Reigning in Inventory

October 7, 2014 —

When it comes to buying merchandise, don’t just think about how much you’ll be spending. Think about how much you can save.

I was in a store recently watching the owner look over the inventory with a sales rep in tow. The rep was holding a note pad while the two of them walked each aisle and looked at the bins of parts.

The owner of the store would pull out a bin so that he could see how many of that part he had, and with a brief hesitation would say to the rep, “Give me two of this.”

You could tell much thought was being given to the process because he would occasionally correct himself: “Give me four of this … no, make that just two.”

In today’s world, that technique for ordering has given way to automation. As dealers sell furniture and home furnishings to their customers, their point of sale system tracks how many and when each item is sold. The system then calculates a frequency rate and produces a report telling the buyer how many to reorder.

This usually works, but what happens when the store has a transaction out of the ordinary. Perhaps a customer orders an abnormal quantity of something. Maybe a manufacturer ships an incorrect piece or color. The retailer decides to keep the error and does sell it but does not want to stock the item. Yet the system doesn’t know this and wants to reorder in advance of this unusual order happening again. When the merchandise does not sell, the store finds itself in an overstocked position.

Inventory control is important to any store. With most stores, inventory represents the biggest investment of money; the only possible other sizable investment being the building that houses it.
I remember attending a class on inventory control where the teacher told a story of a small mom-and-pop business. The couple began the store out of their garage and slowly grew the business to where they had the need for a shop and sizable warehouse for all the products they had added to their selection over the years.

What had started as a hobby while they worked their day jobs grew to the point they both quit and were now working full time in their store. They managed to pay off their home, the building they bought for the business and were in the process of developing a sizable nest egg for retirement.

Their method of ordering was the same as the example previously described. However, when they added their newest warehouse, the couple decided they no longer had to order on a ‘onesie-twosie’ basis. They figured they could finally order in larger quantities and get a better price.

The teacher in my class correctly asked, “Why would a business that has profited so much from ordering in a conservative manner change to another manner?”

When you are ordering merchandise there is a lot to be considered. The cost of any item is more than just the price you are paying. With many manufacturers, they have minimum quantity or minimum dollar amount for orders. Perhaps the manufacturer has a service fee for orders that do not meet this minimum. Either or both of these charges should be a component of what is referred to as the ‘landed’ cost.

For example, let’s say you order lamps. If you do not meet the minimum and incur a service fee, the cost of this fee should be added to the cost of the item before you consider the selling price.

Landed cost also refers to an item once it has arrived and is placed on the shelf in your warehouse. There is an expense your business incurs with the person taking a case or pallet off the truck, unpacking it, and placing the items on the warehouse shelf. Add to that the freight factor and/or the service fee and you likely have a very different cost for that item.

How much warehouse space does that product consume? If you look at your storage area and consider all of the operating expenses for that area, the rent or mortgage payment, you can determine a “cost per cubic foot” regardless of whether or not an item sits on the shelf. Traditional retail uses a “cost per square foot.” However, because we have shelves with items stocked above each other, we could use a cubic foot consideration.

A big consideration is the money being saved as well as the money being spent. Yes, there are savings you may have by buying in quantity. However, you have to consider what else that money could be doing for you if you did not buy so many.

This could be a sizable addition of business for the store, but only if there was money available to put the necessary parts on the shelves. Past the consideration of adding this new category of products, any inventory sitting on a shelf can become expensive.

Think about purchasing any part. Our example manufacturer gives terms of 30 days to pay for the item. If the item is sold within the 30 days, our store has received the item and received money for the item before having paid the manufacturer. We refer to this as “playing on house money” because the store has no exposure.

The other side of the scenario occurs when the store pays the manufacturer with a credit card. If the credit card is charging interest from the time of purchase, then that interest should actually be a part of the cost of the item.

If the store owner buys a dozen of an item and has that initial 30 days to pay for the twelve, then any of the items still sitting on the shelf after 30 days is also incurring interest. While this interest may not be paid to a credit card, this is interest that your money could be earning if it were doing something else for you.

Think if you were to invest that money in a money-market fund that earns 1.3 percent over a year. Now that product that is sitting on your shelves after the thirty days is costing you the opportunity to earn that amount of money.

This is not to be a long and complicated calculation that you should be doing with each and every item that you order. Instead, these examples are cause for you to think about how you buy.

Once you have paid the manufacturer and it is your money that is sitting on the shelf in the form of product, you need to ask yourself if that is the best place for your money to be sitting.

If the answer is ‘yes’, then congratulations! You have demonstrated some savvy buying decisions. If the answer is ‘no’, then as you sell down that inventory, look for other products, or ways, to get the most from the investment you have with your money.

Subscribe to Tom Shay’s e-ret@iler, a free monthly newsletter packed with tips for improving the profitability of your store, at profitsplus.org.

Flexible Financing

October 7, 2014 —

In today’s retail environment, offering consumer-financing options not only helps close sales, but it’s also often expected by your customer. Retailers who don’t offer financing options can be at a disadvantage, because it’s likely the competitor down the street does.

Retailer Advantage for NAHFA Members

Some consumer-finance program rates are based on annual sales and offer standard, non-customized programs and pricing. Working in collaboration with North American Home Furnishings Association (NAHFA), Synchrony Financial (built from GE heritage) offers low every-day rates and special financing promotions specifically designed for association members.                                                                                                         

Multiple Reduced Rate Options

Many consumers use in-store credit because they want to, not because they have to. They like having choices in both their home furnishings and the way they pay for them, and appreciate the convenience of longer, deferred interest promotion periods. Twelve-month deferred interest is a standard option, but 18- and 24-month deferred periods are also common. These longer terms and a range of holiday specials are available to NAHFA members at discounted rates.

Being able to offer your customers a choice in financing options lets them choose the one that best meets their needs and increases the likelihood that they’ll buy from you. Two main categories of financing have evolved: One offers minimum monthly payments with deferred interest and the other, equal monthly payments with no interest. Both programs are available through NAHFA.

Stimulate Repeat Purchases

Often, consumers are approved for more than their initial purchase, resulting in an ‘open to buy’ credit line that can be used at your store in the future. You can access lists of these cardholders from the Synchrony Financial Business Center and use the complementary Marketing Toolkit to build a direct mailer, inviting these loyal customers to come back and shop with you.

Additionally, applying for credit means your customers provide you with contact information, which lets you build a database for your marketing campaigns. By reaching out to this database with well-crafted messages you can drive repeat business and stimulate referrals. This can be as complex as sending a parent a flyer about a sale on youth furniture, or as simple as sending a customer a birthday card with a coupon.

No matter who your customers are, offering financing options helps build new and repeat customer relationships and close more sales. Use the NAHFA member-only discounts and rebates from the Synchrony Financial program to drive traffic, increase sales and lower your operating costs.

Call NAHFA, 800.422.3778, for complete pricing and program options. Visit the Synchrony Financial Program representatives at the Retailer Resource Center, 1st Floor Plaza Suites, at this month’s High Point Market.

Inside Coverage

September 8, 2014 —

You’re covered for fire and theft, but what about that employee you fired?

You open your mail and your chest tightens. It’s a court summons. You quickly scan it. The plaintiff is an ex-employee. Now your mind is racing along with your heart as you retrace the employee’s termination. Maybe he wasn’t performing. Maybe business had been a little off and you needed to cut expenses. It had nothing to do with discrimination or sexual harassment or any of those other problems your attorney and insurance agent told you to worry about. Your documentation is impeccable. Your employment manual is up to date. You follow a checklist for all terminations. You are in compliance with all the employment laws. Everything is in order, right? Right?

The truth is, many retailers’ human resources policies and practices aren’t perfect and that might be a problem. Even if you are spot-on, you can be sued.

The average cost to settle an employment practices liability claim can be steep. In 2012, the most recent year for data, employers paid out a record $467 million for wage and hour settlements, according to National Economic Research Associates Inc. The average compensatory award in federal employment cases last year was $490,000, according to Bloomberg Law Report. That doesn’t include attorney fees and punitive damages. The cost to your reputation can be equally destructive.

Small- to mid-size retailers are most vulnerable. They often don’t have the necessary capital to defend themselves against an employment-related suit or other resources, such as a human resources manager who keeps up with the rapidly changing employment policies.

The economic downturn and its resulting job losses have spurred the fears of employers. Litigation against employers by disgruntled former employees seeking redress for issues, both justified and unjustified, relating to their terminations continues to increase. With litigation on the rise, more employees are asking themselves if they need Employment Practices Liability Insurance (EPLI).

First, a little education: Employment Practice Liability Insurance is available to employers to help defend and respond to claims by employees for acts related to their employment. Some types of claims an employer would see coverage respond to include:

  • Wrongful dismissal, discharge or termination of employment
  • Violation of employment discrimination laws (including harassment)
  • Breach of a written or oral employment contract or implied employment contract
  • Sexual or workplace harassment of any kind
  • Wrongful demotion
  • Negligent employee evaluation
  • Wrongful deprivation of a career opportunity

As a retailer, you should know your general liability insurance does not provide coverage for these exposures. Indeed, most commercial general liability polices and workers compensation policies have very specific wording excluding coverage for these types of claims in their policy language. For the most part, the case law has upheld these exclusions with few exceptions.

Before shopping for EPLI coverage, you need to do some honest self-evaluation regarding your organization’s culture as it relates to employees. A thorough examination of your HR procedures is not only necessary from an insurance underwriting position, it is also a good risk management process to undergo on a regular basis.

Consistent evaluation can help identify potential problems before they develop and allow for corrections to be made. As a starting point, take a look at your employee handbook. It doesn’t matter if you have one or 1000 employees, a handbook is probably the single most important tool you should have in your HR toolbox.

A handbook is the best way to communicate policies to your employees and set the tone of your store. Creating—and annually updating—the manual will put your store on the right path to EPLI loss control. Besides, most insurance companies require stores to have a handbook in place as a condition of coverage.

But a handbook is just a starting point. You should examine all of your HR functions and activities. There are many HR assistance organizations available to help any size store with this review; NAHFA has one.

Once you’ve completed the self-evaluation, you can discuss the availability and make up of EPLI coverage for your store. For most retail stores, EPLI is a stand-alone policy. As with most insurance, you get what you pay for, and, thus you can affect the pricing with the coverage options you choose. Also, there is no standardization of coverage forms as with most other insurance policies, so it is important to examine specimen coverage forms carefully to denote differences in coverage.

It would be nice if, in good economic times or bad, having solid and consistent HR procedures were all you needed to reduce the chances of a claim. However, it is not a total barrier and it would be reassuring to know you have the EPLI coverage to pull out of your tool box if needed. Think of your HR procedures as a belt and EPLI coverage as your suspenders. With both in place, it will be very unlikely you’ll get caught with your pants down!

If you would like to get a quote for EPLI coverage, contact your NAHFA membership representative at membership@nahfa.org or (800) 422-3778 and Association Insurance Services can give you a quote. 

Two Stores, One Roof

September 8, 2014 —

Thinking about grabbing a drink or reading a good book? Why not visit a furniture store? While stores like Restoration Hardware are working to get people into their stores and off the Internet by encouraging product interaction thorough their new design galleries, some independent furniture stores are adding other businesses within their buildings to increase traffic.

That’s what Toms-Price Furniture in Wheaton, Ill., did. The family-owned store for mid- to high-end furniture and interior design welcomed Prairie Path Books, Gatherings & Great Reads into an existing apartment set-up within its 65,000-square-foot store.

A book lover and trained lawyer, Prairie Path owner Sandy Koropp had always wanted to open her own book shop, but found the multi-year leases that come with them too expensive. Instead she settled for hosting book events at her home or around town. One of the book events took place at Toms-Price, where Koropp was a good customer.

Furniture store owner Scott Price had originally leased out about 1,800 square feet of the store to a local builder. “It was synergistic and dove-tailed well, but they closed due to the recession,” Price said.

Koropp began hosting book events at the store this past spring. “As I took her around the store, I showed her this [empty] space and suggested she try a full blown book store,” said Price.
When Price showed Koropp the model apartment at the back of the store, she was blown away. “[Price] is an amazing community outreach model,” said Koropp. “He offered the space to me rent free. It was one of the most amazing moments of my life.”

Price’s offer was more strategic than philanthropic. Koropp gets a place to fulfill her dream while Price gets more customers walking through his front doors.

“We like the traffic,” Price said. “It’s not like the grocery business. This helps get people into our store and gives increased exposure to the brand and products we offer—accessories, furniture, mattresses. Sometimes [people] didn’t realize we sold those things. They didn’t realize the full breadth of our offering.”

Sept2014CommunityArt4Toms-Price Furniture added a bookstore inside its Wheaton, IL location creating a stronger sense of community

The store-within-a-store concept is nothing new. Department stores like Macy’s and Nordstrom sub-let retail space to cosmetic companies, who, in turn, provide their own employees. Best Buy’s arrangement with Samsung was instrumental in helping boost the store’s sagging sales. Struggling retailer J.C. Penney is taking the concept to the extreme, offering its entire stores to separate branded spaces.

However, the furniture industry, for the most part, has kept to itself. That is starting to change.

Although Koropp knew nothing about opening a bookstore, timing was on her side. She found a consultant in Florida who helped her determine inventory and bought more books and bookshelves from a Michigan bookstore that was going out of business. Prairie Path Books is open only during Toms-Price store hours, making it accessible seven days a week. Koropp also partners with Whole Foods, which conducts a series of wine, cheese and liquor seminars.

“We wanted to have an impact,” said Koropp, “and increase [human] contact and polite discussion, sharing ideas on issues while listening to a cellist or violinist and sitting on Stickley furniture that still has its price tags.” Koropp and her partners have 18 direct reports, including managers, volunteers and interns. Each serves a specific function from running point of purchase systems and book-buying to training staff and creating events. “We are a team—and we are part of the community.”

Koropp said, “The designers are delightful, even making signs for us, and the customers are the same mix as theirs. Our sales achievements have been higher than our projections.”
Price’s store also has a large room where groups—not just book lovers—can hold special events. “We like for the community to be part of the store,” he said. “We like the traffic. Furniture is a business that most people need only every seven years or so. Having the bookstore on-site [enhances] brand exposure.”

Toms-Price manager Cathy Manock agrees. “We knew it would look nice, but it is better than I imagined. It’s creative and inviting as they can sit on our furniture. I’ve heard comments from people about the great looks of the store and people have been coming back. It’s a slow start, but I think, over time, we will see more benefits.”

In Florida, John Washburn, needed a way to introduce people to the trendy, eclectic, imported furniture offerings of his Washburn Imports stores in Orlando and Sanford.

A slumping housing market in the state was hurting sales. “I was trying to figure out how to make things work,” said Washburn, who tapped into in his previous life as a bartender. Washburn built the Imperial Wine Bar in his Orlando store. “We’d serve beer and wine, and inspire people to hang out,” he said.

Washburn-11Florida retailer John Washburn, owner of Washburn Imports in Orlando and Sanford, added bars to his stores to increase foot traffic.

About 18 months ago, Washburn opened a bar in the larger Sanford space. Due to the limited number of county liquor licenses, he decided to offer a full bar. A general manager oversees both furniture stores, and another oversees both bars.

Washburn said, “The bars and the furniture stores have a good symbiotic relationship, although, at times, the staff has a hard time understanding how to avoid stepping on the toes of the other business.” However, Washburn added, “the negatives are so minor they are far-outweighed by the positives.”

To avoid furniture damage, “We keep furniture that can withstand abuse in the bar area,” said Washburn, “but problems are almost nonexistent because we attract a more mature crowd that likes to enjoy a really good beer in a relaxing atmosphere.”

A one-hour time overlap exists between the two businesses, during which people can get a glass of wine and walk around the furniture store. Half the showroom closes when the bar section opens.
The stores are built differently and, therefore, are configured differently; there is a separate entrance for the bar in each store. In Sanford, private parties can be given private areas accessed by the store door.

So far Price and Washburn are happy with the increased traffic they’ve seen in their stores. Despite his wife’s initial skepticism, Washburn says the bars “definitely have increased business in our stores.”

Price will re-evaluate Prairie Path’s sales benefit to his store in the next six months to a year. To date, neither he nor Washburn see any negatives.
Price says the bookstore’s atmosphere mirrors that of his furniture store. “You can go and browse, read, and linger there,” he says. “We want our furniture store to be like that. You can come, linger, hopefully make a purchase, but always feel welcome.”

Finding the Right Partner

When furniture store owners Scott Price and John Washburn went looking to add a store within their stores, not just any business would do. The key, both men say, is finding a business that provides overlap in your customer base.

Price says the idea of a bookstore within his Illinois store resonated with him because the two businesses share similar qualities. “They are educating people, recommending books to read, providing high-touch, high-service, and that’s very much what we do in furniture,” he said.
“We are both seeking out the customer interested in good service, quality products and a good, high-touch experience,” he says. “Theirs is a store for the book aficionado and ours is the furniture store for people who love their homes. There is a nice synergy in terms of the customer base."

Price recommends other retailers find a business that will generate a similar type of customer their store already attract, like a coffee shop. “Anything that draws customers and makes them part of a community but also a place people want to go to and go to visit,” he says.
At the book store tucked into a corner of his furniture store, “you can go and browse, read, linger; we want our furniture store to be like that. You can come, linger, hopefully make a purchase, but always feel welcome.”

Washburn, whose two furniture stores in Orlando and Sanford, Fla., include bars, says bringing two businesses together under one roof “has to be a good symbiotic fit—somewhere people want to hang out.”

“Keep people interested,” he says. “Make it a lifestyle experience that will drive people into your store. It can be coffee, mahjong or whatever.”

Currently a freelance writer, editor, and public relations consultant based in suburban Chicago, Sue Masaracchia-Roberts has more than 25 years of experience in public relations and writing. Her specialties are the fields of manufacturing and small business, healthcare, and natural and alternative medicine. Her writing has appeared in a number of newspapers and magazines, including RetailerNOW, the Chicago Tribune, NorthShore Living, Vital Times, the Business Ledger, and What’s Happening?

Get Along, Little Doggies

September 7, 2014 –

You know the sofa. The one with the pastel floral design that somehow looked oh-so-gorgeous at market, but now, 10 months later, stares at you from the showroom floor. Really? Pastel flowers? What were you thinking?

Every retailer has a story (or three) about a bad buy, a piece of furniture that mocks you every day. There’s even a name for them: Dogs. Actually, there are lots of names for them, but we like to think of ourselves as a family-friendly magazine.

Just like any other dog, yours is taking up valuable space that could be used for furniture that actually sells. Even worse, your pooch is money that is sitting dormant in your store; much like putting money under a mattress.

Should you be concerned about this? Absolutely! At the North American Home Furnishings Association’s annual Home Furnishings Networking Conference in Phoenix, we did a case study of what dead inventory really costs your business. You might be surprised at what we found.
We had an example store with gross sales of $875,000 annually, inventory of $250,000, a maintained gross margin of 47.43 percent and an annualized inventory turn rate of 1.80 at cost. The store had a net profit of $84,000 after taxes. We also determined that the return on investment in this store was 27.68 percent which is a more generous ROI than the money could produce invested elsewhere.

It was suggested that 15 percent of the store’s inventory could be categorized as non-moving. This would be $37,500 of inventory at cost and the plan was to sell that inventory at cost. Putting that money into the checking account, the remaining inventory, $212,500 would produce the same amount of sales because we agreed that the $37,500 was dead inventory.

Now the store has an inventory turn rate of 2.12 times at cost. Our assumption is that this store really has a turn rate of 2.12 times, but it is that dead inventory that is dragging down the turn rate and creating an incorrect number of 1.80 turns. Not much else happens in the business as the money produced by the dead inventory was just put into a checking account. The ROI remains the same.

What if this store took that $37,500 from the dead inventory and invested the money in inventory that would produce the same 2.12 inventory turn that the rest of the store, now without any dead inventory is producing?

The first thing you will notice is that $250,000 in inventory is working harder for you. Where once it produced $875,000 in annual sales, now, free of those dogs, your inventory will produce $1,008,200. An increase of $133,200 annually. Your old net profit of $84,000 is now $126,560—an improvement of $42,560.

The net profit has improved from 9.6 percent to 12.55 percent because you rid yourself of that dead inventory and replaced it with furniture that sells.

Most impressive is the change in the return on investment—from 27.68 percent to 41.70 percent. Compare that to what you are earning in the stock market, money market fund, or worse yet, the 1.02 percent a bank will pay you for a two-year certificate of deposit.

This exercise proves two points about any home furnishings retailer’s business. The first is that dead inventory is costly when you consider what it could be doing for you. The second is that no investment beats inventory in a store.

However, this does not mean that when you are buying you should look at a sofa, mattress, recliner, lamp or any other piece of furniture and think that if six on hand is a good quantity then 12 of the same must be better.

Instead, having six on hand means you should take that dead inventory or that excessive inventory and turn it into cash. That cash should then be turned into some other piece of furniture that you can show to the customer when they are coming to look at the sofa, mattress, recliner or lamp.
It doesn’t matter if that doggie is in the window, on your showroom floor, or sitting in your warehouse. When you ask how much that doggie is the answer is that it can be very expensive. Not only is your money sitting stagnant, but you are missing a tremendous opportunity to increase your sales, your bottom line, and the cash flow in your store. Sell that doggie.

Subscribe to Tom Shay’s e-ret@iler, a free monthly newsletters packed with tips for improving the profitability of your business, at profitsplus.org.

Women In The Industry (and the secrets to their success)

August 7, 2014–

Bring three female home furnishings executives together and you don’t know what they’ll say. Sarah Lyke, Dorian Stacy Sims and Caroline Hipple, on the industry, Jane Fonda and the B-word.

From left: Sarah Lyke, Dorian Stacy Sims, Caroline Hipple

From left:
Sarah Lyke is the executive director of WithIt, a nonprofit group whose mission is to help women grow in the home furnishings industry.

Dorian Stacy Sims is president of Stacy Furniture & Design in Grapevine, Texas.

Caroline Hipple is the CEO of HB2 Resources, a management consulting firm whose clients are primarily in the home furnishings industry.

RetailerNOW: How has the industry changed since you first started?

Caroline: Imagine an hourglass. Big at the top, narrow in the waist and big at the bottom.  When I started in 1977, the population was big at the top and skinny at the waist of the hour glass. The furniture companies rode the wave of Baby Boomers—what was it 78 million?—all through their life stages and we sold a lot of furniture. I remember looking at the numbers more than 20 years ago and saying we need to be out of this business by 2008. There were only 42 million of the next generation going through their life cycle and we had built an industry and supply chain for 30 million more. But you know what? We weathered that period of ‘08 to ‘15 where demographics were so tough. It was hard, but I think the people who survived, that stayed relevant to their customers, they’re the ones who are going to benefit moving forward.

Dorian: But even if you weathered through this you still need to be constantly reinventing yourself because this generation is so different from the last in terms of what they want and how they want it.

Caroline: Exactly. It requires being there and listening to your customers, growing and changing along with them. My grandfather, who was an entrepreneur, once told me, “Honey, if you can develop one characteristic, you need to be adaptable.” I was 13 when he told me that. Who knows what that means at 13, but he was so right. For retailers today it’s all about adaptability and staying relevant, figuring out how your customers buy and who your customers are listening to and getting their information from.

Sara: I completely agree. It’s not easy—never has been—but isn’t it exciting?

Caroline: Oh, absolutely.  It’s not easy, but the best way to adapt and stay relevant is to keep asking questions of ourselves, our customers—anyone we do business with. I was watching a show …. where the American Film Institute was honoring Jane Fonda. She was talking to a packed house of actors and actresses and she said something that really stayed with me. “My last message to you is to always be asking questions.” She talked about how, in the whole room of actors and actresses, only one of them who worked with her ever asked how she did things or how she could improve or be a better actor and that person was Meryl Streep. Is it any wonder (Streep) is the best actress in our time?

RetailerNOW: What are some of the problems you’ve encountered as a woman in the home furnishings industry?

Dorian: It’s very difficult to be an outspoken and intelligent woman and not be perceived as a bitch. I’ve been surrounded by salesmen my whole life. My dad’s a salesman, my uncles are salesmen, too. When I first started as a buyer my dad said, “That person across the table is trying to make a living to feed and support his family. You always be courteous and respectful no matter what. Let him show you his stuff.” Well, OK, you do that. But at the same time I’d rather just let that salesman know that this is something that doesn’t need to be spelled out for me. But if you do—and I have—then you get to be known as the B-word. I truly believe the biggest advantage women can add to this industry is we can handle conversations in a respectful, professional win-win manner. If the manufacturers, the retailers and the reps could understand that women are working for the greater good of the industry and greater good for everyone’s business we’d be a stronger industry. Most women see that it’s not all about competition. It’s about the relationships along the way. If we communicated our needs and came off as professional, intelligent women, our industry, if they would listen, could grow by leaps and bounds.

RetailerNOW: Challenges—what have you faced along the way and how has it changed?

Dorian: I go back to the when I was a buyer. It was almost as though there was a light bulb that went on eight or 10 years ago with the industry that women are the end consumer.

Sara: But yet they still struggle to figure out what that end consumer, a women, wants for a home most of the time.

Dorian: Exactly! As a buyer I would be invited to a design meeting and I’d ask, “Well, why do you do tuck the sheets in like this?” Or, “That doesn’t work here because you can’t reach your alarm clock.” And when I’d say things like that from a woman’s perspective, the people in the room—mostly men—would look at me like the dog who just heard a weird siren. They’re finally starting to listen. It’s great to see that they are listening now, but it’s taken an evolutionary process to have them realize that we’re the end consumer.

Caroline: I was working for an investment banking firm during the day and I needed some Christmas money so I got a second job. That was 1977. When I became a (This End Up) store manager at 21, my father almost hung up on me when I told him about my job. I still remember him: saying, “I paid for you to have an expensive education and you’re going to sell shipping crates?” I was like so many other young women who had gone to girls schools in (This End Up’s) senior management ranks. We were taught by our parents and our schools that we could do anything we wanted and we believed this until we went into the working world.  But when I got out into the world, that’s when I realized there was no chance for me to be a broker. The industry just wouldn’t allow it. So I went looking for mentors and companies that were merit based and not gender based. I was really lucky.  At 23, I was managing nine stores but I still remember one man saying to me “Honey, does your husband run this company?” What I think I learned is to take a job get results and then take another job and get more results. I was always working and building my portfolio of skills. Yes, there was always blatant discrimination and there always will be, but if I focused on that I wouldn’t have been able to do my job well.

Sara: The biggest challenge I see for women is getting them to stay in the industry. What I see a lot of is they get to a certain point and they can’t go any further, but their skill sets are so great so they go to other industries and other industries are benefiting from it. If you’re creative—and women in our industry are extremely creative—every industry can use you. Just in my time with WithIt I’ve seen some of our most talented people leave and it hurts. As an industry we need to better leverage the skills women have.

RetailerNOW: What advice would you give women in the industry now?

Sara: When we go to the universities I’m always telling women to take business courses because when I sit on the advisory board at High Point University I’m hearing  that their graduates just don’t understand business. When women get out into the workforce they need the leaders of their company to take the time to teach them. But even then they can’t rely on others. They should already be somewhat intuitive on how to read the books [accounting] and what needs to be done and how to move forward. They need the business knowledge on top of their degrees.

Caroline: You still see a lot of women in the design field as buyers and we should be celebrating women who have taken on core skills sets like design and merchandising and buying because that is a talent that comes natural for many women. But they need to take jobs that help them manage P/L and operations and some of the other functional areas.

Dorian: That’s the best advice I’d give new people or young people coming into the industry. You may be excited by the design or the textiles side, but you would have such an advantage over others coming in if you at least concentrated on business and the financial  aspects.

RetailerNOW: Men aren’t asked to know the design side. Is more expected from women than men?

Sara: It isn’t a matter of them expecting you to know it. I can honestly tell you the way I promoted it in the software industry was I knew accounting and economics so it let me know how to look at your company and how to visualize it and what it needed next.

RetailerNOW: Mistakes—what have you learned from them?

Sara: I think back to my days in the software industry. What I learned when I decided to leave the industry was I had no network whatsoever.  I learned that one the hard way. I think relationships are so important now. Every job that I see people get in this industry is based on a relationships.  Building those relationships and having a network is extremely important.

Dorian: Even in the worst of storms if you treat those around you—whether it’s your employees or your manufacturing reps—as you want to be treated it makes life better.That sounds simple, but it’s not always practiced. You need to treat everyone like  “Hey, we’re all weathering the storm right now, but we’re weathering it together. I’ve got this end of the rope and I’m not going to let anything happen to you just like I’m not going to let anything happen to me.” That sense of working together has been the driving force of what’s gotten me through whatever storms we’ve faced. Those relationships from the owner of the company to the credit rep are very valuable to me and I don’t take them lightly.

Caroline: And isn’t that why we love this industry? Because it is so relationship driven?

RetailerNOW: What are some of the toughest decisions you have had to make?

Dorian: When you are working in a family business, even though some people are not family by blood or marriage they become part of the family. There are times when I sit down with good friends, friends who are almost like family me, and have to tell them its not working for them and it’s not working for me. Those kinds of conversations—whether it’s a longtime worker or family member—they just absolutely suck the life out of you. At the end of the day, my family is the most important thing to me and the people that work for me are encompassed in that family. I can handle leases going away and dealing with building damage from hail storms. It’s the people part that hurts your soul.

Sara: The decisions of business—that’s all very easy for me. But I think relationships are the main thing I struggled with. When I came into this business I worked with men. Men aren’t collaborative like women. They enter a room, they figure out their stuff, make a decision, get up and leave. I was very much that way. I’ve learned to appreciate the other side of this. Women are collaborative and they get together and discuss ideas back and forth. I always found the customers who complained the most were always the ones I learned from the most. Even in WithIt where the women may have the same goals and objectives they have many different opinions and I’ve learned to sit back and listen.

A Brave New World—Youth Furniture

August 7, 2014—

On a recent Saturday morning, Wendy Levine roamed the Priba Furniture and Interiors store in Greensboro, NC, shopping for her two children. Five-year-old twins Davis and Miller are about to become big brothers—baby Mariah is due in September—prompting Levine and her husband Paul to reconfigure the family’s current sleeping arrangements.

“We’re moving the boys upstairs and they need new furniture,” said Levine, who—the twins’ patience permitting—planned on hitting three more stores before the day was over. “They’ve outgrown their old beds and their dressers are really adult dressers my parents handed down to me. They can’t always open the top drawers. They need furniture their size.”

Retailers and manufacturers, painfully aware of the state of flux to the youth furniture industry, are hoping for more shoppers like Levine in the coming months.

That’s because the youth furniture industry—always a tough sell with many retailers—could use a much-needed boost these days. It’s been four months since Stanley announced it was ending its popular Young America youth brand. Less than two weeks later, La-Z-Boy officials dropped a similar bombshell, saying it would sell off Lea Industries, its youth label, as part of a restructuring of its casegoods business.

Since then opportunistic manufacturers have scrambled to fill the void by Stanley and Lea, while others are waiting to see how things shake out, according to longtime furniture analyst Jerry Epperson.

Youth furniture sales have slowly ticked upward in recent years though never in step with traditional furniture sales for adults. Furniture Today’s annual report on the sector in June projected a 15.8 percent growth over the next five years.

Epperson said that growth will come, but only if the economy continues improving. “What has happened with Stanley and Lea is sad, but the youth category is going to rebound, it’s just a matter of when,” Epperson said. “When a better economy comes along and unemployment goes down, the demand will flow in youth, but right now we’re just not seeing it.”

Not helping matters is a declining birth rate in the country, a key indicator of future youth sales. According to U.S. Census figures, just 3.9 million people were born last—year—the fewest since 1998, and a 10 percent drop from 2012.

The good news is Census officials expect the number to remain level this year before growing in the coming years. The United States will be home to more than 80 million children in 15 years, Census officials predict.

“If you want to sell youth furniture, you better have youths,” said Epperson. “And if you want youths you first need babies.”

Not all retailers and manufacturers are bearish on youth furniture. At a red-brick warehouse in rural Christiansburg, Va., NE-Kids employees scramble daily to fill orders from retailers, who, themselves, are scrambling to fill showroom floor space.

Doug Devine says the company he started has benefitted from the flux in the industry. Devine won’t go into specifics about his private company, but said NE-Kids is seeing “double-digit gains.”

“We’ve definitely added a number of new accounts,” Devine said. “People who had been looking at us, they turned to us after (High Point) market and everything that went down.”

Devine said his company, which has built reputation among retailers in recent years for its innovative looks and trendy finishes, already had a strong product mix for retailers to choose from.

In a sector where brown and white finishes dominate product, NE-Kids was one of the first manufacturers to recognize that grey finishes from adult furniture could be successfully transferred to youth furniture, too.

“Our mix, coupled with our reputation along with (Stanley and Lea’s announcements) has really propelled things for us,” Devine said.

“The big thing with Stanley and Lea is that it forced people to do something and do it fast,” Devine said. “If I can roll out six groups for you, the retailer, I’m suddenly looking pretty attractive.”

Earl Wang, president of Legacy Classic Kids, said his company was already in position to fill the void left by Stanley based on its already-strong market share of infant and youth furniture.

“That’s not to say I think Legacy is going to dominate the industry, but we’re confident there’s a lot of room to grow, both from a manufacturer and (retailer) standpoint,” said Wang, who left Lea earlier this year. “You’re not going to see one or two manufacturers come in and dominate market share in this industry. That’s good for retailers because they’re going to have choice.”

At Stacy Furniture & Design, which has three stores and a warehouse in the Dallas-Ft. Worth area, Rhonda Stacy has been buying youth furniture for the Texas company since 2002. She knows the difficulties of selling youth furniture. Parents aren’t always willing to invest as much in their children’s furniture as they are their own. They fear their kids will quickly physically and mentally outgrow the bunk beds that look like a circus big top.

Stacy calls youth furniture and her corner of the showroom floor the “be-back biz.” As Stacy tells it, customers browse the youth offerings, inform the salesperson they’ll be back and are never heard from again.

“It’s a hard product to sell,” said Stacy. “Parents will buy a $40,000 car over the weekend, but sweat out a kids bedroom suite forever and ever.”

Stacy and Wang believe youth furniture’s biggest supporters are Grandma and Grandpa.

“They’re willing to step in and help out when the parents might not be able to afford the furniture or they just want to do something for the grandkids,” Stacy said.

Epperson believes the last four anxious months in youth furniture will ultimately make the industry stronger.

“Change is hard, but change can also be good,” Epperson said.  “Sometimes the industry is slow to adapt to new styles, new ways of thinking. When one company leaves, two other companies are waiting to take its place. They usually bring different strategies and styles to the marketplace. That can only be good for everyone.”

Your Most Powerful Marketing Tool Might Surprise You

Here’s a hint: It’s you. Now go spread the word.

August 6, 2014—

Alex GoldfaynAlex Goldfayn thinks many businesses have it all wrong when it comes to marketing their company—that includes home furnishing retailers, too.

“Marketing is not about collecting followers or friends on Facebook or Instagram or LinkedIn or any other social media site,” he says. “Marketing is about communicating your value to people who can consistently pay you for that value.”

“Think about it,” he says. “What good does it do to have the best customer service, the best value in furnishings if you don’t get those messages out to people?”

Put down the laptop. At June’s Home Furnishings Network Conference in in Chandler, Ariz., Goldfayn told attendees that marketing has nothing to do with perfecting your website and everything to do with perfecting your communication skills.

“Effective marketing, the kind of marketing that helps you sell more furnishings, more accessories than your competitor, comes from letting more buyers know about your value this week compared to those who knew about it last week,” says Goldfayn.

Goldfayn is a marketing consultant whose clients are as large as Sprint, Lenovo and T-Mobile all the way down to small-business retailers.

“Marketing doesn’t have to be difficult” Goldfayn says.  “People will try to make it difficult, but it doesn’t have to be. Just keep it simple. Communicate your message of how you can help people and you’ll be marketing.”

Goldfayn offered conference attendees nine marketing tips that any retailer can implement within a month—some within the next few days. “Follow up on these strategies and your revenue won’t have a choice but to grow,” he says.

Increase awareness

Goldfayn believes you and your employees are the best marketing tools your store can buy to get your message to customers. But too many times retailers fail to communicate what they can offer the customer. “If (the customer) doesn’t know they can buy something from you they can’t buy it,” Goldfayn says.

Goldfayn says every home furnishings retailer should ask this question of his or her customers: “Did you know you can also buy ….” Or “Did you know we can also furnish…” Don’t be limited to one sale. Let the customer know you can offer more than just a sofa.

 Obtain testimonials to market your business

“If they’re buying from you, your customers must love you,” Goldfayn says. “So why wouldn’t they offer a testimonial to help you?

Target those testimonials to prospects

“It doesn’t matter if you have great testimonials if you don’t communicate them,” Goldfayn says. “Nothing leaves your store—emails, flyers, whatever—without your message on it.”

Create case studies

Create about a dozen or more short quick case studies with your testimonials. Goldfayn says each study should address four points: 1) Identify the problem; 2) How your product or service solved the problem; 3) Show the value the customer received; 3) Include a testimonial quote from the client.

Target your case studies

Now that you’ve created your case studies, you need to make sure the right testimonial is going to the right customer. Goldfayn suggests you categorize your testimonials based on the customer, the size of their home, the room they are purchasing for, etc. “Let them know that other people just like them have come to your store for help and have walked away satisfied with what you were able to do for them,” he says.

Ask for referrals

There’s a reason the customer purchased that dining room set from you, says Goldfayn. “Maybe they enjoyed their experience in your store or they trusted you or you gave them a great value. Maybe it was all of those reasons.”

Now you need to seize on that opportunity by asking that customer for a referral. Give them time, Goldfayn says. “If they can’t give you a name at the store, tell them you’ll call them in a few days. When you call them, don’t just ask for a name—help them think of somebody. Goldfayn says one-third of customers will give you a lead.

Grow your list

You need a list of current and past customers. You need a list of current and past prospects. “I’m not wanting phone numbers,” says Goldfayn. “Besides, people aren’t likely to give out their phone numbers. But you must find a way to get their email at checkout or before they leave the store.”

Reach out

Send emails every two to three weeks that are meaningful and not just self serving. Your potential customers need a reason to open your emails. Offer them tips, tricks, ideas, advice for around the house or in their lives. Include one of your customer testimonials and add a feature product with a link.

Throw a party

Don’t pitch it as a sale, but rather an event. Take your pick: an open house around the holidays, a tailgating party before or after a big football game. And don’t just invite your customers and prospects—invite the media, too.

The New Way of Marketing

July 17, 2014

Marketing changes seemingly overnight. It seems we wake up and discover some type of new marketing tool that is going to change advertising as we know it. But before you purchase that cool new digital software they say has all the capabilities you will ever need, take a step back to think about the way you and your consumer interact, buy things and even think about things.

What did you think about? Did your mind go directly to products, price, place and promotion? The new way of marketing isn’t about getting rid of what you have done in the past. It’s about taking what you have done great in the past and creating marketing that changes the way you communicate with prospects and customers.

There are four dynamic ways in which you develop a comprehensive marketing campaign that will satisfy Ms. Jones and ultimately drive traffic into the store to help you sell more stuff.

Consumer wants and needs (vs. Products)

Ms. Jones is not buying a sofa just to buy a sofa. She is buying a sofa to sit, read, sleep or lounge on. Any furnishing decision she makes is to take care of what she needs. Imagine a world where the headline “Fabulous Brand New Sofas” turned into “The greatest way to watch primetime TV available only at ABC Furniture.”

Cost to satisfy (vs. Price)

Guess what? If we make our advertising about price, Ms. Jones is going to want price. If we make our advertising about how an item is going to satisfy Ms. Jones then price is no longer a concern. Turn the headline “Mattresses starting at $399” into “How much is that aspirin costing you when this new mattress could take that cost (and pain) away?”

Convenience to buy (vs. Place)

How do you buy your product from your manufacturer partners? It is probably a safe bet that it could be done electronically, by fax, over the phone or in person.  How can Ms. Jones buy from you? The more options a consumer is given in convenience the more likely she is going to make a purchase with you.  If convenience to buy becomes a selling point for you then Ms. Jones will have more of a reason to buy from you.

Communication (vs. Promotion)

“I am winning.”
“I am going to win.”
“I won.”

All three of these statements relate to the same concept. However, based on the tense we are speaking it is obvious which one has become the truth. How we communicate through our advertising vehicles is the most important aspect versus what does it look like. Think back to your most successful events. Were they successful because of the name of the event? Or were they successful because of what they communicated to Ms. Jones?

In today’s digital marketplace, authenticity is the new form of payment. Without it, you won’t be able to get Ms. Jones to react to any communication. You won’t be able to sell your products or services. And you won’t be able to build a strong community of customers who think of you as their go-to resource.

The best way to build authenticity is to start thinking about marketing a little differently. It takes a blend of the four Ps (Products, Price, Place, Promotion) and the four Cs (Consumer wants, Cost to satisfy, Convenience to buy and Communication) to create a strong sales process. You can’t get by with only two or three of them.

When your message is right, any media will work. When your message is wrong, all the media in the world won’t help. By building a strong message and strategy for spreading that message, you will continue to deliver useful, actionable content. Thus, you’ll easily rise to the top and capture your market.

Kevin Doran is the CEO of R&A Marketing. Armed with more than 25 years of furniture retail marketing experience as a full-service traditional and digital marketing company, R&A works with retailers in the home furnishings, appliances, and electronics industries.Visit www.ramarketing.com or email info@ramarketing.com for more information.

Into The Great Wide Open

June 1, 2014 —

In case you haven’t noticed, outdoor furniture has become a hot category in home furnishings. According to an upcoming Freedonia study, Outdoor Furniture & Grills, U.S. demand for this segment is expected to rise 4 percent annually through 2017.

Lee Beatrous, production manager for Groovystuff says, “I have seen reports that the U.S. outdoor furniture industry is expected to reach $4.4 Billion by 2015. With steady growth throughout the early and mid-2000s (with the exception of the 2008 hiccup) the outdoor market has remained strong in its growth pattern.”

Beatrous attributes this growth to “the change in lifestyle and the general population’s idea of the importance of spending more time with family and enjoying the present place and moment. The hurried pace lifestyle that people are living is also an encouragement to enjoy the luxuries of home when time is spent there.”

ProductFocusOutdoorLaneVenture ABOVE: This grouping from Lane Venture includes the Clare sofa, with a marine-grade wood frame, removable slipcovers, and aluminum legs; chairs and woven tables from the St. Simons collection with hand-woven polyethylene synthetic fiber on cold-drawn premium aluminum frames; and a cocktail table from the Industrial Renaissance collection, with a solid aluminum top with sound padding and an extruded aluminum base.

Weather obviously has a big impact on outdoor furniture sales. Teresa Buelin, vice president of sales and marketing for Heritage Home Group/Lane Venture says the “long bad winter didn’t help with first quarter sales, but that means there’s pent-up demand.”

Distribution channels for outdoor furniture have changed in the last several years as more traditional furniture retailers jumped into the category.

“Traditional furniture stores are looking for a new revenue source and outdoor living is such huge category now,” Buelin says. “There are so many complimentary products that help sell the furniture: outdoor lighting, rugs and accessories. Selling outdoor typically means a larger sale—at least five or six pieces.”

PFOutdoorGroovystuffoutdoorpicTF-1027

Rory Rehmert, vice president sales and marketing for Pride Family Brands and past chairman of the International Casual Furnishings Association, adds that retailers are recognizing that the sales-per-square-foot for outdoor are almost double that of other furnishings categories.

Adding outdoor furniture comes with a bigger learning curve than does another category such as youth for example. The materials, construction, warranties, vendors and markets are different.

One of the challenges retailers face is in competing with casual furniture retailers, according to Beatrous. “The competition is tough,” he says. “A few [casual] retailers have a stronghold on the market so you need proper knowledge and research to break into it.”

Rehmert says while traditional retailers do need to “learn about the attributes of the products, components and construction,” there are many opportunities for education including trade shows such as the International Casual Furniture & Accessories Market.

Outdoor furniture styles and designs has become as on-trend and fashion-forward as indoor furniture as consumers embrace the idea of extending their living spaces with outdoor rooms. Buelin says conversation seating, especially surrounding the increasingly popular fire pit, is big right now as is the use of mixed materials a woven sofa with an upholstered chair and aluminum table. “Consumers want their outdoor living space to be eclectic, just like indoors,” she says.

ProductFocusOutdoorPrideFamily

ABOVE: The English Garden Collection from Pride Family Brands features hand-woven aluminum, original castings, hand-painted detailing and tailored cushioning. Castelle luxury fire pit features state-of-the-art functionality and durable cast and extruded aluminum construction. 

“The luxury outdoor furnishing category continues to grow,” Rehmert says. “For those buyers, the ability to purchase custom designed furnishings is a growing trend. Nearly 50 percent of our production is driven by custom orders. We’re also seeing tremendous popularity in our fire features in the luxury category. The entertainment factor incorporated into these features creates an add-on interest from homeowners.”

Beatrous says trends vary depending on location and changing lifestyles, but one trend he sees as universal among all furniture categories is the “desire for eco-friendly furniture.”

The facts are there—the outdoor market is growing. More traditional furniture retailers are cashing in on this once ignored segment. Maybe it’s time to find out if exploring the great wide open makes sense for your business.