HIGH POINT— Forbes contributor Pam Danziger’s article on how independent home furnishings retailers are losing the battle to “the big and the virtual,” struck a nerve with many in the industry as did Home News Now’s response to it.
I’ll get to many of the comments that came via phone, email and social media shortly, but first, a quick summary (or you can read the full Forbes piece here and our take here). Danziger, a market researcher, speaker and author on affluent consumer behavior, laid out an argument perhaps best summed up by the headline of the Forbes piece: “Independent Home Furnishing Retailers are Losing. Only the Big and the Virtual Will Survive.”
She pulled together data suggesting, among other things, that furniture and home furnishings retailers weren’t really key participants in the business boom that was generated by consumers, who have been spending much more time in, and money on, their homes thanks to the pandemic.
I said in my response that the gist of the piece is flawed as are at least a couple of Danziger’s sources. The Forbes article suggests the home furnishings stores sector is losing to e-commerce players, general merchandisers and home improvement stores, though the biggest furniture retailers are in much better shape thanks to their strong brand identities and sophisticated online strategies. I know a lot of smaller independents and a few buying group leaders who don’t buy that argument for a second, and they said so.
And more are saying so now, after the HNN article ran, as are other industry leaders. No one argues with the notion that home furnishings retailers face incredible challenges these days; they just don’t agree that it’s all over for them, or that their biggest problems are necessarily those proclaimed in the story — that is, a failure to get with the times and meet the consumer in the digital space with a sophisticated online strategy. Many retailers are doing just that, regardless of their size or whether or not they feature augmented reality on their websites.
Here’s what some are saying:
Randy Coconis, owner of Coconis Furniture: I agree that retailers who do not make changes to compete will struggle to compete. However, those retailers that are and have made changes and improvements to their businesses are succeeding like never before!
“I think the comments from Jim (Ristow, AVB/BrandSource) and Andrew (Kauffman, Furniture First), were right on stating that by working together as a group, we learn more, share ideas, make changes plus buy better, and remain important to our customers and our vendors. Although the pandemic has been a terrible thing, it has also forced and allowed retailers to become stronger, better and be more successful and profitable than any other time in my 45 years in this business.
“We have been forced to embrace and make changes in how we do business. Some of these changes are things we have put off doing for years. It’s also forced us to dive into and embrace social media more and learn to do more and better online sales and communicating with customers through our websites.
“I thank FurnitureDealer.net for teaching, helping and pushing us to do this. Andy (Bernstein) and his team have been a great partner and have helped us tremendously.
“So … I would argue the pandemic has taught and helped us to survive and succeed and put us in a better position to continue to grow in the future. Plus, the Buy Local and Buy American push has never been more on the forefront of shoppers’ minds. We hear it every day. They actually thank us for being here.”
Mike Derro, vice president, furniture and bedding, for Nationwide Marketing Group: “I wholeheartedly disagree that the small, independent retailer cannot survive. During 2020, we saw that those retailers who were able to create a seamless transition from their digital platforms to the storefront — and provide the consumer with an excellent experience in both locations — excelled. In fact, retailers who utilized the NMG digital platforms saw, on average, a 25% lift in sales YOY, and we have seen this trend continue through the Q1 2021.
“During a recent gathering of our furniture and bedding retailers, over 20% said that Q1 was the strongest in sales in their companies’ histories, with March, specifically, being a very strong month. Retailers who can effectively reach consumers where they start their journey online, while creating a seamless transition to the storefront, are thriving.
“When the consumer does enter their store, they are much further along in their path to purchase than ever before due to the change in consumer behavior. In the past, a customer would start their journey in-store. Now, when they walk into the storefront, they are looking to confirm the decision they’ve already made online and are ready to purchase.”
Jeff Holmes, industry veteran and owner of an international business consulting firm: “Two things I have noticed in my 50 years in this industry:
“First, this is a fashion industry with a relatively low cost of entry for retail — especially a specialty store. I would rather be “fleet of foot” than some bloated, obese retail chain with no soul!
Second, the bigger they are the harder they fall and you have given several examples. I am sure there will be more to come. It is the law of natural physics — stars grow, balloon, and then collapse under their own weight. Thank you for shining the light on this subject!”
Casper Fopp, chief revenue officer, Wondersign: “I’d take the premise of the Forbes article with a grain of salt. Headlines are optimized for clicks. “Doom & gloom” messaging gets much more attention than balanced reporting. I think we all got a taste of that over the last year with a constant barrage of negativity and end-of-the-world reporting regardless of the underlying data.
“I think it’s important to differentiate between small independents (and their woes) and industry giants. The large stores and chains that went out of business all had one thing in common: They were massively over-leveraged by (private equity) firms. In the end, they simply drowned in debt.
“We have heard about the “Retail Apocalypse” for years now and it’s just not true. Most digitally native brands have opened brick-and-mortar stores. Opening stores has a positive impact on e-commerce sales in that area. So, to prevent extinction (to stay true to the clickbait approach), the online and offline experiences need to move closer together. Abandoning brick and mortar just to focus on a website is not a winning strategy.
Mike Herschel, executive director of Furniture Marketing Group, a buying group that includes many of the Top 100 companies in its membership, disagreed with the overarching theme of the Forbes pieces but not with many of the points Danziger raised:
“In my opinion, independent furniture retail is far from dead. That said, we agree with much of the cited Forbes article. (Note: Pam Danziger was a featured presenter at FMG’s 2018 Symposium.) This past year, the retail furniture business has been quite strong, and many of our members saw significant year-over-year growth. During Spring Training, our recent online conference, one of our speakers shared a quote about Covid having been an accelerant as opposed to a disruption to business. Whether that statement is true depends on how the retailer responded to the pandemic. The experience of our members over the past 12 months has borne out that those retailers that embraced an e-commerce, or at least a digital marketing strategy, saw success. Those that had invested in quality websites and made digital advertising a part of their strategy prior to the shutdown were able to ramp up their efforts and see sales grow.
“Many of FMG’s members have grown to be dominant or major players in their respective markets. Most stores rose from humble beginnings. Almost all are providing a positive customer experience both within the physical stores and digitally. Members keep us abreast of what is happening in the marketplace, and we encourage them to adapt and grow by seeking and presenting them with the tools they need to compete with even the largest online and brick and mortar competitors. Our Annual Symposium and other events throughout the year help our retailers share and learn from one another and from industry vendors. This is the mission of FMG.
“Many of the retailers included on the Cylindo Top 100 Furniture Retailers list are members of FMG. Those retailers have worked for as many as five generations to grow to the size they are now. They recognize that success today does not guarantee success tomorrow and realize that only 71 of the original 1955 Fortune 500 companies remained on the list in 2020. This past year has shown how important it is for furniture retailers — and all companies — to be agile and responsive to changing market conditions. Our members are aware that new challenges arise each day and the pace of change is greater than ever before.”
Chris Pfeiffer, co-owner of Homestead House, Conroe, Texas, said in his high-end sector of the business, custom-order oriented brands have lost hundreds of thousands of square feet of retail space over the years, only to be replaced by midpriced and low-end operators.
“There are only three of my type of operations in Houston (now), maybe
115,000 square feet total,” he said. So his ranks are dwindling and he doesn’t deny retailers like Homestead House are challenged these days. But he agrees more with independent Mueller Furniture’s take on the challenge in the HNN story than with Danziger’s conclusion.
“So to the question, will I be around in five years? No is the answer, but not for your (Forbes) reason,” he said. “My kids have other careers, no interest in the business. I see that in every one of my fellow small store operations Nationally. Small business is hard, many hours, risk, I pay more taxes than we get back in profits.
“So why do I do it? High-end is a passion. The joy of providing clients with a quality that a few, really really appreciate. … In the past, we used to talk about how things were made, the inspiration for the collection. Homestead House still does that on everything, but we are an exception to the rule. The big chains, its profits over quality. The ‘now’ over ‘take your time and get exactly what you want.’”
Connie Lineberry, industry consultant and former home furnishings media executive: “How many years have we heard about the demise of independent furniture stores? And yet so many of them continue to thrive and grow!”
Jeff Rose, senior director, furniture and bedding, Nationwide Marketing Group: “The resiliency of the independent channel was on full display both during and after the Covid-19 pandemic. If retail was dead, then the stores that closed would never have reopened. But consumers still want to touch and feel products, and so physical stores still play a very important role in the retail experience.
“However, it is definitely a new world for independents. If you are not utilizing websites and digital marketing, you will have challenges. But the dealers who have realized this and adapted are thriving on their own terms. For example, retailers who used the NMG digital platform in 2020 realized more than 7 million conversions with NMG digital advertising campaigns — that’s 7 million times that local consumers connected to their local retailer. That’s due not just to the power of our platforms but also to the power of the ‘Buy Local’ movement.
“‘Buy Local’ means more now than ever before. Consumers are researching more and embracing the ability to support their local economies by choosing independent retailers over big-box chains. In fact, our data shows that consumers are more likely to click on ads that mention a local retailer than a traditional ‘save more’ ad that focuses on promotional messaging. The consumer mindset is shifting, and independent retailers are best poised to meet the need and capitalize on the new opportunities.”
Paul Neto, founder, Complete Furniture Marketing: “We see many small independents who are thriving and positioned to grow. It really is about making the transition to being where today’s customer can find you, but then it’s also about doing so many things better than we did in the past.”
Dana Helms, director of sales and business development, Myriad Software: “… I beg to differ, as well! Many of our clients are thriving and have found ways to survive as well. Bravo independents! Keep it up!”