Bringing It All

June 30, 2006  by in UnCategorized   

By Home Furnishings Business in Customer Service on July 2006 You have a great-looking store, a knowledgeable and professional sales staff. A customer enjoys the shopping experience and selection you offer, and has found exactly what she wants for her home.

So far, it’s a great story, but the game ain’t over by a long shot. If the furniture doesn’t show up at your customer’s home when you said it would, and in good condition, all that goodwill can go right down the drain. Rest assured, she’ll tell all her friends about it, too.

No retailer would call delivery the fun part of the furniture business. Most store owners love the process of merchandising a compelling floor display and the challenge of closing a sale, but the work of getting that furniture to the customer on time and in good condition is a back-office issue that can make or break repeat business.

“We all tend to focus on the front end, because most of us are extroverted sales types,” said Giff Gates, president of Gates Home Furnishings in Grants Pass, Ore. “It’s easy for us as owners to avoid the back end of the business.”

Count Gates among retailers who’ve committed, with varying daily cutoff times, to same- and/or next-day delivery of furniture. The sheer process speed involved in pulling that off creates challenges that, if met, can carry over into more efficient delivery, whatever the customer’s time frame expectation.

Fast Times

When it comes to getting furniture to consumers fast, it’s hard to beat Gallery Furniture in Houston, where President Jim McIngvale has made quick delivery a cornerstone of his business for 25 years.

“If they want it today, they get it today­—we don’t have a lot of bullshit asterisks, and you can quote me on that,” McIngvale said. “The warehouse is open every night till midnight. We do what’s good for the customer at their convenience, not our convenience.”

It takes 80 trucks, a work force that buys into the company’s philosophy, and some long hours for Gallery to deliver so quickly. Are there any employee incentives for those performance expectations?

“They get to keep their jobs,” McIngvale said. “Seriously, we never miss a payroll, and they never miss a delivery. It’s just what we do, it’s not special training or incentives—it’s just taking care of customers, and our people understand what our company’s about. You can’t make same-day delivery at 10 p.m. if you’re at home asleep.”

Gallery also relies on tight relationships with suppliers who’ll meet the retailer’s shipping expectations. Cresent Furniture, for example, ships to Gallery every week, said Richard Tomkins, director of sales and marketing at the case goods importer.

“They order from us every Monday,” he said. “We have it ready to roll on Tuesday for a Thursday delivery in time for the weekend sales. They don’t always order the same quantity every week, but we know it’s coming. We know what their commitment is to delivery, and we try to support that.”

While the Gallery approach sounds simple—and it is when talking in terms of company culture—the actual execution of same-day delivery involves a mix of factors, including efficient systems, supply chain management, and even pricing. And those aspects of the business are key to retailers living up to the delivery time frames they give consumers, whether next week or next month.



Putting It All Together

In June 2004, Tamarac, Fla.-based City Furniture began offering same-day delivery at a single store, and rolled the concept out over the course of a year to all its locations in South Florida. City offers same-day delivery for shoppers closing their sale by 3 p.m., and next-day delivery at its six licensed Ashley Homestores in South Florida.

“In 2005 our success rate on delivery was close to 100 percent,” said Keith Koenig, president of City Furniture. “The only time it doesn’t happen is when the truck breaks down. The product leaves the warehouse on schedule 100 percent of the time.”

Close to half of City’s customers who close their sale before the 3 p.m. cutoff for same-day delivery choose that option, and Koenig said most of the remainder opt to receive their merchandise the next day.

“The most challenging part is labor management scheduling, if you’re going to really provide (same-day delivery), not just advertise it and then talk the customer out of it,” he said. “You need good integration from point-of-sale into your routing system and into your warehouse management system. It is not cheap, and it is not for the faint of heart. Next-day delivery is no easy trick either.”

City’s delivery planners keep track of when most business takes place, and divide each week into “waves.”

“We group the deliveries and have certain cutoffs during the day,” Koenig said.

City relies upon a proprietary POS package integrated directly to its ARC Logistics routing system, which then ties into the warehouse management system.

In-stock positions on merchandise are fundamental to quick delivery.

“The supply chain we’re dealing with is global, and if you’re going to stay in stock you have to order in a planned method that matches up with your sales and deliveries,” Koenig said. “Make it real clear to your suppliers that you’re trying to stay in stock at all times. If you (as a supplier) can’t deliver when you say you will, let your customers know, and that doesn’t matter whether it’s six weeks, eight weeks or 10 weeks. Whatever the commitment, we’ve plugged that product into the system to be here that day.”

Pricing policies are another consideration for retailers trying to plan ahead to be in-stock. Koenig said retailers typically can take two approaches to promotion: a sale, or percentage-off sale; and everyday low price. At City, the latter approach makes order-planning easier.

“Take a look at Wal-Mart—Wal-Mart doesn’t have any sales (promotions),” Koenig said. “I’m not saying we’re Wal-Mart, but if we’re $499 on a hot-selling sofa, during the next month we can count on doing at least 90 percent of the current month’s business on that piece, and no more than 110 to 120 percent. If we were to run it ‘on sale’ at $499, that skews the pattern. That’s one of the fundamental reasons our industry tends to be out of stock.”

Watching the Back End

The operational aspects of delivery are a part of a retailer’s business that shoppers might never see, but they are a key to customer satisfaction.

“The first thing you have to overcome is a lack of desire to really look at the back end of the business—that’s a problem with many retailers in general,” said Ron Wanek, chairman of Ashley Cos. “Too many retailers let (delivery) happen; they don’t make it happen.”

Logistical excellence has long been a priority for Ashley as a supplier—the company operates one of the largest, if not the largest, privately held intermodal shipment hubs in the United States. That focus carried through into its efforts at retail, where it has built the fast-growing Ashley Homestores network of licensed store fronts, the majority run by independent retailer licensees; of some 250 current locations, 12 are company-owned.

Wanek believes that when it comes to employee training and recognition, retailers sometimes give short shrift to the people working in their warehouse and on their trucks.

“Those workers need a store owner’s attention, and they need recognition, training and inspiration—at too many stores, they’re viewed as a bunch of grunts, but we certainly don’t see them that way,” he said. “If customers go out of their way to complement your delivery people, you should recognize that.“

Koenig said hiring delivery personnel who understand the importance of their role to the store’s success is vital to the completion of a sale—getting the product into a consumer’s home.

“People want to be part of a winning team, and in our case, they want to be part of the process,” he said.

Koenig related the importance of speedy delivery to customers through the example of a friend whose resume includes serving as chief executive officer of Mercedes North America, which found some surprising results when it queried consumers on their purchase priorities.

“They were doing consumer research on car purchasing, and asked, ‘Which would you prefer: your first choice of color in 11 days, or your second choice today,’” Koenig recalled. “Guess what—everyone chose today. They were shocked that consumers were willing to give up what they want to get a car more quickly. A customer’s biggest concern is not getting exactly what they say they want, but getting it when they want it. We’ve hired (delivery) associates that understand what we’re trying to accomplish.”

Back-end software systems can help retailers track where problems occur, whether personnel- or product-related.

“You need accountability in the process, so over time it’s important to collect that data that gives you information on which preppers, which product pickers and which drivers have issues—anyone who touches that product during the (delivery) process, who does well and who doesn’t,” said Lee Goodman, chief operating officer at five-store San Diego-area retailer Jerome’s. “You need to know which product has the highest rates of refusals, which needs special attention; which drivers do well for you, which product does well for you. That gives you a starting point on working on exceptions to a good customer experience.

“Whether they’re buying a lamp or a full room, they’re a customer. I track customers, not product. You do it right, or you do it wrong—there’s no in between.”

That kind of tracking is key to getting deliveries done right the first time around—with today’s gas prices, follow-up visits to consumers’ homes eat into profitability more than ever.

Goodman said that while he believes he has a top-notch retail software vendor—in Jerome’s case GERS Retail Systems—that understands the data-mining needs of furniture retailers, it’s up to the retailer to use it properly.

“It’s absolutely our responsibility to understand what needs to be tracked,” he said.

It doesn’t hurt to have non-competing retail colleagues take a look at your operation, said Gates at Gates Home Furnishings. Gates participates in a group of around 20 furniture stores that swap best practices and other advice.

“My group gave us high marks on merchandising and the front end, but dinged me when it came to my clearance center and warehouse,” he said. “I’d encourage anybody to participate in that kind of group. The independents who’ll stay alive are in these study groups.”

Gates also retained warehousing and delivery consultant Dan Bolger to examine his operation.

“We realized we needed an operations manager,” Gates said. “We had an office manager and a sales manager, but we didn’t have a level of management that dealt with the logistics of delivery—shipping, receiving, cycling inventory.”

Paying At The Pump

Fine-tuning the back-of-house aspects of delivery is even more important these days, considering the price of fuel—return visits to a consumer’s home, not to mention regular deliveries, cost a lot more than they did a year ago. Some retailers are finding consumers more understanding about delivery charges than before, since the price of gas affects everybody every day.

“Gas prices have eaten into profitability,” said Koenig at City Furniture. “Our entire delivery area is all of South Florida every day. When you get well into the Keys, which we hit several times a week, we charge a premium (on delivery).”

Wanek said that Ashley licensees develop their own delivery policies for the most part.

“There are a lot of factors that vary: expense of delivery, congestion, the geographic spread of their market,” he said. “In New York City, it’s certainly a lot different from Bozeman, Mont., when you look at delivery issues like that. In general terms, not just at Ashley Homestores, some dealers have put surcharges on delivery, and I haven’t heard where that’s really caused much customer push-back on merchandise. Most people haven’t complained about it to my knowledge since they understand those (fuel) price increases themselves.” HFB