Events, giveaways spur Labor Day sales
Needed break from poor summer sales
Clint Engel -- Furniture Today, October 4, 2010
Chicagoland’s The RoomPlace advertised heavily and used $1,000 cash back or a free 60-inch HDTV to draw traffic and boost the average ticket and gross margins during the long holiday weekend.
HIGH POINT - Furniture retailers across the country reported solid Labor Day sales events over the holiday weekend, with some saying the season's last hurrah was a much needed break from mediocre to lousy summer business.
Television giveaways, coupon savings and extended-term finance offers were among the popular draws as retailers pried open purse strings again and made the most of consumers who are more than ever event- and holiday-driven. A few, but not all, also noted a continuing trend of consumers scaling back in the size of their purchases and the price they're willing to pay for items.
"We had a heavy media presence and I couldn't be more pleased (with the results)," said Steve Giordano, CEO of Lombard, Ill.-based The Room- Place. He wouldn't disclose sales or comparisons, but said, "Traffic was up, average ticket was up. We exceeded our goals."
RoomPlace's big draw was "Everything on Sale," along with $1,000 cash back or a free 60-inch HDTV with an order of $10,000 or more. Normally, the Top 100 company offers free TVs across a broad ticket spectrum. This time, the marketing emphasis was on a larger TV and a larger ticket.
"We didn't expect to get it, and we didn't get it," Giordano said, but it served its purpose. "People came in because of this ad and I think that has lot to do with the reach and frequency we had. RoomPlace advertised heavily on television and saturated Chicagoland with 1.4 million inserts in the local newspapers.
"I think what this tells me is customers are waiting for holidays," he said. "July Fourth was strong. Then August (was slow). ... I'm convinced when we promote, we can get business. That's the biggest thing this shows me."
Simon Kaplan, president of Dayton, N.J.-based Crest Furniture, had a similar take, characterizing Labor Day weekend business as "pretty good," with sales slightly ahead of the same period last year. And like Giordano, he sees successful holiday events as key to getting by these days.
"You promote hard during the holiday and in between time you pray," Kaplan said.
Some retailers offer free delivery
Crest's Value City Furniture and Ashley Furniture Home- Stores offered free delivery and 48-month extended financing terms, which went over well.
"People have changed and are more receptive to financial hooks than they were before," Kaplan said, adding that he's observed this change very recently. Credit approval issues aren't what they were at the height of the credit crunch, partly because "people with bad credit know it and are not coming in," he said.
The negative for retailers is, "it will be a little more costly to promote because these credit offers are not cheap today."
Mulberry, Fla.- based Badcock Home Furniture & more used direct mail and television spots to promote electronics, living room and dinette furniture over the long holiday.
"We do see people react to promotions," said Bill Pou, executive vice president of store operations. "We were pleased with our results. They were up over last year a good bit."
And like Kaplan, Pou said consumers are less reluctant to buy on credit than they have been. "Credit is what we are," he said. "It's good for us that we offer credit and control our own financing so we don't have to rely on anybody outside to make a decision."
Badcock, with 300 stores, has seen gradual increases during the past year, according to Pou. But whether Labor Day portends a continuance of rising sales, he isn't saying.
"As planned, we saw Labor Day as a highlight of the summer because the summer has been pretty (lousy after) the Fourth of July," said Eric Foucrier, president of the 10-store Garden Grove, Calif.-based Linder's Furniture. Like many retailers across the country, Linder's saw strong business in the first quarter fizzle out in the second.
For Labor Day, it offered white glove delivery and no sale tax with purchases of $999 or more, or customers could take advantage of one-year, no-interest financing instead of the tax break.
Overall the event was a bit of a "mixed bag," for Linder's, with some of its stores up and some down from last year, but that's due in part to tent sales held last year in conjunction with Labor Day at three stores, Foucrier said. That element was missing this year.
"For sure, seasonality is back into our business in a big way and customers are being a little more savvy about coming in and buying during these holiday events more than they have in the past," he said.
"They're shopping beforehand and waiting for the event to see what deals are going to be out there."
Consumers buying but trading down
Marquis Furniture, with seven stores around greater Oklahoma City, Okla., planned a warehouse sale as part of its holiday weekend promotion, and "I'd say we were up pretty substantially - more than 10%," said owner Gary Baugh.
He is among the retailers who say they've seen consumers trading down, buying more upholstery than bigger ticket bedrooms, for instance, and stepping down in the price they're willing to pay, too.
"I think that customer that bought from us three or four years ago and bought a $599, $699, $799 sofa - they're maybe looking for $499, $399 right now," he said. "Seems like we're writing a lot more tickets but our average ticket is smaller."
Retailers across the country, like Garden City Furniture in Garden City Beach, S.C., were reporting strong Labor Day holiday events drawing consumers in with everything from television giveaways to special financing to coupon savings.
Unlike many others, Baugh said he's seen business on the upswing for Marquis' fiscal year, which started in March.
Dianne Ray, president and owner of Garden City Furniture in Garden City Beach, S.C., typically closes her store on Labor Day but runs a holiday event before Labor Day that continued through this past Saturday.
"It has always been a sale that is drastic clearance to make room for all the new fall merchandise," Ray said. The store saw great traffic before Labor Day, and after a slow Wednesday, Ray was expecting a nice, Thursday, Friday and Saturday finish.
"Our consumer is still conservative in purchasing and taking longer to make a decision unless it is a timed purchase with limits on the sale," she said. And like Baugh, she indicated consumers are buying fewer pieces and trading down. Instead of buying a five-piece bedroom, for example, "now three will suffice with storage beds, and media dressers and chests."
Ray appeared more optimistic than most about future business, noting that the company is pushing forward with new Broyhill and Bassett Showcase galleries and expanding its accessories offering with a new Imax program and Surya rugs.
"Consumers still want a beautiful home," she said. "They may not purchase as much, but something like a new rug or new chair to complement their pieces gives them a sense of pride for their home."
For Charlie Malouf and Jonathan Ishee, owners of Charlotte, N.C.-based Broad River Furniture with 12 Ashley Furniture HomeStores in the Carolinas and Georgia, "Traffic was incredibly strong," during its four-day event, Malouf said. In fact, some of the stores were so busy at times they couldn't properly service all customers, he added.
Total sales reached past the $1.4 million mark for the event, or $250,000 more than the company was projecting, with stores in certain markets outpacing last year's results while others fell short.
Among other things, Broad River used television, radio and newspaper to promote and got an extra bump with door busters for its coinciding grand opening in Hickory, N.C. Last year's luxury beds on sale for $499 (compared to a $799 regular price) were a big hit so the retailer brought them back again. And TV giveaways "are still very strong for us," Malouf said.
Broad River's business to date this year fits a general pattern described by many retailers, in which sales were strong in the first quarter, weakened in the second, then picked up again with the Labor Day event.
Still some retailers have seen business trending up in recent months. Houston-based Star Furniture fits that bill, with CEO Bill Kimbrell, noting he now has "some guarded optimism that things are sort of picking up."
"But it's taking a lot of motivation to get the consumer interested," he added. Star faced some heavy rains on Labor Day Monday, and that slowed business a bit. But overall sales will wind up ahead for the weekend, Kimbrell said, noting that the company - part of Berkshire Hathaway's furniture division - pushed special values, guaranteed low prices, discount coupons and extended financing terms.
David Burke, an owner of Burke Furniture in Lexington, Ky., is another seeing positive momentum these days.
"We had a phenomenal Labor Day Friday, Saturday and Sunday," he said. "On Monday we were only open (noon) to 5 p.m. and we had the biggest single day on a holiday we've ever had. That was the beauty of Monday."
The best part is the 50,000- square-foot store was selling everything, including big-ticket case goods, a segment that was missing for the past few years, but has been coming back all summer long.
Business so far this year, is up double digits, he said, adding, "We've had a good summer. We've been really blessed."
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