Daily News Archive
Brought to you by Home Furnishings Business
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
March 31,
2007 by in UnCategorized
By Home Furnishings Business in Leather Upholstery on April 2007
Bruce Birnbach joined American Leather as president one year ago, leaving behind Rowe Furniture, the only furniture company for which he had ever worked.
During the first year in his new post, he’s taken the time to learn the ins and outs of the leather category’s lingo, put in new processes to help move the company along to increased sales and done more than just a bit of dabbling in the design and merchandising side of the business—an aspect of the furniture industry that has always been near to his soul. With sales in excess of $70 million, American Leather is poised to grow based on its quick manufacturing time, custom-order capabilities and open ear to
customer suggestions and needs.
Birnbach, who turned 48 on April Fool’s Day, has stepped out of the shadow of his father for the second time in his career. The first came when at the age of 30 he partnered with a high school buddy on the weekends to start Chicken Out Rotisserie, a 28-store chain of healthful, fast-food restaurants in Metro Washington, D.C. The concept flew and the company grew from $1 million in sales to $30 million in five years. Birnbach still owns a minority interest in the business that he credits with teaching him about lease negotiations, hiring people and old-fashioned entrepreneurial spirit.
Before joining American Leather, Birnbach was president of Rowe Furniture’s sourcing division and prior to that post, he was president of the mid-priced upholstery producer for six years. Now, Birnbach sits atop one of the industry’s domestic manufacturers poised for growth.
Birnbach sat down with
Home Furnishings Business prior to heading to the High Point Market to reminisce about his first year with American Leather, the company’s domestic manufacturing and plans for the future.
You were named president of American Leather last year. Sum up the last 12 months.
It’s been a learning experience just to absorb another segment of the business; another customer base. It’s been a big learning opportunity. I attended American Leather University (the company’s in-house training for retailers and new hires), but more importantly I went out and talked to our customers. Between the technical knowledge of the product and the knowledge of our position in the industry, it’s been great. Furniture is in my blood, and I love this industry, whether it’s leather or something else. It’s the same industry with the same great people.
What were the biggest
challenges?
Getting to know this segment of the industry. It’s more of a premium brand, and understanding how it fits in the market. Learning the different language surrounding leather and getting up to speed on the nuances of leather. The people here have been outstanding to work with and in helping me to understand the leather business.
American Leather has such a strong reputation in the industry. Coming into the company from the outside, what was the one thing that surprised you the most about the company?
The customer response to the product. To piggyback on how the last year has been, going out and talking to the customers has confirmed that great reputation. No matter how great you are as a company, to hear your customers say “I want to buy more” is amazing. That’s been a bit of a surprise.
It must be a different world being president of a privately held company compared to Rowe where the parent company was publicly traded.
Amen. That would be true. In a private company you can be very focused on the business as opposed to Wall Street, the board of directors or the analysts. Here, I’m looking more at the business as opposed to fitting into the expectations of an outside world.
I have always operated with integrity, but privately held companies give you a lot more flexibility. You can make decisions on a longer light; you’re not judged quarter to quarter. You have the ability to step back and understand why we’re doing something and how we’re doing it without being second guessed along the way.
That quarter-to-quarter mentality is not a great way to run a business, especially in an industry like ours that is changing at such a fast pace.
Moving forward, what goals have you set for American Leather?
We have been fortunate to grow by double digits every year since the company was started. I want to maintain that trend, and things look really well there.
We’re going to start introducing more textiles into the product mix, and that’s being driven by customer demand and request.
The company has reached a point where we’re trying to get a mentality of a bigger company. We need to ensure the necessary infrastructure in place to do that. Other than that, I’m kind of steering the ship on the same course it’s been.
I have a yearly volume target, and I want to continue that double-digit growth. I’d like to take this to $120 million to $140 million. That’s our goal. Our vision is to take this thing out there and be sure al of our processes are in line to meet that goal.
What changes loom on the horizon that our retail readers can expect to see?
An expanded product offering with a much more design intensive strategy. They’ll see more textiles mixed with leather.
I’ve been very much involved in the product, the merchandising aspect. I very much have my hand in that part of the business. There’s no one that does it better with greater quality than American Leather, but as great as the product has been, I’m looking to take design to the next level. The showroom looks and feels completely different
American Leather has always been proud of its domestic production. So many furniture companies have opted to adopt an off-shore business model. How is it that AL has remained profitable with a made-in-America story when so many others say it can’t be done?
I think, one, where we’re positioned in the market allows us the ability to compete price-wise and design-wise. Technology and driving waste out of the product is also a bonus. At the end of the day, it’s about the retailer and what they need, and a company that can deliver quickly with a variety of choices meets the needs of many retailers today. Those people in the upholstery business in the middle price arena will always have a place in domestic production. Each retailer has its own value proposition, not every one can buy from China. The American Leather model is the perfect model to survive in today’s environment.
Exclusive distribution is a key concern among retailers. How does American Leather support its customers in this regard?
We are very much partners with our customers so we protect them. We want to give everyone the opportunity to make money. We have a really strong brand in the marketplace, and we’re probably able to work that a little differently. We’re very aware of our customers’ needs and work hard to protect those needs.
This issue is all about technology. What has American Leather done to keep up with technology in its business?
If you come through the plant, we’re one of the top three users of technology in the world. Everything is computerized from the leather to the fabric to the cutting to every part of our business, we have some type of automation. We’re continuing to push forward. We’re implementing Oracle to allow us to scale up. All throughout our business we’re looking at technology.
Where do you look for leadership guidance? Books? Role models? Where do you find your inspiration?
I had a phenomenal mentor in my father (Jerry Birnbach, former president and chief executive officer of Rowe). My father taught me about leadership and this business in general. The gentleman I work for now is very bright (Bob Duncan, American Leather chief executive officer and co-founder). I like to read a lot, and seek out self-help whenever possible. I’ve always led with my heart and what feels right to me.
You grew up in the furniture industry. What changes over the last 20 years do you consider the most eye-opening?
The whole advent of China and the impact it has had on this business. If there is one thing that’s changed the industry most dramatically, it’s that. The deflation that offshore sourcing and manufacturing has brought the industry, both retailers and manufacturers, is amazing.
What is your favorite American Leather frame?
The Edward sofa, an updated traditional, channel-back sofa, because it has so many looks that it can appeal to. Either that or the Danford because of its comfort.
HFB
March 31,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on April 2007
A collaboration between two self-described “friendly competitors” six years ago has staked a big claim on the furniture retailing scene in Connecticut.
Pilgrim Furniture City, last year’s National Home Furnishings Association Retailer of the Year, is using a combination of fast delivery, a fun shopping environment, high-impact merchandising for middle price-point goods, and broadcast advertising to attract customers from a wide area around its Southington, Conn., location right off Interstate 84.
Mike Albert, president and owner, and Steve Bichunsky, vice president and partner, combined their respective strengths in operations and merchandising management—and a shared heritage in furniture retailing—in 2001 to form a partnership that has taken a former Levitz store and made it not only a destination for furniture shoppers, but also a significant corporate presence in its local community (see sidebar).
In the past year, Pilgrim has expanded its showroom space by 30,000 square feet, bringing its total display to 90,000 square feet, and created in conjunction with retail designer Connie Post a 6,000-square-foot “Grand Interiors” presentation to showcase its higher-end goods.
On the horizon: a new 100,000-square-foot store set to open early next year in an undisclosed location in Connecticut that Albert believes will double Pilgrim’s sales; and a revamped Web site that better tells the retailer’s story and offers shoppers a better idea of what they can find in the store.
Hooking Up
Albert and Bichunsky both grew up in the furniture business.
Albert had purchased Pilgrim Furniture from his father, Jay Albert, in 1985. The family’s furniture retailing roots date to 1909, when Mike Albert’s great-grandfather opened Albert’s Furniture, which grew to a seven-store chain based in Waterbury, Conn.
At the time, Pilgrim was an 8,000-square-foot operation employing four people with annual sales of $400,000. Over the years, Mike Albert grew the business to 12,000 square feet, employing seven people, with annual sales of $1.2 million.
In 1993, Albert purchased a property owned by his grandfather that allowed Pilgrim to grow to 40,000 square feet including a 10,000-square-foot fully racked warehouse, and employ 25 people.
In May 2001, Albert partnered with Steve Bichunsky to open Pilgrim Furniture City at a former Levitz store in a high-visibility location in Southington.
Bichunsky’s experience in furniture retailing dates to his days as a teenager working for his father and uncle in their business, The Meriden Auction Rooms in Meriden, Conn., where he found merchandising to be his particular operational calling. After that business was sold in 1998, he went to work at Bob’s Discount Furniture, where he worked in purchasing.
“On my way to and from work (at Bob’s), I used to drive I-84,” Bichunsky recalled. “Mike and I had been friends for a long time, basically friendly competitors. I used to drive by our present location, which was a former Levitz store. ... In 2001, we thought, ‘Why don’t we combine our efforts in one store?’”
Their shared concept, “Shoppertainment,” was to make furniture shopping enjoyable and convenient. The store featured a fantasy townscape, highlighted by an old carousel imported from Argentina. The new store, which in 2001 employed 70 people, also housed a 20-seat movie theater to entertain children while their parents shopped.
For their combined efforts, Albert is the operations expert, while Bichunsky oversees buying and merchandising.
Upping the Ante
Last year, Pilgrim converted another 30,000 square feet of its Southington location to retail display in the store’s second project with Connie Post (the first included the addition of a skylight to shed natural lighting on the shopping area). A highlight of that expansion, which held a grand opening last fall, is Grand Interiors, a 6,000-square-foot footprint showcasing in particular Pilgrim’s high-end case goods, Fine Furniture; and Massoud upholstery.
Grand Interiors is a full-scale facade of a New England style home added to the store’s original townscape and designed to help customers see how the furniture on display looks in an actual home environment.
The $3 million remodeling project basically gutted Pilgrim’s previous floor layout, retaining only the original configuration’s cityscape, carousel and skylight. The café, also remodeled, remains a highlight, Bichunsky noted.
“Creating a destination is very big for us, and part of the experience includes a full-service cafe,” he said. “One of our favorite items is a steamed Nathan’s hot dog we sell for a dollar.”
While it boasts a brand-new look, the store also constantly updates its floor presentation. A team of three merchandisers led by Vince Alberino, store designer, works full-time to fine-tune the visual aspect of Pilgrim’s sales floor.
Meat to Go with the Sizzle
Fun is fine, but Pilgrim works hard to back an inviting atmosphere with powerful service.
For almost two years, the store has offered—and promoted—same-day pick-up and delivery on customer purchases.
“I think we deliver better than anyone in our market, and there’s a huge fun aspect to this store. Our customer is a woman who’s probably working, and when she shops she probably brings her kids with her,” Albert said. “We decided that to say we offer this service on network television would been a lot. It was a simple process for us. We were working out of one building, we have our own drivers and our completion rate is very high. We serve most of Connecticut, and we attract people from great distances, so this is an extra incentive to shop our store.”
Bichunsky believes Pilgrim is the only retailer in its market offering same-day service on orders.
“People want immediate gratification—they’re time-starved,” he said.
Albert and Bichunsky expect their 112 employees to meet that service commitment, but they also walk the walk, leading from the front during the store’s busiest days.
“There are two owners on this property every day of the week,” Albert said. “On weekends, one of us might come in early and the other later. It shows the employees we want to be here when the ducks are flying.”
Telling the Story
In its advertising, Pilgrim Furniture City goes heavy on the airwaves—75 percent television, 20 percent direct-to-consumer and 5 percent newspaper—and Bichunsky gives a lot of credit to the retailer’s ad agency for telling its story of fun shopping, attractive mid-price furniture and fast delivery.
“Our ad agency, Horich Parks Lebow in Baltimore, has been a key part of our growth,” he said. “Our advertising is getting the message out. We’re right in the middle market, and we really have to put the merchandise on a silver platter.”
Pilgrim also is revamping its Web site, pilgrimfurniturecity.com, which both partners admit to date hasn’t reflected the experience customers have in the store itself.
“We’re 30 to 60 days from bringing out a brand new Web site,” Albert said. “It will include pictures of store interiors, merchandise, more features and designs to get people into the store.” HFB
March 31,
2007 by in UnCategorized
By Home Furnishings Business in Retail Technology on April 2007
With a few exceptions, the furniture industry hasn’t lived on the cutting edge of speeding product to consumers, so it’s no surprise that a lot of furniture stores trail retailers in other sectors such as consumer electronics, apparel and appliances when it comes to adapting the latest and greatest technology for their business.
That said, more and more retailers are putting information systems to better use in their operations, and automation vendors say technologies are on the way that while not always brand new, haven’t been used as much in furniture stores to date as in some other sectors.
There are a number of areas where furniture retailers can expect technology enhancements within the next year or two, but some already are givens in other industries.
“The furniture industry is so far behind what’s going on for technology that the leading edge is several hills beyond the horizon,” said Russell Higgins, a principal with Myriad Software in San Diego. “What we’re looking at in the next couple of years is not ‘new’ technology by any stretch of the imagination.”
What to Expect
Myriad is concentrating on product development for Web sites, enhancing retailers’ role as service providers.
“Retailer Web sites are a big area companies like ours are going to have to develop tools for,” Higgins said, noting that retailers’ use of the Internet reflects its tech status relative to other industries. “Most retailers don’t even want to put pricing on their Web site, much less sell there. I think they’re going to face pressure, not just from other sectors, but also in furniture from people like Pier One, Crate & Barrel and Restoration Hardware who are selling furniture on the Web.”
A retailer should know whether a customer in the store has visited its Web site, and get ready for a generation that expects more response and access via the Internet.
“At a minimum, consumers are going to want to be able to go in (a Web site) and create a shopping cart or do some sort of room planning,” Higgins said.
Higgins said retailers can expect more applications to automate many aspects of customer service.
“What do people want to know about their purchase? When it arrives at the store and when they can expect delivery,” he said. “Retailers should be able to let them know when the goods arrive at the store from the manufacturer. It’s an event-triggering mentality that generates an e-mail to the customer.”
Creating a “seamless” flow of information among and between systems is a key development area at San Diego-based Escalate Retail, said Roy Martin, product manager.
“Folks are looking to increase and enhance the customer experience,” he said. “We hear people talk about that all the time, but what that means relative to technology is creating a seamless environment for all ways they actually have that experience. For example, a customer might buy something on the sales floor, return it on the Web, or exchange it through an in-store kiosk. Information should flow seamlessly among all those.”
That demands a common services layer in the system.
“What are all the bits and pieces that need to be tied together and how do I integrate them?” Martin said. “In the past that was a simple file transfer, or sometimes keying a Web sale, for example, into the store’s main information system. Create a layer that indicates what needs to be transferred.”
Loyalty programs, especially tech support for “Web malls” in which retailers team up for a shared Web presence, is another area of interest for Escalate.
“It might be consumer electronics and furniture retailers, for example,” Martin said. “That loyalty should transfer between retailers. If a shopper needs a television and the furniture to go with it, those points can go to either retailer.”
Room-planning software that integrates manufacturers catalogs and electronic data interchange will be a priority, said Larry Stark, chairman of Colorado Springs, Colo.-based Profitsystems.
“Everyone doing any sales training is pushing room planning and selection up to and including computerized planning,” he said. “If you’re doing room planning, that indicates you’re doing a lot of special orders, which is the most profitable type of business. With special orders, you don’t have any dogs—whatever product’s been ordered has already been sold.”
Stark noted that techology that combines merchandising and EDI right when consumers make their decision lessens the potential for buyer remorse. Seamless interplay among various systems also is a focus at Profitsystems.
“We look at our expertise (in) inventory and accounts receivables management, but the main thrust of our development today is tightening our integration to other applications to the point it seems like one system (to the user) for processes such as GPS routing, EDI and manufacturers’ catalogs.”
Ren Baker, president of CDS Solutions in Lancaster, Pa., said technology to build sales force productivity has great potential, especially for small to mid-size retailers.
“It’s about identifying who the customer is and how to market to the right customer at the right time. Can we start to predict when people buy, what they want to buy, and how is the best way to market to them in the future?” he said. “It’s all about capturing minute transaction details and mapping information from outside furniture, such as leveraging data from private label lines of credit as to when they buy furniture and what sorts of offers they respond to. Personalized one-to-one marketing. ... That’s a gold mine when it’s done right, but you need databases, transaction histories and (leverage) that into business rules that drive the sales force.”
The increased amount of product hitting retailers’ docks directly from overseas will influence their technology investment, said Gloria Walsh, product marketing manager for Mt. Arlington, N.J.-based Storis Management Systems.
“With everybody buying by container, people have a lot more concern now about importing items and freight and how it’s handled and what’s the best way they can manage that in the system (in terms of) customer expectations,” she said. “When you deal with a domestic warehouse, sometimes you could get things in a week or two, but with a container that’s going to take eight weeks. If the shipment runs late, you’re not just disappointing one customer. There may be 30 customers who are linked to that container. The access to that information and managing that is critical.”
Mark Van Winkle, director of sales at Storis, said retailers are looking for more e-commerce capability.
“There’s also CRM packages, contact management—they’re always looking to do that more efficiently,” he said.
Walsh added that those functions are very important to small stores.
“If they don’t have a big advertising budget, if they’re sending out a circular or a coupon or some sort of a promotion, they want to be sure they can track everybody who comes into the door to track how successful this promotion was,” she said. “Did it work? How many people came in, what sales increased, what zip codes increased based on our mailing? Having robust contact management and reporting systems can enable you do do that.”
Areas Affected At Retail
How will these technologies affect retailers in specific areas of their operation, such as inventory control, merchandising or delivery?
Escalate’s Martin said seamless communication among selling tools such as the Web and kiosks and between customer-generated and internal information will change the retail landscape.
“We may be forced to a more mobile POS environment where we’re using PDAs and handheld computers to receive alerts,” he said. “If you want to create that ultimate experience for the customer, you’ll have to spend some money on devices. Fortunately, the prices on things like tablet computers and PDAs are coming down. Because people must be more mobile in order to not only react but also be proactive on things such as instant alerts on product outages, you should be able to schedule delivery and service on the sales floor.”
With more choices for GPS delivery and routing systems, retailers have an opportunity trimming costs in that expense-intense function, said Stark at Profitsystems.
“If a store is already profitable, any little increase in sales or efficiency has a huge effect on the bottom line,” he said, adding that the average store has a 3 percent profit margin. “But once you get past break even, you get 25 percent on each sales dollar, not 3 percent. The same is true for reducing your expenses.”
New applications for EDI and radio-frequency identification embedded in products will affect logistics and inventory management, said Myriad’s Higgins.
“Right now we do a great job with EDI, but I think companies like ours will have to extend that to the transportation system when you consider the impact of off-shoring,” he said. “Are all those plants overseas online in real time with EDI? My understanding is that a lot of information has to get rekeyed, and it’s important because the manufacturer is a point of information access for retailers ... Now there’s not only truck transport to deal with, but also the high seas issue.”
Down the road, watch for permanent chip technology built into every product.
“It will probably be perfected in the grocery business first to the point where you bring your cart to checkout and you immediately have your entire purchase rung up” with a single scan, Higgins said.
That kind of technology, in furniture more applicable to receiving and inventory tracking, would require a big critical mass in furniture on both retailers’ and vendors’ parts.
“Everyone has to hold hands and start to play the game at the same time for it to make sense,” he said. “In a lot of sectors, the retailers got so big that they could make the rules that manufacturers had to meet to do business with them. In the furniture industry, it was traditionally the other way around, and I can tell you retailers have felt the pain as a result.”
Baker at CDS believes retailers will be stocking less and focusing on customer relationships, diverting investment in warehousing and inventory to the merchandising side.
“The ones who are driving change in the industry are going to force this separation,” he said. “Technology has never been a differentiator, it’s a tool to drive success. It won’t make or break a retailer.”
Baker predicted that eventually, smaller retailers could look to larger counterparts as distributors.
“As those companies move away from having to stock everything ... a lot of their wholesale activity will happen through larger retailers who have the big warehouses and systems selling to smaller retailers,” he said, noting what’s already happening in sectors such as appliances. “The large guys will do almost no special orders because the transaction costs too much. Part of this isn’t in our control, but determined by the customer. Home furnishings will follow the path of every other retail sector—you’re going to see some Darwinism here.” HFB
Senior Editor Jo Fleischer contributed to this report.
March 29,
2007 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on March 2007
Specialty retailer Pier 1 Imports is laying off 175 positions in a cost-cutting measure.
The move will impact 75 administration positions in the company’s field offices and 100 jobs in its Fort Worth, Texas, headquarters.
“We know we can return our company to profitability and to that end, we have established clear business priorities,” said Alex Smith, president and chief executive officer. “One of those priorities is to make the organization leaner, simpler and more efficient in every way. The realignment of our field and home office administrative functions will create a more responsive, cost-effective structure that will improve long-term operating efficiency as well as provide savings that can be reinvested into key areas of our business.”
Smith said the company is assisting people impacted by the lay offs.
During the first quarter of fiscal 2008, the retailer expects to incur severance and outplacement costs related to this realignment of about $5 million. Pier 1 estimates that the move will generate annualized savings of about $17 million.