Crunch Time

Exploring a New Distribution Network

April 15, 2013

In response to one of my blog posts back in September, a ‘Disgusted Industry Veteran' commented that, "The distribution network of the 20th century is dead." He or she is right — the fact is, retail stores are not seeing the traffic they did in years' past.

The customer is starting shopping experience from the comfort of her sofa or kitchen table. She doesn't have to hunt down the closest retail store for a spark of decorating creativity — it's at her fingertips. More and more consumers have never or rarely set foot in an actual furniture store, and the younger they are, the higher the odds that physical stores are never a part of their furniture shopping process. Retailers have been at a loss for how they fit into the online marketplace, and many will agree with that Disgusted Industry Veteran's sentiment regarding our current distribution networks.

But is there a way we can remodel and revive our industry's model of distribution?

One concept toward a renovated distribution network is the digital boutique. Retailers in general have predicted that their customers will want more of a showroom approach to brick-and-mortar stores, where they can browse and get inspiration in a showroom but then buy products online.

Digital boutiques offer an online convergence where manufacturers, retailers, and designers can all come together to bring the best experience to the customer, and benefits to their businesses. First, let me explain what a digital boutique looks like:

A consumer has spent hours online to plan and think about redecorating her living space. She ‘pinned' some inspirational photos on Pinterest, with some items that she considers buying but isn't confident they will compliment each other or her room. So, she finds a store less than a mile away that advertises its free in-store designing service.

When she arrives, the designer looks at the customer's Pinterest board on an iPad, confirms that yes, the sofa she chose works perfectly with that rug, and this lamp will also perk up the space for the look she wants. The designer sits the customer down in front of a large screen that is connected to a central repository where manufacturers have listed all of their available products (including images, descriptions, specs, etc.). The customer can then scroll through items with the designer beside her, offering affirmation and guidance, compare them with the look she wants for her living room, check out important product information, read reviews, and order the item.

With this scenario, the customer benefits from an informed shopping experience that is rife with confidence and affirmation, while also being suited to her needs and method of shopping. Of course, the manufacturer and retailer benefit by gaining a sale from a customer who nowadays would just visit a website to buy her products.

What is needed to make digital boutiques a reality?

Vignettes and expensive arrangements on vast showroom floors equate to a waste of space and resources in today's changing home décor marketplace — especially if customers aren't even visiting them. Here is one retailer's hypothesis for a successful transition to the new distribution model of a digital boutique:
• Transition from stores of 100K square feet to smaller spaces of 7K to 12K square feet.
• Instead of using floor models and showroom inventory, turn to software and technology for the display and inventory of their products, while keeping sample books for customers to experience fabrics and materials.
• Leverage digital technology and software by encouraging their manufacturers to digitize their inventory on a single online platform.

It's necessary for manufacturers to get on board for the success of the digital boutiques. This model offers them many opportunities to cut costs, but they must:
• Move away from the catalogs and embrace digital imagery for their products (thus eliminating the cost of printing catalogs - and it's more eco-friendly!)
• Recognize the necessity for the application of software and digital compatibility with their products and distribution methods.
• Transition to a central repository for storing and showcasing their inventory, one that their retailers can access through kiosks in their stores, to which the manufacturers and easily and inexpensively update with new or discontinued products.

With a digital boutique as the complimentary model for the brick-and-mortar side of home décor retailing, retailers can offer a seamless, fully integrated experience that is ingrained in the online marketplace. Not only that, but the digital boutique expands the store's ability to become the one-stop shopping experience, offering the customer beyond just furniture; everything from paint color, to flooring, to fabric selections, to accessories and lighting.

Regardless of how you decide to reach your customers, the old distribution networks have become less effective because your customers have evaporated to the Internet. It's time for a major overhaul for the survival of retail within our industry, and I think digital boutiques are the way things are going for the future.