New Dogs and Old Tricks

In my last post I spoke to the point that, especially at the upper end of the furniture-retailing spectrum, consumers are buying furniture that is “Good Enough”; that many customers are still buying, they are just buying products that are less expensive but still meet their needs. The retail buyer who might have spent $3,000 four years ago for a sofa, today may spend $1,600 because it is ‘good enough’, still not a cheap sofa.This got me thinking about retailers competing at this price level. Do they have plenty of ‘good enough’ merchandise to offer? Which begged the question in my mind, ‘Have their buyers been trained in and do they employ strategies that most of us learned when we were coming up in the industry, to offer the same quality at lower prices?’. When business is good, merchants especially at higher price points tend to make their selections based primarily on appeal with less regard to price point. I know that price points are very much in the merchant’s mind at all times, but today it is more critical than ever. When sales are off and retail customers are more conscious of the prices they are willing to pay, merchants may need to work within that framework.

Let’s take that $1,600 sofa, for example. If a retailer wishes to buy from the same resource, there are four ways to go about reducing costs in order to arrive at a lower price sofa. Each may seem self evident; but have new buyers been exposed to them as tactics to reach a selling price?

1. Negotiate, negotiate, negotiate. This is of course the most obvious and most buyers, new or old, understand that the cost offered by the vendor is not necessarily the cost they are willing to accept. This is an entire science unto itself. The difference here is that it may be crucial to success.

2. Frame selection. When a buyer goes to market and sees a stunning sofa that is perfect for the retailer’s customer base, they are often reacting to how the sofa is dressed rather than the frame style itself. Generally speaking, an outstanding fabric combination will be highly saleable on any number of frame styles in the vendor’s line. (The reverse is not necessarily true; an unappealing fabric combination will generally not be a big seller no matter what frame it is used on). This is the second way a merchant can affect price without lessening quality: use a lower price frame style with an elegant fabric combination.

3. Fabric selection. Often, mills will offer fabrics in lower grades that look to a consumer to be very lush and expensive. The reality is, the retail customer has no idea what a fabric costs. An excellent merchant may use this fact to great advantage. By dressing a more expensive frame in a lesser grade fabric (possibly using more expensive fabrics for accent pillows, etc.) cost is lowered, quality is preserved.

4. Bells and Whistles. The final strategy is to add lots of accents (value added) to a lower priced frame and fabric combination. Pillows, bolsters, trims, weltings, interest tailoring, etc.) can all make a sofa appear more expensive than it really is.

I certainly do not wish to offend merchants that have been in the industry for many years by seeming to talk down to them or appear too basic. Nor do I want to offend buyers that are relatively new to the industry, that have already figured out or been taught these tactics. But I do believe that, today more than ever, these old tricks have become ever more important to the success of retailers in this difficult time.