Seizing the High Ground

January 31, 2007  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on February 2007 With furniture stores at low and middle price points fine-tuning their merchandising for the entire home, the challenge to high-end retailers looking to separate themselves from the pack has never been greater. Customers walking into, say, a Bassett Furniture Direct or Ashley HomeStore location will find an array of top-of-bed, lamps, wall art and other items to complete a room’s look that are on par, if not in scale and price but in scope, with the total merchandising schemes that have long defined more upscale retailers.

“By middle price points addressing accessories more successfully, it forces the high end to do better, and that’s how it’s affecting us here,” said Jim Gabbert, Chairman and Chief Executive Officer of Gabberts Furniture & Design Studio in Minneapolis. “We’re not in the position or mindset to advertise lamps to sell more lamps, for instance, but we make sure the lamps we do carry are consistent in style and quality to the rest of the components that go into a particular home’s look.”

Accents and furniture with big impact for not so much money are available to the masses through value-price-point retailers who spend heavy dollars on high-impact television advertising, and that has raised expectations for total-home service across all demographics.

“The problem for high-end retailers is that you can find things like high-thread-count sheets at places like Target these days,” said Todd Banik, vice president of merchandising at Treasures in San Diego. “I look at what’s going on at the lower-end price points to make sure we’re distinguishing ourselves. You need table lamps that aren’t seen at the local lighting store. ... It has to provide some kind of value.”

Austin, Texas-based Louis Shanks uses the same approach it takes for furniture—high-impact, one-of-a-kind items—to create a total merchandising package that tells consumers they haven’t walked into McDonald’s.

“We’ve gone with a lot of larger, higher-impact accessories, because that’s what will look right next to, say, Henredon furniture,” said Mike Forwood, president of the company’s five high-end stores in Austin, Houston and San Antonio. “We have a 60-by-90-inch picture from John Richards, for example. That makes customers stop and take notice. People want that type of thing, but they often don’t know where to buy it.”

What’s Your Culture?

At Fort Myers, Fla.-based Robb & Stucky, nobody walking through the door will think they’re anywhere but a place they’ll find the best, and merchandising is a key, along with customer service and a cadre of floor personnel who know their business.

“Our advertising communicates with the customer to reinforce this culture,” said Claire Goldhagen, upholstery merchandising manager at Robb & Stucky, which has 12 locations in Florida, Texas and Arizona. “So even if our store architecture differs by market, our message is consistent.”

The high end is all about better fabrics, better finishes and better woods than what customers will find at lower price points.

“The average consumer doesn’t know everything that goes in a sofa, but they do know when what they see is better,” Treasures’ Banik said, adding that high-end floor schemes go beyond the actual product for sale. “We merchandise with more expensive, high-end greenery. You’ll see ficus trees at all the discount stores, and we just don’t go there.”

The visual-impact factor reigns supreme when it comes to Louis Shanks’ merchandising.

“I want to have something that, when the customer walks by, they stop in their tracks and say, ‘Wow!’ We’re very big on those jewelry items that are unique and that set us apart from the basic furniture store,” Forwood said, pointing to Theodore Alexander as the type of vendor that helps him achieve that goal. Shanks’ TA business jumped 78 percent last year.

“It’s all about design, and you have Paul Maitland-Smith there designing product,” he said. “You go into their showroom at market and feel like a kid in a candy store. It’s that kind of product that sets you apart.”

Gabbert paraphrased Hickory Chair’s president, Jay Reardon, to describe how the high end can set itself apart at the retail level.

“Options unused are simply overhead. What the vendors and retailers both have to do is a better job of representing the options the product presents,” Gabbert said. “You have to talk about what’s available in terms of finish on wood, and fabric or arm shapes on upholstery. Delivering the total look is much more complex than in the past. Customer expectations are so much higher.”

Goldhagen at Robb & Stucky said making the shopping experience pleasurable and educational, while striving to meet affluent customers’ emotional needs, is the merchandising key at higher price points.

“High-end retailers must offer the sales/design expertise, as well as consistent customer service satisfaction to establish customer loyalty to their store brand,” she said.

Measuring Performance

The upper price-point retailer serving one market faces a different set of performance measures than one serving a single area.

“Our measures at R&S are very specific and focused to our targeted markets—Florida, Arizona, Texas and soon Las Vegas, Nevada,” Goldhagen said. “We utilize store merchandise managers and visual managers to give us feedback about the trends, sales opportunities and creative input that will separate R&S assortments from others. In addition, the corporate merchants are visible in the stores getting feedback from our sales/design staff. They are the closest connection to the consumer’s wants and desires.”

Robb & Stucky, of course, uses as much market-exclusive product as possible.

“We certainly look at turns and profit margins, and we keep track of it by price points and vendors, and if we see a certain category getting hot will increase that mix,” said Shanks’ Forwood. “It’s a constant balancing game. Everybody has chased the prices down, and there’s so much out there that looks the same. We’re chasing our prices even higher.”

For Louis Shanks, that meant the installation of a 7,500-square-foot design center in one of its Houston stores in order to target premium price points with vendors such as E.J. Victor and Guy Chaddock.

Beyond sales and gross margin, speed of delivery is a key metric at Gabberts these days, particularly when a special order is involved, and the reliability of vendor information relating to orders.

“If the manufacturer says it will ship in four weeks, it needs to ship in four weeks—five weeks won’t cut it anymore,” Gabbert said. “We’re selecting those vendors who are reliable and accurate. Who’s delivering consistent quality when it comes to special orders? If a product doesn’t come in right, the vendor says they’ll take care of it, but it’s at the expense of the customer’s time. A product on the floor at the high end represents not only its collection, but also the reputation of the vendor.”

Where to Improve?

Are there furniture or accessory categories underserved at the high end of furniture retailing, or particular opportunities that more stores catering to the upscale market could better address?

That’s an easy question for Shanks’ Forwood.

“Our single biggest area of growth is fine designer accent pieces–it doesn’t have to be a collection, per se, but rather standalone items that really make an impact in the customer’s home, and in the store,” he said. “It doesn’t cost a lot of money to develop those lines—if a vendor brings out 50, and 25 don’t fly, you can churn it to get the right mix.”

Accessories and fine accents are a big winner at Robb & Stucky as well.

“Our accessory departments have accelerated the selection for unique, high-end and exclusive product,” Goldhagen said. “The Gift Boutique offers the luxury customer a selection of the best domestic and imported tabletop, and top of the bed of the finest quality. The Boutique at R&S presents to the customer the newest and most exciting accessories not otherwise available.”

Robb & Stucky also has seen dramatic growth in its leather business through establishing an assortment of non-promotional product.

“To become the ‘headquarter’ store, we concentrate on domestic and imported sources with unique styling and upscale leathers exclusive in our markets,” Goldhagen said.

Casual dining needs more attention at upper price points, said Banik at Treasures.

“Unfortunately when you think of casual dining, you typically think about lower price-point vendors,” he said. “It’s a hard category to shop, and I think it’s a category that high-end manufacturers tend to ignore.”

“Our job is to help our customers create a beautiful home, and it has to be founded in the relationships, trust and talent we have in helping them to do that,” Gabbert said. “Merchandising helps that by giving the interior designer or decorator what they need to put together the total solution. What about window treatments and bed fashions? What about paints and wall coverings? We’ll never get into appliances such as faucets, but there are people who do that well, and we can partner up with them. There are plenty of areas we can address that way.”