From Home Furnishing Business
2017 by Jane Chero in Business Strategy, Industry
With this issue, we celebrate those retailers that have achieved a significant presence within the markets they serve (market share). Some of these retailers have maintained their position while expanding their market footprint. Others, with just their sheer volume, have a significant national presence without dominating a single market. At the same time, some retailers with revenue under $50 million are dominant in their own markets.
Without a doubt, traditional furniture retailing is under assault from other distribution channels, yet this has always been the case. I am sure that the Sears and Roebuck mail order catalog was a threat to all retailers. More recently, the “1-800” number segment was thought to be the demise of furniture retailing as we knew it. Yes, we will need to change some of our practices and improve our productivity and I am confident we will do so. As I write this, I am leaving for one of our Performance Groups. This group of furniture store owners will share their best ideas and what is working for them. All members will leave with pages of notes to execute when they return home. These retailers will be here in the future.
As I close this annual exercise of determining this year’s Power 50, rest assured the numbers define who is selected- no thumbs on the scale. I look at the 300+ that made the first cut. I know that some of those just below the cut will make it to the cutoff next year. But most importantly, these 300+ represent over $30 billion in sales or approximately 30% of the market share.
Let’s continue into the future- history is on our side.
2017 by Jane Chero in Business Strategy, Economic News, Industry
Even though furniture industry sales are projected to grow by a modest 4.1% in 2018, retailers who made the prestigious Power 50 list compiled by Home Furnishings Business undoubtedly will be disappointed if they don’t exceed that growth rate by a wide margin.
It will take an aggressive, play-to-win strategy to beat those industry projections, but that mindset is one of the factors that landed members of the latest Power 50 on the list in the first place.
But the list is not simply based on annual revenue – that’s why a handful of smaller independents made the cut. Instead, it takes into account factors such as market share, expansion, and social engagement.
Market share, in fact, 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.
The list gives revenue the second most weight, accounting for 20 percent of the score. Revenues are compiled using publicly-available information or HFB estimates.
The factor getting the third most weight – social engagement – is the most complicated, but accounts for 19 percent of the score. It considers social signals, website metrics, and third-party scoring platforms to arrive at a list of home furnishings retailers with the strongest online engagement, as measured 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 measures 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.
2017 by Jane Chero in Economic News, Industry
Rapidly changing consumer work patterns and even more rapidly changing technology are continuing to drive the home office category, despite the move toward designing homes with more open floor plans.
Such floor plans typically don’t allow for a dedicated home office space, but producers say that doesn’t seem to have crimped sales. Instead, consumers are creatively developing spaces for multiple uses in their homes. And producers say some are even buying home office furniture with no intention of setting up a home office.
“People are finding ways to integrate office pieces throughout the home,” said Lorri Kelley, president of office and entertainment furniture resource BDI. “That’s why we’re designing pieces that are more modular in nature. We are making sure that our product offering will fit into a variety of rooms, for a variety of functions in a variety of layouts.”
She said increasing real estate costs, and the ease of conducting meetings and collaborating with co-workers without everyone being in the same room is decreasing the need for workers to go to a company office every day. Instead, she said many are choosing to work from home at least part of the time.
“We know the category is going to continue to grow just for that reason,” said Kelley. “That just makes the development and integration of these types of products even more important.”
Consumer research by Impact Consulting Services, parent company of Home Furnishings Business, showed that, among recent purchasers of home office furniture, nearly half (46.4%) use their furniture for work when they’re not in their regular office. Another 42% said they use it for home and family business, while only 11.6% said it is used for a home-based business.
Nearly 60% of those surveyed said the furniture was going in a room specifically set aside for a home office, while 42% said their office was in a room also used for other functions.
Tim Donk, director of marketing at Legends Furniture, said he believes the increasing use of rooms for an office and other functions is contributing to strong sales of his company’s writing desks. Such desks will more easily blend with almost any type of room décor, unlike the large executive desks that once dominated the category, he said.
“We do really well with our 60-inch writing desks … and the matching bookcases,” he said. “The bookcases are something that can be used virtually anywhere. They don’t even have to be in an office.”
Among consumers in the Impact Consulting survey, some 26.1% said a writing desk was their preferred style of desk, which was second only to an L-shaped desk at 27.5%.
Corner desks came in third at 15.9%, and executive desks were next at 14.5%. They were followed by desks with a hutch (8.7%), a secretary (4.4%) and roll-top desks (2.9%).
Donk said he was surprised by the strong showing from L-shaped desks, given the trend toward smaller living spaces and the reduced need to accommodate desktop computer towers and large amounts of storage space for paper files and books.
“It’s always interesting to see how furniture industry trends are driven by electronics,” he said. “We used to sell a lot of computer desks, but back then, almost everybody was using a desk top, and there were no smart phones.”
Desks with an adjustable-height feature that allows the user to stand while working wasn’t included among the survey choices, but Kelley said that style is rapidly gaining in popularity. In fact, BDI and other producers, notably resources such as Twin-Star and Turnkey, are devoting increasing amounts of time and showroom space to develop these products.
“We have been exceptionally pleased with the (sales) results from our standing desks,” Kelley said. “It will be significant part of our product development strategy going forward.”
She said the adjustable-height feature is being marketed as a health benefit, noting that many health experts now recommend that office workers stand 45 minutes to an hour in the morning and afternoon. Kelley, who uses an adjustable-height desk in her office at BDI’s headquarters in Chantilly, Va., said they also help alleviate neck and shoulder cramping that can result from long periods of sitting “hunched over a computer.”
Donk said he also has an adjustable-height desk in his office at Legends Furniture in Phoenix, but is more skeptical about the long-term prospects for the product. He believes it will continue to gain strength in commercial office settings, but may not catch on in residential use.
“There’s some novelty to it. But I think the jury is still out,” said Donk. “We decided it would not be that strong of a residential item.”
Donk and Kelley are in agreement, however, about the trends in finishes they’re seeing. Suffice it to say the lighter and grayer the better.
“The growth of gray has been remarkable to watch,” said Kelley. “It’s fun to see fashion start to come into furniture, particularly in case goods.”
Donk said the gray finishes that are most popular in the Legends line have a casual rustic feel. “Most of our better-selling writing desks are along the rustic line. The grays still have legs.” he said.
Desks have always been the centerpiece of the home office category, and the Impact Consulting survey showed that more than 59% of respondents had purchased a traditional desk or computer desk in the past two years.
The most frequently mentioned item, however, was a desk chair, which was purchased by 47.8% of respondents. Some 36.2% said they had purchased bookcases for their home office, 15.9% had purchased a file cabinet, and 10.1% had purchased a work table.
In addition, one-third of survey respondents said they spend more than 15 hours a week in their home office, while another 10.1% said they spend 10 to 15 hours. Another 30.4% said they spend five to 10 hours per week, while 26.1% spend less than 5 hours.
2017 by Jane Chero in Business Strategy, Industry
The October issue presented the numbers and offered the observation that the faster growing retail options tend to offer a shopping experience that did not include a traditional sales person. It presented the opinion that many of today’s consumers do not feel the need for one and may actually fear having someone sell them something they don’t want, or interfere with their shopping experience. The solution presented was to make sure we are properly communicating the benefits of working with our staff and promoting our services to the consumer, not just our products. Don’t assume they understand the process, because they do not.
In the November issue, we addressed the fact that even though we know how important our staff can be to the customer, over 40% of those that do choose to shop at a traditional retail store end up leaving without buying because they “did not see what they wanted”. Since it is primarily the sales person’s role to help them find what they want, this is a very concerning number. So, we presented some ideas about the fact that many customers don’t even allow our staff to help them when they enter our store by telling them “I’m just looking”. If you can’t properly open the sale and build trust with the customer, then you have little or no chance to close the sale.
The main issue discussed last month was the fact that so many customers leave our stores saying they did not see what they were looking for. While the greeting is indeed the most important element, there is another critical step in the process that perhaps is not being handled as well as it could be by our sales team. Once we get the consumer talking to us about why they came in, we need to properly analyze their needs and wants, then develop a solution that fulfills their dream for the room within whatever physical or financial limitations they may have. Therefore, to complete this trilogy, we will present some of the elements in the needs analysis and development process we use to train our clients to provide for their customers.
This great observation from Stephen Covey summarizes our approach:
“An effective salesperson first seeks to understand the needs, the concerns and the situation of the customer. The amateur salesperson sells products.”
Defining Needs Analysis
Needs analysis is not qualifying. Qualifying customers is a concept of the past. The idea that there are a few questions whose answers can tell us all we need to know to help a customer has been largely responsible for the dismal performance of our industry for decades. There are no such questions and few of us are trained to qualify anyone. Needs analysis and development, by nature of the very words, is a far more expansive process. The goal of needs analysis and development is to satisfy our primary mission to help our customers understand how to use our products to enhance their quality of life and not just how to buy them. Needs analysis is a mission-driven process and lies at the very heart of being a professional salesperson.
Let’s consider how other professionals work with their clients. For example, how does a good doctor, lawyer or dentist do their job? Their business is referred to as a Practice because it is based on a group of clients that they develop over time by providing successful results to them. These people rely on them for advice, recommendations and results that fit their individual needs/wants. However, the steps they go through are exactly the same as the ones sales professionals must go through.
Certainly they have to greet and establish trust with their prospective clients. Next, they proceed to the critical phase of needs analysis and development to determine what treatments or actions will deliver the best result for their clients. To do that they ask a great deal of questions and do tests or research to make certain that they understand the situation and determine the real needs. Would you become a client of one of these professionals if they merely gave you a quick answer before understanding your problem? It would be like a doctor saying “Take two aspirin and call me if you don’t feel better tomorrow.”
Retail customers need to give a professional sales consultant a lot of information in order to help them solve the issues the consumer brings to the store. In most cases, just like with a doctor, most customers do not know what information the sales person needs to have. So, as with these other professionals, our sales staff must have a method of discovering the real truths. A doctor asks questions about symptoms to determine the root cause of the problem. We also have to ask questions to find out the real needs and wants of our customer.
Our business is driven by the needs of our customers to create beautiful homes. Therefore, the need lies in the home, not in the store. Solutions can be found in the store, but if your staff is ever tempted to think of a customers’ need for some item or a thing in your store – have them STOP and THINK of this basic principle. The need is in the home. In order to understand the need and offer a solution, you must deal with the home first.
In order to get started, it is often helpful to ask some key questions about where the customer is in their buying journey. Getting an idea of what they have already done and seen will help the sales person catch up with them and be more of a partner as they go forward. It can also shorten the discussion time needed by determining if they have actually found something they like or at least have a good picture in their mind of what it could be. The following questions are examples of what has worked well for many such as; “Have you been shopping long?” and “What stores have you visited?” Or, “Have you been online?” “Whose sites have you visited?” and “Did you visit our website?” Other questions to ask are; “Have you seen anything you liked?“ “Where was it?” and “What did it look like? Do you have a picture or can we bring it up on the screen here in the store?”
These questions will help us determine not only where the customer is in the shopping/buying process, but how she is approaching the task of finding new furniture. Many customers already have a good idea of what they want when they enter the store. If we can determine this early in the process, it can make the rest easier, particularly if the customer can give us specific guidance about what she is looking for by showing pictures from a magazine or website. If not, they can often accurately describe it or even give us a brand, style name or number that can be researched. In fact, many may even have gone on your store’s website and selected products to look at prior to visiting your store. The quicker we can find that out, the better.
However, do not assume that they will tell us! Remember the fears and lack of trust they bring with them to the store. We will usually have to find a way to get this information from them, it will not automatically be volunteered until they trust us and we ask them these questions.
Making the Key Needs Analysis Request
After learning where they are in the process and determining if they have already found something they like, no matter what we learn, the best way to really dig into needs analysis is to ask the customer to tell you about their room.
This is the starting point of all product needs analysis. It can only happen after we have earned the right to ask for this information, by virtue of completing a successful greeting and earning a level of trust from the customer regarding not being sold something she doesn’t want or that isn’t right.
This is what is called a “high-gain question”, which means that it is one simple question, which will return a lot of important and useful information to us. In addition, it will reduce the total number of questions we have to ask to get all of the information needed to help this customer achieve her goal.
Sketch the Room
We feel very strongly that the most effective needs analysis tool we have at our disposal is the sketching process. Only by making a visual representation of the room can we share a common understanding of exactly what the problem is and what the customer wants to have happen. You have heard that “a picture is worth a thousand words” and that has certainly been proven true here.
Sketching is a very detailed process previously addressed in the June 2015 issue of HFB in an article titled “Sketch to Build Sales”. I highly recommend that you go to our website (www.hfbusiness.com) and click on the magazine tab and dropdown menu for past issues to review this information so you have a better understanding of this important element of the needs analysis process.
My intent here has been to give the reader some ideas about the importance of Needs Analysis and offer a few tips about the steps involved. This is by no means a complete dissertation on it, merely something to get you thinking about how it is currently being done in your store and what you might want to do to make it better. Your best solution will always be to bring in an outside, professional trainer that can help your staff improve in this critical area and take better care of your customer’s needs. By the way, if during the interview a trainer doesn’t ask you a lot of very pertinent questions about your situation and what you want to have happen, before they tell you what they will do - don’t hire them!
2017 by Jane Chero in Business Strategy, Industry
By the time he was in his mid-20s, his father essentially turned the business over to him, and Schneiderman and his brother, Russ, successfully ran Schneiderman’s Furniture for almost four decades until Russ tragically lost his battle with cancer in 2011.
That was also the year Larry Schneiderman learned he had Parkinson’s Disease, an incurable central nervous system disorder that can include symptoms such as loss of balance, tremors, and general slowness of movement.
But that didn’t stop Schneiderman from running the family furniture business. Until fairly recently, most employees of the six-store chain didn’t even know he had the disease.
He even found time to fulfill one of the items on his “bucket list” by becoming an author. Published in 2014, “Call of the Couch” is a memoir about his family’s “love affair” with the business. The book won a Midwest Book Award in the business/memoirs category, and also was winner of the Axiom Business Award for books in the business category.
His second – and he says final – book, “Nobody Knows,” was launched in October. It’s a novel about a carpet store executive who finds out he has Parkinson’s Disease while trying to straighten out his messy personal life.
Early this year, Schneiderman stepped away from day-to-day oversight of the business and sold Schneiderman’s Furniture to his son, Jacob.
Larry Schneiderman recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the new book, his struggles with Parkinson’s Disease, and the current state of the furniture industry.