January/February 2010 Western Retailer by Western Retailer Magazine

J o u r n a l o f t h e We s t e r n H o m e F u r n i s h i n g s A s s o c i a t i o n

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www.WHFA.org

Member Profile: Fiesta Furnishings & Brix Home To Buy or Not to Buy?

CHANGE SERVICE REQUESTED Western Home Furnishings Association 500 Giuseppe Court, #6 Roseville, CA 95678 est.1944

January/February 2010

INSPIRED L IVING h armoniz i n g y o u r w o r l d Emerald coming on Friday

Visit Emerald Home Furnishings in Las Vegas to see

BRADDINGTON

LAS VEGAS MARKET February 1-5, 2010 World Market Center Space B-1350

The Braddington living room collection features transitional style that combines traditional elegance with modern conveniences. This collection offers a dark brown leather match cover providing a timeless look. It offers 8 way hand-tied springs for comfort and durability,1.8 lb. foam, and an all wood frame for stability. To see our entire line visit www.emeraldhome.com or call 253-922-1400 for more information.

Emerald Home Furnishings

J o u r n a l o f t h e We s t e r n H o m e F u r n i s h i n g s A s s o c i a t i o n

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EDITORIAL STAFF Managing Editor: Melissa Dressler................................ mdressler@whfa.org Publisher: Melissa Robinson............................................ mrobinson@whfa.org

table of contents featured articles

Advertising Manager: Cindi Williams..............................cwilliams@whfa.org

Operational Excellence To Buy or Not to Buy?.................... 12

2010 WHFA OFFICERS AND EXECUTIVE COMMITTEE WHFA PRESIDENT Claudia LeClair - Fiesta Home Furnishings, Scottsdale, AZ...............(480) 951-3239 PRESIDENT ELECT

It’s All About Sales & Marketing Alternatives to Traditional Advertising................... 15

Angel Lopez - Dearden’s, Los Angeles, CA........................................(213) 362-9600 VICE PRESIDENT Chris Sanders - Everton Mattress Factory, Inc., Twin Falls, ID..........(208) 326-3407 TREASURER Valerie Watters - Valerie’s Furniture and Accents, Cave Creek, AZ....(480) 483-3327 SECRETARY

Celebrating 20 Years In the Beginning............................. 26

Lael Thompson - Broyhill Home Collections, Aurora, CO...................(303) 360-9653 EXECUTIVE COMMITTEE CHAIR Marty Cramer - Cramer’s Home Furnishings, Ellensburg, WA...........(509) 933-2172 PAST PRESIDENTS

The World Around Us Success In Spite of the Economy.... 28

George Nader - Nader’s La Popular, Gardena, CA............................(310) 327-8585 Cherie Rose - The Rose Collection, Los Gatos, CA...........................(408) 395-7773 EXECUTIVE director Sharron Bradley - WHFA, Roseville, CA.............................................(916) 784-7677

Operational Excellence Recruiting & Hiring Salespeople.... 32

AT LARGE EXECUTIVE COMMITTEE MEMBers Gary Absalonson - Walker’s Furniture Inc., Spokane, WA.................(509) 533-5500 Howard Haimsohn - Lawrance Contemporary, San Diego, CA.......... (619) 291-1911 Marvin Kerby - Kerby’s Furniture, Mesa, AZ.......................................(480) 834-3888 Karen Kohlman - West Harvard Furniture, Roseburg. OR.................(541) 673-4221 WHFA/NHFA Liaison

in every issue

David Harkness - Harkness Furniture, Tacoma, WA...........................(253) 473-1234 WHFA Board Members

Industry Beat. . . . . . . . . . . . . . . . . . . . . . . . . . 8

Buzz Burnett - Treasures Furniture, San Diego, CA...........................(858) 586-1900 Gene DeMeerleer - Furniture West, LaGrande, OR...........................(541) 963-5440

Board Member Q&A with Scott Selden. . . . . . . . . . . . . . . . . . . . . 8

Patti Evans - Consignment Plus, Walnut Creek, CA...........................(925) 927-6600 Mark Flegel - Flegel’s Home Furniture, Menlo Park, CA....................(650) 326-9661 Eric Foucrier - Linder’s Furniture Mart, Garden Grove, CA................(714) 210-4848

Retailer Notes. . . . . . . . . . . . . . . . . . . . . . . . 10

Travis Garrish - Forma Furniture, Fort Collins, CO.............................(970) 204-9700

Program of the Month: Homefurnishings.com. . . . . . . . . . . . . . . . . . 19

Giff Gates - Gates Furniture, Grants Pass, OR..................................(541) 476-4627 Eric Harms - Black’s Home Furnishings, Yreka, CA...........................(530) 842-3876 Ron Hoesterey - Royal Mattress Company, Inc., Orange, CA............(800) 987-6925

Member Profile Fiesta Furnishings & Brix Home. . . . . . . . . 20

Jerome James - Hafer’s Home Furnishings, Manteca, CA.................(209) 823-2122 Julian Jeppe - Reeds Furniture, Agoura Hills, CA..............................(818) 597-7800 Doug Kays - Premiere Home Furnishings, Los Angeles, CA.............. (310) 268-0811 Chuck Kill - Bedmart, Tucson, AZ.......................................................(520) 887-7039

contact

Tim Koerner - Koerner Furniture, Coeur D’Alene, ID..........................(208) 666-1525 Don Lemieux - Naturwood, Rancho Cordova, CA..............................(916) 638-2424 Jeff Lindsley - Lindsley’s Home Furnishings, Grangeville, ID.............(208) 983-1040

Phone:

Robert Myers - Ashley Furniture HomeStore, Chico, CA....................(530) 345-2616 Mark Navarra - Jerome’s, San Diego, CA..........................................(858) 753-1549 Michael Nermon - Ergo Customized Comfort, Irvine, CA...................(949) 833-0338

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Scott Selden - Selden’s - Tacoma, WA...............................................(253) 922-5700 Sally Servidio - Silverado Home & Design, Napa, CA........................(707) 251-0888 Mike Shuel - Meredith Furniture, Yakima, WA....................................(509) 452-6221 Tom Slater - Slater’s Home Furnishings, Modesto, CA......................(209) 522-9097 WESTERN HOME FURNISHINGS ASSOCIATION STAFF Executive Director: Sharron Bradley................................................(916) 960-0345 Asst. Exec./Marketing Director: Kaprice Crawford..........................(916) 960-0346

(800) 422-3778 (12 western states) (916) 784-7677 Online: www.WHFA.org Fax: (916) 784-7697 Mail: 500 Giuseppe Court, Suite 6 Roseville, CA 95678 Twitter: www.twitter.com/WesternRetailer Facebook: http://bit.ly/WR-FB case sensitive

Business Manager: Janice Carlson..................................................(916) 960-0347

Western Home Furnishings Association is the western affiliate of National Home Furnishings Association

Events Manager: Cindi Williams.......................................................(916) 960-0277 Operations/Warehouse Manager: Jef Spencer...............................(916) 960-0386 Communications Planning Manager: Melissa Robinson................(916) 960-0349 Managing Editor & Webmaster: Melissa Dressler...........................(916) 960-0385 Membership Manager: Michael Hill..................................................(916) 960-0263 Member Services Specialist: Margie Jacobs...................................(916) 960-0199 Member Services Rep: Adam Gardner............................................(916) 960-0291

est.1944

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WHFA

ACADEMY

RRC RETAILER

RESOURCE CENTER

GBTU GPSXBSE

Your Industry. Your Future. Your Decision.

Accounting Assistant: Melody King.................................................(916) 960-2476

Contact WHFA at www.WHFA.org or (800) 422-3778.

western retailer

January/February 2010

Your e-Solutions If you have to ask yourself what your “e-Solutions” are, you might be falling behind the competition. In the age of the internet, you need to maximize your web presence. How? Your website should be as inviting and helpful as the employees in your brick-and-mortar store. With a fabulous website you can basically add a second showroom without the building expense and create demand that drives customers to your store. Email is not just for forwarding jokes. It is a wildly successful way to market to your clients and it is far more affordable than traditional marketing options. Have the best customer service around by confirming deliveries, following up on sales, and letting customers know of upcoming events, all through email.

Call today for a FREE e-Solutions analysis!

www.profitsystems.com 800.888.5565 “Between our first “preferred customer sale” and the preferred customer web sign ups, we have paid for PROFITconsulting’s e-Marketing program in less than 30 days! The program is working great and we look forward to continued success.” Mark Garrison, Vice President Mattress World Portland, Oregon

Software | Consulting | Education | Performance Groups | Freight Program

President’s Message

New Year! Hallelujah! Is there anyone in our business who isn’t ready to put 2009 behind us? What a year! Usually I start a new year reflecting on the past year, thinking about accomplishments and highlights. This year, I for one am not looking back. It’s 2010… a brand new year, and I’m ready to focus on the future and the new challenges ahead. I think we have all concluded that our economy is not going to rebound overnight. We have spent the past year cutting expenses, scrutinizing our financials, analyzing our staff and streamlining all facets of our business to keep that bottom line where it needs to be. We’ve done our due diligence and it hasn’t been easy, but let’s not stop there. With a new year upon us, let’s take the time to think about what we love about this business and why we’re still in it. For me, it’s all about the PEOPLE… employees, customers and you, the people in the home furnishings industry! Let’s start with STAFF. Our entire staff has had to work harder and smarter than ever this past year. As owners and managers, keeping morale up has been tougher than ever. We need to think of creative ways to reward our staff for their efforts. A little can go a long way in tough times. A businessman and author I admire, Harvey Mackay, has written, “Treat your own people the way you treat your customers.” What can we do for our staff to make them want to come to work every day? Perhaps an impromptu happy hour, a potluck dinner or maybe a small gift card to a coffee house? You don’t have to spend a lot of money, and if you think creatively you can even come up with free ideas; for instance, the best parking space for a week. The idea is to think out-of-the-box and make them feel appreciated. Now let’s talk about our CUSTOMERS. They want furniture and a beautiful home, but are wary of spending their hard-earned money. I can’t blame them. We’re all feeling the pinch. So be sure to make them feel comfortable in your establishment. In our store we go out of our way to make them feel at home. We offer snacks, coffee, soft drinks, wine and, most importantly, a sincere smile. We’ve even started giving small gifts as a thank you for taking the time to visit us. Just a token gift, nothing expensive, but let’s face it, everyone loves to receive something for free. We give candles, notebooks and even small stuffed animals for children. We spend less than a dollar per gift and in our re-evaluation of expenses, we were able to shift some of our marketing and advertising dollars to cover this expense. It takes a little time and creativity to find the perfect little thank you, but we feel it’s worth the effort. When they are ready to buy, they’ll remember us, because we made them feel comfortable and happy. Our new mantra is, “Make them feel at home.” And last but not least, FURNITURE PEOPLE! In my opinion furniture retailers are the best people in the world! They are full of energy, creativity, enthusiasm and kindness. My friends in this business have given me encouragement and countless ideas for surviving these tough times, especially this past year. I can’t say enough about how important they are to me. If you are not currently involved in a performance group, buying group or the WHFA, I urge you to do so. We are always looking for WHFA board members and new members in general, which is a great way to get involved in the industry and meet terrific people. Remember, it’s all about the PEOPLE! Wishing you all a very Happy New Year! To better times ahead!

Claudia LeClair 2010 WHFA president

Fiesta Furnishings / Brix Home Scottsdale, AZ (480) 951-3239 fiestaclaudia@aol.com

ON THE COVER Interior shot of this month’s Member Profile and your new WHFA President, Claudia LeClair, Fiesta Furnishings & Brix Home, Scottsdale, AZ. For the complete story, see page 20. Contact WHFA at www.WHFA.org or (800) 422-3778.

western retailer

January/February 2010

Executive Director’s Message

Sharron Bradley WHFA executive director

hat a year 2009 was. More than a challenge for everyone, 2009 was a most unsettling year. There was nothing sane or normal about it, that is for sure. We’ve had disappearing customers and an economy that didn’t know if it was up or down. We’ve had significant changes in the consumer mindset and an explosion of new media that has impacted the way we market our businesses. Has anyone found the “new normal” yet? So now we begin a brand new decade, one that will bring many more changes and with it new opportunities for growth and development of your business and our industry. Now is time to reflect on the good and the bad of the last 10 years and take the time to plan for what is to come. Our industry and our customers have changed significantly over the last decade. What will you do differently in the coming year to position your business for a successful future? The economists say that we will see improvement in all the key economic indicators as we move through 2010. Especially important to our industry will be recovery in the housing market where the unsold inventory of new homes is now as low as it has ever been. In addition, credit flows have been thawing recently and lending conditions are improving in both the business and consumer sectors. Finally there will be improvement coming in labor market conditions which will begin to lift consumer confidence in the months to come. So with that news you will want to think about making innovative changes to your current business model using some of the latest technology options that are available to you. Social media brings an entirely new component to marketing your company at a relatively low cost. Developing a presence on social media sites such as Facebook and Twitter can bring you closer to your customer than ever before. Revamp your website to make it an interactive tool that your customers will find intriguing and exciting. The old static website model that is nothing more than an online brochure just doesn’t work any more. Jump on board with NHFA’s new consumer web portal, www.homefurnishings.com, to bring a new dimension of interactivity to your online presence and help your customers find your store quickly and easily. As your customers search for the perfect products to make their house a home, they will need the right tools and information to make decisions that will give them the confidence to buy. When it comes to educating yourself about what is to come there is nothing that will compare to this year’s WHFA conference. In partnership with the Disneyland Resort in Anaheim, CA, we will provide ® a host of experts that will guide you into you with the opportunity to learn from the Disney Institute and the future. This is your opportunity to network with some of the best minds in furniture retailing and go home with ideas that will propel your business forward. Last October your association Board of Directors crafted a new long range strategic plan. Together with our members, WHFA will begin a journey that will make you proud to be part of your association and our great industry. You’ll find new programs that will help you grow your business and new ways to engage in conversations that will inspire you. With so many new opportunities to consider it is bound to be an energizing year. Come along, it’s going to be an exciting ride. My best to you for a very successful 2010,

sbradley@whfa.org (916) 960-0345

WHFA’s Annual Membership Meeting

Last month’s magazine is available online at www.WHFA.org.

January/February 2010

DATE: February 1, 2010 TIME: 8:00 – 9:00 a.m. LOCATION: WMC, One Six Club, 16th Floor of Building B Members will vote on candidates nominated for officers, re-election and newly appointed terms to the 2010 WHFA Board of Directors. And, the WHFA President will pass the gavel to the incoming President. All members of WHFA are invited to attend this meeting. Reservations are requested. For more information, please call Cindi Williams at the WHFA office (800) 422-3778, or at cwilliams@whfa.org.

western retailer

Contact WHFA at www.WHFA.org or (800) 422-3778.

Sell more furniture, more efficiently, online & in-store. n ePreVue – to stand out on-line and sell more custom furniture n EasyOrder – to streamline order entry and eliminate errors n EasyPlan – to create room plans that help close sales n EasySwatch – to simplify tracking and updating fabric samples n Exim – to communicate electronically and economically via EDI n ePiphany – to help build a searchable, feature-rich website

What solutions do you need to improve your profits? sales@microdinc.com 800-964-3876

www.microdinc.com. Online marketing and e-commerce solutions for the furniture industry

See us at Vegas Market, February 1st - 5th, 2010.

Industry Beat Karel Exposition Going Strong After 57 Years Larry Karel marks 50 years with the business his father founded Karel Exposition Management (KEM), based in Aventura, FL, opened its doors long before the city was even incorporated. In fact, after five decades of doing business, KEM breaks longevity records as the nation’s largest, most long-lived producer of regional furniture and accessory shows in the industry. Jules Karel, Larry’s father, founded KEM in Chicago in 1952, and Larry joined him when he was just 21. Later, Larry relocated KEM to South Florida in 1968, first in Miami Beach, then moving his home and office to Aventura in 1990. Today, KEM is one of the most respected in the industry. “I love the business and I love living and working in Aventura,” says Larry. “As long as people need a home, there will always be a need for furnishings and accessories.” What makes KEM unique, besides a 50 year history, is the fact that Larry literally takes the show on the road. Industry buyers from department stores and furniture chains don’t necessarily have to make the yearly pilgrimage to High Point, NC, to locate hardto-find, unique pieces for their clients or homes.

board

industry? A: There is nothing more inspiring then receiving a positive letter from a customer. Home furnishings are a very personal purchase and can have a very powerful impact on how people live in there home. A great comment from a satisfied customer goes a long ways to keep us motivated to do an outstanding job. I feel very lucky to be able to come into our beautiful showroom and work with a talented staff to improve peoples’ lives. Q: How do you describe yourself? A: Tough question… I guess I view myself as a little reserved with a strong desire to please people. I enjoy social gatherings but have a tendency to stay out of the middle of the room. If there is an opportunity to try something new and adventurous… give me a call.

Q&A with Scott

ne onth tu ber m y r e v E m ard Me into Bo learn more Q&A to ur WHFA o about y embers. m d boar

Q: What is the most overlooked secret to success? A: Ordinary people, doing ordinary things… extraordinarily well.

Sometimes the “big idea” has already been taken, so it takes a team with lots of persistence to be successful.

Q: I wish I knew how to: A: Golf… my friends tell me it’s a great game — I don’t get it. Q: Why did you join the WHFA board? A: WHFA is a great association that helps to protect, secure and promote the

Scott Selden Selden’s Interior Furnishings Inc. President 1802 62nd Ave East Tacoma, WA 98424 (253) 922-5700 www.seldens.com saselden@seldens.com

January/February 2010

Instead, KEM stages regionally-based, costeffective venues for exhibitors and buyers to conduct business. “These are no-frills shows,” says Larry. This year, Karel Expo will do six shows in four cities, including Edison, New Jersey, Orlando, FL, Long Beach, CA and Kansas City, MO. “I’m never going to retire,” says Karel. “You’ll have to pull me out of a booth.” For more information, call (305) 792-9990 or visit www.kemexpo.com.

Q: What motivates, invigorates and inspires you about our

member

Karel Exposition team (L-R) Jill Rosditsky, Kathleen McPheter, Beverly Stone, Larry Karel, Sherry Fleischner, Stephen Davis, Richard Diaz and Melissa Hernandez

family furniture store. The retail furniture business has been good to my family, and by joining the board I hope I can give back to the industry.

western retailer

Contact WHFA at www.WHFA.org or (800) 422-3778.

May 2–4

Disney

Our host hotel, Disney’s Grand Californian Hotel® & Spa in Anaheim, CA, is the premier property at Disneyland® Resort and rooms sell out fast! Don’t miss a once-in-a-lifetime conference experience at a once-ina-lifetime rate (starting at $189/night, compared to $340/night). Registe rO nli n

tw ea

* Book your room before February 5, 2010 and receive these EXTRA benefits: • FREE Disney Commemorative Gift • Entry into a weekly drawing for a FREE Disney DVD • Entry into a grand prize drawing for a FREE trip to the Conference, including air and hotel accommodations**

om e.c

** Restrictions apply, see www.WHFAconference.com for details. No purchase necessary.

est.1944

Western Home Furnishings Association

(800) 422–3778

www.WHFAconference.com

HFAcon fe w w.W r e nc

Disney’s Grand Californian Hotel® & Spa Anaheim, CA (714) 520–5005 Reservation Code: GCWD10A

Book your room early for your free gift and a chance to win a free Trip to WHfA’s 2010 Conference*

Retailer Notes

Western Retailer asked David . . .

How does Baker Brothers prepare for Las Vegas Market? David Baker owner Baker Brothers Full-line 55 Brennan St Watsonville, CA (831) 722-6116 bakerbro@yahoo.com http://bakerbros.us

January/February 2010

he easiest way to explain how we prepare for market is by using a timeline. We started our timeline right after September Market. Around November, we began to get ready for the February Market and sometime during that month, we made our reservations for the airline flight and hotel rooms. We do it in November because it gives us a 60-day window and that is usually when we have found the best flights and accommodation rates for that time. What we keep in mind when we make these reservations is that we are concerned about bus routes and proximity to restaurants/ entertainment — so that if we do need to go out with a vendor or treat a vendor, we are reasonably close to a few decent restaurants. Included in those travel plans we have made a list of good restaurants that are reasonably-priced. We have also found that Las Vegas is a very easy city to get around in without a car, so we have all of the major routes that we can take listed. We make a list of the Deuce bus system, the monorail, taxis and market shuttle buses. Our goal is to have two buyers go to Market and spend about $1,000. Last market, we were within 10 percent of that. During the month of December, we begin to gather some data and ideas of what we want to look at. In other words, do we need to beef up our youth area or dining? Then we start analyzing data that we get from our different categories and that gives us general ideas of what we will be looking at. Thirty days before market, we begin to get a little more market driven. We start to think about who we really need to see and the potential time we need in each space. This usually takes place the first week of the month. Then we go into the second week of the month and we plot all of the spaces out on our spreadsheet. We indicate all of the showrooms we want to visit, and we also start to tentatively schedule our appointments. We usually schedule by building, so one day we will see Building A, the next Building B, and then Building C. Occasionally there is also an off-site show, and we schedule in some time to visit those as well. We used to do it all in about two and a half days, but we did miss some of it. Last September Market we ended up spending three days, and we were able to get all of our work done by 5 p.m. on Wednesday. Once we have identified our target products, a week and a half to two weeks prior to market, we begin to make appointments with our vendors. We make appointments for about 75-80 percent of the spaces we visit. We tell the reps that we are there to do business, and we don’t want to horse around — we want to look at the new items and place orders on new stock. We don’t use a market to buy anything that is already in-stock in our store unless it has something like a special price associated with it (i.e. buy two and receive 20 percent off). We are actually looking for new items and items that we think will enhance our existing marketing structure that needed to be beefed up a bit. A few highlights for us during last market were we interviewed a new mattress line, selected a new youth group, looked at a new carpet vendor and picked up a new lamp vendor. We also changed around one of the existing mattress lines that we have — we changed a few of the SKUs on that. We discovered a new upholstery vendor that we are now using to replace another vendor.

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Contact WHFA at www.WHFA.org or (800) 422-3778.

Behold New. Experience Next.

For a clear view of what’s to come, look to Las Vegas Market.

New World. New Way. www.lasvegasmarket.com

Operational Excellence

To Buy or Not to Buy? 10 Components to Build an Open-to-Buy Strategy That Will Maximize Your Cash Flow

W David McMahon senior business coach PROFITconsulting

hen and what to buy are the critical starting points of whether an inventory carrying business will succeed. If you purchase too much too soon then cash flow will be short and inventory overage will result. It is a fact of life that some of what you buy will be best sellers whereas the majority will be dogs. At the same time, you need to find these winners by gambling on new purchases. The hot items make up the overwhelming majority of your sales and gross margin dollars. Bottom line: without buying, you have no sales, but with buying too much or not buying the right product at the right time, you have less cash to buy. This article is about finding a balance to understanding components of an open-to-buy strategy. My definition of open-to-buy is: know when you should buy, know approximately how much you can spend and know what product you should focus on. In my opinion there is not a one size fits all open-to-buy equation. There are many factors that make one operation different from the

January/February 2010

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next. The open-to-buy strategy should really be customized, and then fine-tuned, for a specific operation. With that said, here are some important components that should be considered as part of your open-to-buy strategy: 1. Special Orders: There is always open-to-buy. When a customer wants to order merchandise in a custom fabric, for example, you must order it no matter what your financial situation. These items produce the highest gross margin return on inventory (GMROI) of any items if done right. You have super high turns due to the inventory coming in and going out right away and high gross margin because they can typically be priced at 50 percent or above. There is no risk in cash investment here as long as you require at least a 50 percent deposit or the full amount up front. 2. Best Sellers: There is always open-to-buy best sellers when your individual item stock quantity falls below the level where you would run out of stock. Just make sure you determine your best sellers correctly. They can be defined as those

Contact WHFA at www.WHFA.org or (800) 422-3778.

“

My definition of open-to-buy is: know when you should buy, know approximately how much you can spend and know what product you should focus on.

items that produce 80 percent of your gross margin dollars. You will find that these items only account for a small portion of your total SKU count. Ensure that you check stock levels, rate of sale, and reorder lead times on these items and repurchase them before putting any money into new merchandise. Your odds will always be better if you bet on a winner rather than an untested item. Even if you are over-inventoried in dogs and cash flow is short, you need to find the funds to invest here. Without investing in what works in your business, you will face best seller stock outs and lower sales volume as a result. 3. Also Rans, Slow Movers and Dogs: There is never open-to-buy here. This seems obvious, right? Unfortunately it’s not. I’ve seen many buyers reorder items as soon they are sold off the floor. They will use a minimum/maximum type of method that replenishes whenever they sell down to a certain quantity. They do not take into account how long the item has been sitting on the floor. If one item takes four months to sell, for example, don’t rebuy it. Put your money into a proven best seller or try a new item. 4. New Items: Are you under your target inventory to sales ratio? Eighteen percent is a good number to use for most home furnishing operations. If you are not at this number, you do not have open-to-buy, even if you have a Warren Buffet line of cash. (By the way, people like Warren Buffet, understand this.) 5. Incoming New Merchandise Already on Order: If you factor that into the inventory to sales equation, where does it put you? Staggering is the key with new merchandise. Before you commit to a new order, you should check the aging of your new shipments for the next 30/60/90 days so that you don’t have an unexpected over inventory and resulting short cash flow issue. 6. Liquidity: Is your quick ratio decent? Quick ratio is a measurement of cash flow that basically acts as a gauge whether you have enough cash to cover your short term obligations. This is your current assets without inventory divided by your current liabilities. If you are lower than a .5 (in other industries some say a 1) you need to be extra careful with new inventory purchases. Generally, businesses that operate consistently at under an 18 percent inventory to sales have decent quick ratios unless other factors are present. 7. Open-to-buy Amount: Provided that you have all your special order items and best-selling stock items on order and have a decent inventory to sales ratio, you can figure an amount that you can afford to spend on new merchandise. An Contact WHFA at www.WHFA.org or (800) 422-3778.

approximate open-to-buy amount can be figured by subtracting your current inventory from what your new inventory will be at the higher targeted inventory to sales. For instance, if you are at 15 percent inventory to sales and you decide that the highest you can afford is 16 percent inventory to sales, determine what amount of extra stock will take you to 17 percent. That is the absolute maximum amount of extra inventory investment allowable. Again, don’t forget to take into account lead times and the new merchandise already on order to ensure that you are not hit with a sudden glut of new merchandise. 8. Product Type: When buying new, review your GMROI (Gross Margin Return on Inventory) on all categories and vendors in the category. Buy from strength. 9. Price Points: After you have determined your target categories and vendors to expand, review existing price points. If there are any gaps in best selling price points, focus there. 10. Now What? It’s not over after you have sent that new purchase order. A great buyer recognizes that the actions you take after the new merchandise arrives are just as important. I recommend these actions: • Display fast. • Merchandise in high traffic areas to get the best results. • Educate your salespeople. • Price properly with respect to other items in your line up. • Nail down. • If it works, reorder in appropriate quantities. • If it does not sell in 45-60 days, un-nail and drop from your lineup, then mark down 10 percent each month until it sells. Try to take all these components into consideration when determining the best open-to-buy for your unique situation. Take emotion out of your equation and add analytics. Remember, the name of the game is to sell the most at the highest gross margin with the smallest amount of inventory in stock. David McMahon is a senior business coach at PROFITconsulting, a division of PROFITsystems. He assists operations with improving their efficiencies in many aspects of their business including inventory management, distribution, sales management, financial management and e-marketing. His goal is to increase your profitability and cash flow. You can contact David at davidm@profitsystems.com.

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January/February 2010

It’s All About Sales & Marketing

Alternatives to Traditional Advertising

ost businesses are not adding employees these days, but what if I had information on a worker who will increase sales for you for about 10 to 15 cents an hour? Well, it is not exactly a person; rather it’s an audio speaker in your store! This speaker will provide entertainment and will help ease your advertising budget. Most retailers probably agree that advertising is one of the most challenging aspects of their business. But it can be one of the most important. It used to be relatively simple. Put an ad in the local newspaper or run a spot on a favorite radio station and customers would come through the doors. But today it has become increasing complex due to so many more marketing options than ever before, and advertising today does not achieve the return on investments it once did. While traditional advertising can still be effective, it has become greatly fragmented. Newspaper readership has declined greatly, largely due to the Internet. The U.S. Audit Bureau of Circulation reported in October that newspapers had one of the most severe drops in overall circulation for a six month period ending in September. Average daily circulation plummeted 10.6 percent in that period on numbers that already have been plunging over the last several years. I must receive five different phone books at my home, and with the Internet I rarely use any of them. Arbitron statistics show radio listenership has declined by about 13 percent since 1997. Radio no longer has a monopoly on the dashboard, as it is now forced to compete against the iPod and Satellite. Network television viewership has dropped by about 25 percent since the 1980s according to statistics supplied by Contact WHFA at www.WHFA.org or (800) 422-3778.

AC Nielson. Plus television is faced with viewers skipping messages by fast-forwarding through commercials using their DVRs. In a live online chat session, the Washington Post’s Paul Farhi interviewed ad critic Bob Garfield who said, “We can now avoid most advertising, and 70 percent of the time, do. It all spells the end of the business model for TV, newspapers and magazines. The fantastic 350 symbiosis between advertising and media is decoupling before our eyes.” Businesses have to look for alternative means of marketing. Having a professional audio system in your store creates a unique experience that encourages customers to spend more time and money per visit. Your speakers in your stores can become the perfect salesperson. They put the customer at ease by playing the type of music that they enjoy. Then once in a while they bring something up — the kinds of things that are most important about the store: great financing options; free delivery; community events that the company is participating in. At the same time, this star “employee” is reminding your other employees the important features to convey to customers. The messages do not always have to be overtly about sales. Some messaging can be important tips related to your products, trivia or fun facts. Shoppers can ignore signs and banners, but they can’t ignore sound. People browsing through your store may hear something that sparks them to start asking questions about a product, where they otherwise may have been “just looking”, and left without ever being engaged. So in essence you are complementing your staff with a service that could help improve your bottom line. A poll released by the Elements Report in October stated that in-store marketing is more western retailer

Bill Louie Retail Radio owner

January/February 2010

effective than traditional ads. Nearly a third of the shoppers polled online in March said that in-store marketing is “very effective.” Further, 69 percent of those polled called the in-store experience a “make or break” scenario. And while 65 percent of shoppers made lists, 60 percent said brand decisions were made at the store. Research by AC Nielsen shows that during a store visit, 95 percent of shoppers will buy something in addition to what they intended to buy. I am not saying to give up entirely on traditional advertising. It is still important to advertise what you do to potential customers, but when someone does walk through your door, it is now more crucial than ever to maximize their visit. Advertising is too expensive to consistently garner results of only window shoppers and one ticket sales. A store’s professional audio system really can offer that experience that encourages customers to spend more time and money per visit. Another caution is that simply playing your own music CDs or the radio inside your store is against the law. Music piracy is stealing. Just as you would prosecute shoplifters stealing from your store, music licensing agencies representing the artists who write and perform the music share that same mindset. Failure to obtain a license to perform copyrighted music publicly is copyright infringement under the copyright law. The infringer is subject to a civil suit in federal court. Sanctions against an infringer can include an injunction and the copyright

owner’s actual damages, as well as “statutory damages” of up to $30,000 for each copyrighted song performed (up to $150,000 if the infringement is willful). The infringer can also be required to pay the copyright owners’ legal fees. The law further provides for criminal sanctions against those who willfully infringe on a copyright for commercial advantage or private gain. With advancements in technology and the ability for file sharing, the protection of intellectual property created by artists is likely to increase, not decrease. External advertising is necessary, but given the cost and fragmentations, more value than ever is put on making the most of those that walk through your door. Continue to train and retrain your salespeople, strategically decorate and display your stores and maybe give your company its very own radio station. Putting your speakers to work for you could be the answer. Bill Louie is a partner with Retail Radio, which is helping businesses increase sales by providing them with their own in-store radio station. Retail Radio is so much more than licensed music – it is a customer communication platform that is designed to market to the customer right at the point-of-purchase. Contact WHFA at (800) 422-3778 to find out how you can participate in the music and messaging program.

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Contact WHFA at www.WHFA.org or (800) 422-3778.

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Program of the Month Homefurnishings.com Is Live and Ready to Help You Drive Traffic to Your Store

HFA’s new consumer web portal HomeFurnishings.com went live on October 15th. If you haven’t already visited the site, check it out. You’ll find a growing library of articles related to everything home furnishings, advice from celebrity designers, an image library, a room planner and a retailer locator with microsite. HomeFurnishings.com is the only comprehensive, national marketing program that connects you with today’s consumers. It is an objective, enjoyable and timely resource for the information and inspiration consumers need to make their dream home a reality. HomeFurnishings.com will drive purchase-motivated consumers to you as they begin their shopping process. A unique feature of the HomeFurnishings.com program is the national advertising and promotion component that will reach major home and lifestyle advertising venues that no one retailer could ever afford independently. It will capture the consumer’s attention with memorable advertising in top national publications and online banner advertising. This will be combined with comprehensive online advertising and leading search-engine optimization techniques to guide the consumer to the HomeFurnishings.com web portal when she first starts to shop.

Contact WHFA at www.WHFA.org or (800) 422-3778.

More About The Microsite Single store retailers pay an annual fee of $800 for the microsite, then on a sliding scale based on the number of store fronts (each store front will have its own microsite) and a promotion fee of .08% or less (percentage is on a sliding scale based on revenue). It works out to about $200 a month for a $2 million, single-store retailer. No new advertising revenue needs to be spent. Just reallocate some of your advertising budget that might not be as effective as it once was. The reallocation of ad dollars spent on yellow page advertising or even just one newspaper ad can pay for your participation in HomeFurnishings.com. The retailer locator is at the top of every page except a retailer’s microsite. Once a consumer chooses a retailer, they go directly to your microsite where they can learn about your store, see your current promotions and even complete a credit application to get pre-approved for financing in your store. You can easily post your television ads, product photos, furniture brands you carry and other promotional information. As a participant in the program you will become a Certified HomeFurnishings.com Retailer, bringing additional credibility to your brand. More and more consumers are going online to do their research prior to purchasing home furnishings. Get your name in front of the consumer by joining HomeFurnishings.com now. To learn more about HomeFurnishings.com, please contact your WHFA Membership Representative at (800) 422-3778 or email mjacobs@whfa.org.

western retailer

Kaprice Crawford marketing director WHFA

January/February 2010

Member Profile

Fiesta Furnishings & Brix Home Scottsdale, AZ

Display at the Brix Home location.

E Melissa Dressler Western Retailer managing editor

very day when customers walk through the doors of Fiesta Furnishings or Brix Home in Scottsdale, AZ, they are transported out of the desert and into places full of unique, high-end home furnishings and accessories. While each store has distinctly different styles — Fiesta Furnishings has an Old World, Spanish Colonial feel while Brix Home offers desert urban contemporary furnishings — they both focus on creating one-of-a-kind homes for their customers. “Customer’s can’t go anywhere else in the city and find what we have in either store,” said owner Claudia LeClair. “We want to make our customers’ homes beautiful and different — not like their next door neighbors’. If we furnished 10,000 homes, they would all be beautiful, but slightly different from the next.” Claudia and her husband Ralph Farrar opened Fiesta Furnishings in 1992 after years of owning a wholesale business. In 2005, Claudia and Ralph expanded their business to include Brix Home down the street from their Fiesta store. Each employee is trained to sell for both locations, “All of our employees are trained for both stores,”

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Claudia mentioned. “Each employee has a home base, but we encourage them to cross-sell for Fiesta and Brix. Once we get a customer into either store, we hate to send them away if it is not their style since we have another store that might be a better fit for them.” Over the last few years due to the pressure of the local economy, Claudia has evolved both businesses to be more streamlined and is now more selective on her buying. “We have streamlined our business, like everyone has,” she said. “I have sold down our inventory and have really paid closer attention to my buying and turns.” By paying attention to every line item and streamlining her operation, Claudia has been able to weather the current economic situation which has been especially difficult in the Arizona market. The best advice that Claudia received during this time was to thoroughly go through the business’ financials and study them line by line. “There are many little items that can add up that you might not think of. With just adjusting our trash removal service alone, we were able to cut our expenses by several thousand dollars a Contact WHFA at www.WHFA.org or (800) 422-3778.

year. Since we aren’t receiving as many goods, we just don’t need the trash to be picked up as often,” she said. “Look at every single line item, and if you are still not in the black, go back and look at it again. “The first few run-throughs are the easy, obvious items to cut. It takes going through your financials multiple times. Some of the decisions can be pretty tough, such as cutting managers salaries. Also try going to your landlord or mortgage company, and see if they will negotiate with you for a year to lower your interest rate or principle. We have done all of this and it has helped.” Along with watching the bottom line, Claudia is making sure the slow economy doesn’t affect her employees’ morale. “I think keeping morale high in your business comes from the top, from the owners and managers. If they are not upbeat and positive, no matter what, it is going to trickle down to your staff,” said Claudia. “I have made an effort, and there have been days that it has been very hard, but I always come into the store with a smile on my face. I am also making an effort to get to know my employees better, and I’m spending more time with them, giving them pats on the back and letting them know they are doing a good job.” Besides making sure her employees’ spirits are high, Claudia also devotes a lot of her time to helping the local community, especially projects that assist women and children. Two of the groups that Claudia has been heavily involved with are the Sojourner Center and AWEE (Arizona Women’s Education and Employment). “Sojourner Center is a house in Phoenix for women and children who need a safe place to go because they are being abused,” she said. “I have become very active in supporting the center, and I am working on a fundraiser in the stores where customers can bring in needed items that will be donated to the Sojourner house. AWEE is another foundation that helps women with skills that will allow them to integrate back into the workforce. So when a woman has been displaced, has children to support and doesn’t really have an occupation or field, AWEE will help train her so she does not have to depend on an abusive partner.” While Claudia is cautious about the future, she is also optimistic and has a lot to look forward to. Her son Mason recently joined the business as the warehouse manager and is being groomed in other areas of the business. While Claudia’s current plans don’t include an expansion of either store, she is hopeful that once business returns Mason will have ideas for future business opportunities. Also this year, both stores will be focusing more on eco-friendly products. “We have always had a lot of ‘green’ products, but we have never really advertised them. It has been a slow progression and this last year I have looked for a lot of new products to fit into that group, so in 2010 we will really be focusing on ‘green’ products. More customers are beginning to show interest in eco-friendly furniture, especially the younger generation, so it will be an exciting time,” she said. Claudia is also looking forward to being WHFA’s 2010 President, she said, “I am looking forward to meeting new people and getting to interact with others. It is going to be a great year.” Contact WHFA at www.WHFA.org or (800) 422-3778.

Pictured above (left to right): Shelley Burris, sales manager; Lisa Cannon, office manager; Claudia LeClair, owner; Tiffany Wohl, owner’s assistant

Display at the Fiesta Furnishings location.

At a Glance Type of Store: Full-line Year Founded: 1992 Employees: 30 Number of Store Locations: 2 Top Manufacturers: Fiesta Furnishings: Bernhardt, Jason Scott, Old Hickory Tannery, Vanguard, Theodore Alexander Brix Home: American Leather, Lazar, Brown Jordan, Orient Express, Bernhardt Websites: www.fiestafurnishings.com, www.brixhome.com WHFA Member Since: 2002

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January/February 2010

Witness the World of Everything New at Winter Las Vegas Market World Market Center Las Vegas

Upcoming Las Vegas Market Dates: February 1 - 5, 2010 September 13 - 16, 2010 February 14 - 18, 2011 September 12 - 16, 2011

eaturing the ideal mix of design-leading style, buying efficiency and value that simply can’t be matched, Las Vegas is “the” Market for today’s economy. Buyers and designers conserve time and resources by finding precisely what they need at Las Vegas Market — home furnishings’ spectacular world of “everything new.” With virtually every company at Las Vegas Market prepared to launch new products and lines, those visiting Las Vegas February 1 – 5 will get an all-encompassing first look at the fresh styles and exciting trends in every home furnishings and accessory category. This February, attendees will find more new design-forward manufacturers and resources, more new ideas and product launches, more showrooms and image-creating style. They will also find the latest in trend-setting and ecofriendly furnishings across all product categories. As part of World Market Center’s role as the global platform for home furnishings, comprehensive, dynamic and inspiring design events and seminars are planned. Specialty seminars will feature industry experts, bright minds and highly sought-after perspectives and advice to give market attendees the tools and insight needed to spur business. From Diane Burley, of www.purecontemporary.com, presenting on engaging customers through the Internet, to design industry guru Lloyd Princeton moderating a panel on “The New Language of Marketing,” it’s all part of fast tracking attendees on what’s hot on the horizon for next season. Looking for the newest trends for the years to come? Be sure to attend The Forecast Series for a sneak peak of what’s hot in future seasons. Want to know the fundamentals of adopting sustainable practices into your business? The Brave New World Environmental Leadership Series

will tell you all you need to know about “going green.” Special attention is also being devoted to help retailers capture more profits and better understand the increasingly important juvenile market. The Vegas Kids area on the 9th floor of Building A will host educational seminars and a special reception is scheduled Monday evening. In addition to Market-sponsored events and educational programming, the Western Home Furnishings Association will feature dozens of business-building seminars throughout the week in the Retail Resource Center on the 16th floor of Building B. The Winter 2010 Las Vegas Market will feature more than five million square feet of showrooms in three interconnected buildings and will boast many of the most prominent brands in the home furnishings industry. An exclusive selection of temporary exhibits will receive prominent dedicated locations within the campus, including the high-end Context, Design and Living and One Good World juried sections. The premium placement of these temporary exhibits represents World Market Center Las Vegas’ continuing commitment to the vibrant international, high-end, design and sustainability sectors of the industry. World Market Center Las Vegas and Las Vegas Design Center will honor international design luminary Juan Montoya with one of the industry’s highest designations — Design Icon. The award and lecture series was designed by World Market Center Las Vegas so that modernday design legends can share their experiences and inspire future designers. And of course there will be plenty of entertainment and networking opportunity throughout the week. Check out everything planned for the Winter Las Vegas Market by visiting www.lasvegasmarket.com.

Experience Las Vegas. Experience Las Vegas Market. 22

January/February 2010

western retailer

Contact WHFA at www.WHFA.org or (800) 422-3778.

The RRC is brought to you by:

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February 1 – 5, 2010 Building B, 16th Floor | Building C, 5th Floor

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Winedown: Beer, wine & lite bites (Mon - Thurs. 5:00 – 6:00 p.m.) Seminars: 19 business seminars throughout market.

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Visit almost 40 industry service providers dedicated to improving your performance and your bottom line. Check out www.WHFA.org and click on the RRC logo to view a complete listing of service providers showing at the two RRC locations.

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ACA Advertising Argo Select B&B/CMK - Banker & Brisebois Advertising BA Merchant Services Citi Retail Services Custom Design Software Dover Finishing Products Escalate Retail Furniture Training Company Furniture Transportation Group Furniture Wizard FurnitureDealer.net FurnServe GE Money Genesis Software Systems Great White Bottling, Inc. Guardian Protection Products Guardsman, a business Unit of Valspar HomeFurnishings.com JRM Sales & Management Mail America MicroD Inc Myriad Software & Consulting National Home Furnishings Association Phoenix AMD, Intl. Profitability Consulting Group PROFITsystems, Inc. SMH Consulting Storis Management Systems Truckskin Western Home Furnishings Association Western Retail Services Corporation as of 12/5/09

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Celebrating 20 Years

Celebrating 20 years of Home Furnishings Reporting Twenty years ago, Western Retailer magazine (then known as Western Reporter) blossomed from being a small newsletter, to a full magazine. Join us throughout this year as we look back at the last 20 years with stories, past articles and fun.

Don Meadows, Western Retailer’s first editor, shares how it all started back in 1990… t worked for same company twice! I firs the for d rke wo y the say o can nton Furniture in ’m one of a few people wh , part time. At that time, Jack Moore of Baker Sta e Carlson was 91 WHFA back in 1989 to 19 ere were five people on staff, including myself (Janic stern Reporter Th We t. Eureka, CA was presiden ed me to continue building e Director, Dave Lane, hir the time, Dave was doing the writing and tiv ecu Ex ). too n, the k there bac mat. At a full-blown magazine for boards before giving from a small newsletter to ns and pasting them onto um col ng nti pri a, Arizona, by ter let ws ne tes , over five sta : Californi 00 2,5 ut literally “pasting up” the abo s wa ine gaz lation of the ma them to the printer. Circu ah. Ut d an can remember Nevada, Colorado in its relative infancy — I l stil s wa ng shi bli pu p , deskto columns, place When I first came on board s like the “big time” when we could flow text into . It wa y disks to prepress to using Aldus PageMaker 3.0 a clean page! We still had to send our 1-1/4” flopp t to to paste up. Finally, it simple graphics and outpu . Then back to the office ine ch ma ic on otr Lin a y on s fun but a lot of extra output high resolution cop shoot film and create negatives for a blueline. It wa to r would go off to the printe ay. tod to red pa com work nference Calls” with board nications Committee Co mu om “C ly get together nth mo led torial calendar, then we’d edi an For content, we schedu re pa pre I’d r, yea committee. Each e. I can remember some members serving on that tent to round out each issu con the get Haimsohn and ’d we ere wh or crantz, Lee Siegel, Howard sen to brainstorm how Ro ne Ar , lfe Wo rry rk, I’d sometimes Moore, La e-string budget. For artwo sho productive calls with Jack a on e du ke ma to d e, we ha y for original artwork, Ron Helmonds. At the tim the local community college. Since we couldn’t pa item for their at — the student received an hit-up the art departments in n-w wi a s wa It . art er cov rk. we’d swap a small ad for the e-of-a-kind, original artwo on ed eiv rec we d an o t, Western Reporter portfoli olor. Like the stock marke o-c tw es, pag 12 s wa ine rs in the San Francisco The first “official” magaz We urged all of the vendo e. pac ady ste a at w gre t ching out to the furniture had its ups and downs, bu ertising. We also started rea adv h wit us didn’t exist yet. rt po sup to r ce the magazine examples sin t cep Retailer Resource Cente con a g lin sel — C vendors, the uphill battle , State Fund and other RR ific Pac manufacturers. That was an ty uri Sec ca, eri Am ncisco Furniture of Bank of h January and July San Fra eac With the eventual support g rin Du g. nin run and was off advertising. “Don to hit them up” for Western Reporter magazine m fro it vis a ect exp to d learne efits. Then, in the Market, the vendors soon d full time hours with ben ede ne I se au bec A HF W t lef ing. Dave Lane contacted In the summer of 1991, I full time and had an open to w gre A HF W at on siti and members well spring of 1994, my old po e back. It was an easy sell, because I knew the staff com r five years. me and convinced me to ily — and I stayed for ove fam e lik ost alm re we y name changed slightly)… — the same today (although the the s ain rem l and manage stil n ssio mi retailers increase business gs The Western Reporter’s hin nis fur me ho lp he WHFA website d resources to ve over time, as well as the pro im to provide information an d an w gro ine gaz and say I played a tched the ma d I’m proud to look back an y, their bottom line. I’ve wa wa g lon a e com s ha es. WHFA and other member servic xt 20 years! ne the to re’s small part. He

I Don Meadows Western Reporter editor 1990-1998

Don Meadows 26

January/February 2010

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Contact WHFA at www.WHFA.org or (800) 422-3778.

«Then

Now »

January/February 2010 Western Retailer

Original Artwork

“ Contact WHFA at www.WHFA.org or (800) 422-3778.

For artwork, I’d sometimes hit-up the art departments at the local community college.

western retailer

January/February 2010

“

The first issue of Western Reporter ran in January 1990.

Success

The World Around Us

In Spite of the Economy

Y Philip Gutsell owner GutSELL & Associates

ou have squeezed all the fat out of your overhead. Your traffic is down and your average sales ticket is reduced. Every customer wants a special deal or discount. Your sales continue to slip. Unemployment is high in your market with little or no recovery in sight. Now what do you do? As a retail consultant and high impact sales promoter, I consult retailers throughout North America. I will show you the strategies and promotions that work and that are getting results in spite of tough economic conditions. Even if real “unemployment” is close to 20 percent in your market, stop whining about it. Start taking action inside the walls of your store. Focus on the 80 percent that can buy from you. Included are ideas regarding advertising, gross margin and volume results. There are seven key steps to follow. Strategic! First and foremost I recommend that each and every store have a strategic plan. I am amazed in this day and age when I begin a consultation project with a new client and they say to me, “Phil I need a promotion yesterday!”

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Too many stores continue to face advertising deadlines or have little strategic thought behind it. Before I recommend any promotion for a retailer, I want to make a thorough diagnosis of the store’s present internal conditions. I always ask the following questions: Is your traffic down and if so, how far down from normal? How is your average ticket? How are your closing ratios? Is it your merchandising? One of my clients early on during a recession noted his sales were down 25 percent including the average sales ticket. When the client and I checked the store’s daily customer opportunity logs we discovered that shopping traffic was only down 13 percent. This obviously shows there was a disconnect going on with the sales staff. I therefore explained to my client that there are two bad times to motivate salespeople: First, the worst time for salespeople and their stores is when there are little or no sales. Second, is when business is good, which I will clarify later. First, let’s discuss when sales are slow and how that affects your stores attitude. The obvious Contact WHFA at www.WHFA.org or (800) 422-3778.

answer is salespeople and the stores are not making money. The staff becomes depressed, and they start to force conversations with the customers entering the store, which portrays them as pushy. Also it seems the only customers coming into your store are asking for, in many cases, demanding “deals.” Furthermore, the news media keeps recommending that customers should insist on deals and discounts from their local retailers. By the way, these are the same media outlets that want you to buy their advertising media and are starving for revenues as well. In good times, I have jokingly suggested to clients that they send these “price chiselers” down the street to their competition. Eventually they will drive your competition out of business. I was right! Much of your competition has diminished and now we must welcome price chiselers with open arms. In slower times or recessions, these price chiseling customers seem more apparent because the most desired customers are behaving like them too. Some customer’s actually behave like sharks. They can actually smell retailer blood in the marketplace which can lead to a feeding frenzy. I want all of these customers regardless of the economic climate. Whether a recessionary or growing economy, I want a feeding frenzy of buying customers in our clients’ stores. Why can good business be bad for salespeople? The main reason is that salespeople get lazy and develop sloppy selling behaviors when business is thriving. When traffic is exceptional and customers are buying more easily, salespeople’s professional selling skills diminish. Test your sales staff with these two questions and make them write down their answers so they don’t piggyback and skew the results: 1.) What is your favorite buying signal? 2.) What is your favorite closing question? The answers I receive from even experienced salespeople astonish me. The favorite buying signal given is when the customer says, “I’ll take it!” That phrase is not even a buying signal. The sale is already made. That is an order taker’s buying signal. Question two’s answers are a close tie between, “I told them it was on sale” or “Let’s write it up.” These two answers aren’t even questions. If these answers show up with your staff, they need a dramatic professional sales tune-up, immediately. They are costing you sales and profits! If your sales are down more than your traffic, evaluate your closing skills. When I conduct my live sales meetings, the store’s priority is always to improve the closing ratio. However, equally as important may be your greetings. Too many salespeople drop or are dropped by customers. Because most economies are slow or tight, we must contend with those aforementioned chiselers and/or challenging customers. Teaching salespeople how to close before you teach them to greet and develop rapport is a waste of your investment. Be sure your staff is building rapport, greeting enthusiastically, qualifying the customer’s needs and wants with sketching, demonstrating your products, overcoming common objections, selling value instead of price, test closing, asking for customer commitment, building referrals and not only writing thank you notes but also calling the customer with a thank you after the sale is delivered. Could your merchandising improve? It could be a factor, but most stores I work with are well stocked and need only slight tweaking. None the less, inspect your merchandising plan and be sure all your best sellers are in stock or nailed down. In slow times, retailers are tempted to sell their best sellers off the floor. This is retail suicide. Get your slow or unproductive stock off the floor. Check out your GMROI (Gross Margin Return on Investment) to measure your best sellers. Grade your merchandise and prepare to discount it accordingly. A - Goods that Always sell! Never or only slightly discount. B - Goods that are Better sellers but not quite “A”! Discount slightly C - Goods that are Competitive. Price them to your market or slightly below the competition. D - Goods that are Dogs! Discount these good heavily. If they haven’t continued on page 30

Contact WHFA at www.WHFA.org or (800) 422-3778.

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continued from page 29

sold in nine months they are dogs! E - Is for Evict! They’ve been on your floor from 9-12 months. It’s time for them to go. F - Is for Forget about ‘em! Sell at cost or below if necessary. Get your money back and reinvest in “A” goods. If business is slow, buy only the best sellers and keep them in stock. Some stores let their best sellers go to the customers who declare, “I need it right away” even though these same customers have been indecisive for weeks. Furthermore don’t let your sales staff persuade you to let this merchandise go. Why is it that some salespeople will spend more time selling management instead of the customer? They give you more reason’s why they should let this best seller off the floor than they give the customer for buying the product. Even worse, they want to give their chiseling customer a discount on this prime merchandise. Remind them that professional salespeople are not needed for the best sellers or close-outs as they sell themselves. They are needed for the rest of your merchandising. Teach them to use outstanding persuasion skills with your customers instead.

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Once all selling and merchandising issues are evaluated, I move onto using a proven strategic advertising plan. Consider running a major clearance to jump start your sales. If you cannot remember the last time you ran one, or if it’s been 30 days or more, you are way overdue. Plan the event from start to finish. Look at your calendar for strategic dates. Kicking it off in general media and finishing around holidays gives the greatest return. Always send a letter or postcard to your preferred client list announcing the sale prior to the event. Remember these customers are familiar with you and will respond the best. I recommend a mailer of some kind, at least once a quarter depending on the size of your list. In some cases, my clients send out mailings every other month. If your event has a very strong reason (more about those later), I recommend considering demographic, homeowner mailers to your best zip codes. If you have been collecting email addresses send a blast at the beginning, middle and end of your event. Consider all media in your advertising budget: television, radio, print, store signage, price tagging, sign walkers, banners and billboards. I have often said, “All advertising works; the question is what works best in your market?” If you cannot afford to utilize all then choose the best three and dominate

Contact WHFA at www.WHFA.org or (800) 422-3778.

“

Philip M. Gutsell is president and owner of GutSELL & Associates. His expert consulting business is known and widely acclaimed for increasing profitability for big ticket retailers and putting them on the road to growth. Gutsell is a dynamic and motivational speaker. In addition, he serves as a featured seminar speaker for the National Home Furnishings Association, Western Home Furnishings Association, North American Retail Dealers Association, Home Furnishings International Association, Brand Source Associated Volume Buyers and numerous other associations. You can contact him at: GutSELL & Associates, 6141 N. Elston Ave., Chicago, IL 60646, Phone: (773)792-2480, Fax: (773)792-2671, Email: gutsellassoc@aol.com.

innovate

them as best you can. How and where to spend your advertising is based on your historical performance. Unique! Make sure your event is “unique”. Be the first in your market if possible. Too many promotions are “me too” as in “anniversaries or Financing” events. If you cannot be first, then your event must be better! Bring in a professional with not only knowledge of your local marketplace, but also throughout the industry. Continuing! If you use an aggressive high-impact promotion, make sure it is clear that your store is “continuing”. Too many events resemble “Going Out of Business” sales. Make sure your events have a positive underlying reason. After all, you are here for the long run. Concepts! Use proven, tested concepts. I recommend one of my Three R’s of Promotion: remodel, re-merchandise or re-organize. This is one of the most positive events you can run. It says you are growing and continuing. Keep in mind after you have a remodeling clearance, you have the pardon our dust or paint phase and finally the grand opening of the newly remodeled showroom. Re-merchandise any time you are making a major vendor change. You must get rid of the old line before you can bring in the new! Re-organize happens less often but is incredibly compelling. “Buy-out” a partner or a competitor. You have some competition that may have a better location than you and is willing to sell. Consider “retiring” mom or dad. Follow this up with the “under new management” phase to emphasize that you are continuing. Ensuring! If you want to ensure your success, use a price guarantee. Mastering the price guarantee as not only a basic marketing tool but also gets you more customer commitment and will reduce price chiseling. Refresh your sales staff on how and when to use it. It is especially useful for the price chiseler and the “first store” customer. Drop tag every major item for a high-impact event using the markdown suggestions I made earlier. In my company, we offer a unique guarantee to “high-impact promotion clients” based on their current gross margins and a reasonable advertising budget. We can make this guarantee because these are the areas we can control during one of these events. Substantial! If you want more of the same, keep doing what you are doing now. Remember the definition of insanity is doing the same thing over and over and expecting different results. Change with a tested and proven strategic plan. In our high-impact events using one of “The Three R’s of Promotion”, remodeling, remerchandising or re-organizing increases stores volume dramatically even in slow markets. Sales! That’s what it’s all about. Even in states like Michigan, Indiana, California and Nevada with some of the highest unemployment rates are bringing home an improved bottom line. When you put these seven steps together in your store it spells S.U.C.C.E.S.S. in spite of the economy!

CONNECT:

“

If your sales are down more than your traffic, evaluate your closing skills.

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western retailer

January/February 2010

Operational Excellence

Recruiting & Hiring

Salespe Your People Set You Apart From The Competition

ave you ever hired somebody that you felt was going to be a fabulous salesperson, and they ended up stinking up the place and not working out? On the other hand have you ever hired somebody and settled for what you felt was a warm body, and they ended up being one of the best people you have ever hired? I am sure the answer is “yes” if you have hired any number of people for your business. Effective hiring has always, and will continue to be, one of the great mysteries. However, I know that the only thing that really separates one furniture store from another is the people that they have dealing with and selling to there customers. The following are some points to help increase your chances of hiring the right person for the sales position. As a sales manager you need to: 1. have a large pool of people from which to make your decision. 2. maintain a constant recruiting effort. 3. be prepared for unforeseen staff changes. Brad Huisken owner IAS Training

Recruiting/Finding Applicants There are numerous sources for a furniture store owner or sales manager to find applicants for a sales position. Keep in mind that you are not looking for the so-called “qualified applicant”. There is no such thing as a qualified applicant, unless they have worked for you in your organization in the past. The only thing that would pre-qualify one applicant over another is through him/her having some product knowledge in the furniture industry. However, as you know, product knowledge can be learned in a relatively short period of time.

January/February 2010

western retailer

Contact WHFA at www.WHFA.org or (800) 422-3778.

Interviewing A common mistake made by owners and sales managers is giving the applicant the answers to questions before they are even asked. For example: If you say that you are looking for an aggressive, motivated, self-starter, in your advertisement or to start an interview — chances are, that when you ask them to tell you about themselves, they will tell you that they are aggressive, motivated, self-starters. Your interviews must be designed to find out as much about the applicants as possible. Through effective questions, you will find out all you will need to know to make your decision. Your goal through out the interview process is to make them comfortable enough to open up and give you the valuable information you’ll need. Come out from behind the desk and make the interview into a one-on-one conversation rather than a pressure packed interview. The end of the interview is the time to sell the applicant on working for you and to answer their questions. Stay in control of the interview process and remember, you ask the questions until the end of the interview.

First Interview

ople! Sources of Applicants • Have a recruiting poster in your place of business • Offer a recruiting bonus to your existing staff • Print a recruiting statement on your business card • DECA & JA Coordinators at schools • Placement coordinators at colleges and trade schools • Steal them from other businesses • Your customers • Electronic help wanted resources • Job fairs • Help wanted ads (do not place a help wanted ad in the help wanted section of the newspaper — place your ad in the design or fashion section of the newspaper. The people that read the help wanted ads may not be the people you want to hire.)

The first interview with an applicant should be designed to eliminate applicants rather than to make a final decision. You will need to bring your possible choices down to three to five people for second interviews. I don’t believe that you should ever hire an individual on the first meeting. Even if you have to reschedule a second interview for later that day or the next day. Through the course of the first interview you will be asking general questions to see if the applicant can carry on a conversation, is self-motivated, has had problems with past employers, is reliable, stable, and will fit in with the rest of the staff. You will also want to let him/her know the generalities of the pay plan and benefits that are offered in addition to what is expected of him/her.

First Interview Questions • • • • • • • • • • • • • • • •

Why did you leave your last position(s)? Why do you want to leave your current position? What did you like the most about your job? What did you dislike the most about your last job? What are your strengths? What are your weaknesses? What has been your biggest success? What has been your biggest failure? What kinds of people do you get along with the best? What kinds of people do you seem to not get along with? What do you like the most about sales? What do you dislike about selling? What is your selling background? What is your basic sales philosophy? What are your immediate professional goals? What do you find attractive about working for our company? continued on page 34

Contact WHFA at www.WHFA.org or (800) 422-3778.

western retailer

January/February 2010

Again, at the end of the interview it is important that you allow the applicants the time and opportunity to ask you questions about your company and the job. You must also use this opportunity to tell the applicants exactly what will be required of them as far as training, accountability, coaching, and your sales and customer service standards. The second interview is also the time to talk directly about the salary or pay plan that you are offering.

Testing During the second interview is also the time to give the applicant any tests that you feel are appropriate for the position. Sales aptitude, honesty, hand-writing analysis and basic skills are all tests that are tremendous tools in helping to avoid a costly hiring error.

Checking References

The Second Interview The second interview should be designed to give you the answers you will need to make your final decision. You will be looking for answers to your questions to determine whether the applicant is willing to work by your rules and regulations, has the drive to be successful in sales, is honest, believes in integrity, has personal goals, and is trainable and coachable.

Second Interview Questions • What do you feel is more important, success or money? • What are your goals for the next year? • What are your goals for the next 10 years? • What do you feel it takes to be successful in sales? • What do you feel would be appropriate action if you were not reaching your sales goals within three months? • What kind of formal sales training have you had in the past? • What are your thoughts about role-playing sales situations? • What would you do if the prospect was willing to buy our product but was misinformed about its use? • How often do you make mistakes? • What do you do when you have made a mistake? • What would you like to tell me about yourself that may help me make my decision? • How do you feel about commission sales?

January/February 2010

western retailer

Every applicant that makes it through, as a potential new hire after the second interview should have references checked. In checking references the main question that you want answered is: Would they be eligible for re-hire? In addition, you would want to ask questions to: verify what they had told you in the interview, productivity, and discover any honesty or integrity issues. You would also want to verify any pay information that they had given you. Many companies won’t offer any information when it comes to checking references, but most will let you know if they are eligible for re-hire.

Making The Decision You will need to consider the following when making your final decision: 1. The answers to your interview questions. 2. Their ability to carry on a conversation. 3. Whether they maintain direct eye contact with you. 4. Their skills, ability and knowledge. 5. Whether they will fit in with the rest of the staff. 6. Their internal drive. 7. Your gut feelings.

continued on page 36

Contact WHFA at www.WHFA.org or (800) 422-3778.

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Hiring Don’ts • Don’t judge all applicants by one great interview. • Don’t eliminate applicants who may be over-qualified. • Don’t eliminate applicants who may have to take a pay decrease. • Don’t eliminate applicants who want more money than you offer. • Don’t lose control of the interview. • Don’t waste time with people you know won’t work out. • Don’t sell the position first. • Don’t allow any prejudices in your decision-making. • Don’t sell the position with unreasonable promises or expectations. While you can never guarantee that the person you hire is going to work out, increase the likelihood that they will be successful by following these guidelines. Then after hiring you have to train the applicant to be successful. The number one thing that people want out of their jobs is the ability to be and feel successful. Giving the new hire the skills, knowledge, training and thus the ability to be successful will increase the odds that your new hire will become a productive member of your staff. It is up to the furniture store owner/sales manager to train the individual to be successful! Mr. Brad Huisken has been in sales since 1971. Since the early seventies he has been directly involved in all aspects of sales. His experience and knowledge have enabled him to author the highly acclaimed book I’m A Salesman! Not A Ph.D. and his new book Munchies For Salespeople! Sales Tips You Can Sink Your Teeth Into. To contact IAS Training call (800) 248-7703, info@iastraining.com or www.iastraining.com.

All That’s Missing Is YOU! The Faces of WHFA Join WHFA and experience a sense of community that will add to your bottomline. Be a face of the home furnishings industry’s premier retail association. Visit our website or call us today. Western Home Furnishings Association Ph: (800) 422-3778 Web: www.WHFA.org Facebook: http://bit.ly/FB_WHFA (case sensitive)

est.1944

January/February 2010

western retailer

Contact WHFA at www.WHFA.org or (800) 422-3778.

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western retailer

January/February 2010

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Advertisers Index Please support the advertisers that support your magazine. Advertiser

Page

Phone

Argo Select................................................. Back Cover................. (800) 422-3778 Cruise4Two.........................................................16........................ (866) 541-8077 Emerald Home Furnishings................................2......................... (800) 685-6646 Furniture Wizard.................................................14........................ (619) 869-7200 Future Ford.........................................................35........................ (916) 349-3336 GE Money...........................................................17........................ (866) 209-4457 High Point Market..........................................29 & 31.................... (336) 869-1000 Las Vegas Market...............................................11........................ (888) 416-8600 MicroD, Inc..........................................................7......................... (800) 964-3876 PROFITsystems, Inc........................................4 & 39..................... (866) 453-5010 Restonic..............................................................37............... (800) 521-3985 x105 Retailer Resource Center............................... 23-25...................... (800) 456-3778 Serta....................................................................18............. (800) 327-3782 x6014 Therapedic- Idaho.............................................37........................ (801) 453-9099 Truckskin.............................................................30........................ (877) 866-7546 WHFA 2010 Conference.....................................9......................... (800) 422-3778 WHFA Membership...........................................36........................ (800) 422-3778

Advertising Inquiries & Rates Contact: Cindi Williams, WHFA Advertising Manager, 500 Giuseppe Court, Ste. 6, Roseville, CA 95678. (916) 960-0277 E-mail: cwilliams@whfa.org. Subscriptions: $35.00/year, USA. Published by Western Home Furnishings Association, a National Home Furnishings Association affiliate, in the interests of retail home furnishings dealers, manufacturers, distributors and salespeople. Distributed to home furnishings retailers handling furniture, accessories, bedding, floor coverings and specialty home furnishings in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming. Mailing list compiled by WHFA. Official publication of Western Home Furnishings Association, which is responsible for editorial content and advertising policy. The views expressed in articles appearing in Western Retailer are not necessarily those of Western Home Furnishings Association. Western Retailer magazine is copyrighted by Western Home Furnishings Association. January/February 2010, all rights reserved.

Western Retailer:

Read by furniture retailers in the West

Distribution: Western Retailer is read by more than 10,000 home furnishings retail store personnel handling furniture, accessories, bedding, floorc overings and specialty home furnishings in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming.

Marketing Philosophy: Western Retailer focuses on business market trends in the furniture, bedding, flooring and accessories industry. It highlights sales, marketing, operations, showroom design, trends, succession planning and industry events.

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January/February 2010

western retailer

Contact WHFA at www.WHFA.org or (800) 422-3778.

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