Peter Bjerregaard, Ekornes president

October 31, 2008  by in UnCategorized   

By Home Furnishings Business in on November 2008 Peter Bjerregaard’s varied background has included jobs with shoe manufacturer Ecco and high-end electronics firm Bang & Olufsen, representing those Danish companies here in the United States. Surprisingly, Bjerregaard, who has served as president of the North American division of Ekornes since 2004, says selling furniture isn’t very different from his previous jobs.

“Ecco shoes are sold on comfort with a very strong marketing package, and Ekornes and Stressless are sold in the same way,” said Bjerregaard, with just a hint of an accent from his native Norway. “Bang & Olufsen is a high-end brand that’s sold on a design and convenience basis with, again, a very strong marketing package. So, even though the industries are different, they all put very similar mechanisms in place to make it work.”

Norway’s Ekornes, the maker of Stressless chairs and furniture, has been producing steadily rising sales in North America by focusing on a message of unrivaled comfort and patented technology. With a focus on innovation, Ekornes has remained one of Norway’s biggest furniture producers by using automation—including industrial robotics—to counter the Scandinavian country’s high manufacturing costs. The comfort message is boosted by an official recommendation from the American Chiropractic Association.

Bjerregaard sat down with Home Furnishings Business a short time before the October High Point Market to discuss how the company’s continued investments in providing training to sales associates has enabled the company to generate strong demand for its $4,000 and $5,000 chairs, even in an uncertain economy.

In light of the fact that Ekornes’ sales in North America were up 18 percent in the first half of 2008, how has Ekornes and its Stressless brand outperformed the industry to such a degree?

It’s more than just the product. I believe that, first of all, we need to find the right stores to be in, so it’s about distribution strategy. We only go after the best stores. The stores we’re in have to show the best products and have to understand that in order to (succeed) they have to sell high-quality products and they have to advertise. ... Furthermore, we spend a lot of time training the sales associates in the stores. We believe in the power of the sales associates, meaning that if you walk into a store, many times you’ll walk out with a product the sales associate has recommended. Because of that, the sales associates have to understand the concept that we’re selling, and that’s why we spend a lot of time in training. We have many, many great sales associates who are making it happen in the stores.

How aggressive are you about protecting designs to battle all the Stressless knockoffs in the marketplace?

Our mechanisms are patented and our base is patented. It’s very easy, design-wise, to copy a product by changing just a few details. But, you can’t copy the comfort, which comes from the Stressless mechanism. We do see copies coming up all over the place. Sometimes, one of our own dealers will have a chair that’s similar (and cheaper), and we don’t mind that. It’s good for the consumer to have something to compare us to. The consumer can feel the difference between a copy and one of our chairs. Right now, there’s a big chain in the Northeast that’s running a TV commercial comparing their $399 chair to one of ours. That’s fine with us, because we know that when a consumer comes into the store, they’ll feel the difference with the Stressless chair. Second of all, our dealers have sales associates explaining to consumers exactly what the differences are. So, once again, it’s back to the power of the sales associate.

What type of stores carry Stressless?

Most of our distribution is the two-store or three-store chains that are very local. That’s where we work the best. If we’re in bigger operations, we don’t always succeed as well. We started out going to Scandinavian furniture stores, which was very natural for us as a Norwegian company. But, our biggest growth area in distribution in the last two years has been traditional furniture stores.

Is it true you pay most of the expenses to bring more than 1,200 sales associates to New Jersey for training each year?

Yes. We start off (at new dealers) with the usual type of in-store training. But, we also have a school we call Level 1 that’s held either here in New Jersey or in Las Vegas. It’s really an introduction to Stressless, and it’s open to all sales associates, but we recommend that new stores wait two or three months before sending sales associates to us because that enables the sales associate to ask more qualified questions. They get more knowledge about the product because they already have some interaction with consumers. Two years ago, we also implemented a Level 2 school for the sales associates who we call “Stressless Maniacs.” They’re the ones who already know so much about the product and how to sell the chairs that we can’t really teach them much more about how to do it. So, what we do is bring them together so they’re able to share information among themselves. It’s more like a workshop where the interaction is among the “Stressless Maniacs” themselves. Our trainers are mainly keeping the discussion going.

Do you also provide training to delivery and repair associates?

Yes. We created a repair and assembly school. In this industry, we tend to forget the post-sales element when we’ve sold the product, but when a consumer buys a $4,000 or $5,000 sofa or a $16,000 sectional, the smallest issue can become a big problem if it’s not dealt with correctly. So, we bring those repair and assembly associates here to New Jersey, and our product specialist provides training. At the same time, the repair and delivery guys will bring up issues they’ve seen in the field, and they’ll be taught how to deal with them in as smooth a way as possible. The worst thing that can happen when there’s a problem is that somebody comes out who doesn’t seem to know what they’re doing. When the furniture arrives at your home, you want a smooth process that confirms that you made the right decision.

Tell me about your advertising, especially the Stressless infomercials.

About two years ago, we started using infomercials to educate the consumers. We run them at the traditional time, which is about 5 o’clock in the morning. Of course, NordicTrak were the ones who really started running infomercials about 20 years ago to educate consumers, provide a lot of product information and reasons to buy. Tempur-Pedic is another company that has done this very successfully. We’ve expanded (recently) to run a one-minute or two-minute version on CNN and Fox News, and the ads have increased traffic for our dealers. We track the results carefully with everything we do. When the infomercials run, the hits on our Web site go up. From the dealer locator on our Web site, we can monitor where these consumers are looking for dealers. ... That allows us to fill gaps in our distribution, and we can also tell a dealer, “There were 500 consumers looking for a Stressless store in your town in the last six months, which means you need to advertise more to tell people in your area about Stressless in order to get more of those potential sales.”

How important are point-of-purchase displays in selling your chairs?

We have the same approach all over the world with what we call our Comfort Zone (display). It’s a dedicated area that has educational materials for the consumer. There is a skeleton of chair, so they can see exactly how the chair moves and the mechanisms work. There will also be a DVD running showing the factory and the concept, along with all the leathers and selling tools the associates need. What we’ve found is that if we go into a store that doesn’t have enough people to cover the floor—and that’s usually in a big box store—we aren’t successful. We have to have an educated and committed sales associate working with the consumer to fit them into the right chair and fit them into the right sofa. We have different sizes of chairs in the Comfort Zone, and finding the right one depends on your body size, whether you have a long torso or a short one. To give you an example of the power of the salespeople, we run a promotion in July and August where we offer one of our chairs at $995, which is very unusual for us. In analyzing our sales, we found that the people who bought the $995 chair were new consumers for us. At the same time, sales of more expensive chairs increase dramatically during the same period, which tells us that once the salespeople directs the consumer to exactly the right chair, they’ll buy it, even when it costs $1,500 more than the chair in the special offer we’re running.

In a year as difficult as this one has been, how will sales be affected?

We believe in the concept we have and the path we’re on. It’s a long-term strategy. We’re sticking with the dealers we have and we’re not lowering our targets for (more) distribution with lower-quality dealers. What we’re doing right now is more of everything—more advertising, more infomercials and providing dealers with more tools to make all this happen. That’s our response to the downturn right now. We’re strong believers in what we’re doing. HFB