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Is This the Future of Our Industry?

January 19, 2008

Could you run your business without sales staff or at least a much smaller sales staff?  Could your business just be open four days a week including the weekend? Could you sell furniture for only four hours a week? All of this sounds unlikely until I read a recent article in Home Furnishings Business, January 2008 issue. The article is called "New Directions" and immediately caught my attention with the first line, "The advertising slogan "no nagging salespeople" in television ads…..takes direct aim at the aggressive sales tactics found in some traditional furniture stores."

Here’s the 411. A company called Direct Furniture Factory Outlet, in Shelby, N. C., operates 100,000 sq feet stores with a handful of people and no commissioned sales staff. When a customer comes in, an employee tells them to look around and if they want to purchase something, pull the price tag. Apparently the staff will answer questions, but the customer has to find them. It might not be the most convenient way for a customer to shop but the discounts are so high because personnel overhead is so low, most customers don’t mind.

Another retailer is only open Friday through Monday. Salespeople are rarely idle and again customers believe that the prices must be pretty low since the store only has overhead for four days a week instead of six or seven. (This logic is flawed of course, but perception is reality). The sales staff loves working just four days a week, by the way.

Finally, there is another store that is open Monday through Friday but its actual selling takes place during a few hours Friday nights when furniture is sold by auction.

Now, I know what you are thinking, none of my high-end customers are going to stand for that. Maybe, maybe not. The article goes on to say that about 16% of customers like this kind of shopping. In a large metropolitan area that is enough people to support at least one, if not several, of these operations. As I remember when the warehouse clubs opened, specialty retailers said their customer wouldn’t go there because there was no one to bag for them. How wrong could we have been?

Regardless of whether it would work for our industry or not, we all have to be thinking about new ways to do business. Our market is changing and not just because big boxes and warehouse stores have gotten into the business. The change is being led by our customers, genXer’s and genYer’s. These clients have been raised to expect immediate gratification. They don’t like to wait four to six weeks for a customer order. They want it now. Even more important, they want to be able to change things up every few years. "Disposable" is not a dirty word to them. If their cappuccino maker breaks, oh well; it gives them the opportunity to upgrade to this year’s model that has more bells and whistles. I cringe every time I hear a customer say, "I don’t want to spend that much on furniture because I’ll want a new look in a few years."

It is also changing because outdoor furniture manufacturers are starting to mimic what is happening in the indoor furniture industry; they are opening retail stores. Another article in Home Furnishings Business titled "Reading Between the Lines" addresses this phenomenon. You should know that this revolution isn’t a one-way street; retailers are starting to go into manufacturing. We have seen this in our industry with buying groups that bring in offshore lines that have been made exclusively for their members.

If I listen carefully, I can hear footsteps slowly approaching me from behind. It is the footsteps of an outdoor industry that I won’t be able to recognize twenty years from now. I just wonder if I will be able to stay ahead of those footsteps or be trampled as they charge ahead.

Yours in confused retailing, Bruce

You can read the articles from Home Furnishings Business by going to:

New Directions

http://www.hfbusiness.com/story/story.bsp?sid=85184&var=story&ga_dir=Current%20Issue

Reading Between the Lines

http://www.hfbusiness.com/story/story.bsp?sid=85183&var=story&ga_dir=Current%20Issue