Independents seek ways to drive traffic
By Marc Barnes -- Furniture Today, June 25, 2007
High Point — Ask a medium-sized furniture retailer how business is in the industry right now and you'll hear some recurrent themes, whether the store is in Alabama or Oregon, Missouri or California.
There are challenges in each market area, whether it's slow sales, competition by larger and better-financed merchants, or customer concerns over high gas prices and increasing mortgage interest.
For Stuart Shevin, president of Standard Furniture in Birmingham, Ala., which has 13 locations across Alabama and one in Tennessee, the key is both simple and complex — and applies to Top 100 retailers as well as to single stores. The industry needs to find a way to get more customers to think about furniture.
"The last time this came about, it was about cocooning," said Shevin. "After 9/11, we had the idea, but as an industry, we didn't do anything with it."
Shevin said that at his stores, upholstery and occasional are going well, while case goods sales are lackluster. Ensuring product quality and finding qualified personnel are both challenges. To address these issues, Standard has made some changes in its inventory and is exploring changes in employee benefits.
Industry observers say a willingness to change will make the difference for medium-sized retailers hoping to survive and grow.
The Great American Home Store in Southhaven, Miss., for one, seems headed upward. Established in 2005, the store recently beat out 160 competitors across other business sectors to win the Small Business Award sponsored by the Memphis Business Journal.
Brad Becker, Great American's personnel manager, said that the business stacks up well against National Home Furnishings Assn. metrics. For example, it pulls in $400 per square foot in sales, compared to the industry average of $160, and $309,000 in sales per employee, compared to the industry average of $196,000.
"The company really operates on the premise that excellence in every particular aspect of our operation will yield success," said Becker. "If everybody does their job the way they have been trained, we can do as well as anyone, anywhere."
Becker attributes the store's success to four factors: its ability to respond to customer needs; being truthful; being involved in a myriad of charitable causes in the community; and hiring the right people.
At Hefner Furniture and Appliances in Poplar Bluff, Mo., owner Joseph "Slug" Hefner said that he can't complain but he can't brag, either.
"I have yet to find a rep or another business person who disagrees with that position," said Hefner. "It is not terrible, but it's not great, either."
Hefner said that to improve performance, he has installed a new computer system to keep up with accounting and inventory, made changes to the product mix, offered bonuses to his delivery crews and put more emphasis on training for sales associates.
And he also continues to do what he can to make shopping fun. Hefner has classic cars, a hot air balloon and mechanical shark in his showroom. Even Elvis has been sighted there.
"You have got to keep the right attitude," said Hefner. "Every day is a new day in paradise."
At Gates Home Furnishings in Grants Pass, Ore., owner Giff Gates said that the last two years have been slower than usual. And then last fall, somebody — or something — turned the faucet off.
"Things just completely stopped," said Gates. "I don't know if it was credit, or energy prices, or interest rates, or the war. I really can't put my finger on it."
In response, Gates upgraded his accessory selection, renovated his store and updated his Web site with new merchandise and targeted e-mails.
Gates also began leasing furniture to local developers who have vacant homes for sale, which sometimes leads to sales to new homeowners. A market study said a growing number of customers want a no-hassle return policy, so he started stressing that.
"We are trying multiple things to change this market but the sad point is that we don't see it turning around," said Gates. "If we are not getting growth, I don't think any people are. We are scratching our heads."
At Edelstein's Better Furniture in Brownsville, Texas, owner Ben Edelstein, 81, said that sales are up slightly from last year, but his biggest concern is growing competition from big-box stores and large regional retailers.
"When my dad started out, we were the only store here," said Edelstein. "When I was a kid, there were two. And now, there must be about 20 stores here."
Edelstein's has 14 stores in the Rio Grande Valley. Most sell a mix of furniture, appliances and televisions. Edelstein believes in promotions: Last year, on the store's 100th anniversary, Edelstein's gave away a $100,000 house and the furniture to furnish it.
"We are fighting the best we can, trying the best advertising we can do, trying to train our salespeople and improve our delivery," said Edelstein.
At Home Gallery Furniture Superstore in Victorville, Calif., owner Steve Moniz said that his main challenge has been to stay even or grow past last year's revenues, given a volatile marketplace.
On the good side, increases in real estate costs have driven potential homebuyers out to the suburbs, where his stores are. On the bad, higher gas prices have made the up to two-hour commute to Los Angeles more expensive — and the home mortgage mess has made credit harder to get for his customers.
To combat that, Moniz said that he is working on developing partnerships with builders, who can add in a furniture allotment as an incentive to sell homes without lowering prices. Other tactics include going into battle against bigger stores.
"We do what they cannot do," said Moniz. "We know what their weaknesses are and whatever they cannot offer, we have to offer. We make their life difficult by offering service or products that they can't say 'yes' to."
At Montana Furniture Galleries in Bozeman, owner Greg Metzger makes wood furniture that he sells in his own six stores as well as to other retailers in 22 states. There was a seventh store, but he decided to close it.
"We need to focus on places where it is easier to be successful," said Metzger. "Working hard is one thing, but pushing against a brick wall is another."
Perhaps in two years, that additional store would have been established enough to stand on its own, he added, "but we can't sustain two years of experimentation."
Metzger said that growth has slowed in his remaining stores over the past six months, but remains at about 5%. To hold onto the ground he has gained, Metzger is doing more weekend promotions and special sales and shifting the focus from image advertising to showing examples of what the store does for its customers.
"It is an exciting and challenging time," said Metzger. "It is different than it used to be, when you could work hard and good things would happen.
"I don't think it works that way (any more). You shouldn't expect good things. You have to make them."
