Collaboration, social media, flash sales change retail
December 14, 2011,
NAPLES, Fla. - In 2009, the economic climate wasn't working in favor of Gardner-White and the Detroit metro area.
Two of the big three automakers in town were talking possible bankruptcy. Gardner-White's main goal was getting listed in the 2010 telephone directory, Vice President Barb Tronstein told attendees of Furniture/Today's Leadership Conference.
The retailer went so far as to budget for a 10% sales decrease.
"Fortunately that never happened," said Tronstein, speaking on a retail panel about Changing the Game via Collaboration and Social Networking. She was joined on stage by Best Buy's Ezi Irizarry, who oversees a program to work with furniture retailers; Amber Langston, marketing director for retailer I.O Metro; and Jason Goldberger, general manager of Gilt Home, part of flash sale e-commerce retailer Gilt Groupe.
For Gardner-White, the collaboration came in the form of a partnership with electronics powerhouse Best Buy.
"Working with Best Buy has really changed our whole business."
Barb Tronstein, Gardner-White, Detroit
At the time, furniture source Ashley had signed a marketing deal with Best Buy that allowed one furniture retailer per market area to sell Best Buy products. Tronstein's company jumped at the chance, and in June 2009 it ran its first promotion - buy the furniture, get a free HDTV. The formula was simple at the time; the more money a customer spent on furniture, the larger the TV the customer got.
"Working with Best Buy has really changed our whole business," Tronstein said.
Instead of the 10% sales decrease Gardner-White was bracing for in 2009, the seven-store Warren, Mich.,-based retailer posted an 8.5% gain in furniture, bedding and accessories sales in 2009 and a 15.6% same-store gain in 2010, according to estimates in Furniture/Today's Top 100 reports.
Tronstein said Gardner-White might be able to buy the television for less money on its own than via Best Buy, but for a few extra bucks, Gardner-White gets to advertise the Best Buy name and gets Best Buy's electronics expertise and resources.
"When you walk into one of our stores, you see the Best Buy logo all over the place," she said, noting that this gives Gardner-White added credibility in an exciting category.
Best Buy ... is interested in establishing similar relationships with furniture retailers in other markets.
The relationship between the two companies continues to evolve. Gardner-White now integrates the brand-name televisions in more than 100 room packages, and with Best Buy's help, has added a wall of TVs to its stores that shows how consumers could upgrade for a little more money.
Best Buy's Irizarry said his company also has started selling the popular tablet computers via furniture stores, and is working to build a relationship with the furniture industry in other ways, including through a friends and family discount promotion for Best Buy employees that can drive traffic into furniture stores.
He added that 76% of the consumers getting TVs through Gardner-White are not typical Best Buy customers, which helps explain why the electronics company is interested in this type of collaboration.
Best Buy already is going strong with Ashley dealers and is interested in establishing similar relationships with furniture retailers in other markets, he said.
Amber Langston of Lowell, Ark.-based I.O. Metro discussed changing the game with social media. She offered conference attendees advice on what it takes to make a meaningful connection with consumers on Facebook and other channels.
Social media marketing is "very much a conversation with
She said there's always a place for social media, no matter the business model, but retailers need to decide which channels make the most sense from the hundreds of options out there, including Facebook, YouTube, LinkedIn, Digg and others. Langston suggested focusing on one to three channels for starters.
Retailers also need to be fully committed, fully invested and realistic about what kind of results to expect, she said, adding that measuring the sales effectiveness of this type of marketing is difficult.
"It's like a marathon" she said. "You have to keep at it ... keep making customer contacts."
Langston characterized social media marketing as "very much a conversation with consumers." I.O. Metro, for instance, wants to be talked about as "all things design-oriented," so it has built its social media content around this theme.
The company touted a "Complete My Design Contest" and a "Strike a Pose" game, in which consumers were invited to upload photos of themselves with their favorite pieces of I.O Metro furniture for a 10% discount off the pieces.
More recently it held a "Calling All Local Artists" contest, which drew more than 2,000 entries. Artists were encouraged to post photos of their work on the retailer's Facebook page. The retailer's product development team selected 25 winning pieces, which are being mass produced and sold in all stores with a percentage of the sales going to the artists.
"Companies that use these platforms solely to push out sales and promotions will not do well," Langston warned. She said the whole idea behind this revolutionary new marketing strategy is to engage the customer, not necessarily sell her on the spot.
Discussing the fast-growing and increasingly crowded field of flash sales, Gilt Home's Goldberger cited the early success of parent Gilt Groupe, which launched less than four years ago and is on track to do $500 million in sales this year with more than 5 million member subscribers.
Seventy percent of the company's shoppers are female and their average age is 38, he said. Members' average household income tops $100,000, and they come to Gilt for high-end, brand name products, including apparel, gifts, gourmet foods, even an Evoque Range Rover automobile. Gilt has since sold an airplane experience for $60,000.
Gilt members shop limited-time flash sales and also can shop an assortment of core merchandise that's available for longer periods of time.
In home furnishings, Gilt Home is selling more upholstery than case goods. And while brand names are not quite as dominant as in other merchandise categories, Gilt is selling from sources such as Century, Baker, Calligaris and Brown Jordan in furniture and Safavieh in rugs.
Goldberger said he's often asked if people really buy sofas online and his answer is "absolutely." Gilt Home sells sofas every day, he said, many for more than $4,000.
The consumer "brings the same expectations to furniture (shopping) that she brings to other categories."
A home customer, he said, has been shopping online for the past 10 years or so; it's now "part of her normal shopping pattern.
"She brings the same expectations to furniture that she brings to other categories," he said. That includes great imagery, an expansive selection, accurate product dimensions, helpful content and ease of shopping.
And the home category is only going to get bigger for Gilt, he said, adding that the retailer wants to expand further into bedding, lighting, framed art and housewares.
Asked later how Gilt Home handles what could be expensive returns, Goldberger essentially said it doesn't, noting that most items on the site are non-returnable.