Retail Ideas: Focus on sourcing, branding
By Clint Engel -- Furniture Today, March 27, 2005
Springfield, Va. — Smaller retailers can — and should — get into the global sourcing game, says Keith Koenig.
That was one of many insights that Koenig, president of Fort Lauderdale, Fla.-based retailer City Furniture, offered at Reed Business Information's inaugural Retail Ideas workshops here last week.
The three-day program — the first of seven regional Retail Ideas events planned through November — drew about 35 retailers and featured two workshops that emphasized driving profits and building powerful retail brands. Reed Business is Furniture/Today's parent company.
Koenig, a featured speaker, said that to appeal to today's value-driven shopper, retailers must have a global sourcing strategy. While that has been a challenge for smaller stores that can't efficiently buy containers full of furniture, he said market shifts are making it easier.
For starters, many vendors now offer mixed container programs, helping retailers who may have thought they were too small to import. In addition, more importers and Chinese factories are stocking goods in new Chinese warehouses and shipping within two weeks.
That can cut lead times on orders to about six weeks from 20 weeks or so.
What's more, Koenig said that for the first time many — but not all — Chinese factories have more production capacity than they have orders.
"You're more in the driver's seat than you've ever been" in negotiating price, terms and warehousing, said the leader of the 15-store Top 100 company. "Everyone is going to be competing for your business in China."
Retail Ideas Director Loreen Epp hosted the Virginia event. Topics included how to gain a competitive edge through strong merchandising, how to build profits, and how to understand the changing consumer, who she is and why she buys.
Epp said the traditional ways of marketing to the consumer by demographic and life stages profiles are starting to come apart for several reasons, including the aging baby boomers' refusal to just grow old.
Today, consumers need to be segmented into categories more personalized than age-based. Examples are the young (or young-acting) do-it-yourselfer, who is an energetic and imaginative home improvement hobbyist; dual-income shoppers, who are time-pressed and looking for shortcuts; and bargain hunters, who constantly are digging for deals online or at discount retailers.
In a talk called "Your People are the Brand," consultant and training specialist Anne Allred said shoppers are more savvy and self-confident, which makes it more important for a retailer to have well-trained, on-message employees. Shoppers today are less loyal, more cynical and more demanding, she said.
Allred said that when she began selling in the 1980s, many how-to books told the "tricks" salespeople can use to overcome consumer objections. Those don't work any more, she said.
"If the experience doesn't align with their expectations, the best salesperson cannot bridge that gap," she said.
The good news for small retailers, she said, is that the playing field has been leveled. The store with the biggest ad budget isn't always the undisputed winner now because smaller retailers have more brand-building tools at their disposal, including Internet marketing and the same ability as large companies to build their brand through their employees.
Many presentations at the three-day Retail Ideas event were focused on the importance of measuring performance, then coaxing improvement — from nudging up gross margin, to selecting and monitoring top-selling SKUs and styles, to targeting clean deliveries that stay put in consumers' homes.
Koenig said the when City Furniture changed its compensation for delivery teams — adjusting pay up and down based on first-time delivery rates — its returns and other muffed deliveries dropped dramatically.
Today, 83% to 85% of the retailer's deliveries stick, he said. Before the change, it was 67%.
City's offer of same-day delivery seven days a week on purchases made by 3 p.m. also has been a winner, he said, with about 50% of its customers taking up the offer.
"It's very powerful, because you can take them out of the market today," Koenig said.
Still, there are challenges with scheduling and labor management, he said. And although customers are warned it is a possibility, they still can get ticked off on the rare occasion when a delivery arrives after midnight.
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Retail Ideas: Focus on sourcing, branding
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