From Home Furnishing Business
2014 by in Business Strategy, Industry
By Powell Slaughter
HOW DOES OUR BUSINESS STACK UP IN TERMS OF RESPONSIBLE ENVIRONMENTAL CITIZENSHIP?
October 2001. Anyone who was there might remember that High Point Market as something of an out-of-body experience. People wondered how they could worry about selling furniture in the aftermath of terrorism’s worst strike on where we live.
The nation and the industry were in a stunned mode, but that was when Gerry Cooklin, CEO of now-defunct vendor South Cone—and a native of Peru, a country torn by terrorism long before it invaded our space—issued a call to the furniture industry when the company hosted an anniversary party at High Point’s Spring & Splinter Club. Cooklin had long been concerned about the furniture industry’s environmental impact, and the importance of sustaining the forests that provide the bulk of its raw material.
He spoke of balance and harmony with the earth. That all sounds pretty touchfeely for an industry that looked with horror upon mahogany protesters hanging banners from the High Point’s International Home Furnishings Center during the 1990s, but Cooklin’s call eventually led to the establishment of the Sustainable Furnishings Council, which today counts a fair share of old-school furniture names among its membership.
As an issue and as a talking point for the industry, sustainability is here to stay. A decade-plus later, how do we stack up when it comes to watching out for the resources we use; our impact on the communities surrounding our operations; and the consumers we serve?
A LOT OF PROGRESS
In addition to activities at the SFC, which includes vendors and retailers, the American Home Furnishings Association has worked hard this millennium to encourage sustainable practices among its membership. Pat Bowling, vice president of communications at AHFA, said there are two ways of looking at how well the furniture industry is doing with regard to sustainability and eco-friendliness.
“Are furniture companies making progress in terms of sustainable operations, and, as an industry, are we producing and marketing eco-friendly products to meet consumer demand?” she said. “AHFA primarily concerns itself with the first aspect—developing ways to help furniture companies move toward more sustainable operations. We promote environmental awareness and improved environmental management among manufacturers as a ‘best practice’ within our industry. These are ‘best practices’ because environmental stewardship is a key ingredient in being a good corporate citizen.”
Those best practices steps reduce waste and lead to greater efficiency, which leads to greater sustainability. While AHFA has many member companies working to produce and market ‘green’ or ‘eco-friendly’ products made from eco-friendly components, its work, as an organization, has been more on the sustainability front. “Have we made progress?” Bowling said. “Yes. Fifteen years after its introduction, AHFA’s environmental management program (EFEC—Enhancing Furniture’s Environmental Culture), continues to grow. As of this month, 14 companies have implemented EFEC in 79 different facilities, including one La-Z-Boy facility in Mexico.” Counting the Heritage Home Group companies separately, all of which have installed EFEC in at least one domestic facility, that total is 23 companies. Seven of those companies have taken their commitment a step further with AHFA’s Sustainable by Design program, which extends EFEC’s culture of environmental stewardship throughout a company’s global supply chain.
This year, AHFA will roll out its new carbon calculator; and soon after will start publishing industry best practices, followed with an annual Furniture Industry Sustainability Report.
There is far more awareness throughout the industry of the importance of sustainability issues, according to Susan Inglis, SFC executive director. Those include problems of toxic waste pollution such as carbon monoxide emissions; poor indoor air quality; and good management of wood and other natural resources. “But there is still a lot of confusion in the industry that does sometimes lead to ‘greenwash,’” she added. “Consumers are pretty clear that they want environmentally safe furnishings and they are often more clear than the retail sales staff about what that means.”
Take the recent “Toxic Hot Seat” HBO examination of fire retardants in furniture as an example. Such reports are what a lot of consumers are bringing along when they walk through a retailer’s door, and retail sales associates need answers in hand when questions arise about a product’s safety.
“SMALL BUT IMPACTFUL”
Inglis believes that while progress has been made toward sustainability, home furnishings as a sector hasn’t caught up with larger industries such as construction, paper and tourism. The good news is those sectors have laid plenty of groundwork. The SFC incorporated initiatives begun in those other industries in its list best practices for furniture companies to follow when looking to increase their sustainability quotient. And since so much of our sector’s raw material depends upon natural resources that must be sustained, the industry can have an impact beyond its dollar numbers relative to other areas.
“Those larger industries have laid a lot of the groundwork so there is a lot of low-hanging fruit for manufacturers and retailers to seize, including new non-toxic and low-impact materials, and also greater consumer awareness,” Inglis said. “We can take advantage of what they’ve done, because those industries have been an impetus for the increasing supply of responsibly sourced raw materials.
“Manufacturers need to be asking their suppliers for non-toxic and lower-impact alternatives to the materials they need for manufacturing our furnishings products. Many more excellent alternatives are available now than were on offer even just a few years ago.”
A SIMPLIFIED APPROACH
SFC board member and Co-Chairman of Mitchell Gold + Bob Williams Mitchell Gold gives the industry a “B” for the improvements it’s made in the past 15 years. “Yes, (we’re) doing better,” he said. “Consumers are demanding a greater attention to preserving the environment and safe products so many companies are trying more than ever—some kicking and screaming, and some embracing it.
“Every company, wholesale and retail should join and support the Sustainable Furnishings Council, and that is not the case now,” Gold said. “The SFC is constantly updating best practices for the environment, and factory and home safety.” SFC recently reformatted its standards for vendors to qualify for under organization’s “Exemplary” status in sustainable product. (The new format can be found online at http://tiny.cc/8ezb9w.) Inglis said the length of the old form might have put off companies that were in reality making strides toward sustainability. “We wanted to make it easier to recognize companies that are doing good things, and to get other companies excited about doing good things themselves,” she said of the new form. “It’s a shorter document, and you can attach documents that prove what you’re doing. We hope this will make a difference, and encourage more companies to participate.
“In the new format, manufacturers see the requirements laid out first—that they are public about their commitment, that they are measuring the reduction of energy use, that they are looking out for their suppliers as well as their employees, that they are careful in materials choices and procurement procedures. Then they can earn Exemplary recognition at the Bronze, Silver, Gold, or Platinum level depending on specifics around their operations, their products, and their outreach. We are excited that many more deserving companies will be able to earn the recognitions now that it is all laid out more clearly.” HFB
“Manufacturers need to be asking their suppliers for non-toxic and lower-impact alternatives to the materials they need for manufacturing our furnishings products.”
Sustainable Furnishings Council
AHFA IS DEVELOPING “CARBON CALCULATOR,” SUSTAINABILITY REPORT
The American Home Furnishings Association has spent several years developing a standard reporting system to collect data from companies participating in its EFEC program. This reporting system will lead to the development of an AHFA annual sustainability report, which will highlight the achievements of the industry as a result of implementation of AHFA’s sustainability programs. “One of the keys to generating this report has been the development of an AHFA ‘Carbon Calculator,’” said Bill Perdue, AHFA’s vice president of regulatory affairs. “We are refining this tool to enable companies to accurately report reductions in common greenhouse gas emissions. It also records reductions in water usage and waste, as well as recycling achievements. The result is an accurate carbon footprint.
The calculator gives companies the ability to track, measure and reduce the overall environmental footprint of their facilities while realizing immediate cost savings.
“With this tool, we will be able to recognize and document the achievements of the industry. AHFA member companies over the past several years have not only embraced sustainability, they continually press forward seeking incremental improvement.” The goal is to help AHFA member companies tangibly reduce their environmental footprint by implementing proven reduction strategies. “One of the primary tenets of the EFEC program revolves around the axiom ‘you don’t do what you don’t measure,’” Perdue said.
2014 by in Business Strategy, Industry
By Powell Slaughter
80-YEAR-OLD RETAILER DISCOVERY FURNITURE RE-INVENTED ITS BRAND AS FURNITURE MALL OF KANSAS.
Re-invention is a tradition at the Topeka, Kan., Furniture Mall of Kansas, which opened this past Labor Day weekend. The destination concept arose from Discovery Furniture, which itself is an umbrella brand established in 2000 by Winter Furniture, a family owned retailer with roots going back to 1933. The thought process that led to the mall began when another area retailer, Marling Furniture, had closed in November 2012. Discovery believed the
Marling name still had cache and acquired rights to the brand, but already operated several stores carrying multiple brands, including Discovery and Roommakers for furniture; Mattress Headquarters for bedding; Abbey for flooring; and a separate Ashley Furniture Homestore. Furniture Mall of Kansas opened in Topeka’s Westridge Mall this past Labor Day weekend in an 180,000-square-foot space that was formerly a Macy’s location.
FULFILLING A VISION
The site, which Discovery bought, was a good fit for the Furniture Mall destination concept, designed by Martin Roberts, with two floors and five entrances that helped define the various brands with different entrances for different brands. The mall grew from Discovery’s vision to be the best at answering three questions:
What do customers want?
How can we give it to them?
How can we make it better?
“This line of questioning is what led us to open competing stores and what has led us to combining all our store brands into one easy to shop furniture mall,” said Co-Owner Jeff Winter. “The vision is translated into all areas of our company through constantly asking those three questions and putting the answers into our best actions—and then doing it over and over.” Examples include the retailer’s move to iPads in the store so that sales associates—called “home specialists” at Furniture Mall of Kansas—don’t have to leave the customer making them wait.
“One thing customers want is speed—quick answers or not to be left waiting to write a sale or get a special order price,”
THRIVING ON COMPETITION
Furniture Mall of Kansas isn’t the only furniture “destination” in its region—Nebraska Furniture Mart has a location not far down the road in Kansas City. “Of course we have competition, but if our focus is on competitors our customers lose,” Winter said. “Our focus must be on customers and what we can do to be the best at giving them what they want—and that is more than a full time job.” Winter pointed to several keys in how Furniture Mall of Kansas differentiates itself.
“We do lots of training for our home specialists so they can truly be their best at helping customers,” he said. “Most customers appreciate genuine help from a knowledgeable specialist in making the best decisions for their home, but none like to be sold.” The store also belongs to the Furniture First buying group. “That helps us buy like we are a billion-dollar store, while still allowing us to individually pick items that are fashion right for our customers,” Winter said. “They also provide many learning opportunities and relationships with other furniture retailers that keep us at the cutting edge of retail and how to give customers more of what they want.”
It’s a given that a good retailer must put a lot of effort into display and accessorizing room groups so customers can better visualize how things can look in their homes, but Furniture Mall of Kansas didn’t stop there. “This led us to help fill the need of our customers to better accessorize their home by offering seasonal design classes,” Winter said. “The attendance continues to grow, and our three “Holiday” classes had an attendance of 990 women.”
Finally, the furniture mall blends five individual stores in one easy to shop location with a hands on, family based approach to the business. “Our customers want a large selection to choose from, but don’t want it to be overwhelming, while still wanting personalized attention and service,” Winter said.
Winter believes a big part of creating a friendly shopping atmosphere was Discovery’s decision in January 2008 to move from commission to non-commission compensation for its sales force of “home specialists.” “Our focus on the customer is what drove the change,” he said. “Pros are better customer experience, willingness of specialists to work together as a team including training new specialists; and better staffing to traffic by using part time specialists on the weekends.” The challenges are that non-commission demands closer management, better measures and feedback to help grow customer experience.
“Sales cost as percent of sales is not fixed but a variable expense, and therefore has to be managed,” Winter added. “We determine pay rates and raises in annual reviews based on the specialists performance in three areas: happy customers, team work and contribution level.”
LONG FAMILY TRADITION
What’s now Furniture Mall of Kansas had its beginnings in 1933, when Ben and Eva Winter opened the “Howdy Come In” lunchroom, gas station and frozen homemade custard shop west of Emporia, Kan., on Highway 50.
The furniture operation began the day a hitchhiker stopped at “Howdy Come In.” One of his two suitcases carried the man’s cabinet-making tools; and the Winters hired him to build a chifferobe for their new son, Bobby (who still works in the business as a co-owner), and a partnership was born.
The Winters soon converted a dairy barn to Winter Furniture, where they sold new and refurbished furniture; and moved the store into Emporia several years later.
Bob Winter and his wife, Joyce, moved to Denver, Colo., where Bob worked as a furniture buyer. The couple returned to Emporia as partners in Winter Furniture and moved the business to Topeka in 1995. Jeff Winter, grandson of the founders, and son of Bob and Joyce, came in as a third-generation owner along with his wife, June, in 2000. Jeff had worked as an engineer and manufacturing executive at Maytag for 16 years before returning to help open Discovery Furniture by Winter that year.
Discovery opened a 40,000-square-foot sister store, RoomMakers, carrying Ashley goods in 2003 in Topeka; and a 30,000-square-foot Ashley Furniture Homestore in Salina a year later.
After Bob and Joyce’s youngest son, Jamie, joined the business in 2010, the Winters opened a fourth, 45,000-square-foot location that included Discovery Furniture and Roommakers, along with a new Mattress Headquarters store, in Lawrence in 2010. Jamie had spent 16 years as an engineer and manufacturing executive for Motorola. That included living in China for four years with his family while starting and growing an automotive electronics factory.
PULLING IT ALL TOGETHER
The Furniture Mall of Kansas represents the fulfillment of a brand promise that started with Winter Furniture and continued with Discovery Furniture: friendly, trustworthy and expert assistance on the floor; and a big range of reasonably priced goods and categories. The closing of Marling’s Home Furnishings, which had served Kansas for 75-plus years, and Discovery’s acquisition of the name created an opportunity to pull its spreading brand position under one roof. Rather than open yet another store, the retailer pooled its assets.
“We know people are busier than ever and we want to make shopping easier and more convenient,” Winter said. “We created the Furniture Mall of Kansas to do just that.” The concept blended trusted regional furniture retailing names with a small-store comfortable feel and attention to customers; with the convenience of broad selection in one location. “Our desire is for our customers to have a legendary shopping experience—where they are wowed by the big selection, guaranteed low prices, and personalized high service,” Winter said. HFB
Furniture Mall of Kansas at a Glance
Headquarters: Topeka, Kan.
Six brands in three retail locations: 180,000-square-foot Furniture Mall of Kansas with Discovery Furniture, RoomMakers, Mattress Headquarters and Marling’s Furniture brands; a 45,000-square-foot “mini-Furniture Mall” with Discovery, RoomMakers and Mattress Headquarters brands; and a 30,000 square-foot Ashley Furniture Homestore in Salina.
Warehouses: 50,000 square feet in Topeka; 6,000 square feet in Salina.
Employment: 130 full- and part-time employees.
Key management: Co-Owners: Bob Winter, Joyce Winter, Jamie Winter, Jeff Winter, June Winter, and Jeanne Winter.
Revenue: $15-25 million
Web Site: FurnitureMallofKansas.com
Key Vendors: Ashley, Flexsteel, Thomasville, England, Southern motion, Amish Impressions, Tempurpedic, Serta, Sealy, Mattress 1st, Stressless, Aspen, Magnussen, Best Home Furnishings, Bernhardt, Universal, Legacy Classic, Mohawk, Shaw, Beaulieu, Daltile, Lexmark, Milliken and more.
2014 by in Business Strategy, Industry
By Sheila Long O’Mara
Formal dining rooms and casual dining areas are being used for things other than simply eating and sharing meals. According to a Home Furnishings Business consumer survey conducted last month, people are using their dining areas as a central hub of their households. All sorts of activities are taking place around dining tables, including sitting around the table and talking, homework time, watching television, paying bills and catching up on office work. The dining area and the dining table, formal or casual, has become the work center for many households. The kitchen and dining table have become quite the hub.
According to our survey, families seem to be heeding the advice of the experts who encourage bonding over the dining table. Nearly 84 percent list table talk as their top activity at the dinner table in addition to dining. That chatter is followed by all the buzz of work time. Most likely as it’s an easy location for parents to keep an eye on studying children while multi-tasking with dinner and after-meal, clean-up duties.
A key marketing tool to growing sales in the dining category could be for retailers to emphasize other activities that take place at those all-important tables. Not surprisingly, nearly 70 percent of our consumer panel said the dining furniture they just bought was for a casual dining area, and not a formal dining room. More than 50 percent of them said the casual dining area in their home was a separate area outside of the kitchen.
About 45 percent of those casual dining area’s are now the proud home to contemporary furniture. Another 23 percent of the consumers bought traditional dining furniture, and about 14 percent of the consumers described their purchases as rustic country.
Most of the casual dining purchases were crafted of wood (78.1 percent) while another 21.9 percent were of mixed materials. Of consumers who classified their dining purchase as formal dining, more than 40 percent put it into the traditional category. The style classification drops off significantly to 28 percent contemporary; 15.6 percent rustic country and 9.4 percent European country.
Those buying formal dining, most (84.4 percent) bought wooden furniture.
When it comes to additional features and function available in casual dining tables, 64 percent of the consumers list a protective finish on the table top as the most valuable feature—one for which they’re willing to pay. That finish is followed by a leaf storage within the table at a distant second place with 42 percent. For the casual dining sideboard or cabinet, consumers weren’t as much in agreement as on features for the table. However, a few features rose to the top, including felt-lined silverware drawers (30 percent), built-in wine racks (23 percent) and hidden storage for small appliances (23 percent).
In their formal dining table, consumers are a bit more demanding. Two expandable table leaves are at the top of their wish list at 56 percent, followed by leaf storage within the table (54 percent) and a protective finish for the table top (47 percent). When looking at the sideboard or china cabinet for formal dining, consumers top wants include a felt lined silverware drawer (50.1 percent), hidden storage for appliances (31.3 percent) and a built-in wine rack (25.1 percent).
What Retailers Say
THE HARTFORD TABLE BY
PALETTES BY WINESBURG
It’s made in the U.S.A. of solid cherry with high-quality, Amish construction. It’s an easy story to tell that the customer appreciates and understands. After the story is told, the customer understands the value that this heirloom quality furniture really is.” Maynard’s sells the table with chairs from the company’s Prestige collection. Table with six chairs retails at $2,599.
Maynard’s Home Furnishings
GO 400TK FROM
“The mango color seems to be in right now, and it goes with a wide variety of dining room and home environments. This group has a great look for the money, an exceptional value.” The seven-piece set in mango retails at $798.
CANYON TRESTLE TABLE FROM KEVIN CHARLES
“Part of City Furniture’s propriety brand, this group’s classic design brings casual elegance to a dining space.” Retail is $2,299.90 for table, four chairs and credenza.
Quail’s Run from Winners Only
“It is a light wood table set, offered in different colors choices, with multiple chair styles and table heights.”
Selva’s Waldorf Table
“The piece embodies classic elegance and modern splendor that captivates the essence of hospitality,” said Philipp Selva, president and CEO. “The inspiration for the stainless steel base came from the Waldorf Astoria in New York. The clear lines of the table legs intentionally form the W of the Waldorf Astoria. It is a distinctive piece that captures the Selva touch in the design.”
Retail is $14,266.
Waverly From Cresent Fine Furniture
Industrial Modern design meets everyday durability in the Waverly dining collection,” said Richard Tomkins, director of sales and marketing. “Crafted in sustainably forested solid acacia with a wire-brushed finish, Waverly is perfect for growing families and the centerpiece of family get togethers. The versatile dining bench can also be used in other areas of the home where space is at a premium.”
Artisan Home’s IFD962
“This table’s value makes it a great success for us,” said Diana Zaldivar. “Solid poplar tops, hand-painted finish and wrought-iron base at a suggested retail price of $499.
Universal Furniture's Paula Deen Home Kitchen Island
“Islands that offer accessibility from both sides work well in the open floor plans of today’s homes. More than ever, the rooms in our homes are used for many purposes, and there is a need for items that are also multifunctional,” said Kevin Miller, director of marketing. “For example, consoles and desks are often found in the living rooms as the homework or bill-paying center. Likewise, this kitchen island with pull-out table, tons of storage, and stainless steel top serves as a great place not only to prepare food but also to eat meals, do homework, crafts, etc.” Approximate retail is $1,299 to $1,699.
Somerton Dwelling’s IMPROV B
“The transitional dining group appeals to consumers across multiple tastes, regions and age groups,” said Rita Ho-Bezzola, president. “Key to its popularity is Somerton’s Freestyle Living concept. Eight basic units include open shelf cabinets, glass or solid door cabinets and chest units that stack and restack to form servers, china cabinets, display cabinets and non-traditional cabinetry showing up in home today. The optional teal shelves add an elegant color accent to Improv in B’s warm walnut veneers. Whether it’s all storage or all display or something in between, Somerton Dwelling’s Improv in B dining delivers a broad spectrum of options.” Suggested Retail for table, four side chairs and two armchairs is $1,795 to $1,995.
Century Furniture’s OMNI Dining Table
“The Omni dining table has been one of our best-sellers for years,” said Comer Wear, marketing director. “The combination of a beautiful, sweeping silhouette with the gorgeous veneer work across the top makes this table stand out. In addition to selling it as it is shown, we have built it custom over 50 times—at 220 inches long, round versions as well as custom veneers across the top. It really speaks to customers.”
The Aspen from Simply Amish
“The Aspen’s namesake was the town, not the tree. But the town was named after the tree, so it’s a bit ironic that our most popular dining table is available in red oak, soft maple, cherry, character cherry, hickory, maple, quarter-sawn white oak, and walnut, but not aspen,” said Charles Curry, sales manager. “The dining table top gets three coats of catalyzed varnish, all stain is hand rubbed, the bottom of the table is finished so you won’t snag your clothes; the chair has a comfortable scooped seat and lumbar profile, real inlay, and a style that implies rugged sophistication. Standard options like a butterfly leaf, ball bearing slides, self-storing leaves, along with a myriad of size and stain choices make The Aspen our most popular dining table.”
Greenington’s Currant Dining Collection
“Flexible in size with the extra leaf, the Currant’s clean design and smart scale fit well with many different home interiors,” said Mary Settle, marketing. “The beautiful grain and natural coloring of the solid bamboo make it a clear winner. Featuring elegant lines reminiscent of Mid-Century Modern, the collection is crafted in 100 percent solid Moso bamboo.” Suggested retail is $1,499.
Pastel’s Quanto Basta
“The rectangular table with glass top features clean-lined Sonoma veneer wood frame and stainless steel base in a unique, yet simple design,” said Amber Chen, marketing coordinator. “The Quanto Basta side chair exemplifies handsome proportions and a bold design. With simple lines mixed with curves for comfort, this chair adds style and elegance to the dining experience.” Suggested retail for table and four chairs is $3,570.
The Zen Dining Collection from Creative Elegance
“It’s a clean and architecturally appealing design with a lot of options,” said Mark Popel, co-founder. “Since we make it in our own factory in Southern California, we do a lot of different size and configurations as well as offer a variety of woods and finishes.”
42 x 84-inch tables range in price from $3,000 to $4,000.
2014 by in Business Strategy, Industry
By Powell Slaughter
SALARY OR COMMISSION? NO ONE SIZE FITS ALL FOR HOW FURNITURE STORES PAY SALESPEOPLE.
Salary or commission, or some combination thereof? How you pay your salespeople is a question of your store environment, traffic and how your sales approach fits your business goals. Home Furnishings Business asked retailers and sales trainers for their thoughts on the topic—the former on what makes sense in their business model; and the latter on which compensation approach works for different sorts of retailers.
Short story: Commission is the best motivator for go-getters who want to hoe their own row; and salary—or some sort of guaranteed income—helps create a friendlier, less high-pressure environment for customers.
Which model, or combination of sure compensation and incentive, is a call you have to make on your own. Following are thoughts to consider when making that call.
Salary Vs. Commission
Home Furnishings Business asked several retailers which sales compensation they prefer—salary or commission. Read their responses throughout the following pages, starting here.
“To me, it’s the lesser of evils – in a perfect world, I’d love to have people work on salary, but the truth is we have a wide range of performance among our salespeople.
If I put everyone on salary, I’d have to pay my best people less. We do push in the element of a blend because we have a bonus system based on how well the store does.”
“In my opinion, paying commission many times brings out the worst in an individual. When someone walks in the store, they know if someone’s working on commission.”
Bob Mills Furniture
Base plus Commission
“The base is to compensate for the administrative tasks I hold them responsible for – we’re are fairly small and everyone has to do a lot of things.
“The sales commission is based on a minimum requirement of $30,000, when they get 6 percent. Once you $70,000 it goes up and so on. We pay 3 percent on closeouts – I gave up margin, so they give up margin.”
DoMa Home Furnishings
St. Petersburg, Fla.
“We do a weekly draw and pay commission monthly. It keeps them hungry. It’s better for us and for them to have a sales force on the floor that’s motivated for high performance.”
Boca Raton, Fla.
“We are commission. In sales, you are not paid to finish a job, the sky should be the limit. We want to keep the possibility of unlimited potential income out there for them. “The more you put into it, the more you get out of it.”
Bloomfields Hills, Mich.
Base plus Commission
“We do a base and a draw against commission. The designers get more commission than the salespeople because they do the house calls and the big sales, and longer-term projects. “The sales team gets a base because they sometimes have to turn a customer over to the designers when it becomes obvious it’s a larger scale project that needs the extra service.”
“We are a little bit of mutant in that regard. Everyone is basically salaried. In our operation people have lots of different jobs, and we don’t have straight salespeople. It can be difficult being focused on making the sale, but they have a lot of ownership in the business, and we tend to have very strong employees. We do have bonuses that are performance and sales-based, so we aren’t devoid of the incentive of getting a higher income.”
The Century House
“We had been doing salary with a bonus, but our CFO has convinced us to switch to a commission-based plan as of January. We weren’t meeting our sales goals, and our sales expenses were high compared with the rest of the industry.
We needed to inject a degree of hunger into the equation, while retaining the quality of a friendly, helpful sales associate.”
“We’re looking for the people to be entrepreneurs who rely not only on people walking through the door, but also on their own personal business development. Commission fits our culture and our goals in the organization.” – Garry Ikola, City Furniture.
Salespeople at Tamarac, Fla.-based City Furniture work on straight commission supplemented with bonuses.
“We’re looking for people to be entrepreneurs who rely not only on people walking through the door, but also on their own personal business development,” said Garry Ikola, vice president of sales. “Commission fits our culture and our goals in the organization.”
At City, salespeople are expected to essentially run their own business within a business, and the retailer goes to great lengths to attract talent who gravitate toward that model.
Commission works best in high-volume, high-traffic stores, according to Jeff Hiller, director of training for Chicago-based JB Training Solutions.
“If you’re a mid-size to big retailer you’re probably running pure commission, with a draw against commission,” he said. “That’s harder for smaller stores since the traffic potential isn’t enough.
“The big stores count on salespeople to sell maybe $800,000 a year, which (with typical commission) gives an income of $40,000 to $50,000 a year. If you’re awesome, you make 80 to 100 thousand.” At a retailer running $2.5 to $7 million dollars in sales a year, salespeople might be targeting $500,000 to $600,000 in sales, and Hiller worries that might not generate enough commission on a consistent basis to keep top people on hand.
“If I’m looking for a good person to work my floor, can they really survive or be inspired by making $30,000 a year?” he said. “What I like, is if you’re in that middle range, have a base that is covered, not a draw, say $26,000 to $30,000 a year. Add on a bonus system based on a graduated scale for monthly performance.
“That way, if I’m a salesperson hitting $800,000 in sales for the year and hitting bonuses two out of three months, I’m making $60,000. The balancing act on compensation is urgency versus complacency.”
Tom Zollar, practice manager of retail operations for Impact Consulting of Atlanta, is a proponent of commission since it ties sales team performance so strongly to compensation. “I believe that sales staff should be paid directly based on performance using some sort of commission structure and when possible, bonuses for hitting set goals,” Zollar said. “In some situations this may be on top of a salary or draw, but the greatest portion of their package should come from commission on sales.” He added that it’s not an all-or-nothing prospect between straight commission and some sort of guaranteed income.
“Here you have the options of straight fixed flat rate, variable sliding scale, or set step-based commission programs,” Zollar said. “All of which work great if they are properly administered and communicated. The key is finding the best one for your store culture and your client base.”
Commission-based compensation is a definite motivator for salespeople looking to make their mortgage, but there is a downside. “If salespeople get behind on their draw, they get crazed, and customers pick up on that,” Hiller said. “What you want on the sales floor is gentle persuasion. My sense of customers is that they’re like horses. They can read a nervous rider, and if they sense a desperate, hungry salesperson they shy away. “The balancing act on compensation is urgency versus complacency.”
And whichever route you go on sales compensation, don’t forget that the sales manager— whether that’s you or another individual— also should be held accountable for what happens on your floor.
“My strong feeling is that anyone who is responsible for performance results within an organization needs to have a compensation program that includes some sort of ingredient that is tied to improving the results they deliver,” Zollar said. “It can be tied to actual performance numbers—i.e. commission—or the achievement of set goals and criteria—i.e. bonus—and can be in conjunction with a salary based on the total responsibilities the role includes.”
For sales managers, Zollar suggested they need a salary to carry their responsibility over staff members.
“However, a substantial part of their total package should be tied to how the people under them perform, based on history and goals set by upper management,” he said. “This additional component could be a small commission on sales above certain levels, a bonus based on hitting set volume targets and/or key performance index goals (i.e. gross margin or average sales) or a combination of these.
“The main thing is that those responsible for the performance of others understand that a meaningful part of their compensation is directly tied to how their team performs on a monthly or at least quarterly basis.”
While Zollar is a big believer in the power of commission, he does understand why some retailers think a non-commission sales staffs create a better, less intimidating floor culture for their customers.
“That is certainly the case in most stores I have seen that use a salaried sales force, and as long as their total income is somehow tied to how they perform, I am not opposed to it,” he said. “From a psychological standpoint, in order for their compensation program to have any motivational impact on how they behave on a retail sales floor, most adults need to understand the WIIFME Principle (What’s In It For Me). “So if you tied their salary increases to performance results or gave them additional bonuses for sales achievement on a monthly basis, that would help fulfill this need in a noncommission sales environment.”
Basically, you want your staff to realize that the more they sell, the more they will make.
“All that said, I do believe that in most store situations the sales manager would have a far stronger motivational tool with a commission based sales force versus one using a salary-based compensation program,” Zollar said. “Both can work, but the innate motivation of tying a person’s income directly to what they sale is hard to beat.
“Of course, it also creates a variable versus a fixed ‘cost-of-sales’ financial consideration for the business, and we all know which one the accountants would prefer.”
While City Furniture is committed to commission, Ikola noted there is no single best compensation structure. “You have to find one that fits your goals, and commission has served us very well,” he said.
2014 by in Business Strategy, Industry
By Powell Slaughter
GET MORE OUT OF YOUR SALES TRAINING PROGRAM. YOU DO HAVE ONE. DON’T YOU?
It’s a rare athlete who’s at the top of his or her game every time the clock starts or the first pitch is thrown. The reason all-stars maintain and even succeed on “down” days is the training they do between contests and in the off-season—they’ve drilled on fundamentals to the point that good habits are second nature even if they aren’t feeling at their best. Furniture retailers should look at sales training in a similar way—what you want your sales team to project to your customers must be ingrained at a deep enough level to ensure they’re doing the right things all the time.
IT STARTS WITH PEOPLE
At City Furniture, sales training starts with finding the right people for the Tamarac, Fla.-based retailer’s culture. Vice President of Sales Garry Ikola said City’s approach is that sales is a real profession, and for the right person, a job on the retailer’s floor is entry into a rewarding career path. “What we do is a little different from a lot of stores,” he said. “Besides the traditional method of finding people online, we also do a lot of college recruiting.
“We’re fortunate to have a great university system both locally and in the state of Florida. We participate in (the schools’) specialized training programs.” For instance, Florida State University offers a degree in sales and sales management. City also is working to improve its use of online recruiting channels and the quality of new-hires through those sources. “There are some challenges there, because that pool is skewed toward males, and we’re trying to achieve a female proportion of 50 percent,” Ikola said. “We’re focused on improving that process. We’ve implemented video interviews, along with additional screening. “With the college pool, it’s easier to meet with and interview them, and it’s much easier to get a feel for if they’re a good fit, and if this is the path they want to take.”
City also has an internship program that gets students into its stores during their sophomore or junior year. “The goal is to get the right ones to join us after they graduate,” Ikola noted.
DON’T MAKE TRAINING AN AFTERTHOUGHT
One problem with furniture retailers’ sales training is that many don’t make it a priority—or assume that sales are something that can be learned through osmosis. “There’s a huge spectrum from zero to 100 in how much value retailers put on training,” said Mark Lacy, president of Furniture Training Co., North Logan, Utah. “I talk to hundreds of retailers a month, and it’s surprising how low a priority training in this industry is.” Lacy’s guess for why that is: So many furniture retailers come out of a family tradition.
“Dad, or Mom, ran the store, and the children or cousins worked in the store, learned the business, sweeping floors, working in different departments,” he said. “Learning is the permanent acquisition of knowledge, skills and attitudes. The acquisition of that knowledge was passed working side-by-side. On-the-job training would occur over decades in a family business.” He noted that even new stores are largely started by perhaps a husband-and-wife team: “We have a lot of individual entrepreneurs.”
In some cases, sales training might amount to “You’ve shopped in stores, and you know what you’ve experienced,” so the salesperson replicates what they saw elsewhere.
“Those new salespeople are expected to sell based on what they’ve experienced, and that wasn’t always good,” Lacy said. “Even a couple of years ago, in the midst of the economic crisis, we know how many family businesses closed. The short-term future right now for home furnishings is pretty good. We’re expanding again … but a lot of retailers have run out of family and we’re hiring total strangers.”
If there’s no history of formal sales training, that can make problems for retailers looking to open second or third stores. City Furniture’s no mom-and-pop, but as it expanded from serving the Miami area to opening stores on the Gulf Coast and now in central Florida, it’s moved from a centralized training format to a more individual-oriented program; and as with any organization, training depends upon the logistics of bringing people together.
“In the past, we did a lot of classroom training at our corporate facilities, but as we grew (geographically) we moved to online training, self-paced, in the showroom,” Ikola said. “We have a standard program online combined with exercises at the store level with managers and training specialists.”
Those “floor exercises” in the store help gauge how well salespeople are absorbing the online training. And all that’s not to say the classroom format doesn’t have a place.
“We just added Bernhardt last year, which was a big move—we’d never sold high-end goods before,” Ikola noted. “We brought people in for classroom training with Alex Bernhardt. For major initiatives like that we like to bring people together in groups.” City arranged separate Bernhardt sessions in southeast Florida and for Gulf Coast stores, plus another session for City’s new Orlando-area stores.
TRAINING THE TRAINER
When training your sales force, one thing to consider is whether they know exactly what you’re looking for beyond the no-brainer of more sales. And that responsibility lies with your sales manager, or whoever is conducting the sales training.
Tom Zollar, practice manager of retail operations, Impact Consulting, Atlanta, Ga.—called the Performance Index (Revenue devided by Ups) “the ultimate measurement for the efficiency of your selling rate.”
“When your traffic is up and your revenue per up is slow, that means you’re not staffing the floor properly,” he said. “I’m more interested in consistency when it comes to closing. … The performance index is the red flag. It tells you the efficiency of the store and the efficiency of the individual. It’s the first number that tells you where you need to look. It separates the strong from the weak, the way GMROI does with product.” Is your sales manager a coach who can pinpoint who needs more counseling?
“When you decide whom you need to work with, look at closing rate and average sales,” Zollar said. They might be underperforming “because they’re not connecting with enough people, or if they are, they aren’t pleasing enough of them, getting them the product and options they’re looking for.
“It’s a matter of drilling down like you would in a financial report, looking at each account individually. Am I giving them too many ups?” Coaching is a fine line.
“The numbers are the objective, but you can’t do anything with numbers,” Zollar said. “You do everything with your eyes, your ears and your mouth—that’s observation, feedback and coaching. … Numbers are a management function; observation is a training function.
“The key to the numbers is knowing whom to look at and what to look for. The key, once you’re studying and observing a person, is to find out what’s impeding their rates. Performance is a function of knowledge, behaviors to apply that knowledge, and practice.”
Tiger Woods couldn’t have changed his golf swing when he was at the top of his game without tens of thousands of shots on the driving range—or without a coach. Even your top performers can use some work.
“The manager has to watch that knowledge being applied and guiding on the sales floor,” Zollar said.
“You’re not going to be successful until doing the right thing becomes a habit.”
At City Furniture, sales training centers on four keys: selling skills; product and service information; what City calls “World Class Service”; and personal business development.
The first two are self-explanatory, but “World Class Service” refers to customer service standards City developed based on standards established by Ritz- Carlton, where the attitude is “everyone is a problem solver.”
“Personal business development” ties back in to City’s approach to sales as a true profession. It helps that the store has developed its own customer relationship management platform, which all sales personnel are required to use.
“We train salespeople to build their own business— register guests, contact customers for special events, telephone prospecting,” Ikola said. “They have a CRM tool they’re required to use. We have successful special events, but that’s because our salespeople are bringing the right customers in. Our internal CRM allows them to look for the customers they should call for these events.
“Retail sales operations have a lot of down time, and this puts that time to good use.” City gathers its key metric for sales performance is an electronically gathered door count compared with revenue, combinded with close rate and average ticket.
“If traffic grows 2, 3, 4 percent, we want to see that revenue growing at a faster rate, so we know we’re making the most of that traffic,” Ikola said.
“YOU DIDN’T BUILD THIS”
Lacy at Furniture Training Co. believes too many retailers don’t hold their salespeople accountable for the opportunities they’re afforded. Retailers provide the location, the inventory, the advertising and promotion,” he said. “If someone’s selling $1 million a year, they might not want to be trained, but the reason people do as well as they do is the retailer hands them the business.”
Owners should recognize that they’re providing the business opportunity.
“You have the right and responsibility to help them be better,” Lacy said. “Management’s job is to make the best use of assets, and the job of sales management is to make the best use of salespeople, that asset. Set standards, train to hit those standards, and then raise those standards.”
Look beyond numbers such as close rate and average ticket to the behaviors that influence the numbers: quality of greeting; engagement in conversation. “And if they get the conversation going, are they asking the questions that open the mind of the customer to something beyond their immediate need,” Lacy said. “Do they know the product they carry will be enough to match those needs? The most magic phrase in sales is: ‘Based on what you’ve told me, let me show you what we have.’ When the customer hears that, she breathes a sigh of relief.”
Keep in mind that more customers walk into the store having done a fair amount of research into what they’re looking for, and salespeople must offer intelligent, informed information to maintain their value to those shoppers.
“For home furnishings salespeople I have two keys: First, maybe a customer has looked on the Internet, even printed off a sofa from the manufacturer or another competing retailer,” Lacy said. “We’ve done the research to know there are 15 basic styles of sofas—with variations— on a sales floor, and your salespeople need to know those. Sales staff should be able to say: I see what you’re interested in—that’s a kidney-style sofa—tell me more about the room it’s going in, so we can show you some sofas that might work in that room.
“Second—and this is the saddest part of our industry—the home furnishings industry is a fashion business, but the salesperson on the floor so often acts as if they’re selling the customer a toothbrush they like,” Lacy said. “Every salesperson doesn’t need to be an interior designer, but they need to know something about creating a room environment. The job of the salesperson is to know what it’s going to do for the room, so they should have an understanding of basic room design.
“Don’t show a book of swatches and ask what the customer likes. ‘Let me show you colors that would work in that room.’ The customer is about to drop a significant amount of income on a purchase that will last a significant number of years. They’re all buyers—they wouldn’t come to the store if they weren’t—but they walk out because they don’t know what to buy. That’s why product knowledge and room design go hand-in-hand.”
Zollar once saw General Norman Schwarzkopf give a presentation on the subject of leadership.
“His point was that leaders lead and managers manage,” he said. “Leaders get people to do things they wouldn’t do on their own. It’s about knowing your people, developing common goals and a desire to succeed, and a lot of it has to do with hiring the right people.
“You can’t lead from an office. When times are tough or when times are good, the best leaders are coaching in the game, on the floor.”
To properly service a customer and help them solve a problem they have in their home, it’s less about how many people a salesperson approaches than it is about getting the customer to talk about the problem and provide a solution.
“The goal of sales management is each customer getting the most out of every sales interaction,” Zollar said. “Always look at that from the customer’s point of view. Teach your salespeople to really connect with more people versus giving them more ups.
“Sales managers have to remember they manage individuals more than groups, and they must manage each individual’s strengths and weaknesses.”
Independents should know that the big boys aren’t standing pat on training.
“The Top 100 retailers are going after this, it’s amazing how many are making training a priority,” Lacy at FTC said.
To whit, the approach at City Furniture: “I believe selling is a profession, and the way you approach it is critical,” Ikola said. “I’m a big advocate of adding more professionalism to the job, and it can be a very professional position if you manage it properly.
“There’s been an image perpetuated of sales as a game.” HFB