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From Home Furnishing Business

Merchandising Success: Logic or Luck?

Where is the magic in the furniture industry?  The majority opinion is that it is merchandising.  However, that term is as mystical as anything in the furniture industry.  This industry lore is punctuated by references to manufacturers as product men or retailers as great merchants.  The success of many manufacturers and retailers is attributed to the talents of those individuals in merchandising, designing, and selecting products that the consumer loves.

As the industry struggles with what is referred to as the “commoditization” which relegates furniture to a utilization status to be used and discarded rather than cherished and passed on to the next generation.  As is presented in the Statistically Speaking article, the consumer price index declined for the fourth year while other consumer products have increased 10 percent over the same period.

Can we look to merchandising to bring the consumer back into the store to make aspirational purchases instead of searching for the best price only ignoring the value proposition?  Before casting our hopes on merchandising it may be good to define it.   The objective of merchandising, whether a supplier or retailer, is to present to the targeted consumer a selection of product that appeals to that targeted consumer and, rising above price, becomes  a “must have” purchase.  To accomplish this requires a combination of many functional areas all of which are focused on satisfying the goal of enticing the consumer.

The connecting point between the supplier and the retailer is the consumer.  Unfortunately, that is the point that is most often ignored.  In fact, merchandising suffers from both suppliers and retailers working in silo only coming together at Market to see if the product concept envisaged by the supplier matches the merchandise strategy defined by the retailer.  Only later the consumer is engaged by the retailer on the selling floors for the thumbs up or thumbs down.  It is too late at that point.  Unfortunately, merchandising takes time and money.  However, product failure consumes even more money and time. 

Planning? Marketing? Who has time for that?  Savvy furniture manufacturers and retailers say it’s critical to make plenty of time for merchandising.  It’s what separates the leaders from the also-rans.  In the home furnishings space, merchandising is critical at both the wholesale and retail levels of the business.  A manufacturer’s trendy, but poorly merchandised line that, for instance, fails to address a critical price point, is likely to languish.  “If the product isn’t right, then it really doesn’t matter what the price is,” said Pat Watson, vice president of merchandising at Hooker Furniture. “You have to be able to merchandise at certain price points.”

By the same token, a retailer who buys a trendy, well-merchandised line, but displays it haphazardly on the showroom floor is likely to have similar results.   “Unless you’re having some kind of a warehouse sale, I don’t see how you can just line up a bunch of sofas and expect to sell many of them,” said Jeff Selik, general manager of contemporary retailer Hillside Furniture.

Retail executives say manufacturers nearly always merchandise their showrooms by collection, or at least by product category.  However, the retail merchandising story varies widely. Some retailers set aside dedicated space for major collections — especially if they are licensed collections such as Standard Furniture’s mega-successful Magnolia Home or Klaussner’s popular Trisha Yearwood line.  There are retailers who merchandise their sales floors using lifestyle vignettes.  South Florida-based El Dorado Furniture is a standout here.   Others arrange products by category, by style, by price point, or any combination of the above.  “We’re all searching for something that will really entice the consumer,” said Geoff Beaston, senior vice president of case goods at Klaussner.

The Design Story

Design, of course, plays a huge role in any merchandising scheme. And that’s a big reason why manufacturers often urge dealers to display all pieces of high-profile collections together. They argue that good design can’t be fully appreciated if a collection is broken into items and scattered throughout the store.   Design-focused displays also give manufacturers and retailers a chance to tell a story – a story they hope will capture the consumer’s interest and motivate that consumer to add a part of that story to the home. 

 For example, the story behind Fine Furniture Design’s licensed Biltmore collection is one of a fabulously wealthy man – George Vanderbilt – and the magnificent 250-room “country retreat” he built in the Blue Ridge Mountains of western North Carolina in the 1890s.  Today, the home and the surrounding Biltmore Estate are open to the public, and the vast property is owned and managed by Vanderbilt’s descendants.  “We try to come up with classic designs that reflect what we see at Biltmore House, but are functionally relevant for today,” said Eric Graham, president of Fine Furniture Design.

The design of Stanley Furniture’s newest collection, Havana Crossing, is anything but classic, but it has a solid merchandising story centered around a country most of the world has begun to see only recently.  Randy Wells, Stanley’s vice president of creative, said the collection, which will begin shipping to retailers this spring, features a 1950s mid-century modern design that is found throughout Havana today. The city’s unique architecture, he said, gives the appearance that it’s stuck in time.   “People fall in love with a story, and there’s a unique story behind each piece in the entire collection,” Wells said. “They can learn about the place (Havana) and the people who live there.”

For that reason the company is urging dealers to display Havana Crossing in a dedicated space, using the storyboards and other material the company has developed that describes the design inspiration for many pieces and discusses the historic significance of several key buildings.  “Havana is a very special place that the world should see,” said Wells, noting that a percentage of sales from the new collection will be donated to groups working to restore the city’s historic buildings.  Stanley devoted a large chunk of its showroom to the Havana Crossing launch at last October’s market.

Producers say input and inspiration from retailers also is an important part of the process, and Hooker Furniture, for one, takes it a step further by meeting with small groups of dealers once or twice a year to discuss upcoming product launches.

The meetings, which the company calls Dealer Councils, often result in design changes and provide other valuable input, said Hank Long, the company’s senior vice president for merchandising and design.

“We’ve come out with some great product by listening to them,” Long said of the Dealer Council meetings. “You can always learn a lot by listening to your customers.”

He said a meeting typically involves representatives of 15 to 20 dealers – some of whom may be retail sales associates. Attendees are surveyed individually prior to the meeting, and the results are shared with the group. That often spurs additional discussion, which can result in more ideas for improvement, he explained.

“It’s usually helpful to let them bounce ideas off of one another,” said Long, noting that the subjective nature of design makes it impossible to pin down a “right” or “wrong” idea.

Plus, the relationships fostered by the meetings give the company an edge in what Long calls the “tiebreaker,” when a dealer is trying to decide whether to make room for new Hooker Furniture product or that of a competitor.

“It’s good for all those tiebreakers. When everything else is just about equal, they may be more likely to give it (product placement) to us,” Long said.

Watson agreed that the showroom display is critical from a merchandising standpoint because it often influences how the retailer displays it.  He said Hooker Furniture’s merchandising team meets regularly with the showroom design team to discuss how various collections should be displayed. And before a market begins, the sales and merchandising force is provided with a detailed list of the accessories used, names of other vendors used, and even the specific color of the paint and/or wallpaper. That’s because many retailers, especially smaller operations that don’t have in-house merchandising teams, want to replicate what they see in the showroom as closely as possible, he said.   “We try to help the showroom designer get the feel of the environment we’re trying to create for the collection,” Watson said.

Selik, for one, encourages manufacturers to use as many vignette displays as possible because it simplifies his job as retail buyer. He said his time at Market is limited.  Therefore, a manufacturer that ships him the rugs, occasional tables or other accessories in his displays – or at least gives him the name of the vendor for each product – is more likely to get his attention.  “If I can get these items in their showroom, I don’t have to shop for them when I go to High Point or Las Vegas,” said Selik. “It’s a better use of my time … and it makes their stuff look a lot better.”

Selik said vignettes are critical to Hillside Furniture’s merchandising scheme because he believes that it’s really important for people to visualize what it will look like in their home.  But he cautioned that it’s also important to merchandise vignettes with items that blend well together and are similar on the price spectrum. “You don’t want a beautiful $3,000 leather sofa with a $149 cocktail table,” he said. “People who can afford a high-end sofa usually aren’t going to want to buy an inexpensive table to go with it.”

New Product Churn

Like many retailers, Selik wants to see new product at each of the five markets he attends every year and many vendors comply – albeit reluctantly. Some furniture manufacturers would like to follow the lead of the bedding industry and concentrate product introductions at a single market (the January Vegas show), but most feel compelled to have something new at each High Point and Las Vegas market.

Beaston, of Klaussner, said “it’s crazy” to plan merchandising strategy that way, but no one has come up with a better idea. And for his part, Graham of Fine Furniture Designs believes such frequent introductions are almost a necessary evil to keep retail sales people motivated to sell a particular company’s product line.  “A consumer only shops a furniture store once every few years, but the sales people are there every day,” Graham said. “They need to see something new to keep them interested.”

Licensing Success Stories

One merchandising scheme that has been a tried-and-true winner for Fine Furniture Designs, Klaussner and numerous other manufacturers is licensed collections. While such deals can make product development and merchandising more complex (depending on the level of involvement of the licensor), many have found it’s an effective way to open new accounts and secure more floor space from existing accounts.

“Very few furniture manufacturers have a brand name, but licensing gives us a brand,” said Beaston, whose company has licensing deals with Trisha Yearwood and North Carolina artist William Mangum. “I don’t really care if the consumer knows if her furniture came from Klaussner or not … as long as she buys Trisha Yearwood’s or William Mangum’s furniture.”  Beaston said the company is very pleased with both licensing programs, noting that five collections have been launched with Mangum since that line debuted in October 2013, and the company’s third Trisha Yearwood collection will be unveiled later this year.   “What it has done for Klaussner is that it has opened people’s eyes to the fact that we are a total solutions company,” he said. “We’re not just upholstery.”

According to Beaston, Mangum and Yearwood are “very much involved” in the product development process and the personal relationships that have evolved between them and the company have been big contributors to the success of the programs.  “Nothing takes the place of good product at value. But when we can deliver that with a licensing story, that’s a tremendous competitive advantage,” he said.

Graham agreed, noting that Fine Furniture Designs’ Biltmore products, which are at the upper end of the company’s product line, provide aspirational purchase opportunities. Those aspirations are especially important in reaching consumers in the southeastern U.S., where the majority of Biltmore Estate’s visitors live. However, it has become a destination stop for tourists from all over the world.  “There’s an authenticity to it,” he said of FFD’s Biltmore line. “There is a difference between just renting a name … and providing a product that has an air of authenticity to it.”

The Biltmore collection was launched in April 2013, and Graham said the company just signed a five-year extension of the licensing agreement. About 140 pieces are available now, and several more will be introduced at the April High Point Market.  He said occasional pieces in the collection have been the best performers of late, but dining room, especially casual dining, is also doing well. Dining rooms start at $2,499 for a table and four chairs. 

The collection is being produced at FFD’s factories in China, and Graham believes that provides some peace of mind for the Biltmore licensor, knowing the company is not using third-party outsourcing.  “We’re not just going out and finding somebody to make it for us, and slap our name on the box,” he said. “We’re using our factories and our warehouse, which has about 30,000 pieces of furniture ready to go at any time.”

Licensing, of course, has its risks. Just look at the licensing deals Paula Deen lost a few years ago when she was accused of making racially-insensitive comments (although Universal Furniture and its sister company Craftmaster stuck with her, and the program has done well).  However, some furniture licensing deals have been spectacular flops. (Think Elvis and Sponge Bob.)

But neither Graham nor Beaston have had any hint of such problems with their programs, and they have no reason to believe that will change. Graham said the prestige of the Biltmore brand and the great reputations of the Vanderbilt family erase those worries.  “It’s not going to do us any harm,” he said. “They’re not out there getting DUIs or going to prison. They’re just being good stewards of the property they own.”

---------------------------

The answer to the question, “How do you merchandise?” is often a loose series of comments that leaves the inquirer with the perception that the magic cannot be revealed without the statement, “If I told you, I would have to kill you.”  Home Furnishings Business corralled two leading industry participants, each of whom could be referred to as a “product man” or “merchant,” to get the straight story.  However, both of these individuals would reject the label, insisting that it takes a team to execute merchandising and it does.

Building the Perfect Beast

Merchandising a stationary upholstery line may seem like a magical combination of creative thoughts, clairvoyance, luck or maybe even directions from some alien intelligence.   Clearly, creativity is critical and working hard to find a style with sales velocity has a bit of luck attached to it.  However, there is much more to finding the winning recipe for an upholstery product portfolio.

To start, a clear understanding as to whom you want to sell and an understanding of the key items needed to start a product portfolio to address your audience becomes the first step.  This is where your due diligence on your competition becomes critical.  You either have to zig where they zag, or do what they do at a better value (not only just cheaper which gets you into a pricing box, but also with better sales/marketing support or better operational support).  Be disciplined to build the fundamental merchandising scheme with products to hit the “good, better, best” formula.

Many elements of style, shape, or scale attract the buyer(s).  With this in mind, as you research the competition by style and price point rationale, ask why these items sell as well as they do.  Is it the overall silhouette, comfort level, cover application, scale, function, price, or a combination of several of these elements? Use this information to build into your styling as the models are being discussed and planned for development or purchase. 

As the designs are selected, close attention to every component used to develop the model is weighed to help reach the cost target (to hit the selling price with appropriate margin).  Do you select softwood plywood, strand board, hardwood plywood, or even solid wood for the frame construction?  Each has it’s own attributes, but can vary in cost by as much as $50 added to the frame cost.  Which one is more readily available from a reliable source, which one can be replicated in the factory more efficiently with automated equipment, which gives you a stronger frame with less labor – and still hits your cost for the target selling price? 

Foam and filling materials (cut fiber) are key components whose cost varies greatly.  A set of foam for a sofa can range in cost from $65 up to $100 depending on the density, ILD (Indentation Load Deflection), and size needed for the model.  Review solid foam versus coil/foam seat cores for costs/comfort relationship.  Seat cores have a ratio to hit the target comfort based on the ILD which is a measurement of the hardness of the foam, the weight or density (how much chemicals/materials are used in the foam to increase its cellular strength), and the dimensions of the seat core.  Care in selecting the right foam for the model at the right comfort/durability and cost is very critical.  Foam is also used to pad out the frame along with bonded fiber and other such materials. Likewise the type (virgin fiber, mixed fiber, short staple, long staple, slickened, number of crimps per inch, for example) and amount of filling materials (used in the backs and/or arm pillows) has to be justified to achieve the look, comfort, and durability to hit the target cost.

One of the largest purchased components is the cover.  The cost of the cover varies based on the amount needed models’ cutting and sewing pattern (is it a match pattern, is it a chopper, is it up the roll), the base cost of the cover (if a top grain leather with a split match is used, it can be as much as 65% of the total build cost of the item), the yield on cutting of the cover and, of course, the sewing labor.  In selecting the cover one must keep the price point in mind, but get the maximum look, feel and durability that you can afford at each price point level.  Paying close attention to color, patterns, and textural trends is important to maximize your item’s look and differentiate it from the competition.  The old axiom, “the cover sells the bones” is a true statement.

Other components that warrant attention in the costing and product line build-up are:

Seat suspensions – do you use eight-way hand tied, drop-in coils, webbing, sinuous wire, drop-in sinuous wire.  Each has a cost implication and a comfort/durability consequence

Back suspensions – sinuous wire, webbing, or elastic sheeting

Scale or size – the larger the item the more components used

Legs – made into the frame, screwed on; solid wood, resin, plastic, metal.  Legs can range from a few dollars for each piece to as much as $14-$16 each piece (heavily carved and multi-finished).

Throw pillows – size, cost of cover used (matched or chopped), inter-bagged and zippered closed, blown directly into the cover envelope and sewn shut, and the type of filling used (feathers, a mixture of feathers/fiber or fiber) can vary the cost of a pillow from $11 up to as much as $50 each.

Packaging – how much and what type is needed to ensure the item’s arrival to the end user without damage – cartons, shrink wrapped with trays/side suspensions, plastic bag tapped enclosed; costs can run from $10 to $35 in general for the type of sofa pack selected

Replication within the factory – Will the item run efficiently down the line in the factory?

From a manufacturing point of view, working closely with your product development and manufacturing team along with accounting is fundamental to reach your selling prices and margin requirements for the long-term health of the organization.  This is also true for retail merchants since they are charged with producing profitable sales across their assortment and maximizing their sales potential by having what their customers want at the price points that entice them.

As you build up the line with key styling staples like roll arm traditional looks or casual pillow top styles, keep in mind developing the line with some product differentiation to entice the buyer(s) to purchase from you.  Over the years in the furniture business, we have all witnessed a style jump off the sale chart and, within a few months, weeks or days, the competition has their own versions.  These items come along when all the elements of style, scale, comfort, and cover cross at the same time.  Learning from these moments is critical as the line is built up.  It may be as simple as an added sew line, an attractive pillow combination, the shape of the leg or some other design component.  Always keep in mind the price point level for the model and use more intricate shaping, sewing and components to walk up the price points.  You want to be able to demonstrate to your buyers your ability to fulfill their price point and style needs without their having to go anywhere else.

As the product portfolio strategy develops it is easy to imagine attacking higher price points since that’s the promise land of margins and, hopefully, velocity.  It is much more fun to work with more expensive covers and components than it is to wring out the best look for the least amount of cost in the lower price point arena.  One has to be able to take the customer on this journey with the least amount of questioning possible (“We don’t look to you for this price point” is a no-sale statement).  The value proposition you have has to be intact even as you walk them up the price point either from a style, scale or cover point view.  At the same time, keep a watch on your flank as the competition will try to eat into your base portfolio looks.  Shoring up the other price point levels as you take the price points up is the key to maintaining the sales and position of the line with your customers.

As you can see, components, manufacturing and strategy can drive your thinking on the scale, shape, comfort and look of the product line as it comes together.  Waving a magic wand would be easier.  However, until Harry Potter becomes an upholstery merchandiser, we will have to rely on the old fashion methods.

Port Woes

Just when players in the furniture industry think they have the logistics side of importing all figured out, something comes along and smacks the entire industry in the face.

The most recent slap was painful.

The West Coast labor dispute that caused a months-long slowdown at some of the busiest ports in the U.S hurt. Those same ports are the ones many furniture importers use to bring in their goods for sale here in our country. The logjam is still being cleaned up and will be for sometime.

While there’s a preliminary agreement in place that have workers moving again, there’s a rogue faction that has said it disagrees with the agreement. Negotiations continued at our presstime.

This has been a precarious situation for our industry. Furniture executives are quite adept at tackling problems head on and finding creative solutions. Once the solution is implemented, the problem gets checked off the list.

The port slowdowns—perhaps in the future it will be port shutdowns—fell completely out of reach for the industry’s brightest problem solvers. The issue impacted an abundance of suppliers and retailers. The few domestic suppliers were unscathed, of course, but for the most part, this has been an across-the-board blow.

And, the timing couldn’t have been worse. Companies involved in premarket in High Point were struggling to get goods in time. Regrettably, some missed out and their product was still sitting on container ships waiting their turn to come in for unloading. Other companies opted to pay the additional cost of sending goods via air freight, and still more paid the cost of surcharges that felt more like exorbitant premiums.

I’ve heard from a few who were still waiting at the end of March for product to be unloaded. I’ll be interested to see in Market showrooms how many new collections didn’t make it to the big dance.

The supply chain broke down, and it stands to happen again when the union contract expires at ports on the East Coast in the next couple of years.

Perhaps it’s time to start crafting a strategy for when that time comes. I’m not sure what the plan is or how it will work, but I do know that a predicament like this one would be just as painful.

Take 5: Steve Stagner

Welcome to the first installment of Home Furnishings Business’ new feature, Take 5.

Each month, we’ll pose five questions to a mover and shaker in home furnishings. We kick things off with Steve Stagner, President and CEO of Houston-based Mattress Firm, who discusses the bedding retailer’s acquisition strategy during its eight-year growth spurt.

Home Furnishings Business: Mattress Firm has made 18 acquisitions since 2006. What’s the driving strategy behind the acquisition mode?

Competitors have entered our markets, and some have done well, but as we develop a fortress position it enables us to drive profitability. Those 18 acquisitions since 2006 enabled us to build that fortress position faster.

(Acquisitions) help us leverage scale for several advantages: increasing advertising at a more efficient rate; increasing our presence in the marketplace; and increasing our ability to educate consumers in those markets about the benefits of better sleep.

HFB: Mattress Firm will be up to 2,030-plus stores with the latest acquisition of Sleep Train. Is there still an appetite for more?

Stagner: We have a long history of doing acquisitions, and right now we have a lot going on with Sleep Train (311 stores), and concurrently Back to Bed (135 stores).

Our primary focus right now is on digesting these acquisitions. We want to ensure a smooth transition and success in the long term. That said, there is an appetite for more. We could do some smaller ones where it makes sense in the near term--our stated goal is to go coast-to-coast and build a national presence.

(Digesting) is our preference right now, but we do have a fantastic organization that's demonstrated a capacity to handle a lot of activity.

HFB: Do you plan to convert any of the new brands to the Mattress Firm name, or will they continue operating under their own banner?

Stagner: Our first focus is to expand the Mattress Firm brand across the country to leverage the benefits of advertising, so yes, we will convert some locations to Mattress Firm.

That said, many locations, particularly with Sleep Train, have done a fantastic job building brand equity in their markets. We'll examine that over time. Sleep Train currently has a multi-brand approach on the West Coast, and we're comfortable with their experience operating a multi-brand company.

We feel the market can sustain multiple brands.

HFB: Something about the companies you’ve acquired obviously caught your eye. What criteria do you consider when looking at an acquisition?

Stagner: We look at a variety of things such as the quality of the real estate, the quality of the culture.

One of the most important things is what their position in the marketplace is. What share do they have? How does that fit our goals in that particular marketplace where they operate?

HFB: Moving ahead, what challenges do you see for the bedding retail segment? What indicators are most important to ensure Mattress Firm remains successful?

Stagner: The largest challenge we have is battling an apathetic consumer. There are a lot of consumers, based on our research, who have mattresses that are more than 8-years-old.

We believe that, both as retailers collectively and the wholesalers, the opportunity to provide in our advertising the benefits of better sleep. We can unlock a lot of consumers who, candidly, are sitting on the sidelines.

We look to strategic indicators such as what is our relative market share?

We also measure our turnover rates. We have lower turnover rates than most of our peers and retailers in general. We focus on our culture and our people. We focus on our customer care and response time.

Those are the leading indicators--the overall effectiveness of our people and culture, and our customer service. If we take care of those, the lagging indicator of profitability will be fine.

 



 



 

 

Are You a Merchant?

What Does Your Store Sell? Furniture, or Solutions That Meet Your Shoppers' Aspirations? 

Merchandising is an art. It’s also a vital function of a retail store’s profitability.

How well does a store blend eye-catching floor appeal with a product mix that brings dollars to the bottom line?

Home furnishings retailers can blend aesthetics with dollars and cents to boost the bottom line.

The execution of merchandising covers a broad range of disciplines including what stores display from a style and price point perspective to how it is displayed. The starting point is determining how much of the selling space is allocated to a product category.

The accompanying graphic shows FurnitureCore participants’ floor allotments through this year’s first quarter, excluding bedding. The point is, analytics will never make a poor merchant great, but they can allow an average merchant to approach that threshold.

 

UPHOLSTERY RULES IN FURNITURE 

At stores reporting to FurnitureCore, upholstery accounts for more than 51 percent of furniture sales; case goods almost 42 percent; and occasional, almost 9.5 percent. Accessories and outdoor furniture have 3.5 percent and 3.4 percent, respectively.

We asked some retailers about their hottest categories, and their responses lined up pretty well with those overall numbers.

“Upholstery is what is working right now and we are devoting more floor space to upholstery,” said Peggy Burns, queen bee at Circle Furniture in Acton, Mass.

“For us, it’s stationary upholstery, then bedroom and bedding on account of the extra activity with power bases,” said Dorian Sims, president of Stacy Furniture & Design in Grapevine, Texas.

Sims is expanding its reach in the category, as well.

“In upholstery, we’re introducing different lifestyles and concentrating on more fashion at our price points—a little more color, a little cleaner lines than what we’ve traditionally done in the Texas market,” Sims said.

 

PRESENTATION ISSUES 

Within the designated product areas, an allocation must be made to both price points and styles. If a retailer focuses on one price point, it is simpler.

As an example, a middle-price retailer might display fabric sofas at retail price points between $399 and $899, which addresses more than 50 percent industry sales. The decision to venture into upper price points—sofas ranging to $2,000, for example—might target another 25 percent-plus of industry sales.

The question here: Can the retailer allocate 25 percent to 35 percent of the department to provide a proper selection?

At the next level of detail is the percent of slots by price point. Instead of relying on a “feel,” take a look at industry sales—look at the accompanying graphic for percentage by units and dollars of middle price points.

This retailer’s sales, we should note, are skewed to the $599 price point at the expense of the higher price points. The following graphic compares the hypothetical retailer’s slot allocation to the industry average.

“Obviously, with more than 47 percent of the floor assortment allocated to $500 to 599, that is where the majority of the sales occur,” said Bob George, CEO of Impact Consulting the parent company of FurnitureCore. “Would allocating more slots to higher price points improve overall sales? We believe so.”

 

SMALL-STORE ADVANTAGE? 

Sometimes smaller footprint stores perform better than the 200,000-square-foot behemoth. Why?

In a smaller, say 45,000-square-foot space, retailers have be more judicious in product selection. It requires them to really know their customers' tastes—a rifle versus shotgun approach, let’s say.

Circle Furniture’s stores fit that smaller category in terms of footprint.

“We tend to use a broader range of bold color than most stores and we are known for our floors using color,” Burns said. “Of course, not everyone can relate, as they would prefer a neutral pallet, as it is easier to envision it in their home.

“We have really terrific designers who will work with the customer and create a beautiful room in the customers vision.”

Stacy Furniture & Design has two 90,000-plus-square-foot stores, along with a 42,000-square-foot location. The latter has a distinct merchandising scheme.

“Our strategy there has been flooring our best-sellers for the most part, but we rotate items in and out faster” than in the larger locations, Sims said. “That floor space is too valuable to leave product out a long time for testing.”

 

VENDOR CHANGES 

Making a major vendor change in categories you floor is a challenge when it comes to merchandising. Beyond the training and advertising issues involved, re-structuring the showroom floor can make for headaches.

Circle Furniture is pretty lucky in that regard, Burns said.

“It is a major undertaking to add a new upholstery vendor because of all the fabric samples,” she said. “We are very fortunate right now that we have some great vendor partners, and we don’t need to add another vendor today. We would have to have a very specific need to add a major vendor today.”

At Stacy Furniture, Sims said they have a predicament when it comes to flooring new vendors.

“In the bigger stores, what works for me in bringing in a new vendor is going big,” Sims said. “If I haven’t dedicated six or eight new slots, it’s not a compelling enough opportunity for (customers) to learn more.

“And the larger the launch, it shows my commitment to the manufacturer. A lot of people cherry pick lines, and when I go big, I would hope that would help us when distribution issues come up. If I do it the right way, I should have a little more protection.”

She added that the cost of an unsuccessful buy seems much greater these days, especially when business is inconsistent.

“When I launch, I want to give it every opportunity to be successful from the beginning,” Sims said.

Smaller dealers should make the decision to stand for something as opposed to try being all things to every customer, said retail design specialist Connie Post of Connie Post International.

“By this I mean look at where the most return business is, and use more floor space to have a good selection to appear dominant in that category,” she said.

 

BOTTOM LINE: SALES PER SQUARE FOOT 

What are retailers doing to improve sales per square foot when it comes to merchandising, especially when they don’t have as much square footage to work with than big boxes?

It’s not rocket science: Look at product turns.

“We have very small footprints so it is important that what is on our floors is selling and earning the rent,” said Circle’s Burns. “If something isn’t working out we will take it our fairly quickly and try something new. We are constantly trying to ferret out the new best seller. We pay close attention to what customers are asking for should there be a need we cannot meet.”

Sims at Stacy Furniture & Design said it’s a must for product to prove itself on the floor at the retailer’s smaller store. Otherwise, the product is tossed from the merchandising mix quickly.

That particular store’s space is too valuable to allow a lengthy merchandise test.

Don’t forget supplementary sales, and the role merchandising plays there

“It’s all about accessorization and making each vignette its own unique story,” Sims said. “Adding the accessories and the rugs for easier add-on sales that build tickets.”

In smaller stores, retailers have be more judicious in product selection.

It’s indeed harder for a smaller footprint store to be “everything to everybody,” said Tom Zollar, practice manager for Impact Consulting. This requires retailers to really know and target their consumer’s wants and needs.

“The most successful small retailers do this with a combination of research, experience and what I call ‘customer intuition,’” he said. “Basically they watch what is happening in their market, they track what is selling in the store, they ask their customers questions and they listen to their answers. Salespeople, local reps, in-store events aimed at product feedback will all help you focus your merchandising decisions and increase your success rate.

“It all starts with knowing your market through quality research and analysis, then tracking and studying your results. But a consistently accurate ‘gut feel’ for what they want can be huge.”

 

DO SOME SURGERY

Bob Phibbs, the “Retail Doctor”, suggests going through a retailer’s product selection and doing some serious cutting.

“Cut your SKUs by 20 percent and give your displays some space,” Phibbs said. “The days of doing furniture like a department store are history.

“The consumer already has too much choice. The idea that you line up four brown recliners, maybe in a slightly different shade is old.”

Take a chance.

“Car dealers will find the most outlandish color, and that’s the first car off the lot,” Phibbs said. “Why not a turquoise sofa with a yellow pillow? Make some bold choices and stand by it—don’t discount it.

Appealing to various shopping demographics can be tricky. Different generations tend to prefer different styles and different store layouts.

Drilling down and really examining the different segments can make a difference in a retailer’s success—or failure.

Who's your customer? Who are you trying to sell? Does it matter for most retailers, and do they know the difference?

Do shoppers want a big selection of like product, or lifestyle vignettes? How do you make the call, and are there particular categories that lend themselves to the different approaches?

Target specific products to specific consumer groups. While typically 50 percent of a retailer’s assortment sells to all consumers, the other half is preferred by certain segments. Tailoring the store’s assortment to the store’s demographics is the next frontier for the traditional retailer.

First, do you know your best-selling frames? Do you know this by age and income of the consumer?

There’s often been an assumption that younger shoppers like lifestyle presentations, and older shoppers like categories lined up like soldiers to better compare. You’d best think before making that assumption.

Bob Phibbs, the “Retail Doctor,” disagrees that older shoppers like a line of like product. More than that, he believes the idea that you can sell to all generations is “a little off.”

“Who still controls most disposable income?” he asked. “The millenials are getting used furniture. Highlight the boomer audience and encourage it to take something home today.”

Tom Zollar of Impact Consulting also doesn’t agree that older customers prefer commodity products lined up like soldiers.

“If so we might as well be Walmart,” he said. “However, in many cases, displaying product by category can simplify the shopping experience for your consumer and that does have some merit.

“If you feel the need to lay out your floor in this manner, then the best thing to do is to create small lifestyle pods or mini-galleries within each category. Whatever path you chose, it is extremely important for both your customer and your sales staff, that the flow of product throughout your store makes sense and is visually exciting—tough, but doable if you think it through and plan it out in a war room first.”

Stacy Furniture is still figuring out how to sell home furnishings to various age groups, and President Dorian Sims said she has bigger fish to fry, particularly with the addition of Nebraska Furniture Market to an already crowded Dallas, Texas-area market.

“I’m trying to separate myself from my competition versus speaking to a specific audience and their buying habits,” she said. “My typical customer does tend to be older. When we expand to appeal to younger customers, I think they’ll be attracted more to a lifestyle experience. That’s what they’re seeing with catalogs and online.

“Lifestyle is the best way for us to go. Even if millenials have done their research and know what they want, they’re so used to (drilling) down on their computer that a huge amount of product in rows is overwhelming.”

Acton, Mass-based Circle Furniture doesn’t discriminate among customers.

“Our customer is anyone with disposable income who wants and needs new furniture,” said Peggy Burns. “Generally they are older, as our price points tend to be higher and furniture has not yet become an important purchase for the younger crowd. We do our display in more of a lifestyle vignette and space is tight, so it is often more crammed than I would like. I don’t like a lot of accessories, I prefer to have the furniture be the focus.”

Retail design specialist Connie Post of Connie Post International said the new rebranding of home décor retailer Garden Ridge to At Home is an excellent example of appealing to multiple generations.

“Special vignettes show products that are cross merchandised, while some areas are still racked and stacked to show dominance in categories,” she said. “This is not typically how big boxes handle their displays.”

Within the newly formatted stores, the retailer shows completely decorated room displays.

“These displays show consumers how to bring it all together inviting and stimulating guests to buy more,” Post said.

 

 

 

 

 


Publisher's Letter : Merchandising Can Set Stores Apart

Consumers have more choice than ever before, and everyone is trying to get their money.

Most retailers are quick to say the ecommerce business models are difficult to compete against. They have lower overheads and in most case, fewer employees, both which allow them to offer the same products at lower prices. So what is a brick–and-mortar retailer to do?

When I did my holiday shopping last month, I bought no gifts online, not even one. Yes, it would have been easier to sit on my sofa, watch TV in my warm house and shop online. No crowds to deal with, no worries about parking, no strollers getting in my way, just me and an iPad knocking out my list of gifts.

Instead, I ventured out to the mall and small retail locations to shop. Why you ask? Because I wanted to see what was new, and what retailers were doing to promote these items.

I needed to learn the latest kid friendly items, so I could get those gifts for my nieces and nephews. Not having (or wanting) kids of my own, I needed to find out what was available. I needed help because the kid’s department is not a familiar stop.

While shopping, knowing this retail merchandising was coming up this month, I looked at things a bit differently. How were these stores merchandising? I began my “surveying” as I approached every store. What did the outside of the building look like? Were the windows clean so I could see in them? Were the aisles clean and passable? Was the presentation of products appealing to me? Could I find an associate to help me with questions? (Remember I’m in the children’s section.)

These are the differences between a retail location and shopping online. This is where you have the advantage. You have the opportunity to have grand displays, whether it is seasonal or not. You have the chance to create an ambience that can’t be duplicated on a Web site.
You invested in the premium location, now you need to offer a premium shopping experience, that’s how you separate yourself from other retailers and Web sites. Merchandising is more than placing your products on a shelf, it’s about the image you want your business to have. The businesses I like to shop are clean, neat, well-maintained and always ask me to please come back again. These are the things that will get shoppers in your door and back again.

This month’s issue covers the merchandising angle and is a great read to gain a better handle on store merchandising. Learn from your peers about what they are doing to create an environment that attracts customers and helps get products moving out your doors. I’m sure many of you believe you are hitting all the right buttons to make this happen. If you feel this way, walk out your door and do your own “survey” with your location and then go to your largest competitor’s store. If you are so busy you can’t find the time, just ask a customer on the showroom floor for an honest opinion, that could be interesting.
Hope to see you around market!

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