Klaussner gallery boosts sales
Clint Engel -- Furniture Today, June 25, 2012
EVANSVILLE, Ind. - King's Great Buys Plus has added an approximately 4,500-squarefoot Klaussner Solutions Studio to its store here, part of its effort build a bigger furniture and bedding business in the wake of declining margins and shrinking tickets in electronics and appliances.
If the test is successful - and it's off to a great start - King's owner Terry Oates said the program could expand to his other stores as well as the 61-store Great Buys Plusnetwork, in which Oates is a part-owner.
What's more, the program goes hand-in-hand with the efforts of buying group Nationwide Marketing Group (King's is a member) to encourage electronics and appliance-heavy members to go deeper into the home furnishings business.
King's only recently completed merchandising the space in its largest store and even before the mid-June grand opening, the consumer reaction was stellar, Oates said. He said the store's furniture business jumped about 25% without any promoting.
Upholstery is the focus of the studio with an emphasis on sofa-sleepers. Oates said the move was a natural progression for the retailer, which recently put renewed emphasis on its bedding department and watched that business take off over the past 12 months. The store now carries bedding from Tempur-Pedic and Serta, including the latter's "wildly successful" iComfort gel memory foam line, Oates said.
King's wasn't doing a great job with sofa-sleepers previously, but since opening the Klaussner studio, "hardly a day goes by that we don't sell at least one," he said. "That was like found business for us."
Oates said independent and regional electronics and appliance-dominant retailers, such as King's, see furniture and bedding as a way to augment the deteriorating margins they face in their primary categories, especially electronics. Gross margin opportunity is declining "on a daily basis," he said, to the point that TVs and other electronics are practically commodities.
In addition, as the big-box televisions of a few years ago have been replaced by thin screens, floor space has been freed up for other goods, such as furniture.
"The impact furniture and bedding can have on an appliance and electronics dealer's bottom line is nothing short of dramatic," Oates said.
If the test at the 36,000-square-foot Evansville store goes as well as he expects, the company will roll out the studios to his store in Owensboro, Ky., and other King's stores in Madisonville and Princeton, Ky., and Lawrenceville and Harrisburg, Ill.
Furniture and bedding historically have accounted for less than 10% of King's total business, Oates said, adding that he'd like it to hit 20% to 25% in 12 to 18 months and "ultimately be 40% or more."
Some of the stores in the Great Buys network are traditional furniture stores with a wide assortment of home furnishings already in their lineup, but Oates said most of the dealers don't have a relationship with Klaussner yet. And since Oates is involved in merchandising for the network, he will aim to change that.
"As I look around now, there are only a couple of vendors out there that can do for the electronics and appliance channel what (Klaussner) can - that is, be pretty much a one-stop shop for a breadth of product and popular price points," he said. Klaussner's made-in-America story is another plus, he added.
Klaussner executives see a lot of opportunity in King's and stores like it. While furniture and electronics dealers aren't exactly uncharted territory for the supplier, "we're not near any point of saturation" with the distribution channel, said Klaussner President and CEO Bill Wittenberg.
One of the constant struggles in the furniture industry is keeping good, well-trained salespeople on the floor delivering the right message, he said, adding that the problem can be magnified in appliance and electronics stores where the furniture category is foreign.
But Wittenberg said Klaussner "went about simplifying the whole process," developing the Studio Solutions program with its designated signage, point-of-purchase materials, and a MicroD-enhanced computerized solutions center that simplifies the selling process. The area also plays up Klaussner's strength in the broad middle price points with custom-order upholstery capabilities and 21-day delivery.
The program gives retailers the ability to choose from multiple retail price configurations, including a one-price model, upcharging for special orders and a tiered pricing format.
The first studio opened about a year ago and Klaussner now has about 60, Wittenberg said. They start at about 2,500 square feet and can go up to more than 10,000 square feet for retailers wanting to display the full line.
Wittenberg said he'd like to have about 100 studios open by the end of the year. He said it's too early to say how many of the thousands of appliance and electronics stores in the nation could wind up with a Solutions Studio, but the niche "has the potential to be very big.
"We're just now rolling it out, and targeting King's was not by accident," Wittenberg said. "He gets it and he sees what it's capable of doing."
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