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Frontier Spirit

By Home Furnishings Business in on May 1, 2013

A focus on bringing a fashion and design orientation to middle price points and making shopping there a family tradition has meant steady growth of Montgomery€™s Furniture.

The fifth-generation family business just opened its third and largest location, a 60,000-square-foot store in Watertown, S.D., which joins existing stores in Madison and Sioux Falls.

€œWe aren€™t the biggest stores, the biggest operators in the market, so our approach is to keep that family way of doing business, that family atmosphere,€ said Clark Sinclair, who owns Montgomery€™s Furniture along with wife, Connie, son, Eric and daughter-in-law Neala.

€œWe€™ve kept it different by spending a lot of time on displays and accessories at all our stores. We look for unique, fashionable fabrics and accessories. The bigger stores in our area concentrate on high-volume prices and looks, so we merchandise away from them. Our niche is to do the things they don€™t want to do, which involves looking for something a little more on the fringe, a little younger. We try to stay a little more on trend.

€œWe constantly search for the kind of products that aren€™t safe enough for the big boxes, so we give our customers a completely different experience.€

Montgomery€™s Watertown and Madison stores carry middle price points, while the Sioux Falls caters to a higher-end customer.

€œA lot of our sales people are degreed interior designers with a lot of years of experience,€ Sinclair noted. €œWe have a very stable staff that€™s thoroughly qualified to go into the home and help consumers with complimentary design service.€

That€™s for all three stores, not just the higher-end Sioux Falls location. It€™s in-home design service at very accessible price points. Stability among the sales staff€”indeed, all levels has been key€”and Sinclair believes it€™s because the company gives its sales/design staff the support they need to do their job.

€œWe feel we€™re providing an opportunity for them to run their own business,€ he said.

€œThey don€™t have to clean the store or buy for the store, that€™s all done for them. We give them a lot of latitude to do their job.€

More than half of Montgomery€™s 85 employees are in supporting roles to the sales staff: €œWe have all the support people€”cleaning, delivery, customer service,€ Sinclair said. €œIn some stores, the sales staff has to clean up, handle customer service.
€œWe make our own draperies in-house, so the designers can work with those accents with customers in the store.€
The store€™s Web site highlights its design service with designer profiles; and a room-planning tool is front-and-center on the home page.

The business dates back to 1888, when the Dakotas were still a territory.
€œGeorge Montgomery was a cabinet maker from back East who came out as far as the railroad went,€ Sinclair said. €œHe stopped at the end of the line.€
Montgomery set up as an undertaker and furniture dealer. His son took over the business along with a son-in-law, the latter of whose children formed the third generation of management.
€œThe two sons were partners, and one of those sons was my father-in-law, so I am the fourth generation,€ Sinclair said.
The other brother also had a son in the business, but the two brothers split up their partnership, which included two stores at the time.
€œMy father-in-law sold my wife and I the business in Madison 25 years ago,€ Sinclair said. That was 10 years after he€™d begun working at Montgomery€™s.
Seventeen years ago, Montgomery€™s opened a location in Sioux Falls, an hour south of Madison, which carries step-up price points.
€œWe had two small locations (in Madison), an old downtown location with three floors, kind of hard to work with; and a discount store on the edge of town,€ he recalled. €œWe closed those and opened a new, 40,000-square-foot location 10 years ago.€
In February, Montgomery€™s opened its largest store yet, 60,000 square feet in Watertown, an hour north of Madison. That location carries the same mid-price selection as in Madison.
€œWith Watertown, we€™re well located along the state€™s eastern border,€ Sinclair said. €œBy the end of the year, we want to feel we€™re running on all cylinders there. We bought for it last (High Point) Market, and we€™ll fill any voids.€
Watertown has a lot of synergy with the Madison  store.
€œWe€™re advertising and merchandising the stores the same for more efficiency,€ Montgomery said.
With those two stores carrying similar product, Montgomery€™s now has the volume to order containers for these locations.
€œWe€™re also going to carry patio furniture in all three stores,€ Sinclair said. €œWe€™ve been buying patio furniture in containers for the first time this year, since it€™s for all three stores.€

In his 35 years at Montgomery€™s Furniture, Sinclair€™s management techniques have evolved as the business has grown.
He said it€™s far different running a single store with four employees€”including himself€”to overseeing three locations with some 85 employees.
€œI used to manage by my gut when we were small, but now it€™s all statistics,€ Sinclair said. €œWe have a monthly meeting just on metrics€”floor covering issues, perfect deliveries, sales, inventory levels€”with each store€™s management team.
€œWe€™re looking at how to measure lots of different things€”we€™re going to institute a better way to track traffic.€
Montgomery€™s membership in a performance group through Impact Consulting Services has pushed that along.
€œThe performance group really helps with that because now we€™re comparing with our peers,€ Sinclair noted. €œWhen we see we have one of the lowest fabric treatment sales levels, we can figure out how to improve on that.€
The stores are moving to iPads, integrating them into their systems so sales associates don€™t have to go to a computer when helping customers on the floors.
€œIt€™s part of providing the tools they need,€ Sinclair said. €œThere€™s a lot of training and effort that goes into the tech side of our business.€
Montgomery€™s also is shifting resources into e-marketing initiatives.
€œMy son is new-generation, so he€™s really involved with this,€ Sinclair noted. €œHe was a rep with Rowe for five years, seeing retailers of all sizes. Eric also belongs to a local group of young members of family entrepreneurial businesses.€
Regarding promotion, he added that the business is fortunate to be located in a where television advertising is affordable.
€œAs we€™ve grown, we€™ve been able to do more€”that€™s our biggest vehicle,€ Sinclair said. €œWe also do newspapers, and we like local glossy magazines, because of the quality of the image we can show. We€™re getting more involved in e-marketing and a little bit of direct mail and radio.€
The selling tools, the design orientation and the good working environment serve a goal that€™s never changed.
€œOur customers just expect more out of us in terms of quality and service,€ Sinclair said. €œWe want to be the place to go if you want something fashion forward.
€œI know of customers who are third-generation since I€™ve been doing this.  We depend on those people. There aren€™t enough people in South Dakota that you can count on a lot of new people coming in.€ HFB

Retail Math 101

By Home Furnishings Business in on May 2013

Numbers don€™t lie, or do they? I€™m a wordsmith, not a math whiz. Even given that, I know the basic numbers that are important in the business of furniture.
Customers are steadily in your store or stores; employees busy and the cash register offers the frequent cha-ching as sales tally. (At least, I€™m hopeful you€™re hearing the ringing at your sales desk.)

We all know the importance in measuring same-store sales figures to last year€™s revenue. The measurement tracks whether you€™re growing or just maintaining. Comparisons are great, but what other components should be tracked.

1. Sales per square foot
As most know, this data helps with planning inventory purchases. Dividing your total net sales by square feet of selling space€”not including your warehouse or distribution center€”gives you your store€™s square foot of selling space. Sales per square foot is a great measure of return on investment. Are you buying the right product for your market? Lower than the industry average, your merchandise mix could be off and not keeping pace with your target consumer€™s wants.

2. Sales by category
The furniture industry loves to talk about categories. Dining room, bedroom, upholstery, home theater, recliners, and the list goes on. Which categories are the workhorses on your sales floor? Do you know? Figure it out and it could be that the category you thought was the winner if floundering, at best. Maybe the upholstery selection needs to be winnowed and youth bedroom boosted.
Who knows? But, until you do the math, you could be missing out on a key merchandising element.
Divide your the category€™s total net sales by your store€™s total net sales. Analyze the numbers for each category and see if your floor is in line with the results.

3. Staff productivity
Folks get a bit antsy about this one, but let€™s be honest. If your sales associates aren€™t performing, you have a problem, and you need to fix it fast. Your business runs on sales€”doh!€”without them you are out of business. Most of your sales come from your floor associates. Be sure you have the most productive ones around.
Figure sales per employee by dividing net sales by the number of employees. Keep in mind that you€™ll need to consider whether your sales asssociates are full-time or part-time employees.

4. Sales per transaction
Or sales per customer, this figure tells you your average ticket or transaction. Do the calculations and you may find that your sales team could do a bit better by selling consumers up. Decorative accessories and rugs, let€™s say, add the spice needed to pull together the new sectional and swivel chairs Sally just ordered. AND, makes for a bigger ticket at the register.
Divide gross sales by the number of transactions. Figure out a way to encourage your sales team to upsell your customers and boost those tickets.

Those are a few of the very basic items you should track and measure. In today€™s e-commerce and social media climate, you also need to take into account how your Web traffic and social media efforts are playing into your business.
Inside, we€™ve shared expert opinions on math that matters for retailers. If you happen to be a math whiz, well, let€™s hope the inside offers you a few tips and ideas that you can put to work in your business.

Hail to Market!

By Home Furnishings Business in on May 2013

I never aspired to become a writer and sometimes find it difficult coming up with the words to put in my monthly column. However, it€™s a duty that comes with being publisher of Home Furnishings Business magazine.

I€™ve tried to come up with an angle or story that I can relate to our discussion this month regarding metrics, but my mind and other responsibilities are focused on follow up from the recent High Point Market.

So, I will head in that direction.

I love markets. It€™s like going back to school after summer break. I get to spend time with many of my friends who are retailers, service providers and manufacturers. It is also a time where you can make new contacts and form new business relationships. The energy, spirit and vibe of the entire event are enough to recharge about anyone€™s batteries. I get to see what many manufacturers have been working on for months, and I love to see what new products they introduce during market. The grand showrooms are immaculate and many of the events are as impressive as the showrooms. The vendors put a lot of time and effort into catered breakfasts, lunches and parties in hopes of getting you to spend time with them.

Our team had a list of 30-plus events that we tried to attend during the five-day market. Some were top notch and some not so much. A couple that stand out are Stanley and Surya. When I arrived at the Stanley event I saw a line half a block long to get inside. The showroom, food, beverages and band were all very nicely done.

The second was Surya. If you€™ve not been to a Surya party, well you should. The event they host is arguable the best at High Point Market. The huge showroom was packed with people. I heard discussions in the elevator the next day that more than 2,000 people were in the showroom. Now I can€™t confirm this number, but would be surprised if they had less than that. The energy filled the spacious showroom. At one point, I saw a caterer€™s table being moved (by party attendees) to allow more space on the dance floor. I literally felt the floor moving under my feet, and I was only one beer deep at that time, so it wasn€™t the alcohol. Well done Surya, well done.
I hear talk all the time that we have too many markets and retailer attendance is down. If any of you were with me that night you would think otherwise. I saw the metrics and the fact is, these manufacturers found a way to get a lot of customers in their showrooms. This approach could work the same for you at the retail level. Generating traffic will only increase your opportunity to sell products.
I know many of you host events in your stores. I€™ve seen your pictures posted and information about them on your social media pages. By the way, like us on Facebook, and we will return the favor. Kudos to each of you for hosting events and then promoting them on social media. For those that aren€™t maybe consider a customer appreciation day, team up with a local radio station and hold a food drive, give a kid a coat or some type of charity event. What about holding a ladies€™ night and host an interior design seminar? Any of these could be excellent exposure for your businesses, show community involvement and provide content for you to use for marketing to you customers.
We would love to hear your success stories; drop us an e-mail.

Traffic Conversion

By Home Furnishings Business in on May 2013

Getting ups today is not good enough to grow your sales. Converting impressions into contact information is how you grow your sales.

The world has changed. This is not a news flash, but it has changed. Marketing messages and metrics have changed as well. Long gone are the days of €œshotgun€ approaches just trying to get impressions. Today, every advertising dollar is valuable and so are the eyeballs (or ears) that absorb it.

We need to focus on the idea of cost per lead and what that effectively can do to our bottom line.

Cost per lead is not a measurement of sales or closing ratio. Cost per lead is the measurement of did you get your advertising to effectively lead to an action. An action in this case is the following:

1. A Web site visit
2. A customer up
3. A social media interaction (Facebook like, Twitter follow, Pinterest follow, etc.)
4. An e-mail open and a click through
5. A text message sign up
6. Any thing that could result in a customer contact

For one of our retailer clients in the month of March the following data was compiled:

€¢ Number of leads generated during the month: 2,860
€¢ Advertising dollars contributed to those leads: $21,000
€¢ Total Cost Per Lead/Opportunity: $7.32 per lead/opportunity

How do you begin driving down cost per lead and generating more leads? Direct the consumer to go some where.

Here are some awesome things you can do to help drive her somewhere:

1. Utilized paid search on the major search engines. The consumer is searching for items every single day. However, getting in front of her is not always easy. To have your ad showcased when a consumer is searching for keywords that relate to you can only help drive home a possible opportunity.

2. Have different traditional mass medium (newspaper, TV, radio, direct mail) drive to different pages on your Web site, social media portals or dynamic landing pages. This will help you gauge the overall effectiveness of your messaging and media selection in your marketplace. It will also allow you to experiment with giving different offers and promotions to different segments of people.

3. Make your e-mail marketing messages come to life! Just sending out bland images or your current ad does not allow consumers to shop. Most e-mail suppliers allow for custom designs to help drive activity to multiple areas on the Web that can help allow for tracking and costs per lead to go down.

Today€™s consumer does expect an offer. However, she also does not mind having to find that offers through different avenues. Let your advertising drive Ms. Jones to different vehicles so you can start capturing information from the consumer.

Once you captured Ms. Jones€™ information you have the opportunity to speak to her before, during and after the sale. Not getting any information means the conversation cannot occur and thus an opportunity has slipped through your fingers.

Web Metrics 101

By Home Furnishings Business in on May 1, 2013

Just about every retailer has a Web site, and most are getting into the social media game.

In addition to expanding your store€™s reach, your online presence€”home page, Facebook page, etc.€”offer a wealth of information you can tap to learn more about your customers and, in turn, get them to do more business with you.

Per Impact Consulting€™s retail effectiveness analyses, 14 percent of
furniture purchases last year were made on the Internet. And that€™s €œreal€ furniture€”sofas, dining, etc., not accessories.

€œYears ago, it was more home office, but now it€™s sofas, dining room, across the board,€ said Impact CEO Bob George said. €œWayfair, for example, has started running major ad campaigns in Atlanta.€

Web analytics start with Web page visits. George noted that with 76 percent of all consumers go to the Internet to pre-shop before going to the stores, you need to get your share unique visitors and get a sense of how you€™re stacking up in your market.

€œIf you aren€™t getting the (Web) visitors, you€™re already behind the eight ball,€ he said.

Retailers also need to track how many pages potential customers visit on the Web site and how long they stay; mine potential data from social media; and analyze actual inquiries on their Web site.

Instead of looking at all Web traffic in one bucket, Paul Fastner, Web development consultant with suggests breaking it apart to look at mobile traffic separately.

Retailers in€™s network have seen traffic from mobile devices such as smart phones and tablets go from less than 10 percent of the total a couple of years ago to 32 percent today.

€œIt wouldn€™t surprise me if at the end of another two years that figure is above 50 percent,€ he said. €œIn general, a lot of mobile visitors are in a hurry€”they€™re looking for directions to the store or a phone number. Nowadays though, phones and tablets are so good that a lot of people use them as they would their computer.
€œThe one thing that doesn€™t work is having a Web site that doesn€™t work on a smart phone. In the past year, we€™ve rolled out mobile-friendly Web sites for all our clients.€
To evaluate your site€™s effectiveness, key mobile metrics to examine include bounce rate€”when a visitor to your sits views one page and leaves.
€œIt usually means they didn€™t like whatever they came to the page for,€ Fastner said. €œIt might have been to slow, or it was too hard to browse on a phone.€
How much time to visitors spend on the site, and how many pages do they visit?
€œThese are measures of visitor engagement,€ Fastner noted.
In your Web analytics, remember that not all traffic is equal.
€œInstead of looking at all their (Web) traffic, retailers should look at the traffic that matters,€ Fastner said. €œWe work with local retailers, and for them that means traffic in their market area. We separate that traffic into segments.€
Those segments include people who are trying to find your store€”they typed in the store€™s url, or conducted a search using the store€™s name.
An extremely important traffic segment comprises People who weren€™t looking for you but got sent to your Web site after a search. What€™s key here are organic search hits, not those generated by paid positioning on a search results page.
€œThat€™s one of the primary methods we use to measure SEO effectiveness,€ Fastner said. €œDo you come up when someone€™s not searching specifically for you?€

Fastner said that when it comes to increasing the effectiveness of your search engine optimization, nothing beats unique, high-quality content on your Web site.
€œYou can€™t cheat Google€”if you do, you can€™t do it for long,€ he pointed out. €œGoogle€™s watching that bounce rate, so it sees if someone comes right back to the search results page.€
The €œGoogle Places€ geographical location function is very important these days, and something retailers should monitor.
€œSay you search €˜furniture stores Miami,€™€ Fastner said. €œGoogle will pull up local businesses with actual addresses, phone and Web site listed. Make sure that information is correct, because we€™ve seen errors.€
For example, the pointer on the map might be in the wrong place.
€œGoogle can let you fix that. You also can add images and other things to enhance that listing,€ Faster explained. Another really important element of Google Places is reviews.€
Make sure to take the opportunity to respond to those reviews, or deal with a situation they might describe.
Number of customer inquiries creates opportunities for sale, especially if you€™re using something such as Google Ad Words.
€œWe want to look at how many leads this is driving,€ Fastner noted. €œThis goes back to €¦ combining data. If you get an inquiry and your matching that with sales data, you know how many leads you€™re closing.
€œIt€™s an important thing to look at, especially for retailers with multiple stores, is how many of these online leads you are closing. If in one store you€™re closing 10 percent, and in another you€™re getting five percent, there€™s probably something you€™re doing differently in those stores.€

According to €œLeveraging Big Social Data,€ a report from online marketing platform Offerpop, social media remain a largely untapped information resource for most companies.
According to Offerpop, 1.4 billion consumers spent 22 percent of their online time in 2012 on social platforms. Since social media are constantly refreshing content, marketers can gain real-time access to what€™s going on in potential consumers€™ lives; and social platforms offer up consumer information about age, gender, place of residence and e-mail addresses. (See accompanying boxes in this article for key metrics to consider in social media.)
Facebook, in particular, is a potential treasure trove of information, according to Kevin Doran, vice president and co-owner of R&A Marketing.
€œThe reason I focus on Facebook is because of the analytics it provides,€ he said. €œThe others like Twitter and Pinterest aren€™t there yet, but Facebook gives you news you can use for your other marketing materials.€
Facebook€™s demographic information, for instance, can give you the percentage of females that like your page and, importantly, the city where they live.
€œThat can help you do a targeted direct mail piece,€ Doran pointed out. €œAnd think of the friends of your friends you could reach.
€œIf you€™re the Facebook administrator, you can now promote your posts through the €˜increase your reach function.€™ Twitter and Pinterest are great, but they don€™t give you as much information.€
When beginning to analyze their Facebook presence, a lot of companies get caught up in how many €˜likes€™ they have. The real thing to consider, according to Doran, is €˜reach.€™
€œWhen you say how many €˜likes€™ you have, that€™s how you€™re perceived outside,€ he said.
€œLikes€ are not a true measure of how many potential customers you can reach on Facebook, Doran said.
With Facebook, consider how many people you€™re actually reaching. The potential reach is the chance you have to turn people into customers.
€œ€˜Reach€™ means the people you reach through your €˜likes€™€” look at how many friends your fans have,€ Doran explained. €œRadio doesn€™t work that way, television doesn€™t work that way. With social media you have a 100 percent chance for that to happen. Those people reached through your likes actively see your brand name€”that€™s the social nature of the beast.€
He mentioned one client with 441 €œlikes€ but still has the potential to reach more than 200,000 people, those fans€™ friends.
Facebook, Doran added, is based on its newsfeed, and the medium€™s algorithm€”its brain function as it were€”makes it hard for a brand to show up without user opt in.
€œYou can see what times are the best for posts€”what you are posting and how you are integrating social media into all your other marketing,€ he said. €œIt€™s about having a social media campaign linked with everything you€™re doing from a traditional marketing standpoint to create a traditional promotion.€
For instance, Mrs. Jones might €˜like€™ you on Facebook but not do anything else with you, such sign up for e-mail. Let Mrs. Jones know wherever she interacts with you what€™s going on at the store.
€œSo what if they didn€™t €˜like€™ something or comment on it? They still saw it. You have potential customers,€ Doran said. €œIf you stay consistent with your social media presence, you€™ll see a consistent analytical return.
€œOffer design tips, ideas. Share fun things like an employee€™s birthday, doing something funny to the boss. Show them you€™re a real company, and that you€™re socially aware. It€™s one piece of the pie, and if you don€™t have a social media connection in your marketing, you don€™t have a complete promotion.€ HFB

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