Monthly Issue
From Home Furnishing Business
October 8,
2014 by in Industry 
By Sheila Long O'Mara
Welcome to our 106th issue in all its redesigned splendor.
Nine years ago this month, I took a leap of faith and joined a small team of smart, creative women eager to change the way the furniture industry viewed trade publishing. We banded together, and set our sights on creating a fresh, retail-centric magazine.
In the fall of 2005, the concept of Home Furnishings Business was born, and then, in January 2006, we published our first issue. As we approach our 10th publishing year, we thought it was only fitting that we freshen things up a bit. And, freshen we have.
Surely you noticed our revamped, sophisticated logo on the cover. You may not have recognized us at first, and while that was a concern, we know nothing remains the same; nor should it.
So now, after 105 issues, I’m pleased to unveil our new look and re-introduce you to Home Furnishings Business. We’ve dressed the magazine in a cleaner, more sophisticated manner to better present our content.
In short, we’ve grown up.
Have no fear. Inside and out, the pages may look quite different, but the content you’ve come to expect and love is all here—with a few enhancements.
Let me introduce you to two new features that will appear each month. First up is our monthly, compelling Q&A—Take 5. We kicked off the feature with Mattress Firm’s Steve Stagner, who has a lot to talk about with all of the retailer’s recent acquisitions. You’ll find it on page 40 inside.
Next, you’ll find Numerology. One page filled with juicy nuggets and factoids that are relevant to furniture retailing, consumer insights and generally anything else we find intriguing and cool. This month, the snippets are customer service related just by happenstance. You’ll find them on page 74.
The very creative soul Wes Kennedy, our senior art director, gets all the credit for our new look. His steady hand and keen eye for design has been a welcome addition to our team. All compliments go to him; while I’ll gladly field any complaints and furiously defend our changes. You know where to find me!
The double-digit years are special and worthy of grand celebration. Here’s to a year filled with celebrations.
One last note—welcome to High Point Market. I look forward to seeing many of you there.
Enjoy!
September 18,
2014 by in Business Strategy, Industry
You’ve probably been hearing for several years about this thing called “the cloud.” The term gets tossed around a lot, but a lot of folks don’t really know what it means in the context of store technology and operating systems.
Basically, the cloud is a network of servers accessed via the Internet that can provide the same sort of operating functions that are housed in the physical servers running in any business.
Here’s an example from digital innovation news source Mashable.
If you take a picture on your smartphone, that picture resides in that physical device. If you upload it to Instagram, it’s going onto the cloud, where you can access it at any time, anywhere from your laptop, tablet or phone. If you delete the photo from your phone’s internal memory, it still exists on a server located elsewhere—along with information from thousands, even millions of other users.
Some service providers are moving entire operations to the cloud. Take Adobe, which has transitioned its creative services to the cloud. You can’t buy the software for yourself any more, but pay a subscription fee to use “Adobe Creative Cloud” online. Home Furnishings Business recently moved its editorial production to this service.
IMPLICATIONS FOR FURNITURE STORES
Retail automation vendor STORIS has offered its operating system on the cloud for 10 years, said Don Surdoval, president and CEO. He believes the cloud is a big part of furniture retailing's future. Already, at least 125 of STORIS' retail customers have migrated to the cloud, representing north of 1,500 users.
"We feel that, for the bulk of the industry, it's more cost-effective for us to provide the infrastructure" for running the software, he said.
The cloud even is attracting the attention of some of STORIS' largest furniture retailing clients, companies that have the volume and complexity to run their own servers.
"Even the top 100 (retailers) are talking about using it now," Surdoval said.
The best thing about the cloud is that you can access it from anywhere, any time, said Myriad Software Principal Carolyn Crowley. Myriad made its store operations software available on the cloud in 2008.
“For a furniture retailer who doesn’t want to be heavily involved in information technology, it’s perfect,” she said. “You don’t have to worry about an infrastructure.”
The cloud is gaining momentum at Myriad. In 2012, a lot of its larger clients began to move that way.
“Close to 25 percent of our clients are on the cloud,” Crowley said. “In the last couple of years, the majority of new systems we’ve sold have been cloud-based. “We go either way—server or the cloud.”
Profitsystems developed Retailvantage on the Cloud, the cloud application of its point-of-sale and inventory management system, seven years ago, said Guadalupe Pagalday, product marketing manager at the company’s Denver, Colo.-based parent company Highjump Software. Clients began signing on soon after.
"Serving their customers and growing their business: That should be the focus of retailers," Pagalday said. "Profitsystems developed RETAILvantage on the Cloud to allow home furnishings retailers to focus on what they do best and solve two significant obstacles retailers face when adopting a retail management system: limitations of cash and technical expertise."
WHY THEY SHIFTED Crowley said maintenance issues and expense have pushed more of Myriads retail customers
“cloudward.”
“They had an ‘event’—a server crash or hardware program and they didn’t have a back up,” she noted. “What made it an easy sell with single stores, was the ‘I don’t want to buy another server and worry about maintenance and upgrades.’
“For us, if our client is growing the business and add more memory and additional users, it’s very easy to add new user licenses, and you don’t have to pay labor for installation.”
She added that it’s not just the hardware that a retailer purchases if they want their own in-house server.
“It’s the labor—if there are problems, you pay to fix them,” Crowley said. “The contractor must maintain it. You have to add this to the cost.”
Does your system need an upgrade? That’s a lot easier on the cloud. Cloud providers often offer selections that are upgradeable in the future.
The cloud solution has proven to be stable and reliable, with an up time of 99.9 percent, state-of-the-art anti-virus and firewall protection
"Our retail cloud solution eliminates the burden of maintaining a computer network,” Pagalday said. “There is no file server to purchase, no backup hardware to worry about, and no expensive outside technical help needed."
CHALLENGES Crowley said the biggest block for retailers considering the cloud is that they’re nervous not having their data housed in their store or warehouse.
It’s an issue of security, and hackers have shown plenty of skill when it comes to infiltrating the Internet.
“Any cloud provider is very on top of security,” Crowley said. “That’s improved a lot over the past 10 years.”
In late 2008, a coalition of industry practitioners, corporations, associations and other key stakeholders formed the Cloud Security Alliance. The association’s mission is to promote the use of best practices for providing security assurance within cloud computing, and to provide education on its uses to help secure all other forms of computing.
The organization’s Web site (CloudSecurityAlliance.org) contains a wealth of information on security issues related to cloud computing, and the establishment of standards to help ensure the protection of data and services on the cloud.
The cloud is a strong bet for a number of large, everyday-name technology companies like Microsoft, Apple, Google and Yahoo.
“The Cloud is here to stay, and the Cloud is where business operations have moved or will move,” Crowley said.
For those with security concerns about cloud security, network administration specialists monitor and maintain the cloud network.
Other benefits include remote access that allows retailers to connect to their business from anywhere in the world via the Internet; rapid deployment and scalability.
"Managing the business from the cloud allows retailers to be nimble and react quickly to changing needs,” she said. “During short term events like annual holiday sales where traffic patterns increase and additional sales help is required, it is a straightforward and simple process to simply 'turn on' additional user applications and have them available only for the duration of the event."
The only potential disadvantage to the cloud Highjump sees are local Internet-service interruptions, but there's a fairly easy fix for that. Most companies would opt for cable Internet access for more reliable service with less downtown than satellite, DSL or other broadband options.
Cloud computing is gaining popularity as businesses face the prospect of replacing aging servers and networks, which can be costly and time consuming, Pagalday noted.
"Making the move to the cloud is attractive for three primary reasons: cost savings, flexibility, and security," she said. "We have seen our clients increase efficiencies, improve cash flow, and be able to meet business demands more quickly by moving their computing system to the Cloud."
August 22,
2014 by in Industry
Here in the steamy South, our schools are back in session. Summer vacation, teamed with the furniture industry’s various events, makes for quite a hectic, crazy few weeks. Some weeks, I can’t wait for that school bell to ring. Other weeks, I think I may dread the school house openings more than the youngsters in my house.
I’m pretty certain the kids were barely drip dried from their first dip in the ocean this magical summer before an onslaught of commercials touting back-to-school sales starting playing in loop. As sick as I was to hear the constant din of the magic of the latest fashions for kids, the buy-eight-get-two-free composition book promotion and the Microsoft Surface tablet, it started my marketing mind to churning.
The Staples and Office Depots, the discounters like Target and Walmart, and the youth clothing chains like American Eagle and the Gap are marketing machines. Those guys are on the radio, on the television, in the newspaper and popping up in my mail box AND inbox with ads and promotions to outfit missy and junior with everything they could possibly need. It’s a constant, seemingly never-ending message targeting parents with kids headed back to school from pre-kindergarten through college.
Then, take a look at Bed Bath & Beyond, Pier 1 Imports and The Container Store. Those guys are beating the marketing drum in hopes of furnishing and outfitting those cramped dorm rooms. Come to think of it though, I hear from friends who are sending kids off as fresh-faced freshman that the cramped dorms of my college days have changed dramatically, which means more goods to be sold by those home stores.
So, while we often hear complaints of summer selling and the slowdown the industry undergoes, there’s money out there to be had. The question becomes whether or not furniture is top-of-mind for her as she’s going about her normal schedule. Shout it loud and proud, frequently and throughout a variety of media and chances are that replacing the tired, worn-out sofa will become much higher on her priority list.
By the way, because I know you’re dying to know, I took advantage of the composition book deal. Three young O’Maras just plunged back into school for the 2014-2015 year. A lot of paper will be used, and I’m pretty certain come second semester in January, we’ll need more paper, pens, pencils and stuff.
Happy back to school for each of you affected, and here’s wishing all a boisterous fall selling season bolstered by smart marketing.
August 22,
2014 by in Furniture Retailing, Industry
A focus on full design service, strong partnerships—social and businesswise—in the community and a search for products nobody else carries have Contents Interiors primed to reap the benefits of a rebounding economy.
Owners Carol Bell, president, and Tamara Scott-Anderson, vice president, built on a strong foundation after acquiring the store 13 years ago, and developed it from a furniture store into a soup-to-nuts design center for contemporary and traditional southwest home owners.
Bell had worked as store manager for Contents furniture 10 years, when the previous owners, Linda and Ken Smalley, decided they were ready to retire. The decision was unexpected, because construction on a new showroom for the store was well under way.
In October 2001, the Smalleys made an offer to Carol to buy the business. Carol was faced with looking for a new job or taking over a business that she new well and loved.
BUILDING ON STRENGTH Her choice to accept the offer was a no-brainer—the challenge was pulling together the resources and talent she needed on short notice. Bell called a previous employee of Contents, Tamara Scott-Anderson, and offered a partnership in the business. Scott-Anderson had worked for the company eight years as an interior designer and home furnishing sales associate before leaving on good terms in 1995. An ASID member, she had moved on to expand her expertise in the construction side of interior design.
Scott-Anderson was ready for the change and the challenge. The new owners formed a business plan, found financing and started building their staff in a very short amount of time. The new showroom opened with new owners in March 2002.
“We were fortunate to buy an established business with a good reputation,” Bell said. “When people ask what the best decision we’ve made is, I said it was to say ‘yes’ to the offer.”
In addition to a good name locally, Bell and Scott-Anderson benefited from years of networking in the Contemporary Design Group, of which Contents Interiors was an early member.
The partners have divvied up responsibilities: Bell is chief buyer and runs the business side of the operation; Scott-Anderson is lead designer and manages the showroom floor and a staff of five design professionals.
A NEW SPIN While Bell and Scott-Anderson bought an established business, they had their own ideas of where they wanted to take it. They expanded on selling quality home furnishing to include more interior design services. Contents Interiors is one of the few local retail interior design/furniture showrooms in Tucson to hold an Arizona Contractors license; and is licensed and bonded to do non-structural interior design work both residentially and commercially.
“When I was working for (the Smalleys) we were a furniture store with accessories,” Scott-Anderson said. “When Carol and I took over we decided we wanted to offer more services and products—window coverings, wall-to-wall carpeting or tile.
“We got our contractors license. … That’s one of the things that makes us different from a lot of other stores. … I can help pick out lighting, plumbing and other fixtures, and work with another licensed contractor (for installation).”
The partners also set aside part of the showroom to showcase resources and work on projects in a 400-square-foot design resource center.
“Selling furniture is still what pays the bills for us,” Bell said, “but a lot of the people who buy furniture come back to us when they have a design project; and we have a nice relationship with several builders.”
MAXIMUM MERCHANDISING When it comes to the floor, Contents creates a lot to look at.
“People tell us we don’t look like a lot of furniture stores,” Bell said. “We’ll change things out: One year we focused on ‘contemporary Southwest.’
“We have what we call our ‘Tucson traditional,’ It’s a hacienda feel with a touch of Tuscan. The front of the store is where we keep the contemporary and softer traditional looks. We do a lot of what we call ‘organic contemporary’ with reclaimed woods.”
Contents doesn’t sell on the Internet, but it’s Web site is very useful in giving shoppers a sense of what they need to look for in the showroom through an online “style test.” The detailed quiz helps customers drill down to which lifestyle sections in the store are most simpatico with their sensibilities. From general styles of casual, contemporary, traditional, eclectic and southwestern, the shopper’s responses steer her toward the store’s “contemporary,” “comfortable desert living” or “Tucson traditional” settings.
“People can go to the Web site and pick their look,” Bell said. “They can take the test and feel confident saying ‘I’m Tucson traditional.’”
The key is creating an impressive visual display of products customers might not see anywhere else in the market while avoiding clutter.
“It’s packed full of accessories and artwork,” Scott-Anderson said. “We have at least three items on each table; and we showcase local artists on a regular basis. We have an art show of Arizona artists, and the ones who sell, we’ll show year round.”
“It’s our way of staying in touch with the local arts scene, and it’s good business,” Bell added. “The showroom always looks fresh. If something doesn’t move, the artist always is ready to trade out for a different work. We also have a strong stock in production art work as well.”
“People say there’s so much to see that you have to walk around two or three times to take it all in,” Scott-Anderson said. “We like to be on the cutting edge, even if Tucson is sometimes a little behind the latest colors and trends.
“We carry lines that offer a lot of customization for special ordering, and we blend that in with container lines. Those always look better mixed in with the (customizable) furniture.”
MIXED AD CHANNELS When it comes to promoting the store, a mix of advertising and promotional vehicles is working best at Contents Interiors.
“Direct mail has been most popular,” Bell said. “Because we’re more design-oriented than some stores, we do the local shelter magazines. We do newspaper ads for sales events.
“We have a great community of retirees here, and they still read the newspapers. We also have several publications targeted at high-end neighborhoods, and this year we’re back on television with ads.”
For added personality, Scott-Anderson’s dog, Freeway, is an important element of the store’s Facebook persona.
Other new advertising vehicles are under consideration: “Someone should create a new magazine for iPad,” Bell said. “Digital is becoming more important, and we’re figuring out how we want to handle that.”
New this year is a custom-published magalog through Contemporary Design Group that Contents Interiors will send out as a direct-mail piece.
“In addition to this opportunity, there are lots of other benefits” to CDG membership, Scott-Anderson noted. “The previous owners were among the original members. Over the last few years, (CDG) has been more like a performance group.”
THE CONTENTS DIFFERENCE What else makes Contents Interiors different from other home furnishings retailers in the Tucson market?
Contents Interiors’ “master plan,” sort of a house call on steroids, is big differentiator for the store.
“It’s not just a house call, we do an extensive interview to pin down likes and dislikes, the customer’s goals for the home,” Scott-Anderson said. “We have a graphic artist who produces floor plans to scale with rugs and furniture included, and we deliver that in a formal presentation.
“We’re about being professional designers and giving people a program they’ll be happy with, that fits their home, and avoids buying mistakes.”
That tailored approach has the partners feeling good about a rebounding market for home furnishings, especially at better price points.
The store didn’t have any debt going into the recession, and during slow times, events such as art shows and design seminars kept people coming through the doors even if their buying appetites weren’t as strong as before the real estate bubble burst back in 2008.
“We’re on Fort Lowell street, where there were eight furniture stores,” before the recession, Scott-Anderson recalled. “We’d advertise together as the Fort Lowell Furniture District. There are three left.”
For the past 11 months, business has been very good, Bell said.
“We held our breath for five years, but now homes and subdivisions are building again—Tucson had a huge housing bubble,” she noted. “We’ve initiated a realtor program where we sign up realtors and give them a gift certificate for new home owners to come shop with us. Who sees a homeowner sooner than the realtor? That is proving very successful in getting new customers, and we include it as part of our advertising program.”
The program really took off after the partners hired Lee Goodrum as realtor program director.
“He goes to open houses and realtor meetings for presentations,” Scott Anderson said. “The fact we have someone managing that program is what made it successful. Carol and I had been doing it in our spare time, but there’s too much going on in the market for us to get the most out of it and run the store at the same time.”
CRYSTAL BALLING Looking ahead, the partners believe technology will have the biggest impact on how furniture retailers operate. They are exploring ways to utilize technology to enhance brick-and-mortar stores’ competitive position vis à vis online retailers.
“I’m not an Internet shopper yet, but I find myself going online a lot because it’s so easy,” Bell said. “When I see some of the Web sites like Joss & Main, they’re doing a fabulous job with room presentations. Brick-and-mortar stores need to do more to bring technology into our environment.”
That doesn’t necessarily mean selling online.
“It’s not who we are,” Scott-Anderson said. “Our business model is having a professional designer help people outfit their homes.”
One of the vendors with which Contents Interiors’ has an exclusive in Tucson, Lee Inds., has partnered with an online magazine, RestyleSource.com. It’s an example of the sort of technology the store wants to pursue.
“If you like something in one of the articles there, you can find out who carries it,” Bell said. “If you click on our store, it shows the Lee product we carry and a presentation of what we do. This is a Web site that’s all about getting people into brick-and-mortar stores.”
Along with market exclusives from the likes of Lee and American Leather, Contents also focuses on private labeling in order to combat showrooming.
“And when they say they saw an item in the store online, we coach our staff to explain the service level we offer,” Bell said. “We tell them to read the fine print on shipping, ask if the (online dealer) handles warranty problems or damage in transit. They might not bring the furniture inside the home, un-box it and set it up.
“What if there’s a problem down the road? We come to the house to make sure it’s right.”
GENDER GAP For the most part, Bell and Scott-Anderson, find advantages in running a women-owned business. Still, furniture remains a boys’ club in some ways.
“The one thing that comes up to this day is if we walk into a new showroom at market, they want to know if we’re independent designers or have a showroom,” Bell said. “I guarantee you a husband-and-wife team doesn’t get that question.”
That’s why the Contents partners put a photograph of their store on the back of their business cards: “It gets us past that quickly,” Bell said.
Scott-Anderson believes that two women bosses create a different—in many ways better—culture in the store.
“I believe we’ve built a company that’s like a family,” she said. “Of our 10 employees, half have been with us for eight years or longer.
“I believe it’s helped create a nurturing environment for our employees.”
“We knew she was wonderful, just not how wonderful,” Bell said. “We’re on our fourth bookkeeper so far this year. Losing a person, especially in bookkeeping, has been a challenge.”
Unreasonable customers—fortunately a rarity at Contents—account for most of Vice President Tamara Scott-Anderson’s sleep deprivation.
“The customer is not always right,” she said. “I can deal with angry customers who are reasonable. It’s the ones who have unrealistic expectations that are hard to handle.”
August 22,
2014 by in Industry, Internet
The benefit of a historical perspective of the Internet in our industry could provide some insight into the question of whether or not the Internet is a blessing or a curse. Some may remember the dotcom start-up FurnitureFan, a portal that allowed consumers to search for great pieces of furniture by style or room or manufacturer.
Subsequently, the consumer was directed to a retailer in the area where he or she lived. While conceptualized by industry insiders with venture capital funds, it did not result in success during these dotcom years. I became personally involved at the end attempting to restructure an idea that was before its time.
In the summer of 1992 at the American Home Furnishings Alliance marketing meeting in Hilton Head, S.C., I presented consumer research reporting only 2 percent of consumers visited the Internet before shopping for furniture. Luckily, I said we would continue to monitor it since we believed it would increase. We did, and the most recent statistics show that 73 percent of consumers now visit the Internet as a first step to shopping for furniture.
The logical expansion of the Internet into e-commerce led to the next challenge for the furniture industry. This development allowed industry outsiders, such as Wayfair (formerly CNN Stores) to bypass the slow-to-adapt industry and go directly to the consumer. I am sure that if we check the DNA of Wayfair we will find some kinship to FurnitureFan, both of which are Boston-based.
This is not to say all of the industry ignored the potential of the Internet or e-commerce technology. Unfortunately several early adopters, recognized retailers, adopted the e-tailer strategy and ultimately failed. Now another group of well-established retailers are pursuing the same opportunity. The results are too early to report. This stroll down Memory Lane is relevant only to say that the Internet is no different from any other technology that emerges and is embraced by the consumers we serve.
We are not encouraging furniture retailers and suppliers to change their business strategy to an Internet strategy. The preceding has illustrated the pitfalls of following approaches without the technical expertise or capital to succeed. Rather it is to encourage retailers and suppliers to address the reasons consumers are embracing the Internet and to understand how their business models can be modified to deliver the same experience. Consider addressing these reasons.
· The consumers’ ease of finding what they are looking for — 26 percent of consumers will leave a brick-and-mortar store because they can’t find the desired product.
· No selling pressure, only information — the younger consumers under the age of 35 dislike pressure selling. Just give them the facts.
· A total home furnishings solution, not merely the major products — consumers are looking for a lifestyle solution, not just a sofa.
In conclusion, the Internet is not a new distribution channel, but it is the way a growing number of consumers want to purchase furniture. What is the solution for traditional brick and mortar retailers who do not want to become e-tailers? Make your in-store retail experience appeal to the needs and the desires of that consumer who walks in your door.