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Brought to you by Home Furnishings Business
June 30,
2007 by in UnCategorized 
By Home Furnishings Business in Retail Technology on July 2007
Securing the business at a traditional, brick-and-mortar furniture storefront business boils down for the most part to pretty basic issues. Those include physical losses such as shrinkage through employee, customer or organized theft; and financial tampering.
Video surveillance might help prevent the first, and regular audits and controls offset the second. Taking the store to the Internet raises the stakes, though, dragging in the issue of protecting consumer information as well as the retailer’s business—along with as the need to guard the network against problems such as Web-born spam and viruses.
With merchants gathering a shopper’s credit card number and other delicate data, unscrupulous but savvy e-criminals want to use the Web to access that info.
Just ask TJX Companies—whose retail brands include T.J. Maxx, Marshalls, Winners, Homesense, T.K. Maxx, A.J. Wright and Bob’s Stores—which suffered a huge data breach uncovered and announced in January.
The breach involved the portion of TJX’s computer network that handles credit card, debit card, check and merchandise return transactions for customers of its T.J. Maxx, Marshalls, HomeGoods and A.J. Wright stores in the U.S. and Puerto Rico, and its Winners and HomeSense stores in Canada.
In the first quarter of fiscal 2008 alone, TJX recorded a charge of around $12 million, or 3 cents a share, to cover the cost of investigating and containing the breach, including enhancement computer security and systems, customer communication, and technical, legal and other fees.
The company expects to record another 2 to 3 cents a share in second-quarter charges related to the intrusion.
‘Smart Bad People’
“There are some very smart bad people out there, people trying to access credit card information,” said David Hogan, senior vice president and CIO of the National Retail Federation. “All too often I talk to people who identified credit card fraud.”
While identity theft is a buzzword among consumers, credit fraud is the most common data security problem when dealing with the Web, said Hogan, who directs numerous internal and retail industry IT initiatives and manages NRF’s CIO Council, a committee of retailing’s most prominent chief information officers. He also provides oversight for the Association for Retail Technology Standards.
Hogan spent his entire career in retail prior to joining the NRF. His experience includes serving as vice president and chief information officer of international retailer, Duty Free Americas; and has held senior level positions with The Limited Inc., serving as CIO for the company’s Lane Bryant division and vice president for specialty footwear retailer, The Kobacker Co.
“You have several levels of protection,” he said. “First, the appropriate level of security based on who needs to use a particular part of the system, payroll for example. You also have file or data-base security as well. There’s software that will flag when an individual tries to access X-file on X-date at X a.m., that is when somebody tries to tap your perimeter, someone unauthorized is trying to tap your systems. Then there’s storage protection of customer data while it’s resident in the retailer’s system.”
Retailers should work with a qualified security analyst to establish and verify the security of their databases.
“And no matter what you do, have someone come in and do an audit of your system’s security,” he said. “Perform perimeter testing of e-Commerce sites and internal systems.”
Credit Card Security
Credit card companies themselves are leaning on major retailers to beef up database security, pushing for compliance with the PCI Data Security Standards, a series of 12 steps and procedures (see accompanying sidebar) governing security management, policies, procedures, network architecture, software design and other critical protective measures. This standard’s goal is to help businesses take proactive steps to protect customer account data.
The PCI Security Standards Council, a global forum for the ongoing development, enhancement, storage, dissemination and implementation of security standards for account data protection, was founded by American Express, Discover Financial Services, JCB, MasterCard Worldwide, and Visa International.
PCI DSS is subject to ongoing development. Its current version—the original is dated January 2005—became effective Jan. 1 this year.
On the Legislative Front
When it comes to potential federal laws governing data breaches, NRF urges distinction in types of consumer information retailers hold.
As Congress examines potential regulations to establish a national data breach notification standard, the National Retail Federation holds that any new federal law should recognize the fact that retailers usually do not possess the private consumer data needed to commit identity theft.
“A uniform national data breach standard with strong preemption is the only way to ensure that all consumers are treated equally,” said NRF Senior Vice President and General Counsel Mallory Duncan, who testified in June at a House Small Business Committee hearing on data security legislation’s impact on small businesses. “(It) would also lessen the compliance burden for all businesses and allow for one clear notice to be given to all affected customers. Current state laws are generally written to cover residents of that state, not businesses that conduct business there. This means that under the current patchwork of state laws even small businesses could conceivably run into a multi-state compliance burden just by having customers from another state.”
Duncan said retailers typically possess the names and credit card numbers that make credit card fraud possible if breached, but not the Social Security numbers and other detailed information needed to commit identity theft. While identity theft can be difficult to resolve, most fraudulent credit card charges can be easily erased under the Truth in Lending Act requirements and other federal law, he said.
“The distinction between true identity theft and credit card account fraud is very important,” Duncan said. “For most businesses, the most sensitive piece of customer information they posses is a credit card number. A data breach resulting in the loss of a credit card number may at worst lead to credit card fraud, which is easily detected and resolved, and not the more insidious crime of identity theft. As a result, legislation should treat the breach of account information differently than the breach of more sensitive data.”
The NRF has supported the Federal Trade Commission’s proposed “significant risk” standard rather than “reasonable risk” standards that it fears could lead to over-notification and desensitize the public to cases that could pose a real risk.
Duncan said any legislation on data security should take into account both the type of data held by different businesses—not imposing the same requirements on retailers, for example, as on financial institutions, which hold a full array of personal data—and also their size.
“For data thieves, it literally is a numbers game,” Duncan said. “They go where it is efficient to gather the greatest amount of useful electronic information. Most small businesses do not generally store these large caches of sensitive information that the thieves most value.”
Similarly, extending data security laws to paper documents is unnecessary because would-be identity thieves are not likely to steal large quantities of paper documents when they can more easily acquire the data electronically, Duncan said.
Duncan said legislation requiring retailers who suffer a data breach to reimburse banks for the cost of reissuing credit cards is not needed because merchants’ contracts with credit card companies and banks already require the party responsible for a data breach to cover associated costs.
June 30,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on July 2007
Lifestyle retailers like Restoration Hardware and Crate & Barrel have always had a strong online presence that pulls together the distinctive look of their respective stores and catalogs.
In today’s fast-paced, Internet-driven world, many of the industry’s top lifestyles retailers are turning an even closer eye to the Web as a way to increase business.
Both Restoration Hardware and contemporary specialist Design Within Reach have said publicly that the Internet is a major component of their futures. The parent of Pottery Barn and West Elm, Williams-Sonoma, is also continuing the building of its online empire as it marches closer to hitting the $1-billion mark in online sales.
Here’s a snapshot of the most popular lifestyle retailers and the presence they hold on the Internet.
Crate & Barrel
Chicago
crateandbarrel.com
With more than 140 stores in 21 states, Chicago-based Crate & Barrel’s online presence continues to grow. The company conducts about a quarter of its sales throught its Web site. Published reports have revealed that the retailer’s online sales jump up by 10 percent each year.
In 2006, a
BusinessWeek article focusing on majority shareholder Dr. Michael Otto of the Otto Group pegged the retailer’s sales at $1.2 billion with about a quarter of that total coming from online sales.
Design Within Reach
San Francisco
dwr.com
The contemporary specialist has had a challenging couple of years since its inital public offering in 2004 in which it raised $49.2 million. The bright spot for the retailer that has more than 60 storefronts in 25 states has been its online store.
For 2006, the company reported total net sales of $178.1 million. Of that total, the retailer’s online sales were $30 million, 16.8 percent of the total. In 2005, total sales $158.2 million, and online sales accounted for $29.2 million or 18.5 percent of the total.
Ray Brunner, president and chief executive officer, during a conference call on the retailers’ 2006 financials called the company’s Web site its “vehicle for future growth.”
“We believe the Web offers the greatest potential for long-term sales and profit growth,” he said. “The Web enables us to expose the customer to our full product assortment and is an effective vehicle for low-cost customer prospecting, penetrating new markets, testing new products, and building a DWR community.”
Brunner said the company has more than 600,000 subscribers to its online newsletter, up from approximately 375,000 at the end of 2005. Later this year, the retailer plans to post a new Web site that Brunner said will better serve the needs of the company’s customers.
In its 10-K filed with the Securities and Exchange Commission for 2006, the company said its success depends in part on its ability to market, advertise and sell its products through its Web site.
Restoration Hardware
Corte Madera, Calif.
restorationhardware.com
It’s hard to imagine that a vintage fixtures operation that started in a home could have grown to what Restoration Hardware has become today.
The retailer, with more than 100 stores in more than 30 states and Canada, announced earlier this year that it would shift its strategy to focus on its online and catalog business for future growth.
The retailer’s direct sales, which include online and catalog sales, were $244 million, or 34 percent of the company’s total sales of $712.8 million in 2006.
Gary Friedman, chief executive officer, said the company has no plans to open new stores this year and that the direct business will become the majority of the retailer’s business in the next three years.
Next year, Restoration Hardware plans to introduce Restoration Hardware Kids, focusing on a premium line of children’s home furnishings. The catalog and Web site are set to debut in the spring of 2008.
comScore Networks, a company that tracks Web site traffic, reports more than 580,000 unique visitors per month to the retailer’s Web site.
In addition to slating e-Commerce higher on the list of priorities, Restoration Hardware is also launching a series of new and highly-targeted direct marketing efforts. In August the company expects to unveil Brocade Home, a brand targeting a “broader value market.”
Williams-Sonoma Inc.
Sonoma, Calif.
williamssonoma.com,
westelm.com, potterybarn.com
The Williams-Sonoma family of brands, including the Pottery Barn group, West Elm and Williams-Sonoma Home, is pushing toward the $1 billion mark. For fiscal 2006, the company grew Web sales by 21 percent to $927.6 million from $766 million in 2005. For 2006, Williams-Sonoma posted net earnings of $208.9 million on revenue of $3.72 billion, compared to net earnings of $214.9 million on revenue of $3.53 billion in 2005.
Overall the web accounted for 25 percent of sales in 2006.
“Although our fourth quarter and fiscal year 2006 results were not where we expected them to be when we entered the year, we do believe they demonstrate our ability to aggressively react to a rapidly changing business climate and our commitment to optimize profitability, even in difficult times,” said Howard Lester, Williams-Sonoma chairman and chief executive officer.
According to the company’s financial filings, its direct-to-customer net revenues, made up of catalog and Internet sales, jumped 4.5 percent to $1.574 billion compared to $1.506 billion in fiscal 2006.
The increase was attributed to jumps in net revenues generated in the Pottery Barn Kids, Pottery Barn, PBteen, Williams-Sonoma and West Elm brands.
The company said breaking out its Internet revenues isn’t precise, but it does estimate that about 45 percent of its companywide, non-gift registry Internet revenue is generated online. About 55 percent of the sales are
driven by customers who recently received a catalog.
June 30,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on July 2007
Perhaps you’ve heard of a little thing called eBay.
Jokes aside, the world’s leading auction Web site is also the No. 2 biggest overall online seller (behind amazon.com). And in recent years, more and more furniture retailers have been harnessing eBay’s power to sell their products, with increasingly impressive results.
So it’s no surprise that interest was high when speaker Mary Liz Curtin presented “A Shopkeeper’s Guide to Selling on eBay” at High Point Market’s Retailer Resource Center this spring.
Curtin knows what she’s talking about. Besides being an eBay consultant and columnist, she’s in the home furnishings business, as co-owner (with her husband Stephen Scannell) of furniture/gift store Leon & Lulu (leonandlulu.com).
“eBay is a marketplace where honesty, trust, efficiency and loyalty are rewarded,” she said as she cited some facts about the site:
• eBay currently has 193 million subscribers.
• The average annual spending per eBay buyer: $631.
• The number of people currently making a full- or part-time living selling on eBay: 724,000.
Curtin said that even though the site does huge business, it actually owns nothing; all of its merchandise comes from sellers who ship directly to customers.
Getting Started
If you’ve yet to take the eBay plunge but are interested in selling on the site, Curtin recommended you go to its Seller Onramp area (eBay.com/startselling) for free expert help on setting up shop.
Seller Onramp will guide you as you place your first product listing. Curtin passed along these tips to keep in mind as you do:
•
DON’T USE ALL CAPS in your titles. It seems like you’re shouting at potential customers. Titles should be direct and include words that you think customers will enter when doing searches—your item titles are not the place for creative language, although adjectives indicating attributes such as “beautiful” or “elegant” may attract potential buyers. Also, make sure the spelling is correct in your titles and listings, so shoppers don’t miss them in searches.
• Don’t sell anything that even refers to a protected species—for example, “tortoise color” would be a no-no, as eBay flags any product that may be made from such species.
• Look at your competition’s eBay auctions. See what they’ve done. Then try to do better, with more detailed and compelling listing text, more attractive visuals, and more thorough information on your sales policies.
• Ship to as many locations around the globe as possible—especially Canada. The more places you can ship, the more people you can sell to. Keep shipping fees reasonable (you can set either a flat shipping rate or base your fee on location), but don’t set them so low that you lose money on them.
• Establish return policies, and stand by them.
• Start your auctions with low opening prices. This attracts people to bid. If your starting amount is too high, it will scare off bidders.
Picture It
Photos are a key element of selling on eBay, Curtin said.
Her advice: get a decent digital camera to take good, clear photos of your products, but make sure the digital files are 600 x 800 pixels or smaller, or else they’ll load slowly (or not at all) on shopper’s screens. Use a tripod to ensure quality images.
Curtin also recommended setting up a picture gallery (for a small additional cost) showing your products from various angles, and include close-up shots of key points. Close-ups are also useful if you’re selling a used product and there are any stains, nicks, dents or other damage. Honesty is always best when selling on eBay, and photos will build trust between you and your customers.
Paying the Price
Once your auctions are up and running, hopefully people will bid. Once they do, they’re locked into eBay’s terms that they must buy if they’re the winning bidder. That means once you have a bidder, you have a sale (unless you set a “reserve”—a minimum price, unknown to bidders, that must be reached before you’ll sell the item).
Another option is to set a “buy it now” price—a set price you’ll sell your item for instead of taking bids.
But however you sell on eBay, once you do, you’ll have to get paid. To do so, Curtin strongly recommended going with eBay’s payment system, PayPal, saying, “PayPal is the way business is really done on eBay.” She said you should expect to pay about a 2.8 percent fee per sale for PayPal transactions—roughly the same as credit card fees.
It’s worth the expense. PayPal has security measures in place to protect both buyers and sellers from getting ripped off. PayPal and eBay also have strong measures in place to prevent phishing by identity thieves.
Building Your ‘Bay Biz
Curtin suggested furniture retailers consider establishing their own eBay stores—an area on the site unique to your business where you can list your items and customize the appearance to present a unique online presence, a virtual version of your store.
However you go about your eBay business, she emphasized that “It’s absolutely essential that you do what you say you’re going to do or your buyers will slam you” by leaving negative feedback that will deter future buyers.
As with anything in retail, eBay is all about keeping the customers satisfied as you, in Curtin’s words, “let the personality of your store shine through.”
June 30,
2007 by in UnCategorized
By Home Furnishings Business in Retail Technology on July 2007
When you think of the furniture industry’s “dot-com pioneers,” R.C. Willy, Raymour & Flanigan and Nebraska Furniture Mart probably aren’t the first names that leap to mind.
But those very traditional brick-and-mortar retailers are leading the furniture industry
into a new Internet age. All three of them started extensive Internet retail sites in the last 18 months or so. Each site takes a dramatically different approach to selling furniture online than those of the first dot-com wave in the early ‘90s. Failed sites like Furniture.com, Living.com and GoodHome.com all burned brightly for a brief time, but were ultimately doomed by high costs—especially the costs of shipping chairs, tables and other furniture nationwide. Furniture.com was resurrected five years ago as an e-Commerce platform for established furniture chains.
The three major traditional furniture retailers now charting a new path in Internet retailing are squarely focused on serving only their existing delivery areas with the trucks and infrastructure they already have. In many ways, furniture’s newest dot-coms are building on the lessons provided by the success of Internet furniture retailers such as potterybarn.com and crateandbarrel.com. Both retailers leveraged the strength of their existing stores and catalogs to move to the Internet profitably with what’s become known as a “clicks-and-mortar” strategy.
One of the best examples of the new breed of traditional furniture chains that has successfully moved into e-Commerce is Salt Lake City-based R.C. Willey, which launched an Internet retail site about a year ago in response to what President Jeff Child said was a growing surge of visitors to rcwilley.com when it was purely an informational site.
Another Internet innovator is Liverpool, N.Y.-based Raymour & Flanigan, which operates 72 stores in the Northeast and added e-Commerce capabilities to its Web site, Raymourflanigan.com, in early 2006.
Three Types of Internet Shoppers
Child said rcwilly.com serves shoppers in three ways: “One is the guy who gets on and buys a mattress or electronics right away without ever visiting a store. Then there’s a huge group who wants to research (your store) and see whether you have the looks they’re searching for before they come to the store to purchase it. Then you also have a third group who—for whatever reason—leaves a store without buying, but then decides to go on the Internet to purchase something right from home without making a trip back to the store.”
Asked about those shoppers who visit stores but wind up purchasing online, Raymour & Flanigan Vice President of e-Commerce Lance Wardell said, “With today’s buy lifestyles, consumers do not always have the time to return to a store to complete their purchase. In addition, the Internet provides an element of privacy to customers to make decisions on their own terms. Therefore, we believe the Internet will continue to play a growing role in sales that may have orginated in a store.”
The Internet’s $1 Trillion Impact on Stores
Recent studies assert that 51 percent of consumers fall into the second group as “cross-channel shoppers” who rely on the Internet as a research tool before making a store purchase. Across all categories of retail, Forrester Research estimates that online research by consumers will influence $400 billion in in-store purchases this year—or 16 percent of all store sales. It expects that “cross-channel” influence to grow to more than $1 trillion by 2012.
Internet experts say cross-channel shopping research is much more effective for consumers on a full-fledged e-Commerce site that includes pricing along with other product information.
In a May report on cross-channel shoppers, Forrester Research Analyst Tamara Mendelsohn said retailers are taking note of the rising number of cross-channel shoppers, especially in high-ticket categories where consumers often want to examine the product in person. According to a recent survey by the firm, “45 percent (of cross-channel shoppers) say that they buy additional products once in the store, spending an average $154 in (add-on) purchases. This behavior enables the Web to affect store sales, making cross-channel shoppers the segment to watch over the next five years.”
Because a full-fledged e-Commerce site is an enormously complex and expensive undertaking, moving to Internet retailing can give larger retailers additional advantages over smaller rivals. That’s especially true for the Web sites of furniture chains that offer features such as online credit approvals and delivery tracking in addition to the ability to purchase online.
Fewer Store Visits, Ready to Buy
Child declined to offer specific figures on R.C. Willey’s online sales, but said the main focus of rcwilley.com is as a marketing tool customers use for research. “It used to be that people might look at five or six (different furniture stores) and come back to your store two or three times before they bought something. Now, they’re doing a lot of that research right in their own home, and then they come in with a pretty good idea of what they want and they buy it.”
In fact, Child said R.C. Willey prefers to serve customers in its stores, where they can get assistance from a salesperson who can help them find complementary items or point out the advantages of higher-priced products. “Surprisingly, there are a lot of people who are very comfortable purchasing product over the Internet. A lot of times, it’s a convenience thing. They might have a second home (in Utah), for example, and the Internet makes it easy for them to have a mattress delivered when they get there.”
At Raymour & Flanigan, Vice President of Marketing Lisa King said the store’s Web site assists customers in ways that go beyond online sales alone. “The efforts online complement the in-store experience by empowering customers to pre-shop, apply for credit and even see if their furniture selections fit their rooms by using our interactive room planner. We are committed to creating an exceptional experience at every touch point.”
Furniture.com CEO Carl Prindle (who is featured in this month’s Table Talk, p. 58) has nearly a decade’s worth of experience in selling furniture over the Internet. In 2002, he bought Furniture.com and changed its business model completely. It now serves as the e-Commerce platform for retailers such as New York’s Levitz, Chicago’s Harlem/Roomplace, Canada’s Leon’s Furniture and RoomStore in the Southeast. Prindle said large furniture retailers, in particular, are becoming keenly interested in the role a store Web site can play in driving customers to stores. “Consumers who see a flyer (often) look at the retailer’s site online. If they see a particular bedroom on sale, they tend to look at other bedrooms in case they don’t like (their first choice) from the flyer once they get to the store. So, the flyer is sort of a lead-in to the Web site, but we often find them shopping and, ultimately buying something that wasn’t in the flyer.”
Spurring Online Purchases by Mail
Of course, so-called “click-and-mortar” stores like Pottery Barn have long seen a similar response from consumers. In a recent earnings statement, San Francisco-based Williams-Sonoma, Pottery Barn’s parent company, officials said 55 percent of Internet sales are driven by customers who just received a catalog. The company’s Internet business, which increased 21 percent to $927 million in 2006, is a key point of emphasis for Williams-Sonoma and other traditional catalog retailers because “click-to-buy” transactions cost far less to process than catalog orders that operators take via the phone.
Sev Ritchie, president of Furniturefan.com, which connects online shoppers with furniture stores in their area, said some of the barriers that once made traditional furniture retailers resist selling online have fallen away in recent years. In particular, fewer manufacturers object to seeing retail prices displayed on store Web sites. At the same time, the amount of furniture being sold online is grabbing the attention of major furniture chains. The U.S. Commerce Department estimates that consumers bought $1.3 billion worth of furniture on the Internet in 2006, and many observers predict that figure could top $2 billion this year. “There’s a reason why R.C. Willey, Nebraska Furniture Mart and Raymour & Flanigan have all gone to the Internet,” Ritchie said. “You are going to see a whole lot more retailers starting to use it in their local markets.”
Prindle said he’s been in talks with a number of large furniture retailers who are considering moving to Internet sales. “In the last 18 months, e-Commerce has risen to the top of the agendas of many major furniture retailers,” he said.
What remains to be seen is whether rising gas prices will give the Internet an even more important role in capturing customers who delay a purchase decision in the store, then use the Internet at home to order once they’ve made a decision—thus, avoiding a return trip to a store.
“It’s a wonderful safety net for stores,” Ritchie said. “Normally when a customer who can’t make up their mind goes home, it’s so easy for that customer to abandon the sales process. With the advent of (Internet) shopping carts ... retailers are seeing more and more customers buying later via their Web site.”
‘Upside Potential’
eMarketer Senior Analyst Jeffrey Grau said that the relatively low number of furniture retailers now selling online means furniture still has “a lot of upside potential.”
Grau said furniture is a lot like the rapidly growing appliance and electronics categories in that online shoppers want to view the items in a store before making a purchase decision. “They’re all products that are complex and that you may want to see in person to evaluate,” he said. “The Internet is ideal for doing the research, but most people want to actually sit in a chair (in a store) or see the fabric close up.”
Prindle said Furniture.com studied cross-shopping for one of its retail clients. The study identified people who had registered on the retailer’s Web site, and then tried to identify how many of those names turned up on in-store sales tickets. Prindle said that for every online order, those registered customers his company tracked made five in-store purchases at his client’s furniture store. “If a retailer is looking at getting a certain percentage online, they’re looking at a five-time multiplier in stores (since so many) customers want to touch and feel the product, as you might imagine.”
How a Web Site can ‘Backfire’
Grau said that with so many furniture shoppers using the Internet for research, having a detailed Web site that provides an extensive overview of the products a store carries is becoming a major advantage for large retailers that it’s difficult for smaller stores to match. “It’s no small investment,” he said. “Providing the ability to do research along can drive traffic to stores. However, it works both ways in that having a Web site that’s sort of half-hearted in its execution can kind of backfire and not provide any of the advantages” in driving traffic to stores.
Of course, the risk in displaying detailed product information on the Internet is that shoppers seeking a specific product will search the Web sites of multiple furniture stores in search of the lowest price. While some bargain shoppers will only focus on price, Grau said retailers can use their Web sites to point out distanct advantages such as rapid delivery, an easy return policy or the convenience of a store’s location.
Despite the rapid growth of online furniture sales in recent years, the reality is that the vast majority of furniture stores don’t have Internet retailing capabilities. Ritchie said thoese stores can use informational Web sites to drive customers to their stores. “The biggest problem retailers have right now is a lack of continuity. Those retailers might have a great Web site but it doesn’t match to what customers see in the retailer’s print (or television) advertising. Or, the customer really likes what they see on the Web site, but when they get to the store, it doesn’t look the same or the products they see are not available. Those continuity problems create consumer distrust.”
Faded Online Billboards
A common problem, according to Ritchie, is that some retailers invested in an informational site years ago, but rarely update it. In many cases, he said the retailer may not be aware of how many furniture shoppers are looking at its Web site. “They put it out there like they put up a billboard, and, like a billboard, it will get old and faded after a while. If you fail to change your look and make it exciting for the customer—just like you change out merchandising on the store floor—it makes the customer feel your store is not exciting or they figure nothing has changed in your store.”
June 30,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on July 2007
Just imagine you were there when the idea was first proposed to sell furniture on the Internet. The pitch was probably greeted with howls of laughter and comments like, “Customers will never go for that. They can’t touch it or sit on it? Just look at it on a screen? Furniture’s too big, too bulky to sell online. Fuggedaboutit!”
But we know that’s not the case. In his session entitled “Leveraging the Internet—You Don’t Have to be Wal-Mart” presented at High Point Market, Escalate Retail’s Roy Martin (also a frequent contributor to
Home Furnishings Business) cited research that predicts a staggering 71 percent of all furniture sales will be influenced by the Internet.
That’s not all. Martin said currently 38 percent of affluent shoppers prefer buying online to the 33 percent who’d rather shop face-to-face, and 46 percent of all consumers do research online before they buy.
But even with this heavy traffic, the news isn’t all good for online sales. Technology presents challenges: 89 percent of customers have experienced issues while attempting to buy on the Internet. Of that 89 percent, 33 percent will try again and 27 percent will give up.
Take the Steps
These stats indicate that to maximize your online selling potential, you must make the most of your Web site to ensure it’s effective, compelling, user-friendly, and armed and ready to drive those sales.
To aid you in this quest, Martin offered eight suggestions to help your site be all it can be.
1. If you build it, they will come. If you don’t already have a store Web site, get one fast! Martin recommended that your site show a wide range of item selection, give directions to your store and offer shopping tips to customers. He estimated developing a new site would cost you a minimum of $5,000 to $10,000. “If you don’t want to start a Web site,” he added, “consider eBay (see story on pg. 50), Amazon, Yahoo or Google. All of these sites have fairly small price tags for entry, offer a tremendous volume of information, and provide experts to help you get started.”
2. Go back to school. Need to develop a new site, or revamp an old one? Martin suggested going to a local college or trade school to find young, aspiring Web developers. “Students must design and post Web sites as educational projects,” he said. “Why not work with (them) and have one create yours?”
3. Know who is buying what. Once you’re up and running with your site, consider putting systems in place to track customer data. There are a variety of different ways to do this that Martin cited, including recording all customer information in one master record whether sales occur on the Web or in your retail stores. “Successful companies treat their Web sites as just another store,” he said. “Pricing may be different between the Web and in their stores, but all of their data should come from (and be recorded in) one place. Think about when you need to automate the integration (between Web and store). It doesn’t have to be day one.” He also suggested that you have Web orders re-keyed into your current system, mainly to standardize the flow of information and add unique data as needed.
4. Keep in touch. Today’s Web-savvy shoppers have grown accustomed to quick, thorough follow-ups from sites like Amazon after they order, and you should follow suit. At a minimum, Martin suggested, you should send an initial e-mail that confirms a purchase and pricing, and indicates when the item(s) will be shipped and delivered. Also, immediately acknowledge and verify charges, and send subsequent e-mail reminders when the product ships and to confirm delivery.
5. Make yourself known. Start a blog that links to your Web site. As you share your thoughts, you can use a blog to promote your knowledge of furniture, and offer tips on how to buy it and get the best value for the customer’s dollar.
6. Map it out. A valuable enhancement to your Web site may be a page offering a virtual map of a bedroom that can be customized when a customer enters dimensions, existing and desired pieces, and even electronics, enabling them to design their room before they buy.
7. Reward loyalty. Martin said loyalty programs, which reward shoppers for repeat purchases, are an effective way to drive business to your Web site. With such a program, for example, shoppers would receive “points” for every purchase (possibly based on dollar value), and upon racking up set amounts of points, they’d get store credit or free gifts. One option Martin proposed was to partner with other stores that complement your business, such as an electronics store selling home appliances, for your loyalty program. Another variation he suggested was to do a loyalty program in collaboration with a local mall, providing links to the mall’s stores on your site and vice versa.
8. Broaden your horizons. Once you’ve established your site, worked out the bugs, and are gaining ground as an online seller, you may want to consider moving on to the next level of technical sophistication. Next phases that Martin said are within the grasp of most Web merchants include setting up provisions for special orders or creating a workable electronic catalog.
What’s Next?
Martin foresees the evolution of retail Web sites into what he calls “the ultimate experience, where instant updates occur between the Web, store and call center channels.” Such systems will enable customers to order online and pick up in stores, and allow retailers to share inventory, analytics and returns information between various channels. They’ll also perform advanced applications such as instant click analysis, with which you can assemble statistics on how many clicks shoppers execute before buying or leaving your site.
The future of online retailing is a sunny one in Martin’s view. He predicted the costs of running and enhancing Web sites will come down as technology improves and the online retail community continues to grow. But he felt it’s crucial that the furniture industry stay on top of cutting-edge advances in Web technology.
In closing, he offered this advice for newcomers to Web selling: “You don’t have to be a big guy to get going (on the Web). You can start with a few small ideas. You don’t have to do them all on day one. Your initial investment can be less than $10,000. Programs are in progress to provide “Nirvana.” People will buy (online) if (you carry) what they really want—they’ll even pay extra freight charges. Just tell them upfront about it by providing a calculator with your shipping information.”
Soon, that ultimate experience may be your reality ... as we all hit the surf.