From Home Furnishing Business
Furniture and bedding are both members of the family of home furnishings, but the categories are as different as that second cousin you recently met at the family reunion—not different “weird”, but different “interesting.” If we start at the manufacturing sector, we find bedding companies focused on marketing. That doesn’t mean just the perfunctory catalogs, but also marketing messages aimed at establishing the brand’s unique selling proposition. Before the recent explosion of the new materials that launched the premium bedding sector with price points unheard of prior, there was always the bedding technology with pocketed coils and other innovations from the three “S companies” and others. In comparison, the furniture sector often lacks an emphasis on marketing, speaking not to its consumer, but to its partner, the retailer in the distribution channel. Focusing on magic price points rather than product innovation often leads to a continued reduction in quality, features and other key components of product promotion. For decades we have concentrated on $399 to $499 sofas while other industries, like the automotive sector, have focused on innovation. As a result, the car industry has quadrupled its basic price points. In 1964, my new Mustang was $5,000. Today, I could not buy the equivalent of that car for five times that amount. Not only is innovation important; so is the selling and marketing of the innovation—first to the retailer and then to the consumer. Back to the automotive industry as a case in point—did we really need power windows?
There are flashes of progress; take as an example power in motion furniture. However, this requires that manufacturers and retailers work together as partners. It is a no-brainer to floor all motion slots as powered. We know consumers buy what they see. After trying that nifty power button, all but the most frugal of consumers will opt for the $100 upgrade. Yet manufacturers and retailers must make it happen by putting electricity to the display, flooring a more expensive product, and follow up by training the sales associate on the product’s features and benefits. The results? An increased average ticket. The question becomes, “What is the bottom line for retailers?” Bedding, as a percentage of total sales, can range from 2 percent to 20 percent. What makes the difference?
It is the emphasis placed on the product category. Treating bedding as a separate business with its own advertising budget, merchandise strategy, and product training can produce results. And it should not be forgotten that an important ingredient is the bedding manufacturer who aggressively supports the effort. Furniture manufacturers should take note that for every $1 invested in marketing there is a return of $20 to $25 in sales. To net better results, perhaps we should emulate our distant cousins rather than merely saying that we are different. Siblings or Distant Cousins?
Whether we care to admit it or not, mattress shopping is unbelievably confusing and challenging for consumers. An unlimited number of choices exist; the rectangular cubes look the same; the endless ads can be overwhelming; the different construction options are mind-boggling; and typically, the mattresses are all lined up like little soldiers on parade. No wonder normal, everyday folks become so overwhelmed when shopping for the perfect night’s sleep. Add to that list that most consumers are sleep deprived, and we’ve got some serious issues. Statistics say the average adult needs between seven and nine hours a night of sleep. Of course, that can vary slightly depending on the person. According to the Centers for Disease Control and Protection, more than a third of U.S. adults sleep less than seven hours a night, and many report problems concentrating, remembering and yes, driving. Let’s face it folks, we’re tired, and we crave sleep! Americans filled about 60 million prescriptions for sleep pills last year—all in the endless quest for that elusive night’s sleep. That’s up from 47 million prescriptions in 2006, according to IMS Health, a health care services company that tracks such things. Everybody loves to get their fill of a good night’s sleep, but apparently from the stats, too few people are managing it. I’m not sure meds are the correct way to go about it. How about we as an industry get engaged in a comprehensive campaign to educate consumers about sleep, what it means to get a solid night’s rest and how to go about capturing that through the RIGHT sleep surface for each individual? Oh sure, we’ve talked about it, and some companies have even tried it. But the industry in total—as one combined entity—hasn’t pulled together to undertake a major collaborative marketing effort promoting the need for sleep and the importance of uncovering the perfect bed for each person. It’s the mattress category’s version of the dairy industry’s “Got Milk “campaign. Or, comparing apples to apples—the pharmaceutical industry’s marketing initiative to promote sleep through medication. Apparently, that approach is working seeing as they sold 60 million prescriptions for those sleep aids and the number continues to climb. Speaking of sleep woes.
Have you looked down the street from your furniture store lately? Chances are there’s a dedicated mattress store within a stone’s throw. Chances are it just may be your target consumer’s first choice when she ventures out in search of a new place to rest her head. This month’s issue delves into the bedding category and where consumers tend to gravitate when they’re looking for a new mattress. The proliferation of bedding-only stores tells us there’s money to be made in the specialty shops, and those retailers are taking business away from the traditional furniture stores, who also happen to sell beds. Inside, you can explore a number of strategies from retailers when it comes to selling our industry’s most profitable category. Some are headed into dedicated stores; others have a store-within-a-store approach; while others are sticking to the tried and true. We’ve captured an abundance of information to help you rest a bit easier when it comes to selling mattresses. Read on and enjoy a good long nap upon completion.
The summer doldrums for furniture sales: We’ve all heard how business slows in summer as families concentrate on hitting the beach and find ways to keep the kids busy while they’re out of school. Malarkey. Take a look at the accompanying graphic of an 8-year analysis of furniture sales by month from the U.S. Department of Commerce. Comparing month-to-month furniture store sales as tracked by the U.S. Department of Commerce from 2005 through 2013, there’s little variance. The data shows a low of 7.9 percent for the months of January and April, and a high of 8.8 percent in December. Drill down further into the summer months of June through August, and we find 8.1 percent in June; 8.4 percent in July, and 8.7 percent in August. Mere blips, and an ever-slight increase through the summer. Rest assured, if you buy into the idea that summer is a down time for home furnishings retailers, your competitors are eating your lunch during those months.
Don’t blame the heat. Blame yourself for not giving potential customers a reason to come to your store. This month, Home Furnishings Business examines solutions for home furnishings retailers to break through the summer doldrums—whether myth or reality—and make their stores exciting places to get out of the heat.
REGIONAL, SEASONAL MENTALITY
It’s easy to develop a mindset that the weather, the season, is going to impact your sales. Has any retailer working on the southern Atlantic seaboard who bemoans the heat of summer keeping customers at home in the air conditioning ever thought about what it must be like during winter months in the upper Midwest? You never hear about the “winter doldrums.” “You get a forecast for eight inches of snow, stay home if you can, and that’s not good for any retail business,” said Jeff Selik, president of Hillside Furniture in Bloomfield Hills, Mich. “But we’re used to the snow. If we have a couple of inches and the roads are clear, that’s fine selling weather for us. “You have to have a promotion mix to bring people in at all times of the year. We don’t sell outdoor furniture, because it applies to such a small part of the year around here.”
Summer sales rest on three things, according to Britt Beemer, chairman of Charleston, S.C.-based America’s Research Group: Memorial Day, the Fourth of July and Labor Day. “If you miss out on that, it’s a long dry spell,” he said, adding that there are ways to build business outside those traditional high-traffic weekends. “A lot of people do a tent sale in the summer, and that’s one of the most successful that I’ve seen,” Beemer said. “Use it to clean out old, dead inventory. It gets the bargain hunter out to the store. “If you’re store’s in the right location, you don’t need to spend a lot on advertising, because that tent is your advertisement.” Try flipping the seasons.
“For a lot of retailers, Christmas in July is a big event,” Beemer said. “Decorate the store for Christmas, and run it for three weeks, following up to the Fourth of July. “If you’re having a warehouse sale, actually hold it in the warehouse. It creates a bargain atmosphere, and you’ll grab that same customer who shops tent sales."
GIVE A REASON TO SHOP
Generating business during the summer—or any season—is not rocket science. “Give the customer a good reason to shop,” said Alejandro Macias, vice president of Del Sol Furniture in Phoenix, Ariz. If any retailers have an excuse for dismal summer sales, it would be those in places such as the Sun Valley, where daily temperatures during those months regularly exceed 100 degrees. “I have come to the conclusion that there are no such things as (seasonal) slumps,” Macias said. “There are times when people naturally buy more, but we should be working just as hard those months, as the slower ones, working to give the customer a reason to shop.” July had traditionally been Del Sol’s worst month of the year for sales, but the retailer countered that with a “Midnight Madness Sale” to bring customers in after the sun went down. “After we did this sale, it became our No. 1 or No. 2 month of the year,” Macias said. “It became so good that we moved it to Tax Season.” After that move, the challenge became what to do in July to get people to buy. “Before this, we never did a 4th of July sale,” Macias said, since the thought was that holiday would not connect with Del Sol’s traditional Hispanic customer. “Well we focus on it now, make an event of it, advertise and we have a great weekend every time. “Last year we did the Smurferrific Sales Event with Ashley after the 4th (of July), and that also did well. It was a back to school/smurf-themed sale … during the time the “Smurfs 2” movie was being released. That event did great, too.
A PLACE TO BE
This summer, sometimes characterized as slower by a lot of furniture retailers, Gallery Furniture Owner Jim McIngvale said the retailer will work hard to make the furniture store an exciting place to be for Houston-area consumers. “It’s all about making the store topical, making the store relevant,” he said. “During the summer, we’ll come out with lots of experiential events for customers so they don’t feel like they’re in a funeral home when they’re here.” Gallery paid out a pile of money on a sports-related promotion for this year’s NFL playoffs and Super Bowl (see accompanying story), and it’s betting again this summer with a free furniture promotion if the Houston Astros win 63 games this baseball season.
Do you have a remodeling project in the works? Build a sales event around it.
“Two years ago we had a huge liquidation event in July when we did three months business in one—it was our biggest sales month ever,” said Hillside’s Selik. “We had validation behind it because we were repainting the whole showroom. We were going to have to stick that furniture somewhere, so why not sell it off.” Think about “off the wall” promotions that generate excitement. Hillside played upon its multi-generational ownership with “Shh… Don’t Tell My Dad”—a play on the retailer’s father-son team of Jeff and Bruce Selik. “We do that every other year,” Jeff Selik said. “People I’ve never seen before but who recognize me from the commercials mention that to me at least every other week.
BEATING THE HEAT
The summer slump is a reality for Midtown Furniture Superstore & Mattress Center in Madison, N.C., said Woody Whichard, president. He’s dubious of the Commerce Department’s statistics regarding furniture sales over the last several years. “I do not trust the government or any of the figures they come up with, he said. “It is like an advertising salesman trying to sell me their product over their competition. Metrics can be changed to fit any situation. If you change the way you measure something
to your advantage, what is the real truth? Take unemployment rates today verses 10 years ago. This is the way I look at the government’s numbers. All markets and stores are different, but most of us would measure our sales the same, total sold for the month.” Whichard said Midtown’s month-to-month performance over the past five years has been unpredictable at best. “In 2008, we lost 40 percent in sales from May to June. In 2009 we gained 30 percent; 2010 we lost 50 percent; 2011 we lost 40 percent; 2012 we lost 50 percent, and 2013 we gained 3 percent,” he said.
“I feel the doldrums. Unfortunately, the way we used to measure and budget has completely changed under the current administration. I feel that the consumers are just as confused as us retailers as to when to have confidence again.” It’s hard to depend on monthly historic patterns. “When I set our annual budget I lower the numbers for the summer months and budget for higher numbers in the spring and fall,” Whichard said. “So, yes, I do believe there are summer doldrums.”
That’s not to say Midtown doesn’t stand pat in summer. “We have tried to do our very best advertising to generate sales during this time,” Whichard said. “One of our most successful sales is the trade-in sale. We will take any furniture in any condition and donate it to a local charity. Not only does the consumer receive a discount for their worn out furniture, but they also leave with the feeling of helping someone less fortunate. We take any category, including mattresses, for trade in.” Make sure that any sort of promotion that brings a community benefit lives up to its promise. “As it says on the front page, ‘All furniture traded in will be donated to the Salvation Army’ and it was,” Whichard noted. “As in many things we do we look for a win-win. In this case it is a win-win win. The customer wins, getting rid of furniture they were wanting to throw away and getting a discount for doing so. The charity wins because they get so much to offer their customers, and we win with an increase in sales and goodwill in the community. “We also offer a partial discount to those that do not have anything to trade in. We have tried this sale at different times of the year and it seems to get the best response in May, June and July.” Whichard wasn’t the only retailer questioning the so-called summer furniture doldrums as a myth.
There’s “no real differentiation between what works in the summer versus other times,” said
Ronny Bensimon, president of Dearden’s in Los Angles. “Regardless of the promotion, the lift will be less in the summer. “You need to find out who is reporting those statistics, find out what they’re doing, and let me (and other furniture retailers in my circle) know what they are doing. Are you sure the retailers being queried are not south of the equator where the seasons are flipped?”
When considering summer promotions, think about what your consumers are doing during the season. Think they might be playing golf? Atlanta-based Imagine advertising showed up in Ashley’s showroom at the recent High Point Furniture Market with a full-on presentation for its “Sink Fore Savings” promotion, which included signage and a putting green. The promotion is scheduled to run Father’s Day through the U.S. Open, and is designed to create an exciting, fun event for sales people and your customers. Retailers would set up a putting green in-store and offer the customer discounts for every putt made. Creative will show men, women and family/kids golfing. For example: Make one 13-foot putt, get 10 percent off; make two 13-foot putts, get 20 percent off, etc. Retailers set the number of putts and discounts that work for their store. They can reinforce your message online and with in-store signage. “People out there in the market are ready to buy furniture at all times of the year. It’s a matter of reaching them,” said Hillside’s Selik. “I always hope they’re coming to Hillside because they’ll see furniture they won’t find anywhere else around here, but you still need to give them a reason.”
The hilly country where Kentucky, Ohio and West Virginia meet consists mostly of small cities and towns. It’s fly-over country for a lot of people—and for a lot of national brands in home furnishings retailers—but it’s both home and opportunity, as in $165 million in sales last year, for Big Sandy Superstores. The 13-store-strong, Franklin Furnace, Ohio based mid-price retail brand for home furnishings, electronics and appliances filled in another space in the region last month when it opened a new location in Lancaster, Ohio.
While Big Sandy serves many communities, most are located in a single television market, and that’s worked well, said Robert Van Hoose Jr., chairman of the retailer “Big Sandy has a competitive advantage in our local market based on sheer size,” he said. “Because most of our stores are located in one major television market, we are the number one advertiser for most of our media partners and typically buy around 2,000 gross rating points every week. “Most other competitors would struggle to get to 300 points per week.”
SERVING A REGION
The company was founded in 1953 by Van Hoose’s father, Robert Van Hoose Sr., who worked in the business until 1976.“At that time our total volume was $6 million, and since I had just graduated from college, my dad decided to retire at the age of 47 to move to Florida and focus on the Arabian Horse business,” the younger Van Hoose said. “He sold it to myself and my partner, John Stewart. That started a long journey to grow and expand in our market area leading to a 60 percent share of furniture shoppers in the Charleston-Huntington ADI (area of dominant influence).” Van Hoose and his team have watched what other retailers have done, and brought in ideas from outside the company.
“We have had a lot of outside influences over the years,” henoted. “Connie Post has designed several of our stores, including our newest location in Lancaster, Ohio. Kim Yost at Art Van has been an outside motivator with the way he has led his team with ‘Pumpitude.’ (Pumpitude is the Art Van CEO’s take on building performance through attitude.) “Our vendors have been great partners to support our expansion plans, and we have a great core group of associates that are starting to see the value of being employee-owned and focusing on creating a great customer experience in our stores, every customer,
every time. That is a big focus of ours in 2014.”
Employee ownership is a big part of getting buy in for improving customer experience throughout locations. “It is hard to be totally consistent, as the main ingredient is people and that is another area we are focusing on to make sure we create the same experience for every customer every time, but we have a ways to go to reach that goal,” Van Hoose said. “The merchandise is the same at all the locations, but the presentation can vary depending on when the store was last updated.” Big Sandy’s markets have struggled economically at times, and were particularly hard hit by the recession. Part of Big Sandy’s customer-experience story is offering customers a variety of financing options.
In addition to a standard third-party option through GE Capital, Big Sandy offers conventional financing through Lendmark for those who may have a blemish on their credit record, but still desire traditional, credit based financing. Cross Check is a no credit check, 90-day, same-as-cash, nocredit-check financing option that Big Sandy introduced in 2010. Cross Check allows customers to pay off purchases over 90 days without paying interest. RAC Acceptance is a finance option for customers in difficult credit situations that offer instant approval with long, flexible terms. Some internal changes made for difficulty beyond the economy. “2012 through the first half of 2013 was the toughest period in our history,” Van Hoose said. “We went through a very hard computer conversion that cost a lot more money than the original outlay,” Van Hoose said. “We have recovered from that by refocusing on the customer experience and developing compelling stories for the customer that sets us apart from the competition.” “We service what we sell” is a big part of Big Sandy’s appeal. In addition to service on manufacturers’ warranties, the store sells its own “Total Care Protection,” which provides three years of full parts and labor coverage. Customers have to clean and maintain the furniture according to the manufacturer’s standards; and recognize that damage caused by pets or animals is excluded from coverage. Customers have to clean and maintain the furniture according to the manufacturer’s standards; and recognize that damage caused by pets or animals is excluded from coverage.
When it comes to marketing, Big Sandy has three areas of focus. “Our biggest expenditure is color circulars, followed by network television, and social media, which is the fastest growing area of our marketing budget,” Van Hoose said. “We still use radio, but that is declining. We put a lot of effort into our Facebook page, which is approaching 18,000 fans and is a great way to connect with our customer base.” This summer, Van Hoose highlighted “Red, White and Free” tent sales for the Fourth of July period, “and we always add a lot of one-day sales and weekend promotions.”
A program that’s taken off of late at Big Sandy is “iAmerica.” The program highlights American-made sofas, loveseats, sectionals and recliners, all available in hundreds of leather or fabric options and available for delivery within 35 days. Amish-made bedroom and dining collections round out the assortment. “Our I-America story is really gaining a lot of traction and is a great tie-breaker
with the customer,” Van Hoose noted.
THE COMPETITIVE DIFFERENCE
Van Hoose said Big Sandy’s biggest advantage is that the company is blessed with a lot of people who have been with the retailer for 10, 15, 20 years and more. “I have learned when you tell your salespeople ‘the plan,’ that just starts the process and you have to follow up many times and ‘inspect what you expect,’” he said. “Accountability is a critical piece of the formula, and I have gone back
into our TV commercials … and adopted the positioning statement of ‘bigger and better’ and challenged our associates to deliver on that promise every day. “We have achieved size and scale in a market that most other national players don’t find that appealing, but to us it’s our home. We are currently posting some of the best same store sales growth in our history as a result of all these pieces
Midtown Furniture Superstore & Mattress Center has run some “wild and crazy” advertising over the years. The ads were attention getting, but Woody Whichard, president of the Madison, N.C., retailer, decided to try some new approaches over the past year. One, cutting back on the advertising budget, did not work. “Another is we called some of our customers and asked if they would like to come in and give a testimonial for a TV advertisement,” Whichard said. “We had quite a few to come in and do so. Instead of blasting price, wearing crazy costumes, and flying around on the TV, we let our customers speak for us.” Those ads generated positive comments from both new and existing customers at Midtown. “We shot the testimonials over 18 months ago and are still using them as we speak,” Whichard said. “They do not create the sense of urgency you look for in advertising, but it does plant a seed that we are the place to purchase furniture.”
INSPIRING A PURCHASE
Is a promotion the only way to get customers to a furniture store? How do retailers measure the effectiveness of their advertising? An effective way is to ask consumers if they considered the retailer and whether they shopped that retailer. Impact Consulting took a look at where consumers are shopping. (The results of this inquiry are shown by distribution channel in the accompanying graphic, “Most Recent Furniture Buys by Retail Channel.”) Another issue: Retailers must create a promotion that the consumer believes, and the graphic, also based on Impact’s research, “Believability Scale” indicates this is an area that needs a lot of work. And while Price (which is influenced by financing in terms of affordability) is important, Impact’s research indicates it is not the top factor in the furniture purchasing
process. (See accompanying graphic, “Purchase Motivators.”)
One way more retailers are building excitement at their stores without highlighting price is through sports- related promotions, that offer refunds on purchases made during a certain time frame should a team win a pennant, return a kickoff for a touchdown, or score a specified number of points. Gallery Furniture in Houston ran two NFL-related promotions this year. Pig Skin Promotion No. 1 offered a full refund to customers buying $5,000 or more of furniture during the contest period. Those correctly picking the winners of the National Football League Conference Championship games received refunds.
That event led to around $800,000 in refunds after all was said and done, according to Jim McIngvale, Gallery owner. That was just a start, though. Pig Skin Promotion No. 2 promised free furniture to customers who bought $6,000 or more and picked the winner of the Super Bowl game between the Denver Broncos and Seattle Seahawks, won by the latter. Denver might be closer to Houston geographically, but apparently there wasn’t much loyalty in that regard: “80 percent of the people who participated picked the right team,” McIngvale said. That second promotion paid out around $7.2 million in free furniture, he noted. “After that first promotion, we said, what the heck let’s do it for the big games this year. Baseball Promotion No. 1 will fully refund the first 500 customers who spend $6,300 or more at Gallery Furniture if the Astros win 63 games in the regular season.
The magic number, 63, honors McIngvale, who turned 63 years old in February.“Some might think this promotion isover the top, and they are right,” he said.“We want to give our customers another reason to get excited about our Houston Astros this season and even more excited about coming in to Gallery Furniture.” Customers across the continental United States also can buy mattresses online at GalleryFurniture.com at a $6300 value or more, and have it delivered to their home within seven days. Boston-area retailer Jordan’s Furniture is no stranger to sports-related promotions. Boston is a fanatical sports town, and the store has run programs promising free furniture for titles from the National Hockey League Bruins and American League Red Sox. The retailer has insured each of the sports promotions.
This year, “The Monster Repeat” promotion commits to free furniture—of any purchase amount—starting April 2 if the Red Sox bring home another World Series title. There is no limit on the amount of furniture or the selection of furniture. With the Red Sox winning it all in 2004, 2007 and 2013, it’s a safe bet the promotion will generate no small activity on Jordan’s floors. To build interest, the retailer will display the Red Sox trophies in stores. It’s the 8th year Jordan’s has run the promotion. The 2007 title ended up with customers getting $30 million in furniture. “We bought insurance so we are rooting for the Red Sox to do a repeat performance of 2013 and hope that we can give away $50 million dollars’ worth of furniture this year,” said President Eliot Tatelman. Television, radio and online ads are promoting the offer at Jordan’s. We’ve been talking the big leagues so far, but the fact is sports-related promotions are a possibility for a huge number of retailers—how many stores aren’t in a market area served by a minor league baseball team? Still, retailers need to make sure such a promotion fits their image and customer base. “I am a huge fan of my Lions and Tigers, but it’s still a fact that my customer is a woman age 35 to 65,” noted Jeff Selik, president of highend contemporary furniture store Hillside Furniture in Bloomfield Hills, Mich. Not only that, such a promotion has to offer a fighting chance for a favorable team outcome: “For it to seem like an opportunity, there has to be a feasibility they’ll win a championship.”
STARS & STRIPES
Some retailers push the fact that they carry products made in America. If you’re one of those, that might be a natural for any Fourth of July promotions. Atlanta-based Imagine Advertising has developed a turn-key program to promote “Made in the U.S.A.” “The concept behind the promotion is for the dealer to be able to promote that they buy products from American manufacturers,” said Flora Stopher, Imagine Advertising owner. The circular Imagine developed for this event features augmented reality.“The customer will receive the ad in the mailbox, download an app on their phone and hover over the pictures on the circular to bring them to life,” she said. Customers can see other product features, other colors, view a store video and more. Stopher suggested American-themed BBQ aprons, BBQ utensils and flags, as instore giveaways to generate activity.