehouse Clubs and Supercenters
Table E shows how warehouse clubs and supercenters increased the share of total distribution slightly from 2002 to 2014—up from 3.6 percent to 3.8 percent in 2007 with an additional 0.2 percent gain in 2014.
General Merchandise Stores
After slightly increasing by 0.3 percent from 2002 to 2007, general merchandise stores (Table F) grew by 1.1 percent in 2014—accounting for 3.4 percent of total distribution.
Discount Department Stores
Discount Department Stores
Dropping the percent of total by 1.5 percent from 2002 to 2007, discount department stores (Table G) rebounded slightly with an increase of 0.2 percent in 2014—decreasing 3.8 percent to 2.5 percent over the 12-year span.
Home Centers and Building Materials
As shown in Table H, stores such as The Home Depot and Lowe’s as a group decreased share of total furniture and bedding sales from 3.1 percent in 2002 to 2.3 percent in 2007 with a minimal rise to 2.4 percent in 2014.
Department Stores
Decreasing share by 0.7 percent from 2002 to 2007 and dropping another 0.6 percent from 2007 to 2014, department stores, depicted in Table I, was 1.8 percent of distribution in 2014.
All other Furniture Retailers
In 2014, the remaining retailers (Table J) dropped to 3.7 percent of distribution, after a decline from 8.9 percent in 2002 to 7.9 percent in 2007.
Editor’s Note: Future articles will address the performance of the sub-channels within the furniture and home furnishings category as well as examine the channels associated with online purchases. Coming soon will also be a look at the major products’ shares of each distribution channel.
May 19,
2015 by in Business Strategy, Industry
By Sheila Long O’Mara
By most accounts, the economy is churning. Consumer confidence is rebounding. Retail sales are steadily climbing, unemployment is down, and so far this spring, housing is looking brighter.
The number of people applying for U.S. unemployment benefits remains at a 15-year low with the most recent figures coming in at the lowest level since May 2000.
Furniture sales are on the upswing.
What could go wrong?
All of the typical indicators are bending in our favor except for that pesky unemployment thing. Overall, a national unemployment rate hovering around 5.5 percent is an impressive figure and one to be celebrated. Many of the brightest economists consider that level as full employment.
In the furniture business, however, that low unemployment rate is causing a bit of a pickle. The competition for good quality employees is fierce. The industry has found itself smack dab in the midst of a labor crunch.
Furniture industry employers are working hard to encourage and show viable candidates that the industry offers great career options and a bright future all while looking to overcome the perception that it’s a dead-end business.
On the manufacturing side of the business, domestic factories are struggling to find skilled labor to build upholstery frames in plants that are now humming with orders after a few slow years beat down by the recession.
“We’re having a hard time hiring people in the biggest sort of way,” said John Bray, CEO of Vanguard Furniture.
That said, the manufacturing sector isn’t alone. Some retailers are struggling to fill slots within their operations, too, and some find themselves fighting the perception among workers that retail is a fill-in-the-gap job until a better job comes along.
The tight labor market has jumpstarted the simple supply-and-demand principle forcing employers to bump up their hourly rates. The push on compensation is exacerbated by the ongoing minimum wage debate going on nationally and within each state.
The minimum wage conversation has prompted many powerhouse retailers to increase their wages. Earlier this year, Walmart, Target, T.J. Maxx all announced they would bump their baseline wages to $9 an hour. The current national minimum wage is $7.25 an hour. Many states have minimum wage laws that vary from the national provision. In cases where an employee is subject to both the federal and state laws, the employee is entitled to the higher of the two minimum wages.
When the super retailers increase their pay scale, it impacts compensation in other parts of the labor market, including the furniture business.
Dallas-based American Leather employs 496 people in its factory and is feeling the pinch to attract the best employees possible to fit into its culture and workflow. Bruce Birnbach, president and CEO, said he competes for workers with every other company in his market looking to hire someone.
“We just changed our wage structure about eight months ago to be able to attract the right employees,” he said. “We had to do it. People are adjusting salaries to draw in the right caliber person. We’re talking 10 to 20 to 30 percent increase in salaries to compete.”
It gets complicated, but the demand for workers doesn’t change and the need to entice them into the furniture landscape is very real.
Attacking the Problem
In Western North Carolina, five furniture manufacturers went to their local community college, Catawba Valley Community College for help (See accompanying story) and found it.
“We knew we were going to have a problem in 2008, 2009 when the economy dipped and our sales dipped,” said Bray, whose Vanguard was one of the five suppliers working with CVCC. “We all had to reorganize our factories and most had to adjust employment levels. When the business came back, we knew were going to be in trouble.”
Now, manufacturers in the region are taking a multi-prong approach to find, train and put the skilled employees to work.
To hear executives tell the tale, the industry found itself in the midst of the perfect storm. The recession took many employees out of the business, others aged out and retired, and the kicker, too few young people have been willing to come into the manufacturing sector of the industry in the last 25 years.
Manufacturing roots run deep in communities that were birthed around factories. Those furniture factories that employed multiple generations back in the heyday were hit hard when many suppliers opted to move production off shore. That strategy resulted in plant closures, incredible job losses and sent an industry into the anti-dumping battle that has left many still bitter today.
In addition to that bitterness, it left the manufacturing community reeling with a major public relations problem among potential employees. Think about it. If a high school graduate witnessed his or her parents, and in some cases, grandparents, lose furniture factory jobs to off shoring, what would entice them to jump into that line of work?
Couple their hesitancy with parents yelling “Stay out of the furniture industry. It’s dying.” Young adults are not inclined to choose furniture as a vocation.
Most furniture manufacturing companies in the Hickory area have returned to or have exceeded pre-recession production levels and have surpassed their personnel needs.
The group in North Carolina is coupling the furniture program at CVCC with another plan to capture young people, show them the way to successful careers in the furniture and to combat the public relations image plaguing the industry.
Working with area high schools and the local chamber of commerce, furniture suppliers will be setting up apprenticeships and internships with older students in the next six months or so.
“I think we will have solved our problem when we can hire high students as interns and show them that by the time they graduate from high school, they can be making more than $30,000 a year with a vision of moving to between $40,000 and $50,000,” Bray said.
Through the program, the candidates will be thoroughly trained, which isn’t cheap. Training costs per person sits around $20,000 a year.
“But, the alternative is to do nothing, and then we’ll see our pool of potential employees go down,” Bray said. “We do see a light at the end of the tunnel.”
In the meantime to fill the gap and keep up with demand, employers find themselves pushing employees to do more and put in overtime, which can be frustrating for overtaxed workers.
In Galax, Va., Vaughan-Bassett Furniture remains one of the largest local employers. Doug Bassett, president, said the company is also working with local community colleges to uncover young people who would be attracted to building bedroom.
Bassett said educating people that the furniture work they remember from their parents or other family members has change significantly.
“It’s not all sawdust and grit,” he said. “We’re looking to marry up with people who have the new technical skills we need. The job today requires working with computer programs. It’s evolved into a less labored job and more skilled work.”
Machinery within furniture factories are reinvented and change frequently these days, Bassett said, requiring employees be tech savvy with strong math skills to keep up with the changes.
Other groups are also pooling their resources to find solutions to the labor crunch. The Solution Partners of the American Home Furnishings Alliance was just awarded a grant from the Furniture Foundation to help develop solutions.
The 10-person task force was set to hold its first meeting at press time, but Mary O’Keeffe, executive director for Solution Partners, said the industry is indeed in the midst of a labor crisis and needs to develop some long-term strategies.
“There’s a call to action that manufacturers have all these jobs to fill, and there are no workers to fill them with,” she said. “Everyone needs skilled workers and they can’t find them.”
Constant Recruitment
City Furniture in Tamarac, Fla., is always in recruitment mode, and the lower unemployment rate has forced the retailer to move into a more passive recruitment mode as opposed to an active strategy. The strategy has the company actively pursuing potential candidates who are currently employed and aren’t active in a job search. The active recruiting deals with people who are searching.
Janet Wincko, vice president of human resources for the retailer, said active mode doesn’t always result in high quality or high quantity.
Recently, the retailer has been working with recruiters who conduct searches through a variety of social media sites including LinkedIn. The entire 1,300 City Furniture is involved in recruiting, and the company makes it worth their effort through its referral program that offers prizes for new hires that stay on the job a certain length of time.
“We’re always looking for ways to enhance our efforts there,” Wincko said, adding that about 30 percent of new hires come in through an associate’s referral.
At Waukesha, Wis.-based Steinhafels Furniture, current employees are also encouraged to be in recruitment mode. Lynda Malmberg, senior human resources manager for the 20-location company, said employee recruitment is a constant with the company staying in recruitment mode.
“Our employee referrals are key,” she said. “We’ve been the top work place in Wisconsin for four years running, and we’re hoping to make it a fifth. That definitely helps in enticing people to come work with us.”
Malmberg said getting people to change their mindset about furniture retailing is imperative in finding the best recruits.
“No one thinks of retail as a career,” she said. “We have professional sales associates on our floors that make very good money.
Steinhafels has a strong commission rate, and the company works to accommodate employees’ schedules, Malmberg said.
“You can make a lot of money here,” she said, adding that nights and weekends can be a drawback for some people. “We give our sales associates Fun Time to make their lives more flexible. If they want a Saturday or a Sunday off to spend with family, we make it possible.
“We give them the opportunity to make really good money all while meeting their family obligations,” Malmberg said.
The lower unemployment rate in Florida pushed City Furniture to make some adjustments to its wages. “Compensation is something that we’re always careful about,” Wincko said. “On the operations side of our business we had to make some changes due to the low unemployment and to increase retention. We constantly have to stay a tune to what’s going on.”
Front and Center
A great recruiting tool for City Furniture is its career site where job seekers can truly explore the company, its culture and get a feel for what it might be like to work for the furniture retailer.
“It’s an amazing tool,” Wincko said. “It presents us well through words, images and video. There’s a whole section on recruiting and everyone the website is a City Furniture employee.”
Wincko said the site gets a lot of buzz from the community, potential hires and employees.
An all-important aspect of finding the right person for an open position is the interview process. That process can be a challenge that requires research and a knowledge of what can be asked and what should never be asked of job candidates.
Here’s a look at questions and topics to avoid, and pointers on issues to bring up from a number of human resources personnel.
1. Do not ask about sensitive or illegal topics
Religion, politics, sexual orientation, marital status, nationality and race are all out of bounds during interviews. It is illegal to ask those questions. Doing so violates the Civil Rights Act of 1964.
2. Avoid bad mouthing former employees
If you’re looking to replace an employee who was a bad hire and was fired, do not share the information with the job candidate sitting in front of you. The topic may come up during the interview if a candidate asks, but be diplomatic in your response. Trash talking is never appropriate and could frighten off a potential hire.
3. Don’t waste time on small talk
Create an interview script with an outline of prepared questions and stick to it to ensure you get the critical information needed about the possible hire.
4. Most wasted question: What are your weaknesses?
A better option is to ask a candidate to provide an example of a work situation they wished they would have handled differently. That opens the door into critical thinking skills.
5. Determine whether the interviewee will mesh with your company’s culture
While competency is key, you still need employees that work well with others on the team. If they’ll detract from the corporate culture, it’s likely best to give them a pass. A good strategy is to have as many people at your company as possible interact with the candidate. Gather their feedback.
6. Investigate whether the candidate is competent
This sounds like a no-brainer, but ensuring he or she is capable of the task at hand is key to making a smart hire.
7. Talk about your company
It’s important to be able to sell your business to the candidate. While you’re hoping to be sold on their qualifications, they need to be sold on your organization. Be sure to point out aspects of your company that make employees want to work there.
8. Drill down and determine if the applicant wants the job
In today’s employment environment, candidates have a variety of options available. It’s important to gauge their interest toward the end of the interview. Ask if they’re interviewing for other positions. Ask how interested they are in a position with you. If they have reservations, you can address them before they leave.
In today’s tight labor market, it’s imperative that companies hold onto the talent they currently have on their teams. Here’s a look at a few strategies to help maintain morale among employees and perhaps just keep them from job searching elsewhere.
1. Show Appreciation
Let employees know when they’ve done a good job.
2. Be Clear
Written polices and job descriptions help keep everyone on the same page
3. Be Consistent
The only thing worse than no rules is not holding everyone accountable to them.
4. Celebrate Wins
When the company or individual employees do well, celebrate the victories as a team.
5. Share Your Vision
Make sure employees understand your company’s business model and goals. Keep everyone on the same page.
6. Squash Issues
Don’t let employees’ problems, interpersonal or performance based, fester until there’s a blow up.
Prompted by a need to qualified employees, several companies from the furniture manufacturing community in North Carolina have come together to help design a furniture program at the local community college.
Catawba Valley Community College in Hickory, N.C., kicked off its Furniture Fundamentals program in January 2014 to offer interested people an overview of the furniture manufacturing process. The program is also designed to provide career specifics on a number of different furniture specialties.
The program meets the need for people in the area looking for careers, while also filling the desperate need for furniture manufacturers on the hunt for employees.
Offered through the college’s Workforce Development Innovation Center, the coursework includes plant tours, career previews and assessments to help students determine career options in the industry.
Participants earn continuing education hours and receive a certificate upon completion of the program.
The program was customized to meet the needs of the local furniture industry that like other employers are struggling to attract quality employees. Companies that partnered in developing the program include Century Furniture, Lee Inds., Lexington Home Brands, Sherrill Furniture and Vanguard Furniture.
John Bray, CEO of Vanguard Furniture, calls the furniture academy an “impressive program” that incorporates problem solving, team building skills and a variety of other workplace skills needed in the manufacturing sector.
Classes include furniture fundamentals, pattern making, manual cutting, automated cutting, sewing, introduction to upholstery, inside upholstery and outside upholstery. Students within the program are taught through hands-on training and learn from furniture craftsmen from local companies.
Human resources executives and employment professionals in the area worked with CVCC to develop the curriculum.
Bray said students who succeed in the initial part of the program and make it through the coursework are guaranteed a job.
“This is a long-term solution for our industry, and it will be successful,” Bray said.
After more than 2,000 Starbucks workers headed to college through the coffeehouse’s original two-year tuition reimbursement program with Arizona State University, the company shifted gears and expanding the program to cover four years of tuition for eligible employees.
Starbucks expanded its College Achievement Plan with ASU last month making more than 140,000 full- and part-time employees eligible for the program.
The tuition program, rolled out last summer, is a collaboration between Starbucks and the university allowing employees to get either full tuition reimbursement or partial scholarships to complete one of 49 online bachelor’s degree programs through ASU.
Originally, students starting out as freshmen and sophomores in Starbucks’ program were given a partial scholarship and need-based financial aid, while juniors and seniors received full tuition reimbursement for any out-of-pocket tuition costs. Upon graduation, employees are not required to stay with the company.
Under the expanded plan, all eligible Starbucks employees can apply to have all four years of their tuition covered by the company and ASU.
Starbucks estimates that over the next 10 years its investment in the plan could exceed $250 million.
Another change under the expanded plan is the way in which employees are reimbursed for their tuition costs. Previously, Starbucks only reimbursed students after they completed 21 credit hours toward a degree. Now, the company repays students at the end of each semester.
Another new component of the collaboration between ASU and Starbucks is an online Retail Management degree.
“We have partners who want to stay with Starbucks and grow their careers in retail after they complete their education,” said Dayna Eberhardt, vice president of global learning for Starbucks. “This customized degree is meant to help teach them the kinds of skills they need to be successful in doing that.”
Eberhardt and her team defined five categories of learning that are important to Starbucks: people and team leadership; critical thinking and problem solving; business management; customer service; and sustainability. Drawing on classes ASU currently offers related to those key subject areas, Starbucks and the university’s W. P. Carey School of Business created the retail degree.
Case studies from Starbucks business situations will be used in the classes, which are open to all ASU students. The next phase of the retail degree might include further customizing classes. For example, future course studies could include examining the challenges of balancing a premium brand with affordability or supply chain issues specific to Starbucks. Another possibility is inviting Starbucks leaders to be guest lecturers.
“It would be beneficial to get as close as possible to teaching our partners (employees) the specific skills they’d need to be successful at Starbucks,” Eberhardt said. “There are many exciting possibilities that would help our partners learn and apply valuable skills that are relevant to Starbucks.”
The NRF Foundation, the research and education arm of the National Retail Federation, joined hands with the U.S. Department of Labor Employment and Training Administration nearly eight years ago to create a Retail Competency Model to help all retailers identify and build talent.
The framework supports a variety of recruitment, training and career advancement solutions built on skills retail workers need to be successful. The ETA worked with business leaders to create comprehensive and readily accessible documentation of the skills required in a number of high-demand industries. The NRF Foundation and ETA collaborated to develop and validate competencies necessary to pursue retail careers.
“We are committed to expanding competency-based training and certification in the retail industry,” said Tracy Mullin, NRF president and CEO. “These competencies set a standard for career advancement and identify opportunities to take advantage of the range of career opportunities that retail companies provide.”
The program has continued to grow since its founding, and the NRF Foundation houses online a variety of information for job seekers including a variety of training programs and locations for testing centers for certifications in customer service and sales; retail management and other information.
For retailers seeking training for employees, the NRF Foundation offers a number of training courses for purchase, including courses on retail operations, customer service and sales skills and more.
May 19,
2015 by in Business Strategy, Industry
By: Tom Zollar
In a recent article we talked about the fact that it is the owner and manager’s responsibility to find and develop the right players to make a team successful.
While having a great coach is critical to success in any performance related endeavor, the players—or the salespeople—really must make things happen in the game. Therefore, the process of recruiting key employees is highly important to an organization.
From a sales perspective, recruiting is an integral part of the larger process of staffing a store to provide the best experience for consumers. Recalling our discussion about missed opportunities in the February issue, if a store doesn’t have proper staffing levels, it will never be able to maximize the customers’ response to what it offers.
Staffing and recruiting go hand in hand to guarantee a store has the right people, as well as the right number of people.
Staffing is the process of planning for the needs of an organization in each department or business area. As Jim Collins calls it in his book Good to Great, this is defining the bus and all of the seats. It involves several important processes including: organizational development, organizational charts, chain of command design, and job plans and descriptions. Without going through this process first, the chances of successfully recruiting and hiring the right people within a business are not likely. A complete compensation program for each area also needs to be appealing to those targeted for hiring.
One of the most critical functions in retail is determining personnel needs or staffing levels for the sales floor and reviewing or reacting each month to changing situations and demands.
A common question I get is—how many sales people do I need? The response is usually—how much business do you want to do?
In truth, this is the most basic consideration. In this case, people are money. The simple rule-of-thumb approach is to divide targeted sales volume by a store’s historic average or its targeted, sales per staff member. As an example, a store has an eight-member sales staff that sold a combined $4.8 million last year. The average per person was $600,000. Based on a market analysis, the store has the traffic and share potential to do $6 million this year. Simple math says the store needs 10 full-time sales associates to hit the goal.
The store could try to get its current salespeople to increase average sales by 25 percent to $750,000 each. That, however, is unlikely to happen.
While the correlation between the number of salespeople a store has and the volume a store can do is undeniable, it is not the right way to look at staffing a sales floor. The real question is: how many people can handle and still deliver the required service level customers need to have in order to maximize the shopping experience?
This is the most critical number for retailers to know because it is the only way to properly match staffing levels to the traffic levels. Without it, retailers run the risk of being understaffed and allowing salespeople to drink from a firehouse. Of course a store could also end up over-staffed in which case it will become hard for good people to make a living. If that happens, the best ones always leave first.
For the record, most stores tend to be understaffed, since the sales people constantly resist any additions to a sales team.
We also must understand that this number varies greatly by store based on products and services offered. Here are some general guidelines based on experience:
Store Profile Ups per Month per Associate
· High velocity, low-to-medium priced, no sold orders 140 to 180
· Low-to-medium; some sold orders 120 to 140
· Medium-to-upper; heavy sold orders and some design 100 to 120
· Medium-to-upper; heavy design and some in-home 80 to 100
· Upper with mainly design and in-home 60 to 80
Of course it will also be different for each of salesperson based on selling style, design skills and personal pace. However, the historic average per associate is what should be used to establish staffing levels. Once that’s determined, it becomes a matter of establishing expected traffic levels and dividing it by this number. In other words: if the sweet spot for monthly salesperson ups is 80 to 100 and a store normally gets 1,000 ups per month, then the store will need a minimum of 10 full-time sales associates to properly serve customers.
After reaching a targeted staffing level, retailers should constantly track, review and rate employee performance to make decisions on future needs. If a staffing change is needed, recruiting the best available talent is imperative.
Recruiting is the process of finding the best candidates to fill vacant or soon-to-be vacant positions. It is the ongoing part of the process that Collins refers to as “putting the right people in the right seats on your bus”. Once roles are defined and people are in position, inevitably some of them will need to be replaced or additional staff will be needed to accommodate growth.
One of the most active areas of turnover in retail is on the sales floor. It is so active and so important that recruiting selling staff should be a constant, ongoing effort.
Keep in mind—recruiting is not an event, it is a journey. You need to train and coach managers to constantly search for talent in the community. Many of the best have special recruiting business cards they give to waitresses, shoe salespeople, clerks, receptionists—anyone they think would make a good candidate for your sales or management organization Drafting the best talent is a key ingredient to building a winning team.
Get Recruiting
Hiring the right people for the job can be overwhelming. Check out these tips to ensure you don’t make a hiring mistake.
· First, look within the company for current employees who want to and can step into a new role. It is amazing how much talent already exists in an organization. Don’t pigeonhole. Most want to grow and evolve, so if you they aren’t offered an opportunity to grow, the good ones eventually leave to find growth elsewhere. We have seen many top salespeople come out of the office, customer service and yes, from the warehouse and off the delivery truck. Always start recruiting efforts from within.
· Set up ongoing programs within the organization to recruit customers, friends and others through current employees. This is a great way to find talented and interested prospects. Most successful retailers have a reward or bounty program that pays a bonus to employees who recruit new people to the company. Teach employees the words to use and coach them on driving home the message. If a customer seems to enjoy the process, a salesperson could broach the subject of employment.
· Always have in-store and exterior recruiting signage to encourage walk-in candidates. This is the most cost-effective way to generate candidates. Place signs in visible places such as by the street, near the entrance and at the sales counter. Make sure the message is specific, exciting and positive. Something like: “Looking for people that want to have fun helping clients create beautiful homes. Join our team and grow with us.”
· Consult with other retailers, local businesses and vendor sales representatives about potential candidates. Good people who want to develop and evolve are highly visible to the people they interact with. Always share needs with reps and other business people. Ask them to let you know if they meet anyone that would make a good candidate for your team. Your local Chamber or any other business organization is a great resource, use it.
· Local job fair participation if applicable, along with connecting with local colleges or organizations that might provide access to prospective employees. Most people at these events or coming out of college do not look at retail as a career. However, present the case for your company as a potential long-term growth opportunity, you have a good chance of finding some interested candidates. Some great retailers, including City Furniture, have been successful in recruiting talented and motivated long-term employers from local colleges. Don’t disregard this potential source if it is available to you.
· Personal recruiting by management within the community at other businesses like restaurants and mall stores. This is possibly the most powerful opportunity you have, and it is probably the most overlooked too, because it takes a consistent, active effort to get it done. One of the best places to actively recruit new talent is at your local mall. The salespeople at mall stores understand retail, have terrible hours, earn less than you are probably going to pay them and have little growth potential. Store managers at places like Eddie Bauer and many shoe stores are well trained and underpaid. With the cutbacks, most support people have been let go, forcing the manager to do much more work with no extra pay—they are looking.
· Online recruiting sites and service providers like Monster.com, Indeed.com, etc. are good resources for finding sales and management. Some charge fees, but they will work with you to help maximize return. Learn how to search and review resumes to whittle down the ones to follow up. It’s easy to create a great resume today. Be careful or you will end up wasting a lot of time.
· Advertising in local markets for prospects is still an option although to do it right can be costly. One efficient way to share your message is to include a hiring statement in all your ads. If you run a dedicated recruiting ad, avoid the classified section. The people you want to attract are currently employed and not looking there. Pay a bit more for placement and the rewards will be greater.
· Use a headhunter if necessary. Typically the most expensive option, strong recruiters are effective. National recruiting services are mostly used for management searches, but some retailers have also found experienced designers using them. If you are located in or near a major metro area, then there are often local recruiting agencies focused on retailer needs.
Editor’s Note: Tom Zollar is retail operations practice manager for Impact Consulting where he creates and delivers sales training for retailer sales associates and managers, facilitates retail performance groups, coaches managers and helps retailers grow their business. In other words, he’s our resident coach.