January, 2017 —
The holidays are over. It’s time to get down to business.
We asked HFA members what they’re excited by—and worried about—for the New Year.
For retailers, 2016 is sooo last year. There are new trends to embrace and challenges to face in 2017. The rise of internet shopping and growth of off-price retailing continue to reshape the home furnishings industry. Retailers who want to survive and prosper will have to respond by restructuring and rethinking the status quo. Relax, we’re here to help.
Function, technology, quality, delivery—these four things appear to be some of the biggest issues facing furniture retailers, according to interviews with Home Furnishings Association members across the nation. How your store addresses these factors will go a long way in shaping sales this year. The world of home furnishings is changing to meet the ever-evolving demands of consumers. Is your store onboard?
Demand for additional functions
One area that multiple retail operations cited as an emerging trend is furniture that serves multiple functions. For instance, a sofa that electronically moves or adjusts with the touch of a finger or offers charging stations for tablets and phones.
Randy Coconis, president of Coconis Furniture with three locations in Ohio, says consumers are looking for more function, a desire that’s going to increase even more this year. “Power reclining really took off for us in 2016,” he says. Coconis believes that as new designs offer updated features, this category will only improve. What makes functional furniture so appealing to a retailer like Coconis is that the technology increases the cost. “This has helped grow our average sale dramatically,” he says. “Plus, it costs just as much to deliver a $799 sofa as it does a $1,199 sofa.”
Steve Nye, general manager of Engles Furniture in North Bend, Ore., adds that the demand for additional function from furniture extends into the bedroom as well. “In the mattress department, we’ll continue to see growth in sleep-tracking technology, which will help bring Millennials into the upper-end furniture market,” he says.
Technology and online retailing
Of course, another major factor affecting furniture retailers in 2017 continues to be online retailing. “Online retailing in combination with smartphones has provided customers so much information they didn’t have access to 10 years ago,” Nye explains. “The customer has a much better idea of what they are looking for when they walk into our store, which helps as long as we have something comparable to what they want.” They are also better educated about what’s available and are ready to purchase when they walk in.
Of course, online retailing has its drawbacks, says Nye. “The major negative is that it has taken market share away from brick-and-mortar retailers and reduced physical traffic counts in stores,” he says.
To combat that negative, HFA retailers are embracing technology in their physical and online stores. For instance, Nye and Coconis are using mobile tablets with their sales staff for instant access to catalogs and price lists. Nye sees more and more retailers embracing in-store, 42” touch screen catalog kiosks that customers can use to see all available products with pricing.
Technology in 2017 will go beyond kiosks, however. One piece of technology Coconis thinks will trend this year is the use of camera-based customer counts and integration with customer relationship modules that can do more than simply count the number of customers walking through your doors. “They can help you run an ups system and grow sales through CRM integration,” he says.
Coconis is focusing on attracting Millennials via a redesigned website and more social media outreach. “We are fortunate to have my son [Bo, a Millennial] in our business,” he says. “He has impacted our social media presence tremendously.”
You get what you pay for
While the internet is certainly shaping how many Millennials research and purchase furniture, it’s not the only issue surrounding Millennials and furniture buying today. Matt Carman, owner of Bare Woods & Home Furnishings in Chantilly, Va., believes there’s a disconnect with many Millennials, particularly in terms of the amount of money they’re willing to spend on furniture.
Carman finds that many Millennials are not buying quality products, a feeling other retail experts have stated for years. “We see second- and third-generation shoppers here, who are our customers; [the younger generation] is reluctant to spend money on quality furniture,” he says.
The furniture industry, like other retail sectors, is incredibly focused on attracting and retaining the Millennial consumer, but as Carman explains, the demographic is widely varied in its interests and tastes, making them a challenge to figure out. In addition to the need to educate Millennials on quality, Carman feels the demographic is less concerned about service than other generations.
“They want to order something and have it show up. They don’t care if something is made domestically, how it’s built and if it’s all wood,” he says. “Millennials are a tough one for brick-and-mortar, and we’re relying a lot on our older first- and second-generation customers to educate them on buying quality.”
Cash and carry products
As Carman addresses, more and more of today’s consumers are demanding cash-and-carry products. “We’ve seen that people don’t have the desire to wait, so we’re trying to stock a bit more,” Carman explains. But for a retailer such as Bare Woods, whose niche has been built-to-order products, that presents a concern. “Seventy percent of our business has been built-to-order, allowing consumers to change wood types, trims, colors, knobs,” he says.
Building on this trend for some retailers is the challenge presented with delivery. “Staffing and finding good drivers is a big challenge,” Coconis says. “In fact, we just recently contracted with a local delivery company to handle most of our deliveries—something I never thought I would do. However, it’s been about six months, and so far so good. Our successful delivery percentage is higher than it’s ever been.”
Staying on top of changing consumer trends and demands will be critical for furniture retailers in 2017. Nye recommends consistent market attendance, as well as involvement with a buying group and membership with a peer performance group. “Engles Furniture attends April and October High Point markets and January Las Vegas market to directly educate ourselves on industry trends,” he says.
Nye is a member of several organizations including the HFA and two different Impact Consulting peer groups. “We visit five different stores annually to perform a store critique after a tour and interviews,” says Nye.
“The meetings include workshop sessions for best-idea presentations, financial analysis and trending topics. The group meetings are extremely valuable for continued education regarding best practices and industry trends.”
Trend-wise, Carman finds consumers are interested in uniqueness. “A one-of-a kind mentality seems to be popular,” he says. “People used to want to compete with their neighbors, now they want something unique that their neighbor doesn’t have.”
He sees consumers adding unique pieces such as these into a room, as a way to express themselves and differentiate their homes.
Coconis expects rustic and industrial looks will continue to be a hot trend in his Ohio stores across categories. “It seems like every piece we put on our floors moves. We think we are getting too much of the look, but they are all selling and seem to always be in our top 10,” he says.
Of course, for every item that moves up in popularity, another must drop. Carman points to the category of television consoles as one of the fallen. He’s seen a significant drop in sales due to wall-mount televisions and consumers not wanting to have their electronics on display in their living and family rooms. “We’re seeing consumers buying other pieces of furniture out of our dining section for a media room because they don’t want something tagged as a TV stand.”
To address this change in demand, he’s begun referring to the pieces as consoles or cabinets, to re-categorize them as a more multi-purpose piece.
Challenges for the future
Combating overhead is an ongoing challenge that Carman cites. “The furniture category has one of the highest workman’s comp claims, so every year we fight with our carrier to not gouge us with the rate, even though we’ve never had a claim. A continual increase in product cost and general overhead seems to be higher than our growth of sales,” he says.
Coconis anticipates the cost of healthcare, potential tax increases and the challenge of finding qualified employees to continue to be issues in 2017. “All the good workers in our area are working, plus payroll costs continue to rise. We have to get it [sales] from somewhere to cover that.”
Finally, Nye saw a slight traffic and sales decline in 2016 over 2015. “The election can easily be a primary component,” he explains. He said it didn’t matter who was elected—Donald Trump or Hillary Clinton.
“Now that the election is over and our next president is chosen,” he says, “the industry will experience growth in 2017.”