Retailers Talk Tech

March 31, 2007  by in UnCategorized   

By Home Furnishings Business in Customer Service on April 2007 “I

t’s all about keeping the hot sellers on the floor and getting the losers out the door!”

That’s how Chuck McMillin describes the primary job of the technology system that has kept his store, McMillin Furniture of Yale, Mich., running for the past 18 years.

Like nearly all of the retailers who responded to questions from Home Furnishings Business about just how much technology they need to compete effectively, McMillin said he’s mainly focused on getting a clear and up-to-the-minute picture of the store’s sales and inventory.

Like many smaller stores, McMillin eschews frills. For example, the store’s staff still writes prices on item tags by hand. But, with advanced desktop reporting tools, he’s constantly updated on what’s selling, what products the store is running out of and which sales associates are keeping pace with expectations. The retailer uses ProfitSystems technology it first installed in 1989.

“With these reports, you can critique your business to the point where you’re not flying by the seat of your pants. God knows in the furniture business, you sure can’t do that anymore. You’d be buried in a heartbeat if you did,” McMillin said.

McMillin said he’s more than satisfied with the technology his store is using, even though he and many other retailers aren’t using the full capabilities offered by their store systems.

Holding Off on Some

Advanced Capabilities

Just as McMillins continues to use hand-written labels—even though ProfitSystems offers advanced bar-coded label printing—other retailers say they’re more focused on vital sales and inventory data than moving ahead with the latest sales floor technologies.

Technology providers say furniture retailers have generally been slower than their counterparts in other forms of retail to utilize sophisticated technology. But that has been changing quickly as mom-and-pop furniture stores have had to contend with better-equipped regional furniture chains, the challenges posed by imports, and the rising expectations of consumers. At a time when it’s possible to order a pizza online and have it arrive within 30 minutes, furniture shoppers want the kind of instant answers about the status of their orders that they get from department stores or Internet retailers.

McMillins is somewhat unique in that it invested in a comprehensive store solution nearly two decades ago. Many of the other retailers who talked to Home Furnishings Business made much more recent technology investments. In answer to questions, most said they need just enough technology to stay ahead of local competitors—while maintaining the potential to add capabilities quickly to maintain an operational edge.

Inventory: The No. 1
Expense Category

One retailer who has made a recent technology investment is Samuel’s Furniture, Ferndale, Wash., which installed a Myriad Technologies store system a year ago. Owner Elie Samuel said the new technology replaced a 20-year-old Unix-based system that was hard to use and lacked a bar-coded inventory tracking system that the Myriad technology provides.

“In the past, we had situations where the customer had bought something and when it was scheduled for delivery a few days later, the product wasn’t (in inventory),” Samuel said. “That’s pretty embarrassing, but now that we’re keeping a much more accurate inventory, that doesn’t happen anymore.”

Samuel said the detailed reports that tell managers what the store’s best sellers are is another major benefit of the new technology. The system also prompts him to re-order top-sellers with long enough lead times to avoid out-of-stock situations.

“In my old system, I would have been guessing at what my best-selling occasional table group was. The greatest change and benefit to us has been the ability to have very specific reporting capabilities that allow me to look at sales any way I want, whether it’s demographically, by department, by product category or by vendor,” he said. “It makes me money by improving my turns ... and making sure my best sellers are in stock.”



Natural Limits to the
Pace of Change

While Samuel’s has made great strides over the past year, the store is holding off on utilizing bar code technology that would enable sales associates to use PDA devices to automatically input orders on the sales floor without leaving the customer’s side. Samuel may one day use that technology, but right now would be too soon. “We went from a system where the sales people were handwriting orders to where they’re using POS to key in orders on the sales floor this year. To add another bit of technology to their job (so soon) is something we’re holding off on now.”

At Hendrixson’s Furniture in Furlong, Pa., Owner-Manager Damian Ford said there are natural limits to how much change store associates can absorb in a short period. The two-store retailer began implementing a Storis store system in 2004 and immediately gained benefits in tracking inventory and reducing expenses. The company had been running on technology that was primarily an accounting system. “With our previous system, we had to do a lot of (manual) cross-checking in the warehouse because you couldn’t rely on whether the piece was actually there or not. Storis makes it so that you can’t even create a sales order unless that item is available for you to take.”

Switching to a more automated order-writing system also enabled Hendrixson’s to save money by reducing its office staff by two people through attrition as its sale order technology cut manual work—and mistakes.

Hendrixson’s hasn’t fully utilized the bar-coding capabilities of its system. “So many peoples’ jobs are affected every time we make a change, and you just need to keep business running in the meantime,” Ford said. “We still use a manual (order) writing system, but when the order goes to our office, the (unique) item number helps avoid mistakes. We’ve deferred bar code scanning, but, when the timing feels right, we can go ahead and implement that very easily.”

From Pen and Paper to the PC Age

In Cramerton, N.C., Baker Furniture has made even greater technology strides over the past four years—moving from an almost entirely paper-based system to a computerized system with advanced reporting features.

“The store is 58 years old, so for 54 years we had a manual system,” said Owner Jim Van Pelt. “The biggest difference is the ability to retrieve information quickly and being able to monitor our inventory daily. At our fingertips, we have the information we need to know what we’re doing per square foot, what our dead items are, and how long we’ve had them.”

Van Pelt said Baker investigated a number of packaged furniture store solutions, but instead opted for a customized solution created largely by an accountant on the staff who is well-versed in computer automation.

“We felt we could handle it on our own, and we’ve been successful with it,” he said. “We were able to adapt it to our (operational procedures) better than taking on the kind of standard approach” of a packaged solution.

With computerization, Baker has reduced costs by eliminating the need to outsource some financial reports to an outside accountant—which often involved a lag time of up to a month in receiving some data. “It’s so important to us to now to have that information daily,” Van Pelt said. “Now, we can (instantly) measure everything down to whether (a sale) was a profitable situation for us or not. We can also do our (advertising) mailings right off of it.”



The Rising Expecations of Shoppers and Store Owners

While the levels of technological sophistication vary enormously from store to store and market to market, technology providers say smaller retailers, in particular, have been adding capabilities quickly in recent years to keep pace with customer expectations. “It’s driven by the customer being frustrated by not having quick access to information,” said Gloria Walsh, Storis’ product marketing manager. “If you’re running a system that’s not integrated, you can have a situation where a salesman takes a day off, and no one has the data that’s needed when a customer calls to ask, ‘Where’s my order?’ What (non-integrated) retailers tell us they want most is better information and tools to help them give better customer service because it’s so competitive now.”

Walsh said the expectations of retailers themselves has been climbing sharply in recent years. “The same retailer who gets an e-mail acknowledgment from Amazon.com that his order has shipped doesn’t want—in his own business—to have to go to five different places to find out exactly what he sold yesterday or how his marketing circular performed.”

Some technology solutions provide advanced sales floor capabilities, including the ability to process customer’s orders with a wireless PDA device. Myriad President Carolyn Crowley said the units can be helpful for placing orders, accessing more detailed product information or even checking whether a manufacturer has a particular item or fabric in stock. At the same time, some stores have held back on deployments of wireless PDAs—sometimes because older salespeople want to view a larger screen at a fixed computer station.

At Storis, which also provides wireless PDA capabilities, Walsh said it can also be challenge for some stores to manage a large number of small wireless devices. “People have to take care of them and not drop (PDAs). The salesperson also has to remember not to keep his PDA in his pocket when he goes to lunch. It’s a good tool, but it has to be bundled with good operating procedures.”



Monitoring the Business
and the TV

Some retailers are enjoying other advanced capabilities—including the ability to monitor their business remotely from virtually anywhere in the world. In Tacoma, Wash., Dave Harkness spends portions of many evenings at home with a laptop closely analyzing every order his sales associates enter into the Myriad store system Harkness Furniture deployed two years ago. Sometimes, he watches TV while he goes through the orders. “It’s amazing how many times I find that a salesperson has written up an order for four tables and one chair by mistake. I’m able to go in there and e-mail them to ask, ‘Didn’t you mean one table and four chairs?’ It eliminates a lot of potential problems,” Harkness said. “My wife doesn’t always appreciate how much time I’m able to spend remotely in the store now, though,” he said with a laugh.

Harkness said he almost always accesses store performance reports any time he travels to furniture markets or takes a vacation—and often checks up on things two or three times a day.

Easily accessible reports is also a favorite capability of Chuck McMillin. “Using what’s called the manager’s dashboard, I can run reports on a whole category of products or look at it by which vendors are doing a good job. You can even look at the sales and profitability of each item,” said the owner of McMillins. “When a sales rep comes in, you can say, ‘I hate to drop your line, but here are the numbers.’”



Veteran Technology User

Utilizing sophisticated features may be an outgrowth of how long a retailer uses a system. Stephen Kidder has been using ProfitSystems at the three-store Vermont Furniture Galleries chain in Williston, Vt., for nearly 20 years. Kidder, whose store uses advanced bar code tools, recently began using a new contact management program to focus store advertising more strategically. By asking each customer how she heard about Vermont Furniture Galleries, the chain is able to track the effectiveness of its TV spots, print ads and circulars. “Over time, we can analyze the data to determine the cost per (new customer visit) in each medium,” he said. “We’re doing more circulars and fewer (inserts) in print and, generally speaking, more television and less radio. TV has become important for us in terms of demonstrably putting more people across our threshold.”

The chain also closely tracks the performance of associates with a module that goes beyond sales numbers to measure how much time, on average, an associate spends with a customer and how each salesperson’s sales vary by category. “If someone sees that their close rate in bedding is not that good, they could work to educate themselves to be more effective, whether it’s learning more product information or changing the way they’re presenting. It’s also helped us eliminate some salespeople who aren’t effective and don’t put that information to use,” Kidder said.

He said the hotly competitive market in Vermont has forced Kidder’s to use its technology as effectively as possible. Kidder said participation in a performance group has also enabled Kidder’s to use its technology more effectively. “There’s a large number of competitors here in what is a small market. We need to do everything we’re doing, plus some to be competitive,” Kidder said. HFB