From Home Furnishing Business
Cover Story: Home Furnishings Business 8th Annual Power 50 Retailers
2018 by HFBusiness Staff in Business Strategy, Industry
Consolidation of the traditional furniture distribution channels: independents, large independents, and expanding regional chains continue, reducing the presence of the independent dealers, which at one time was the heart, and some would say the soul of the industry.
Interestingly, while the story appears to be the expansion of the regional chains, the fact is that what used to be referred to as “alternative channels” are fast becoming the channels. While most of the noise in the press has been around e-commerce and its growth, the fact is the growth of the retail verticals, such as Restoration Hardware, and the manufacturing vertical, such as Ashley Home Stores, are making significant gains.
The future will see the blending of channels. Many of the e-commerce players are venturing into brick and mortar, experimenting first with pop-up stores and retailer partnerships.
Many traditional furniture retailers have hedged their bet by incorporating Ashley Lifestyle stores with their own brands to better serve their markets. Several of the large independents (multiple markets in the same states) have significant Ashley lifestyle stores in their footprint.
Will other manufacturers venture again into the manufacturing direct model in partnership with larger retailers? The model of the hospitality industry should be considered with its multiple franchise brands operated by experienced hoteliers.
But Power 50 is not all about sales and sales growth, but incorporates other measures, such as market share- which measures how well the retailer did compared to the opportunity. Additionally, today the expansion into additional markets must be a factor considered. While decreasing the retailers’ market share because of expanded footprint, the opportunity for future market share must be a factor. Social engagement with the consumer is also an important measure of the retailer’ market presences.
Market share is the most heavily weighted factor determining who makes the list, accounting for 46 percent of the total score. It is determined by dividing the retailer’s estimated sales by the estimated retail sales of furniture and bedding in each of the markets in which the company participates, whether it’s a metropolitan statistical area, micro statistical area, or a rural area. Sales of electronics, appliances, and housewares are not included.
To arrive at a list of home furnishings retailers with the strongest online engagement, we measure by 14 separate metrics. Sources include Alexa, Facebook, MOZ, OpenSEO, Twitter, and Pinterest. On Facebook, for example, the number of “check-ins” and “likes” were among the metrics, as were the number of Twitter followers, Pinterest “pins” and Google Page Rank, just to name a few.
From that data, we used a basic ranking methodology, assigning a numerical value to the ranked list of each metric. (For example, the retailer with the highest number of Twitter followers received a “1,” and so on.)
Then, we arrived at 14 individual scores calculated for each metric. After dropping the two highest scores to eliminate any outliers, the statistical average of the 12 remaining scores was used to calculate the final social engagement score.
The final factor in the Power 50 ranking is retail expansion, which accounts for 15 percent of the total score. Using public records, it measured store expansion and expansion into new markets.
In addition to the Power 50, HFB compiled separate lists that ranked regional chains, large independents, vertically integrated retailers, and independents with sales of less than $50 million in a single state.