2017 by Jane Chero in Business Strategy, Industry
Since most markets are not growing much in size, the only way to increase business without expanding to another market, is to sell more within the existing market. We can accomplish this by selling more people in our current market, selling more to the people we already sell in the market or preferably doing both - thus gaining share. While most retailers think about this mainly in relation to the other furniture stores they see in their area, the reality is that much of their battle for market share is against distribution channels they don’t always consider in their analysis. In addition, the very nature of who we are and what distribution channel we belong to, also can make our job either easier or harder!
To put this in perspective, in 2015 there were 6,774 fewer furniture and home furnishings establishments in the U.S. than there were in 2009, roughly a 12.3% reduction. During the same period of time, the total (all channels) furniture and bedding industry sales grew from $74.17 to $93.39 billion, an increase of $18.83 billion or 25.4%. Given the reduction in retail locations and the healthy increase in volume, it would certainly indicate that the remaining furniture and home furnishings stores must have flourished, particularly since the industry grew another $3 billion in 2016.
Of course, we all know that it wasn’t quite that simple and while there was great growth for some, many others struggled just to maintain what they had. Let’s take a look at the share data from a sales performance trend standpoint so we have a better understanding of who the players really are and how we got here.
At their peak in the 60s, 70s and 80s these “traditional distribution channels” were so dominant that they accounted for as much as 95% of the furniture business in the USA. As the consumer revolution began to take hold in the 90s, the customer began to seek out other ways to buy our products and we saw the birth and eventually the dramatic growth of multiple new channels for them to choose from.
As the graph below shows, these new “alternative” distribution channels began to eat away at the market share of the original ones, to the point where they now account for just under 37% of the home furnishings sales. In other words, the traditional channels have lost over 60% of their share to the new comers. So, let’s take a look at them now. (Graphic 4)
Many of these “newcomers” were not actually new at all, having been around for many years. Their growth in the last couple of decades came for many different reasons. In some cases, existing alternative format retailers just began to put more emphasis on furniture. In other cases, more companies decided to jump onboard and do business in a retail format they had not done before. In addition, consumers changed how they wanted to buy and what they wanted to get from the relationship with their retailer of choice. This helped grow some existing retail formats and also drove the development of new ones.
Of the traditional channels, only the regional chains enjoyed growth over the last five years, while the independent channel gave up over 50% of its already shrinking share. Some of this loss was actually the result of some large independents becoming regional chains through expansion and others converting to manufacturing verticals. Department stores continued to struggle, losing about 10% of their piece of the pie. In fact, if you looked at the top 10 furniture and bedding retailers list from the 90s, most if not all of the companies on it would have been from the traditional channels. Today there are only two from those channels on the Top 10 list. That is a huge change.
As I have said before, data does not give you answers. It only helps you ask better questions. The main questions this data raises are centered on determining why the customer is choosing to take their business from one channel to another and what can you do to keep those customers and attract others?
As a sales coach, one of the things I find most interesting is how the consumer interacts with the retailer during their shopping/buying experience. If you think about it, the three channels that have gained the most share in the past two decades, Lifestyle Stores, Mass Merchants and the Internet, all have a significant difference from the other five channels – they don’t have sales people in a role like the others. Yes, recently Pottery Barn has added designers to most of their stores, but during their growth period they mainly provided clerks that had some product knowledge, but whose role was to help customers find things, not necessarily to sell them things. If you can find anyone to talk to at most Mass Merchants they have a similar clerk role, but normally with much less specific product knowledge. Of course, with the Internet the customer is for the most part on their own most of the time unless they request help.
The next fastest growing segment has been the Bedding Specialty stores. While they do have sales staff performing basically the same role as the traditional channels, they have been very successful in changing the consumer’s perception of that role. The very nature of being at a single category specialty store indicates that the staff are specialists in that area. Since getting a good night’s sleep is the main goal of a mattress purchase, having someone who they believe can help them do that is very important and these stores have done a good job of getting their customers to buy into that.
So what is the main take-away from this observation? As said in many previous articles, we are dealing with a much more educated and style-aware consumer now than we did before HGTV and the Internet. Because they are more aware and have taken the time to research their purchase, they are more confident in their ability to make a major decision for their home. Therefore, many do not feel that they need a sales person and perhaps they carry the same fears as previous generations about the quality of the help a traditional sales person will provide to them. So they shop at places that don’t make them deal with someone they don’t want involved in their shopping process, at least until they are ready.
This is certainly not the only reason that almost 50% share is going to these newer alternate channels. Price, convenience, selection and simplicity also play a major role. What I am saying is that if the customer felt they really needed a sales person, then that number would not be nearly as big. Of course, as we know, most customers actually DO need the assistance, either making the right product selection or putting the total room package together. The problem is they don’t believe that we can help them so they do not value the service we provide!
Therefore, the key thing we must do to be more successful with these potential customers is to help them understand all we can do for them to make the result of their efforts so much better. We are in an age of DIY and unless we can convince our audience that they will enjoy both the process and the result more if they let us partner with them, we will lose them to the newer, faster, simpler, cheaper, slicker and more “in” channels.
Product, selection and price are not the way to separate yourself from these “new competitors”. They can beat you with all of those. Make sure you use your website and marketing programs to drive the message of what you can do that they can’t. Sell your total package of benefits and the fact that you will be there after the sale to continue the relationship. Be part of your community and participate in as many local events and projects as you can. Be the answer to your market’s needs, not just someone that sells product within the market.
It is not going to be easy, but the enemies are at your gate. You need to know who they are and how to fight them or they will continue to steal market share from you!
2017 by Jane Chero in Business Strategy, Industry
In 1965, recent college graduate Alex Sarratt and two fraternity brothers from the University of North Carolina set sail -- literally -- for Spain. They weren't quite sure what they would be doing when they got there, but they had a hunch that it would be a good place to start a business since the country had been opened to outside investment only six years earlier.
One of the three decided this Spanish adventure wasn't for him and returned to the U.S. about six weeks later. But by 1967, Sarratt and Walter Reid had formed a company called Sarreid and were exporting accessories and accent furniture to North America.
After a couple of lean years, the business took off. And the rest, as they say, is history.
Fifty years later, Sarratt is still a partner in Sarreid. He and Reid sold the company in 1985, but Sarratt teamed up with Charles Hoffman and Charles Mauze to buy it back in 1990. And the company's business remains healthy -- buoyed by a product line that includes a lot more than accent furniture.
Sarratt recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the company's history and its future.
Home Furnishings Business: What made you decide to go to Spain to start your business?
Alex Sarratt: Rather than go to law school, which maybe all three of us would have done, we just had an inkling to go to Spain. And we had a friend whose father was in the freight leasing business. He said he would let us go to Spain on one of his freighters at no cost. So all three of us left from Richmond, Va. We had a car and a dog that we took with us.
When we went there, it was a second-world country. Spain hadn't been open to outside investment until 1959, so we were early arrivals to try to do business there. If we had gone to Italy, France or Germany, it would have been totally different.
HFB: What led you and Walter Reid to get into the furniture business?
Sarratt: I guess you could say it was fate that led us into the sourcing hand-crafted accessories and accent furniture. The giftware business was big then, but there really wasn't a commercial category for these types of larger items. We were young and wore sport coats and ties, and everybody thought we were Americans who had a lot of money.
HFB: What were the reasons for its early success?
Sarratt: We were doing things offshore with people who were artisans, which was a category you couldn't find in America. We were working with wood carvers, sculptors and painters. We were able to create a product that was not available in America. We went offshore not to save money, but to create a certain type of product.
An example of that would be in Spain or Italy, the craftsmen did a lot of carved religious figures and things like that. We were able to take those skills and have them make early American folk art. We started making objects like beautiful horses, and other animals that were all hand-carved and finished. I'm pretty sure we were the first to do that.
We went to Italy in 1970 and opened an office there. Italy and Spain were our resource countries until the early 80s. Then Italy and Spain applied for membership in the European Union in 1985. And one of the criteria was that wages had to rise until they equaled French and German wages. So that killed the export industry in about four or five years.
At that point, we went to Mexico, and we went to the Philippines. And then in 1990, we went to India and Hong Kong, where we could source product from (mainland) China.
HFB: So Sarried was one of the first furniture companies to source product from China?
Sarratt: Yes. Back in those days, we didn't have any competition from domestic companies. But when they all went offshore, we were basically just like them, even though we had more experience. But also, when the major manufacturers went to India, China and Vietnam, they brought expertise with them. And they brought suppliers of chemicals and wood finishes and kiln dried wood, and all the machinery that's needed to make fine furniture.
So by 2000, we were gearing up to be a furniture manufacturer. And now, we sell everything but bedroom. It's still hand crafted, still hand-made, still hand-finished. We're at the high end.
HFB: What are Sarried's strongest furniture categories today?
Sarratt: In furniture, it's coffee tables and dining tables. There's a lot of value in each, and they don't take up much freight. We make everything with KD legs in a very sophisticated assembly process, so they're strong.
I'd also say our leather upholstery is strong.
HFB: In 50 years, Sarried has weathered at least four recessions. What's your secret to success during these times?
Sarratt: There are times during recessions when you have to go into a survival mode. We have put money back into the company during those periods. The 1980 recession was pretty tough. The 1987 recession was really tough. The 2000 recession wasn't so bad, but certainly the 2008 -2009 Great Recession was the worst thing anybody had been through. Most people's business fell off by 50% overnight. In September 2008, people just stopped buying, and they didn't buy anything in 2009. And of course, a lot of stores went out of business -- big and little.
Since that time, stores have not chosen to stock. Resources like Sarried have to have the inventory. Somebody will buy one dining room set and put it on their floor, and they want us to ship when they sell one. It's almost like people who lived through the Great Depression in the 1930s. They can't forget what happened, and they're afraid it's going to happen again.
HFB: What's the biggest technological advance you've seen in recent years?
Sarratt: The advent of e-commerce was enhanced dramatically by the iPad, which is only five or six years old. Prior to that, the only way our industry could sell was through photographs that a sales rep had to carry. And we probably had 2,000 photos, and they weighed 120 pounds. (laughs). So a rep would have all these photos in his car, and he would have to select what he wanted to show a certain retailer.
Now on the iPad, it's all there and (the categories) are all divided electronically.
Plus, reps can now see the inventory, so they tend to sell things that are available. (The rep) wants to get paid a commission and a buyer doesn't want to purchase something he can't have right away. That has made things very, very efficient, and we can update things constantly.
HFB: Does Sarried do a lot of business through e-commerce today?
Sarratt: The majority of our sales are still from brick-and-mortar stores. The category that has grown more than any other is interior designers, because they become our best sales people. Our better dealers have interior design departments, too. But when you do business with an interior designer, you're placing furniture rather than waiting for somebody to come pick it out and take it home.
The population under 40 isn't used to shopping at a mall or in a store. If they want something, they look on their phone ... and they feel comfortable buying it that way.
The challenge for our dealers, of course, is to have an extremely good website. And whatever you did last month, you want to make sure it's improved a little bit this month.
But on the other hand, having customer service people in our office that can receive a phone call or an email or text, and take care of that customer is critical. That's no matter who is it. It can be the store that’s our customer or it can be the consumer. We have to take care of them, too. We can't say 'call your dealer.'
That has changed the whole dynamics of how you become a manufacturer and distributor of home furnishings.
2017 by Jane Chero in Business Strategy, Industry
According to a Credit Suisse report, ALL retailers are failing in record numbers. It is projected that 8,640 will close. This is up 40% from its peak in 2008. We will leave this discussion for the October issue on State of the Industry, but will say that ecommerce alone is not causing this Armageddon.
The internet can be the solution to survival for the independent furniture retailer. The major concern today is the absence of traffic that is coming through the door. Instead of defining this as a problem, the retailer needs to embrace the fact that the consumer coming through the door is more informed about what they want and have selected your store as one of the two they have chosen to provide a home furnishing solution. Without a doubt the traffic is down. Statistically, the close rate should be 50% if your performance is average. This is adjusted down for consumers that do not purchase anywhere. It should be in the high 30%. However, the traffic that arrives at your door is ready for you to provide that home furnishings solution.
For retailers their website is the first touch point for the consumer and their store. Even if your store is not first shopped (49%), ultimately it is an influencer on 72% of all consumers that buy. Your website cannot be one and done, but a continuous process of improvement.
As a retailer does with the brick and mortar store when walking the floor critically assessing how to make the merchandise more appealing, questioning retail sales associates’ product knowledge, and evaluating their readiness to assist the consumer, all of these must also be done on the retailer’s website.
Today, the retailer embraces digital. However, is it merely lip service and dollars spent for results? There are many digital vendors willing to provide the magic solution to drive traffic to your store and entice them while they are visiting. The retailer must take a critical look at what is being communicated to prospective consumers via email blasts and presentation on the site. What happens in the digital world should match what happens in the store. Let’s go forward and understand the buying process as it relates to the internet and how to measure digital success.
From a consumer’s perspective, computers and their hand maiden, the internet, have moved beyond business applications and become essential to daily existence. With the coming of voice commands integrated with artificial intelligence (AI), the prospect of “pepper,” the human-shaped robot designed to be the humanoid companion is not beyond belief.
We are still years away from the time when all of our needs will be dutifully performed by a machine that understands our every taste level. For now let’s understand the consumer’s perception of shopping for furniture on the internet.
In terms of marketing, the first promise of the digital evolution was that the consumer could pursue product information on his or her schedule and not be the target of mass marketing’s continuous bombardment with enticements to purchase. While there is now an abundance of information on the internet for any product, the consumer is still targeted constantly with an estimated 360 impressions daily. With all of this noise it is understandable how one could conclude that the demise of brick-and-mortar retail is inevitable.
While it is painfully obvious that retail stores ARE closing (think HH Gregg and Sports Authority, for example), only a portion of that lost volume can be attributed to the explosion of e-commerce. The truth is that the overzealous opening of new stores was beyond the justifiable increase in demand. Fortunately, furniture retailers, either because of prudence or the lack of capital, did not enter this frenzy of store count expansion. Just as the dotcom bubble tried to translate “eyeballs” to revenue, the concept of more locations in a single market did not directly translate to increased revenue. Now the piper must be paid.
What about the impact of the internet on the furniture consumer? Let’s follow this step by step through the buying process. For a brick-and-mortar store the fear is that the consumer will go on the internet to research furniture and will purchase from someone else. The internet is a given for the consumer to accomplish the research, and consumers simply do not have the time to visit the five to six stores that they did a decade ago.
No matter where the consumer ultimately purchases, the first step (54%) for the majority is to visit the internet before visiting the stores. Graphic A illustrates the sequence steps for the consumer in his or her buying process.
Steps In Buying Process – A
It should be noted that for a significant percentage of consumers (40%) the initial step is still to visit a store before going to the internet for research.
Let’s put a perspective on the fear of e-commerce for the brick-and-mortar retailer. Currently only 11.65% of purchases (not dollars) is made on the internet. Table B breaks down purchases by retail channel.
Type of Retailer Purchased From – B
Let’s understand the buying process beginning with the impact that internet advertising has on the furniture consumer. The internet and, specifically the web presence and e-mail, are indicated by 37.5% of the consumers as the most influential advertising media on the intention to purchase furniture. This percentage is more than double that of other advertising media as seen in Graphic C.
Media - Pie Chart – C
This influence is not to be confused with social networks such as Facebook, Pinterest, etc., which have a number one position for only 8.5% of consumers who purchased furniture. The challenge for retailers is to translate that consumer traffic to the website into traffic into the store.
Furniture is not a commodity product, at least not yet. Less than 30% of consumers consider their furniture purchase as “a practical purchase that meets my basic needs.” The majority of consumers believe their home furnishings must communicate “who I am” and reflect a sense of current style.
Table D illustrates the consumer’s attitude toward decorating and home furnishings.
Significantly, the number of consumers who ultimately purchased on the internet exceeds the number who purchased in other distribution channels in both the “practical” and “style” attitudes, and only scored less with the consumer who was interested in projecting the image of success.
Today’s consumer is very interested in buying furniture, with over 68% either thinking about a purchase or has already begun the shopping process. The remaining consumers are actively shopping or have purchased. As can be seen in Table E, those who are actively shopping are predominately online purchasers or those who have purchased from brick-and-mortar retailers.
Stage of Shopping – Table E
As would be expected, the female most frequently initiates the first mention of the need or desire for new furniture. No matter if it is an individual or a partnership, with 49% being female or 21% with spousal partners, the ratio is 3 to 1 female. However, when compared to historical research, it represents a significant change from the 8 to 1 female-to-male radio in the 80’s. The information is presented in Graphic F.
However, as seen in Graphic F, the ratio for the internet purchaser increases to 3 to 1 for the female furniture consumers. Unlike other consumer online purchasers, the female has embraced the e-commerce distribution channel.
It is interesting to note that, on average, the internet purchasers shopped more retailers than the brick-and-mortar purchasers. Additional research will be required to understand better the reason for this. Was it to confirm both price and quality before making the leap to purchase online?
A common belief is that the internet purchaser does so because he or she doesn’t want to drive to a distant store. However, the research shows that the consumer who purchases on the internet is as willing to drive to shop for furniture.
Graphic I How Long Did You Shop Before Making a Purchase?
The major perception is that the internet purchaser comes to a decision faster than the brick and mortar consumer. The fact is that 29% of internet purchasers shop longer than one month as compared to 21% for the brick-and-mortar customers. We believe this is connected to the internet purchaser that is driven by selection.
Graphic J How Was Your Last Furniture Buying Experience?
Fortunately for brick-and-mortar retailers, the internet purchase rated their experience 6 or 7, with 7 being rated excellent only 53% of the time as compared to 58% of the time for the brick-and-mortar retailer. As can be seen from the graphic, the internet tended to be more exuberant with 40% being excellent. Are they trying to convince themselves of their decision?
Graphic K Specifically, Experience by Area
As seen from the graphic, brick-and-mortar consumers give the highest ranking (7) for courtesy of store personnel (41.6 %), product knowledge, (33.8 %) and product display (33.9%), but rank almost evenly with ease of shopping and product selection. There is still an advantage to being able to talk with knowledgeable sales associates and to experience a great visual display.
In summary, the Internet purchaser is a fact of life. The challenge for brick-and-mortar retailers is to make their advantages known to the consumer. Today’s drive in ecommerce is virtual reality to assist the consumer in making product decisions. Will it ever replace a competent retail sales associate?
Without a doubt, the internet has brought about a change much like that of the Industrial Revolution, which moved our society from agrarian to urban in the span of two generations. But what has the internet done to our focus – furniture retailing?
During the past decade, furniture retailers have developed an Alternative Universe. Do not panic! We are not spinning off into science fiction and losing our touch on reality. The advent of the internet forced the furniture retailer to create a virtual store where 72% of all furniture purchasers visit before making a purchase. The furniture retailer had little choice but to establish a web presence. In the early days, some were no more than an expanded “yellow pages,” which were produced by the retailer’s high school-age nephew.
Now, retail sites have expanded from placeholders with the address, brands carried, and store hours to expansive catalogs of every product made by every supplier carried in the retailer’s store. The concept of “the endless aisle,” while important in other industries, lacks importance in the furniture industry. For the furniture retailer, the average time on a site is less than five minutes (for non-ecommerce sites).
The website was envisioned by the early adopters as a way to reduce the cost of advertising. The idea of having consumers visit a website to preview the merchandise when they are ready to purchase furniture, which cost the retailer a fraction of what newsprint and television cost was exciting.
What has transpired is internet research has reduced the number of stores shopped, which has resulted in the industry standard of measure cost per up to increase. Currently, the cost per up average for all retailers is about $14, but can range from $12 to $40 depending upon the size of the retailer. The accompanying graphic illustrates.
In truth, more retailers have not totally embraced the digital advertising strategy and still spend less than one-half percent of sales on internet advertising. The subsequent table presents the expenditure by type of advertising currently.
The question is why continue the older medium and not entirely embrace digital? The fact is, with the current furniture buying consumer, digital has not been as effective as the more established television/print.
For sure, the future, with the approaching millennials, digital will be more effective. Television viewing and newspaper readership are declining. Direct mail, especially targeted demographically/psychographically, with content tailored to the recipient, holds great promise.
A great question for furniture retailers is what is the purpose of their site? If not for e-commerce, what is its objective? For this discussion, let’s put e-commerce to the side.
Most sites today have emerged as super catalogs, which present all products merchandised by the retailer, along with all products sold by their vendors. While this addresses the much touted “endless aisle” that many experts believe the consumer wants, it also challenges the fact that consumers spend less than three minutes on a non-e-commerce site. The graphic illustrates.
It is frustrating for a retailer to create a virtual store in which 72% of his customers may visit, but leave for the most part anonymous. Is this different from most advertising, either by direct mail or television? We should take as a positive the consumer spent more than three minutes previewing your store, the merchandise you carry, and the services you provide.
When designing your website, it is helpful to conceptualize it as a store. Your store design has been perfected over many years and has been effective in guiding your customer through the process of creating a beautiful room. The table presents areas of comparison.
There is nothing like the first impression, whether it be in your store or on your website. The first twenty feet of the store, often referred to as the Landing Zone, sets the expectation for the consumer as to what awaits them. Outstanding visual display of new products, service commitments, and special sales usually greet the consumer at the door. The Home Page of the website is the comparable element. The typical furniture retailer’s website has incorporated slides to present new product – a good solution to establish the style/quality of the merchandise you carry.
Unfortunately, this first impression can deteriorate over time into a haphazard collection of messages and promotions all screaming for attention. Would you let your vendors plaster signs over the windows of your store? Who is the editor of first impressions?
In your store, the important first step is to engage. Tailored to the vision of the store, whether a receptionist or the next salesperson in a rotation, it should be welcoming. The measure of your success on your website is the bounce rate at the home page. Best practices in the industry is an 18%-20% bounce rate for the home page and 20%-40% for the overall website.
There are many variables that impact these statistics, such as the percentage of mobile traffic, Facebook traffic, etc. The key is to measure your site continuously and understand the reason for any changes. The graphic illustrates the weekly monitoring.
Recently, the industry has seen heavy use of a “Pristil,” which is a fancy word for the intrusion of the consumers visit, enticing them to enter a drawing or to provide an email address for future mailings. While this service results in 3% to 5% of consumers doing so, the impact on bounce rate and the quality of the lead has not been accessed.
The next element in the store is for the retail sales associate to establish rapport with the consumer and to better understand what they are looking to purchase – needs assessment. This is a major challenge for the virtual store. While the search engine has been perfected over the past decade, the consumer has a difficult time in communicating what they have in mind. In fact, in our on-going research, when we ask a consumer why they did not purchase from a retailer, a typical response is “could not find what they were looking for” (30%-40%). This is for well-managed retailers. How would internet consumers respond?
The next step is the product presentation. The typical interaction with the retail sales associate and the consumer on the floor is 35-45 minutes. Of that time, about half is involved with the product presentation. A seasoned salesperson would have narrowed the choices for the consumer to 3 or 4 of the most probable selections, along with a step up and step down in price. With each of these choices, there’s a features and benefits story, as well. While a product spec sheet has the same information, it can’t be presented in such a way as to narrow down to a decision.
The final steps of handling objections and closing the sale are best done in person. While “chat” provides an alternative, with over 50% of all e-commerce involved in “chats,” it is difficult to engage the non-ecommerce consumer on-line. The application is inexpensive, but requires a dedicated person to handle all chats.
Obviously, all sites have an “inquiry” function that generates about 1% of unique traffic. The inquiries must be handled within an hour to produce results.
The key to success is to monitor your site and to investigate any changes. While Google Analytics provides a mountain of statistics, focusing on the important ones and relating them to your operation is essential.
We believe the following are important.
Tracking your unique visitors against the purchasers in your price point will provided a perspective of the effectiveness of your advertising, both print and digital. Comparing your visitors to the “ups” in your store is critical. The difference between the traffic to your site compared to your store is the most revealing. While the consumer only “shops” two stores, they visit five to six on average on the internet. If a retailer can achieve a 1:3 ratio, it is outstanding.
The goal is to minimize the clicks for the consumer from the home page to the product in which he or she shows interest. The industry average is 4-5 pages. Understanding how your web design impacts your pages visited is critical.
The industry average of 3-4 minutes on the site confirms the consumer is just previewing your store and not seriously making a decision.
Understanding the different sources of traffic to your site will better allow the retailer to incorporate his website into his overall marketing plan.
Most sites today have been designed for mobile devices. Obviously, the percentage of mobile usage impacts other statistics.
While research shows social media is not very effective in influencing the consumer’s intent to purchase home furnishings, it is very effective in building brand.
The website is an important part of a furniture retailer’s marketing strategy. Creating a positive experience on the website will influence the percentage of time the consumer visits the store to consider a purchase.
For Wichita Furniture founder Jay Storey, the choice was clear. In fact, there really was no choice.
Traffic at his 59,000-square-foot store in Wichita, Kan., was falling fast with no bottom in sight. If he didn’t make a radical change soon, the business he started in 1989 with $5,000 in borrowed money wouldn’t be around much longer.
The only choice was to swallow hard and go digital. That meant replacing a website that contained barely more than the store hours and directions with a full-fledged transactional e-commerce website. And never looking back.
“The revolution is over and the customer has won,” he said, borrowing a quote from a retail pundit whose name has been forgotten. “They are going digital. It’s done. It’s over. We can either get on board with it or we’re done.”
And since he took that leap of faith a little more than two years ago – with a lot of encouragement from his Millennial son, Jordan, the company’s marketing and e-commerce director – the hyper-growth in sales generated by the website has more than offset the decline in store traffic.
Website traffic, in fact, increased more than 50% in 2016, and the company now routinely delivers more than 3,000 pieces of furniture a week.
“Our brick-and-mortar traffic has continued to decrease, but our web traffic has exponentially picked up where the brick-and-mortar traffic has left off,” said Jordan.
Jay Storey said driving that website traffic meant taking another leap of faith by moving a sizeable chunk of marketing and advertising dollars away from traditional broadcast and print ads and into digital marketing.
Today, about 30% of the marketing budget is set aside for digital, and he said the company has been especially successful using Google AdWords, which allows a company to “buy” specific search words. In turn, that gives the user the ability to know who is using Google to search for, say, a recliner, or is visiting websites that include information about recliners.
“One of the beauties of Google is that we’re now able to have that rifle approach where we can target our audience way more than we can from a traditional media standpoint,” said Jordan Storey. “With Google analytics, you can really go into one-on-one marketing.”
And that one-on-one marketing, for example, can result in a Wichita Furniture ad appearing on a non-furniture website when that consumer who was searching for information on recliners moves onto something else on the Web.
“It would probably scare you to know how far Google can take you into their audience,” quipped Jordan Storey. “The truth of the matter is we know who is looking at what, when they’re looking, and where they’re at. And therefore, you have the opportunity to reach them.”
Or as his father puts it, “With Google, you have the ability to find the person with a need, versus spraying (your advertising message) out there and praying that it works.”
Jordan said he especially likes the ability to target specific age groups or other demographic profiles. He said such targeting is typically not possible with traditional media because demographic data is often outdated.
“But digital data is real time. And you can change it immediately if you need to,” he said.
And while Wichita Furniture does ship furniture nationwide – usually smaller parcels that are sent via UPS or FedEx – the Storeys said the biggest benefit of the robust e-commerce platform is the product knowledge it provides consumers, noting the clear majority of them do extensive online research before deciding what store to visit.
“It’s the online education that gets them to transact in your store,” said Jay Storey. “They’re not going to transact as much online because they want to come in and touch it and feel it. But when they walk through the door, they will hold their phone up and say, ‘I want to see this item’.”
Although he wouldn’t disclose specific numbers, Jordan Storey said the improved website has significantly boosted close rates even as traffic has fallen. That has kept retail sales associates fully engaged, knowing that many customers walk through the door ready to buy – and they may walk in with as much product knowledge as the staff.
“It has helped our metrics across the board … close ratios, average tickets, sales per guest, and so on,” Jordan said of the website. “We clearly have a more educated consumer.”
And his once old-school, furniture industry-veteran father knows there is no turning back. He says there is no question that going digital is a huge leap of faith that requires a large investment of time and money, but it’s a necessity rather than a luxury.
“You never will fully grasp the digital world because it changes to fast,” Jay Storey said. “You have to pick and choose where you’re going to go and be the best and what you do. You cannot just be OK at everything.”
2017 by Jane Chero in Business Strategy, Economic News, Industry
Despite the dramatic decline in the percent of Americans moving and changing residences over the last 60+ years, the patterns of mobility have shifted much less than might be expected. Once a country on the move, mobility reached a historical low from 2015 to 2016 with only 11.2 percent of the population moving to a different home or apartment. This compares to a 1948 peak of 20.3 percent.
After detailing the “who” and “why” in two previous articles on Mobility in America, the current issue explores “where” people are moving. Are more movers simply relocating to a nearby apartment or home? Is there migration into the cities from the suburbs? Are some more people moving to sunshine states? (Sources: U.S. Census Bureau, Current Population Survey: (1) 2016 Annual Social and Economic Supplement and (2) Annual Geographical Mobility Rates 1948 to 2016)
Mobility by Year
While the percent of Americans moving has changed overtime, how far away they tend to move has not. Looking at the last 28 years, in 1987, 17.8 percent of the population moved compared the 11.2 percent from 2015 to 2016. Since that time, a slightly higher percentage of movers are moving to a different county within the same state – an increase from 18.3 percent (1987) to 21.3 percent (2016). Meanwhile, while fewer movers are relocating to a different state – down from 16.7 percent to 13.6 percent. (Table A)
Both long distance and shorter nearby moves have fallen by similar rates over the past 60+ years. Between 2015 and 2016, 61.6 percent of all movers relocated within the same county compared to 67 percent in 1948. As shown in Table B, as a percent of the total population, just 6.9 percent of Americans made shorter moves last year within the same county, down from 13.6 percent in 1948. Different county and out of state moves dropped to just 3.9 percent of the total population in 2016.
As expected, metro areas have the most movers by far, with 64 percent of movers electing to stay within the same metropolitan area (Table D). At 16.7 percent, the next highest group of movers traded one metro area for another metro area between 2015 and 2016, while 9.3 percent of movers continued to reside in a nonmetro location.
Despite the perception that inner cities are increasing in desirability the data reflects differently (Table E). Actually a yearly average of 1.5 million movers have left Principal Metropolitan cities (urban areas) since 1985 while Metropolitan suburbs keep growing – increasing by an average of 2.9 million movers a year.
When it comes to the distance a homeowner moves versus a renter, what might be surprising to some is that the geographical mobility patterns among both renters and owners are very similar as depicted in Table F. At 60.7 percent owner-occupied units and 61.7 percent renter-occupied, the vast majority of movers in both housing types moved within the same county from 2015 to 2016. A higher percentage of homeowners moved to a different county within the same state (25.2 percent) versus 19.7 percent of movers that rented in the same year. Not surprisingly, movers from abroad account for a higher percentage of renter-occupied units (4.9 percent) rather than owner-occupied units (1.9 percent).
Overall the sunshine states in the South and West had the most movers from 2015 to 2016. The South had the highest flow of people in and out of the region with Inmigrants and Outmigrants both over 900,000 people. (See definitions below.) At 247,000 persons, the West had the most Net Internal Migration, with the South leading the way in total Net Migration (including movers from abroad) (Table G).
Table H shows the Net Internal Migration of movers (current residents moving within the country) over the last five years. Between 2012 and 2015, the South had on average the greatest net increase in population from movers each year. However in 2015-2016, the West took over adding 247,000 additional people compared to 39,000 for the South. The Net Internal Migration in the Northeast and Midwest has been either null or negative for many years with more people leaving than moving in.
Movers from abroad relocate into all regions of the country (Table I). However, the South has been the greatest beneficiary over the last five years but with 497,000 movers from 2015 to 2016.
Although Net Internal Migration in the Northeast and Midwest has been null or negative over the last few years, the influx of movers from abroad over the last three years has increased their populations. Meanwhile, the South and West are still holding the most appeal for mobility.