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What Is That Light I See?

March 24, 2009

For those of you who are still getting snow and winter, I hope this blog gives you a ray of hope. I recently got an email from a friend which said, “Due to the economy, we have had to make certain cutbacks, including turning off the light at the end of the tunnel!” I think the light has been relit!

With the coming of Spring we are finally seeing our fair share of customers. It has taken longer than usual, but at least the floodgates seem to have cracked a bit. Perhaps the fact that the beginning of Spring coincided with a week of “up” days on the stock market was the determining factor. Or maybe, our customers are getting “Cabin Fever” and have decided to do something good for themselves after doing without for so many months. I don’t know, but I am not complaining.

It is interesting, though, that most of our business is skewed towards custom orders. Several other retailers have told me they are seeing the same phenomenon. Instead of buying what we have in stock, this month’s customers prefer to order exactly what they want and wait.  We are used to handling custom orders; about half of our yearly business comes from special orders. But, I don’t remember us having so many custom orders this early in the year.

Many of our vendors, Gloster, Brown Jordan, and Cast Classics, to mention a few, are running promotions right now. Usually, the programs include discounts we can apply to orders for customers or for our merchandise for our stock. Some vendors allow us to use the additional discount as a spiff if we want. In those cases, we have elected to pass the savings on to our customers, instead. No use in giving a sales person a spiff on furniture that isn’t selling.

The change in our advertising seems to be working. We are in the midst of discontinuing institutional advertising and relying more on event advertising. We were contractually required to run some institutional ads in March and April, but after that, everything will be event oriented. We have also started to advertise on television at the beginning of the week in addition to our traditional end of week schedule. This has added more business to the beginning of the week

Since the middle of March, our ads have been about the Brown Jordan Factory Authorized sale. It has brought in a lot of people. We know this not because we do any sophisticated surveys. Instead, customers are mentioning the promotion when they come in or call us. I would like to think such a big sale on a well-known brand like Brown Jordan is what is drawing people in. But, I think it is just the fact that we are offering almost 40% off is attracting clients.

We have started the process of cutting back on our Yellow Pages advertising. I have been thinking about doing this for about two years. I can’t remember the last time I used the Yellow Pages; what about you? When I need a phone number, I use the map function on my iPhone; it is better than any Yellow Pages. If I don’t use that, I do a Google search. Since our Yellow Pages contract run for a year, I won’t know how this affects us until the next book comes out in about two months.

My Yellow Pages representative wasn’t surprised about my decision. Apparently, we were not the first, and I am sure we won’t be her last, customer to do this. She tried to sell me another product that is supposed to make my web site come out closer to the top in a Google Search. My web goddess already knows how to do this. Actually, I think anyone with a basic understanding of the Internet can do this for far less than the phone company wanted to charge me.

As I said in a previous blog, we have also changed our philosophy about going out to a customer’s home to help them design their outdoor space. In the past, I felt we would get too many Looky Lous and it would stretch my limited staff too much. It turns out, with a little bit of prequalification, we can prevent this from happening. We won’t go out to a customer who isn’t willing to visit us first. When customers spend the time to come in, we feel they are serious prospects. They also get to sit in furniture to be sure it is comfortable let us get a feel for their design aesthetic. Our close rate has been over 90%.  I think our tickets have been higher on these sales, too.

At the beginning of the year, I started taking action to reduce our overhead. Unfortunately, I had to reduce some of my staff to have any significant impact. This means extra work for all of us. As of now, that extra work hasn’t become burdensome. The worst impact has been on our warehouse and delivery system. If we need two men on a truck, we have to send one of our warehouse specialists with the driver. This leaves us shorthanded when we have to receive merchandise or prep it for delivery. On days when we know we are going to busy and shorthanded, we hire day laborers. That is still less expensive than keeping someone on staff. My hope is we will get so busy that we will have to refill some, if not all, of these positions.

I am more optimistic about the economy than I have been in months. In addition to the up tick in business, I am hearing/reading/seeing more positive things about the economy in the media. I think we can all agree positive news promotes positive attitudes in our customers. It will not be a great year by anyone’s standards; but, I don’t think it will be as big a bust as I previously thought. Hs the light be relit for you?

Yours in confused retailing, Bruce