Despite the fact that we have the best economy in recent years, we are seeing some furniture retail sales numbers falling down to pre-2016 lows. How can this be? Well, with a more stable economy, the customer can control how she spends her money, and who she spends it with. So if we as retailers aren’t doing everything we can to acquire new customers, they aren’t going to search us out on their own. Read more to identify ways you can convert new customers and increase sales in today’s great economy.
Despite the fact that we have the best economy in recent years, we are seeing some sales numbers falling down to pre-2016 lows. How can this be? Well, with a more stable economy, the customer can control how she spends her money, and who she spends it with. So if we as retailers aren’t doing everything we can to acquire new customers, they aren’t going to search us out on their own. Read more to identify ways you can convert new customers and increase sales in today’s great economy.
I have lived in the furniture industry my whole life, but my true entry into world of the small business furniture retailer began in June of 2008. I can hear the collective, “That’s one hell of a time to head into furniture,” from all who are reading this article. This is absolutely true. During this time period I have experienced the following:
- The rise of the long-term financing being the primary promotional driver for all home furnishings retail.
- Increased regulation of long-term financing and the efforts the lenders (that the retail sector pays) making it harder to say something is interest free.
- The explosion of e-commerce giants like Wayfair, Amazon, Overstock and numerous others.
- The trend of Ashley, Bassett, Serta, Tempur-Pedic and other manufacturers deciding the only way they can increase sales is to both increase their distribution in retail (undercutting) all while selling direct to the consumer (even more undercutting).
- Seeing the number of independent furniture retail owners decrease while capital investment firms gobble up regional brands to try to get their fair share of this multi-billion dollar industry.
- The belief that social media is simultaneously the greatest and worst thing to happen to brick and mortar retailers.
During the post-recession time we also saw some success among key players in the industry. That’s because as bad as it was for us, the consumer had it even worse. For example:
- Jobs were not stable.
- Taxes were high.
- The number of foreclosures relative to new mortgages were at a staggering difference (and not in the good way).
- Children who were not supposed to be dependent on Mom & Dad’s income were taking even more than they did when they were pre-teens.
- The incoming crop of young people (as a “millennial” I prefer to not stereotype myself into an older generation’s definition of my age) are incurring more debt in their twenties than the previous three generations combined.
So how do all of these factors result in the mini furniture boom of 2012-2016?
Well, because the customer was living in a period of volatility and unpredictability, she didn’t know what to expect from the market. And with the memory of having little-to-no disposable income fresh on her mind, any extra cash she now had was spend on important things that she used a lot in her daily life. Things like:
- Mattresses (gosh, don’t we miss that 4-year period)
But because the recession was still a lingering factor, Ms. Jones’s primary concern when making a purchase was cost. She simply went with the lowest bidder. So as marketers and advertisers we screamed “lowest price”. We shouted our long-term financing promotions. We didn’t care about who we were bringing in. We were just hoping to get anyone to come in.
And as the economy continued to stabilize, the consumer began to feel more comfortable with her disposable income. She began to make buying decisions based on factors other than price and availability. This is why companies like Macy’s, Toys R Us, JCPenny and Sears are now on life support. Ms. Jones wasn’t settling for any object from any brand, she wanted the next best thing. She wanted to feel connected to the brand and the lifestyle that it promoted.
This is why we saw the explosion of lifestyle brands in the mattress category with hybrids, cooling gel, bed in a box, specialty memory foam, and more. And traditional brands invested heavily into lifestyle stars like Rachel Ray, Paula Deen, Kathy Ireland, Cindy Crawford, and Donny Osmand. Even though dollars were still tight in the industry, those collaborations had to happen because our customers didn’t just want anything, they wanted the thing. Combining lifestyle products with an impactful offer is how we drove conversions in our customer base.
But all of this brings us to the question, why are sales so bad now?
Unemployment is at pre-recession levels. The markets are at levels relative to gross domestic product that no economy has ever seen. Corporate America just inherited a 14% reduction in taxes and, as to not lose employee morale, passed a percentage (if that) onto their employee base.
The result is that customers have more confidence in the dollars they can earn. Which means that Ms. Jones has more money than she has had in a long time, and she can choose when, where and how she spends it.
Publicly shouting our very best offer doesn’t help dictate Ms. Jones’s decision one way or another. Sending out 10,000 direct mails for one weekend promotion doesn’t lead to a huge increase in sales. Making your website work just like your brick and mortar store doesn’t solve the problem. Posting on Facebook 5 times per week doesn’t make her more eager to come in.
What will get her to come to your store? Here are 4 objectives you must meet to make your register ring like it was 2016:
- As marketers, we first need to decide who we want to come in and how much we want her to spend. Identifying our target customer and what dollar amount, on average, she will spend helps us identify what vehicles we do (and do not) market on.
- The consumer is being more deliberate with her time spent in brick and mortar stores. Capturing data and leads from the people who walk through our doors is of the upmost importance. Creating a system to generate contact info and then attributing that contact info into dollars earned (or lost) will help you convert more of your sales.
- Find out when Ms. Jones is in consideration mode for the products we sell. If we wait to speak to her when she is ready to make her final decision, it becomes a dog-eat-dog world for retailers. Identifying when she mightbe looking for a new recliner or a new mattress and marketing to that consideration can only help convert more sales.
- Get in touch with your sales and delivery staff to hear what Ms. Jones is asking and craving for on a daily basis. In an increasingly complex ecosystem of marketing methods, we sometimes forget that our most powerful marketing weapons are the people selling and servicing the customer. Have we identified what they need from the marketing to help do their job better?
Right now, our number one job as advertisers in a great consumer economy is to learn how to speak differently to Ms. Jones. We need to set the stage so that when she is ready to buy, she chooses your store. Follow the four steps outlined above and you will be able to focus on the things that are important to your customers. That’s how you can increase sales and build long-term profit for your small business.
Kyle Doran has been President and CEO of R&A Marketing since August of 2009. He has spoken at both High Point and Las Vegas market, given breakout presentations at numerous industry conferences and was the keynote speaker in 2010 at the Unfinished Wood Association’s annual conference.