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Chris Schultz

Dueling Retailers

For furniture retailing ‘newbie’s’. Furniture retailers compete in a fierce and contentious battleground, which becomes more so every year. 

Individuals new to the industry should recognize the competitive nature of our business and a bit about the psychology and strategies inherent in it. Some of the most effective competitors in the retail furniture industry share some common traits, common qualities that cannot be accidental. They are:

• Excellent Merchandise Selection and Value
• Lasting Competitive Edge
• An Innovative Approach
• An Established Company Brand
• A Corporate Culture, which prizes the company’s leadership position

Excellent Merchandise Selection and Value

Selection and value are at the forefront of any furniture retailer’s ability to compete effectively. The customer wants choices when shopping for furniture. More importantly, the customer demands value. Henry Ford once said, “Make the best quality of goods possible at the lowest cost possible.” This tenet is as applicable today as it was then. Regardless of the price level, consumers want to know that they at least received their money’s worth, indeed, that they were not cheated.

Lasting Competitive Edge

The most effective competitors in the industry all possess one or more advantages over their competitors that have endured over time and that competitors have not replicated as well. These may be referred to as a retailer’s Core Competencies and results in an edge over their competition. A core competency is some ability or resource that the retailer has that is of high value to the consumer, not possessed by most other retailers in the same market. The competency may be direct such as the ability to deliver merchandise quickly or indirect such as a having a highly advanced inventory system which keeps the merchandise in stock better. Core competencies help to define a retailer and normally evolve over some time. For core competencies to be exploited as a competitive edge for the retailer then, four conditions must be present.

1. The core competency must offer some value to the consumer.
2. The core competency must not have been replicated by a competitor as effectively
3. The core competency must not be able to be substituted by some other competency serving the same purpose.
4. The core competency must be sustainable over the long haul.

An Innovative Approach

The most effective competitors tend to be innovators. Innovation sets a competitor apart from the rest and helps to establish the retailer’s identity as the leader. Innovations may not necessarily be new to the world; indeed, they need be new only to the local market in which the retailer operates.

An Established Company Brand

Effective competitive retailers tend to pay clear attention to establishing itself as a brand within the market place. Some retailers over the years have spent most of their advertising efforts in establishing and reinforcing the brand names of the products that they sell. Promotional efforts tended to be geared toward advertising particular branded furniture along with the promise of the lowest prices available from the retailer that was promoting the sales event.

Today, many of the most competitive retailers in the country seem to have come to the realization that promoting their own company as the brand that should be foremost in the minds of consumers within the market is a far more competitive tactic. By establishing the retailer’s brand (not necessarily to the exclusion of manufacturers’ brands) the following benefits to the retailer result:

1. It helps to establish the identity of the retailer in the consumer’s mind.
2. It establishes the notion that this store is the place to buy furniture in town
3. It reinforces the belief that it does not matter which brand of merchandise the consumer buys as long as they buy from XYZ Furniture
4. It more effectively opens the door toward privately labeled merchandise because the credibility and image of quality is pre-established by the retailer’s brand.

With so much furniture product being imported from other countries, retail branding in some markets has emerged as more critical than manufacturer branding that has little or no consumer brand recognition.

A Corporate Culture, which prizes the company’s leadership position

Within most effective leading furniture retail companies there tends to exist a corporate culture, which highly values the notion that the company is the leader in the market and will tenaciously defend its position. Beginning with the top echelon of the company and flowing down through the ranks, many of these companies are effective competitors because their employees believe in the company and prize its status as the leader in the market. The corporate culture dictates it. It should be noted that this attitude could also prove to be a negative when competitive tactics become questionable as to ethics.

To read much more about competition in the retail furniture industry, read my book, “Furniture Industry 101: The Strategic Concepts” available on the Furniture/Today website.

Henry Ford said, “Competition is the keen cutting edge of business, always shaving away at costs.” Victor Kiam, chairman of Remington Products, makers of Remington Electric Razors took it a bit further and believed that “In business, the competition will bite you if you keep running, if you stand still, they will swallow you.”

Note that the “traits of effective retailers” is based on ideas expressed by Dr. Philip Kotler, Professor of International marketing, Kellogg School of Business, Northwestern University.