retail operations
Journal of the Western Home Furnishings Association
westernreporter
august 2008
est.1944
Western Home Furnishings Association 500 Giuseppe Court, #6 Roseville, CA 95678 CHANGE SERVICE REQUESTED
www.WHFA.org
Presorted Standard U S Postage PAID Permit #604 Sacramento, CA
Journal of the Western Home Furnishings Association
table of contents
westernreporter
features
EDITORIAL STAFF Managing Editor: Melissa Dressler................................ mdressler@whfa.org Publisher: Melissa Robinson............................................ mrobinson@whfa.org Art Director: Rebecca Arnn...................................................rarnn@whfa.org
President’s Message...................................................5 Editor’s Message........................................................6
2008 WHFA OFFICERS AND EXECUTIVE COMMITTEE WHFA PRESIDENT Keith Koplan - Koplan’s Furniture, Vancouver, WA.............................(360) 695-3388 PRESIDENT ELECT Marty Cramer - Cramer’s Home Furnishings, Ellensburg, WA...........(509) 933-2172
Feature Article:................................................ 10 How to Succeed and Prosper in a Sluggish Economy
VICE PRESIDENT Claudia LeClair - Fiesta Home Furnishings, Scottsdale, AZ...............(480) 951-3239
Lease Renegotiation . ................................................16
TREASURER Angel Lopez - Dearden’s, Los Angeles, CA........................................(213) 362-9600
Is It Time to Get Small? .............................................19 Embracing Electronic Payments to Stay Afloat in a Downturn Economy, Part 3 of 4 . .........................32
SECRETARY Chris Sanders - Everton Mattress Factory, Inc., Twin Falls, ID..........(208) 733-3312 EXECUTIVE COMMITTEE CHAIR George Nader - Nader’s La Popular, Gardena, CA............................(310) 327-8585
NW Furniture Bank Helps Families in Need...............37
PAST PRESIDENTS Marvin Kerby - Kerby’s Furniture, Mesa, AZ.......................................(480) 834-3888 Cherie Rose - The Rose Collection, Los Gatos, CA...........................(408) 395-7773
Creating the Perfect Delivery.....................................38
EXECUTIVE director Sharron Bradley - WHFA, Roseville, CA.............................................(916) 784-7677
departments
AT LARGE EXECUTIVE COMMITTEE MEMBers Bob Ammirato - Design Galleria By Valentine, Sacramento, CA........(916) 922-2200 Taylor Ganz - McMahan’s Furniture, Los Angeles, CA....................... (310) 473-8411 Howard Haimsohn - Lawrance Contemporary, San Diego, CA.......... (619) 291-1911 Lael Thompson - Broyhill Home Collections, Aurora, CO...................(303) 360-9653
Industry Beat..............................................................8 Board Member Q&A....................................................8 with Claudia LeClair Fast Forward...............................................................23 Family Business In-Laws
WHFA/NHFA Liaison David Harkness - Harkness Furniture, Tacoma, WA...........................(253) 473-1234 WHFA Board Members Gary Absalonson - Walker’s Furniture Inc., Spokane, WA.................(509) 533-5500 Eric Blackledge - Blackledge Furniture Co., Corvallis, OR.................(541) 753-4851 Dave Cavitt - Furniture Enterprises of Alaska, Anchorage, AK...........(907) 264-5210 James Copitzky - Bassett, Tukwila, WA..............................................(206) 575-8877 Gene DeMeerleer - Furniture West, LaGrande, OR...........................(541) 963-5440 Jack Fendrich - Brenner’s Furniture, Eugene, OR.............................(541) 345-4451 Greg Follett - Follett’s Furniture, Lewiston, ID....................................(208) 743-0177 Eric Foucrier - Linder’s Furniture Mart, Garden Grove, CA................(714) 210-4848 Giff Gates - Gates Furniture, Grants Pass, OR..................................(541) 476-4627 Ron Hoesterey - Royal Mattress Company, Inc., Orange, CA............(800) 987-6925 Paula Holt - Home Collections/Dining Collections, Salem, OR..........(503) 589-4358 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 Tim Koerner - Koerner Furniture, Coeur D’Alene, ID..........................(208) 666-1525 Karen Kohlman - West Harvard Furniture, Roseburg. OR.................(541) 673-4221 Don Lemieux - Naturwood, Rancho Cordova, CA..............................(916) 638-2424 Sandy Lundgren - Olsen Furniture, Shelton, WA................................(360) 426-4702 Robert Myers - Ashley Furniture HomeStore, Chico, CA....................(530) 345-2616 Michael Nermon - Ergo Customized Comfort, Irvine, CA...................(208) 326-3407 Ray Nunez - Furniture Savings Center, Sacramento, CA...................(916) 487-6005 Sally Servidio - Silverado Home & Design, Napa, CA........................(707) 251-0888 Tom Slater - Slater’s Home Furnishings, Modesto, CA......................(209) 522-9097 Valerie Watters - Valerie’s Furniture and Accents, Cave Creek, AZ....(480) 483-3327 WESTERN HOME FURNISHINGS ASSOCIATION STAFF Executive Director: Sharron Bradley................................................(916) 960-0345 Asst. Exec./Marketing Director: Kaprice Crawford..........................(916) 960-0346 Business Manager: Janice Carlson..................................................(916) 960-0347 Events Manager: Cindi Williams.......................................................(916) 960-0277 Operations/Warehouse Manager: Jef Spencer...............................(916) 960-0386 Communications Planning Manager: Melissa Robinson................(916) 960-0349 Creative Director: Rebecca Arnn......................................................(916) 960-0350 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 Accounting Assistant: Melody King.................................................(916) 960-2476
Contact WHFA at www.WHFA.org or (800) 422-3778.
Member Profile . ........................................................26 Furniture West, La Grande, OR Program of the Month................................................29 Bank of America Meet the New Members............................................31 Product Focus.............................................................34 Start with a Rug! Safety Corner..............................................................35 Early Return to Work Industry Dates............................................................43 Tips & Tricks...............................................................45 Fun Facts & Figures....................................................46
contact est.1944
Phone: (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
Western Home Furnishings Association is the western affiliate of National Home Furnishings Association
westernreporter
august 2008
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president’s message The theme of this issue is operations. I don’t know about you but to me, in today’s business climate that sounds like a theme of surgery without anesthesia. I’ve decided to take a little different look at operations and discuss some thoughts on the way we operate as managers of our business. Certainly, on a day-to-day basis, we are pulled in many directions and probably wish we were more like an octopus with eight arms. A little about the octopus (I had to do a little research here): Everyone knows that an octopus has eight arms, but some may not realize it has no internal skeleton. The octopus can do many things at once, but furniture store owners don’t have as many arms, so multitasking can be much more challenging. Some would argue that while we do have the internal skeleton, we are lacking the backbone needed to accomplish some of our most difficult tasks. Multitasking becomes a convenient, though inefficient way to deal with many of today’s problems. While multitasking may feel like it gives you eight arms to get a lot done in a short amount of time; it has actually been shown to be 44 percent less effective than doing tasks separately. In short, our brains are built to handle just so much information and it takes time to learn. Multitasking degrades performance, results in more mistakes and reduces efficiency as you switch among multiple tasks. One way to shift away from multitasking is to start focusing your attention on the task at hand; try to either finish it or work for a predetermined amount of time. Rank tasks in order of priority, focus on them one at a time and minimize interruptions. Try and group tasks together. For instance, return all phone calls at one time during the day. We may also want to set a time each day to read. Begin with the Western Reporter, of course, then try a few other industry-related publications. Investing 30 to 45 minutes each day in this process helps keep you up-to-speed on the industry, focuses the mind and allows your creative juices to flow. One of the biggest things we can do to improve our productivity and efficiency is take a hard look at email (I’m so guilty here). Get yourself removed from group lists you don’t need to be on. Next, make sure the emails you send are short and to the point. The phone can be more efficient too. Finally, keep your email closed and only open it four times per day. Distractions are minimized, focus is improved and efficiency will skyrocket. Studies find the average manager loses 1 to 1.5 hours each day due to personal visits, 1 hour or so dealing with phone interruptions and up to 2 hours responding to emails that really don’t need to be sent in the first place. You still might feel the need to be an octopus, but at least you can minimize the chance of ending up as a tender, young delicacy on a dinner plate!
Keith Koplan 2008 WHFA president Koplan’s Furniture Vancouver, WA KKoplan@koplans.com
ON THE COVER The Iznik Tiles rug from Company C. For more information, please visit www.companyc.com. Contact WHFA at www.WHFA.org or (800) 422-3778.
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editor’s message Il Bel Far Niente (The Beauty of Doing Nothing) I recently took a class to learn Italian, and I fell in love with the language and culture. I originally signed up for the class to be able to ask a few simple questions when I travel to Italy later this year, but I ended up learning much more than a beautiful new language. The first thing I learned was about the power learning can have on your well-being. Having not taken a class since college, I was excited to attend class each week (despite the fact that I was exhausted from work — try editing in English for eight hours and then switching into a new language!). After class my eyes would be fatigued but my brain would be rejuvenated and inspired. This rejuvenation and inspiration helped me become more creative in my writing and marketing ideas. The work that I produced was better because I was exercising and growing my brain. The second thing that I learned, and have tried to implement in my life, is il bel far niente, which means the beauty of doing nothing. Italians are very hard workers, but they are also masters of il bel far niente. I, on the other hand, schedule my free time down to the minute and often regret not having any time for myself. So I decided to stop making so many social commitments to others and made a social commitment to myself to do nothing — which to me doesn’t mean staring at a blank wall all day, but instead turning off my cell phone and computer and focusing on something that will rejuvenate my spirit and make me feel satisfied with myself. It is such a different feeling to come into work feeling refreshed and ready to tackle the day’s issues — without needing your Starbucks. During these economic struggles, I think everyone needs to take a break, learn something new and learn il bel far niente. You will be amazed at what you are able to accomplish once you take a moment to stop and think of yourself. Take a class on a subject that isn’t associated with your business. You may come up with a way to save your company thousands of dollars if you learn something new or give yourself the time to do nothing. Ultimately, if you don’t take care of yourself, you can’t take care of your business or employees. This issue covers many important topics that relate to your retail operation during this economic downturn. I hope that you learn many great ideas to help your business become more successful and thrive. Arrivederci!
Melissa “Mel” Dressler Western Reporter managing editor MDressler@whfa.org
looking forward
to September 2008
Winning at Retail: Competing on Customer Experience
sales & sales management
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
westernreporter
july 2008
Creating an Experience through Buzz Marketing
www.WHFA.org
Selling through Storytelling
Presorted Standard U S Postage PAID Permit #604 Sacramento, CA
... and much more!
Last month’s feature articles are available online at www.WHFA.org.
Member Profile: The Old Cannery Furniture Warehouse, Sumner, WA
Western Home Furnishings Association 500 Giuseppe Court, #6 Roseville, CA 95678 CHANGE SERVICE REQUESTED
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Contact WHFA at www.WHFA.org or (800) 422-3778.
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A
industry
beat Cherie Rose Debuts the Cherie Rose Collection Retailer Cherie Rose debuted her new store design and name during a VIP preview evening last April and regrand opening during the summer. The new store features Cherie’s own designs or private labels. Tired of playing the “game” of price wars and having customers shop her store before going to a competitor, Cherie decided to get rid of all of the brand names her store carried and focus solely on her brand. After being closed for over three months, the Cherie Rose Collection offers customers high style products and shopping experience. “The new look of the store is very high style,” Cherie said. “Since we were closed for three months, we have now had incredible
board
member
traffic because everyone wants to see what is new. Changing the store was the best thing I ever did.”
For more information on the Cherie Rose Collection, visit www.CherieRoseCollectionStore.com.
Way Basics Donates 5 Percent of Profits to Help1Up/National Furniture Bank Association Southern California and online retailer, Way Basics, announced they will donate 5 percent of their profits and their products to Help1Up/National Furniture Bank Association. The National Furniture Bank Association works with furniture banks to get furniture to families in desperate need.
For more information on the National Furniture Bank Association, visit www.Help1Up.org. Learn more about Way Basics at www.WayBasics.com.
Q What is your biggest challenge in furniture retailing? A The challenges keep changing from year to year. There was a time when getting
Q&A
and keeping great employees was the biggest challenge. Right now it’s keeping traffic coming in the store and keeping our staff upbeat.
Q What motivates, invigorates and inspires you about our industry? A My friends and peers in the industry are a constant motivation for me because we’re always sharing ideas. Going to market inspires me. I always look at it as a fun, stimulating treasure hunt! When I find new, fresh products, I return with the anticipation of transforming my stores. It’s exciting for me, my staff and ultimately our customers.
with Claudia
Q What is your most prized possession? A My home — especially when it’s filled with my family. Q If you won the lottery, what would you do with the money? A I’d take my family on a great trip somewhere exotic, put some aside for a
ne nth, tu ber o m y Ever ard Mem e o r into B o learn mo t A F Q&A your WH about members. board
rainy day, (or an economic downturn!), and donate a substantial sum to a children’s charity.
Q What is the most overlooked secret to success? A Thinking outside the box and never taking “no” for an answer. I’ve always thought that perseverance, hard work and a creative mind are great for success in any field.
Claudia LeClair owner Fiesta Furnishings & Brix Home 15320 N. Hayden Road Scottsdale, AZ 85260 (480) 951-3239 www.fiestafurnishings.com fiestaclaudia@aol.com
Q What does the next five years hold for you? A Watching my two oldest children go out into the world, my youngest son learn to drive, and hopefully, watching my business grow.
Q What do you enjoy most about being a WHFA member? A People, people, people! I’ve made so many great friendships. It has truly changed my life.
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Contact WHFA at www.WHFA.org or (800) 422-3778.
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feature article
What
REALLY matters!
how to succeed and prosper in a sluggish economy
I
know. I know. I know. Business is down. This is true for the majority of businesses in the retail sector. During this downturn I have been visiting at least two stores per month. And do you know what I see? Funny enough, there are still operations with good profitability, those that are average, and those that are weak. I believe that downturns are good. They weed out the weak, and they make room for those committed people, those that are smart, hard working and willing to adapt to change. I’m straight up. Unless you are all of the above, or hire people who are, it is difficult to make it long-term in retail. Now, those of you who are committed to long-term prosperity keep reading — this is about you! As a business coach, it is wonderful working with retailers who are like you, because you are 110 percent committed to success and are willing to do what it takes, by making changes and choices, because you like new ideas. The first question: If sales are down, why? Analyze your sales metrics! Is it traffic, average sales or close ratio? Or, is it all three? That’s where the great retailers start. They don’t panic or shrug and say, “Sales are down,” and stop talking. They have concrete proof of why. Then, they fight! You need to know your metrics: daily, weekly, monthly, quarterly and year-to-date. In doing this you are able to spot downturns quickly and make changes to your operation faster. Now, I’m sure you are all saying, “It is traffic — I know it!” Ok, then, I’ll focus on traffic. So, your traffic has been trending down — what can you do in the immediate future to offset that metric so that cash flow is healthy? Well, I see many operations spending more cash on advertising and holding big promotions that cut into margins. If they just pump the well a little more — some water will still come up, right? No! If everyone is pumping the same well, the same way, what will the results be? Less water for everyone, of course! Find a new well or a new way to drill it! It’s like the cheese in Spencer Johnson’s bestselling tale, Who Moved My Cheese. The mouse that stayed and did the same “ole thing” by waiting while the cheese got smaller starved. The mouse that saw the cheese getting smaller went hunting for cheese. Guess what? He got fat! So there is less water in the well, at the moment… less cheese, at the moment. There is less cash flow being generated, at the moment. You are getting thirsty. Where should you look for water? Where do you find more cash?
Contact WHFA at www.WHFA.org or (800) 422-3778.
Inside First, look within. This is the tough part for many so try to take emotion out of the equation. If your sales have reset down to a new level, your other operating costs must follow suit, as quickly as possible. Cash, without changing debt, is really only produced from net income on the P&L and a reducing inventory. Improve these components and you will increase cash:
Gross Margin
David McMahon business coach PROFITconsulting
Most companies are running at around 4245 percent Gross Margin (GM). When sales fall, this typical GM is often not enough to cover the fixed costs so that enough profit is produced. Massive sales that cut margin even more produce a negative cash flow. Margins need to go up, not down, to prosper. • Concentrate on purchasing only best sellers for stock as they produce the highest ROI. • Never repurchase slow selling, or nonproven items. • Start pricing of new items at 55 percent GM and have a price matching policy if you are under $10 million in sales. Start one vendor or category at a time to track effects. • Only discount slow moving items. Never discount best sellers, new items or special order. • Special orders are an opportunity for higher GM. Grab it every time! • Promote fabric protection and warranty value every step of the way. • Discount in steps according to the age of inventory so that turns and margin are maximized. • Implement a variable commission for salespeople and designers that is based on GM percent performance. The higher the GM sale, the higher the commission and vice versa.
Distribution Unlike other retailers, furniture retailers are burdened with warehouse and delivery expenses due to the bulk of the product. To increase cash flow via this area, you must be efficient in turning inventory fast.
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• Make sure that all available merchandise in the warehouse is displayed each day. • Schedule deliveries ASAP! • Use a routing and mapping program, possibly with GPS to minimize fuel and time costs. • Determine how many delivery crews are necessary to be delivering full trucks at all times. • Set delivery charges at a rate so that all driving related costs, at least, are covered. • Determine how much warehouse space is truly necessary for your ideal inventory level. Get rid of extra storage. (A NHFA high-profit inventory is 15 percent of sales.) • As an alternative, explore hiring out delivery, but not warehousing.
Service Any time there is a service issue on an item, the true profit of that sale is lost. This alone can be the difference between a profit or loss for the year. Declare war on sales mistakes, damages and defects. To accomplish this: • Check multiple times with the customer, salesperson and vendor on all special orders. Follow-up and acknowledge often. • Then, on all deliveries and customer pick ups, preparation, deluxe and closely inspect all items without exception. • If there are any blatant vendor damages or imperfections, take a picture, and document the work to repair it and seek vendor credit for the expenses. • Load and pack professionally and have the drivers take responsibility for the integrity of the product. This will not eliminate delivery damages of course, but it will greatly reduce the amount of customer service issues, increase credits and save many sales. There is a lot of extra business produced when customers are happy.
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Sales Department Salespeople need to be managed. Management needs to provide proper ongoing training in your selling processes. After this the salespeople and sales team should be measured not only on total sales but on its components. Sales = Average Sale x Close Rate x Traffic. Weak performers should be removed and replaced, fast, preferably within the trial employment period. Mid-level performers should be trained to improve. Top performers, you can let run, provided they are team players. • Define your selling process. • Determine the proper number of salespeople for your traffic. This number may differ depending on selling process. For example, a store that is traffic and immediate sale focused will require a higher traffic per salesperson than a store that is lifestyle focused. One hundred UPs per salesperson is a maximum for stores that are lifestyle focused. • Track your metrics. • Focus on team building and improvement. • Eliminate weakness and poor attitudes, fast. • Don’t be understaffed and never be overstaffed with the wrong people.
Administrative Costs This is the hardest part of your business to “look within”. This is mostly because you and your family members may be in this cost category. Let’s focus on you. Temporally take emotion out of the equation. Add up all the salary, bonus, rent, meals and any non-critical business related expenses that run through your company. That total should only be paid if there is a profit. Loss is not an option. Those businesses that take money out even if there is a loss, for whatever reason, force loans and eventually run their well dry. Selling of any asset types is their final step. Don’t go there. Pay yourself appropriately — from profit, only. With employees, including family members who work in the business, embrace the practice of rewarding fewer administration people better. A great employee with a great attitude is worth three average employees in my book and10 sub-par performers with poor attitudes are worth nothing. It is really unbelievable; I see businesses continue to pay great employees $10 an hour when they are vital to business operations while an average family member may get $20 an hour. Creating a career for the great people in your business is vital to long-term success. Remove weakness and poor attitude, immediately. There are many other administrative associated costs — just ask yourself with each one, “How does this help my business?”
Contact WHFA at www.WHFA.org or (800) 422-3778.
Now, as far as daily processing of data such as PO’s, acknowledgements, invoicing and follow-up, there are technical means to do the work that you traditionally paid an employee to do — EDI. Whatever software system you are on there is a solution for you to enable this with your vendors via a VAN (value added network). Seek partners in these areas — visit your NHFA or WHFA Retailer Resource Center the next time you are at market. There are more things than just vendor inventory that can help you improve cash flow in Vegas or High Point! That brings me to:
Inventory Costs This is your largest current asset. This is why you have the operating expenses that I just mentioned. This is where a lot of the water in your well comes from. Here are the keys to tapping a lucrative inventory well: • Carry the appropriate amount of inventory for your sales volume. That is between 14 and 18 percent of annual sales at all times. • If you are over inventoried, don’t stop buying. Stop buying new. Continue to buy proven items and special order. Buy new again when your level has been corrected. • Identify and mark down slow moving items fast. Do not wait for a semi-annual clearance sale. • GMROI (Gross Margin Return on Investment) is critical. Know the GMROI of your categories and vendors. Contract areas of weakness, expand areas of strength.
Outside After taking a hard look at your business within, next look outside. What can you do better to go get your customers? They are still there. They are just spending their money elsewhere, paying their debt or saving. How can you reach out to them? Or, how can you make more out of who you do reach?
as newspaper and yellow pages and into e-Marketing. If you can prove to yourself that the return on your traditional advertising investment is producing a decent ROI, then focus on that. If you have no proof, try something new. e-Marketing allows a business, through online marketing agencies, to improve customer service and target market their customer database online. This is a fraction of the cost of traditional methods. Today, the high majority of your customers have shopped online. They expect that you have the ability to contact them online in a professional manner. They also expect that if you have a promotion you will email them; since you have continued on page 14
One of these people had an HH “GRAND HH&A
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Advertising and Marketing Strategy Recently, I was at a retailer who cut his advertising expenditure by 25 percent. Sales did not decline. He did this through shifting out of traditional methods such Contact WHFA at www.WHFA.org or (800) 422-3778.
'OING OUT OF BUSINESS s 2ELOCATION s ,IQUIDATION s 2ETIREMENT All inquiries handled in strict confidence.
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continued from page 13
filled their mailbox many times over the years. Your loyal customers want you to deliver valuable product information and lifestyle related articles in your monthly e-Newsletter. That’s what other retailers, both online and offline are doing. Are you? The great thing is, it’s only starting and it’s not too late. Here is what to do: • Contact someone who can get you started in finding an e-Marketing agency that specializes in retail furniture. Email me, and I’ll get you moving in the right direction on this: davidm@profitsystems.com. • Train your people in obtaining emails for various activities such as follow-up, delivery scheduling, special promotions and eNewsletters. • Get training on how to build and maintain eMarketing productions. • Export appropriate customer data from your software system. • Import into your e-Marketing partners online portal. • Send your online campaigns. • Access results. With a good e-Marketing agency you can track all results of your campaign. You can see how many customers opened it, where they are from, and what they clicked on. • Keep with it, keep providing value and keep improving!
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Selling Strategy This speaks to my comment about making more from the people you do reach. Your selling system needs to define ways in which your salespeople can help increase average sales, close rate and traffic. It’s been said before, and I’ll say it again, focus on rooms. Require each salesperson to sketch or do an online room, and then plan the room for each and every customer whom they serve. Period. Your close rate and average sale will increase. To increase UPs, automate your salesperson to follow-up via e-Marketing for customers who did not buy, yet. And of course, do this for customers who did buy so that they can be kept informed and easily inform their friends of your fantastic and forward looking company. So there are many ways to improve the production of your well or find more cheese. There always will be. Just look for new and creative methods. Talk to people who can help you improve. Business will not be down forever. The weak will go out of business — and should. That is natural. The smart will prosper hugely in the turnaround. Now is the time of opportunity! Do you want to make more money? GREAT! Email David McMahon, a business coach with PROFITconsulting, with the subject “MO MONEY”, and he’ll discuss with you how you can do it. David can be reached at davidm@profitsystems.com.
Contact WHFA at www.WHFA.org or (800) 422-3778.
Contact WHFA at www.WHFA.org or (800) 422-3778.
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Lease Renegotiation
A
Doug Kays real estate broker
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s a general rule, occupancy costs for a retail business are the fourth largest component of expense, exceeded only by inventory, personnel and advertising. Those costs are controllable, but if you are a tenant, the cost of occupancy is set by contract. When you execute your lease, you are agreeing to pay that rent amount every month regardless of whether or not the business can afford it. In challenging economic times, it is common for tenants to try to reduce their rent, and it is perfectly appropriate to do so. However, in preparing for this negotiation, you need to understand that the landlord holds almost all of the cards. You have signed an agreement (lease) and the landlord has every right to decline to give you any relief from your promise. Further, your only meaningful bargaining chips are that the business will fail and vacate, that you will use your right to sublease/ assign the space, that you will not renew at the next renewal extension date or that you will improve the property or business and want a reduction to support the cost of those improvements. If your sole argument is that the sales are not supporting the business, be prepared to support your claim with documented sales figures and your P&L or business tax returns. If you expect to be successful in persuading your landlord to give up income that the landlord is contractually entitled to, you have to be willing to bare your financial soul. Most landlords feel that they are investing in your business when they give you a reduction, so be prepared to show all. Many retailers think that this is just a negotiation on rent so they go in prepared to talk about the rental values in the area (comp’s) and
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the harm that will come to the landlord if the space is vacant. These are valid arguments, but by themselves they are not persuasive. While the landlord may understand and even be concerned about these issues, few landlord’s will react solely to those arguments. You need to give them a plan and a business rationale that they can react to and sign-off on. Otherwise, if the only argument is the threat that the rent values are lower and the building will be vacant, then the landlord won’t respond because he doesn’t want to validate those fears or risk a similar reduction with other tenants. The best way to succeed is to go in prepared to discuss what you will do to improve your business situation. Propose that the decrease will only be for a limited period of time; start with three years and be prepared to drop it to two years. If you are successful, you can always make your pitch to extend the period of the reduction at the end of the two or three year period. Also, and this is a key point, be prepared to discuss in depth what you feel the challenges to your business are and what you are going to do to address and overcome those challenges. Your business is not a charity case; present a compelling case that will make the landlord believe that you are worth the extra trust and commitment and the lower income. If you are in a shopping center, show the landlord how your extra efforts to overcome your challenges will help the businesses of the other retailers in the shopping center. Also, pledge and keep the confidentiality of the renegotiation. All owners of shopping centers, regardless of size, fear that the word will leak out and other tenants will ask for similar reductions. Contact WHFA at www.WHFA.org or (800) 422-3778.
Remember that your landlord has costs too. It is expensive to operate real estate, even if you have Net, Net, Net Leases. The interest charges on the mortgage alone are probably huge, as are the personnel expenses of running the operation. Also, many times there are investors in the background demanding an increase in returns, not a reduction. By understanding your landlord’s needs and concerns, as in any negotiation, you are in a better position to strike a mutually beneficial compromise. Here are the tools to use as you plan your negotiation: 1. Know the comparable rents in your immediate retail area. Your best argument is to meet any lower rents in the area. It’s very difficult to argue that your rent should be lower than the comparables in the area; however, larger spaces rent for lower dollars per square foot than smaller spaces, so size does matter. 2. Know the term left on your rent. If you have a short period left, argue that a lower rent will help you be successful and make you want to extend your lease when it expires. If you have a long remaining term, use a short period of reduction or argue that the longer term left on your lease justifies the landlord’s continued support of your efforts. 3. Consider offering a term increase to the landlord for any reduction the landlord agrees to. For instance, if you have a short term left or an extension coming up and you feel that you can turn your business around if you get a rent reduction, offer an early extension or agree to add a couple of years to your term if the landlord agrees to an extension. 4. Consider offering a percentage rent tradeoff for a rent reduction. If the landlord feels that he can recoup any reduction on fixed rent through a percentage rent, he may be more inclined to agree to a reduction in the fixed rent. Be sure to be careful calculating the trade-off between percentage rent and fixed rent and make sure that you calculate the remaining fixed rent against the percentage rent before you commit. This is a good negotiation tool, but if not handled correctly, you could end up paying more rent than before. 5. Consider committing to use a percentage of or even all of the funds saved in the rent reduction directly on additional advertising to drive business to your store and to the shopping center. 6. Calculate beforehand what one-year’s vacancy would cost the landlord and what the real estate commission on a new five year lease would be. Lost income because of vacancy is not the only cost that the Contact WHFA at www.WHFA.org or (800) 422-3778.
landlord would endure. A vacant building still has common area expense, insurance expense and real estate tax expense. A new tenant would want certain tenant improvements, a tenant improvement allowance, free rent and there would be broker’s commissions. These can be devastating amounts of money to a small landlord; however, remember, if you walk away from a current lease, you can be liable for these expenses. If you have a longer term left on your lease and you use these arguments, the landlord is liable to turn the table on you and remind you that these are your expenses if you vacate before the end of your lease. The other tools that can be used to reduce your losses under a lease are assignment and sublease. These are not really rent renegotiation tools, but rather they reduce or eliminate your rent exposure by substituting someone else in as tenant. Most leases require approval from the landlord and some require that you pay your landlord’s legal bill for reviewing the documents. Further, some leases require that a portion of any profit you make on a sublease or assignment belongs to the landlord. Finally, in most leases, sublease and assignment are only allowed to a business that is in the same type of business that is described in the lease under the definition of “Allowable Use”. It is important to keep your business expenses in check. Variable expenses are easy to manage because they are based on use. Rent, however, is not a variable expense unless your rent is entirely based on percentage rent. The only way to reduce most rent is to reduce your square footage by sublease or assignment or by negotiation with the landlord. Since the rent was set by contract, alteration of that contract can be difficult because the landlord has the right to collect the rent that was stated. You must be prepared and you must be persuasive in order to successfully change that contract. Remember, by asking to renegotiate, you’re telling a creditor (your landlord) that your business may no longer be credit worthy and that your prior word was not something the landlord could rely on. These revelations may put a strain on your relationship with your landlord, so be prepared and focus the discussions on the business benefits of reaching an agreement.
Doug Kays graduated from Southwestern University School of Law in 1979 and passed the California Bar in 1980, although he is not actively in the practice of law at this time. He obtained his Real Estate Brokers license in 1988. He served as operations VP and general counsel for McMahan's Furniture from 1980 until 1995 when he became VP of operations for the western U.S. for HeiligMeyers Furniture. In 2000 he opened and operated his own eight store chain (Premiere Home Furnishings) which he operated until he opened a full-time real estate brokerage business in 2005. He is the current president of NHFA and he can be reached at (310) 459-5811 or at DKays@DougKays.com. westernreporter
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Is It Time to Get Small?
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t should be clear by now that our industry is in trouble. We can point fingers and cast blame, run around like Chicken Little, or we can reach for the Jameson’s — but, in the final sobering analysis, we realize we’ve got to do something meaningful or this tsunami will sweep us and our businesses away. While most TV pundits earn fabulous livings preaching doom and gloom for maximum effect (and we waste productive time listening to them), many of us in retail home furnishings spend our evenings quietly, if sadly, staring at our balance sheets and scratching our heads in dismay. What do we do? How do we get our arms around the things we need to do to ensure the survival of our businesses? How long will this — ahem! — downturn go on? And, most importantly, what can we do to minimize the long-term impact this economic crisis will have on the morale of our organizations and the people who staff them? Unfortunately, when traffic, revenues and average sales are down, there are no short-term lasting solutions. You can have some aggressive storewide sales to generate quick cash — but this is usually at the expense of margins and future business. These kinds of promotions reach into the future and pull on-the-fence clients into the present to buy now — and future sales are ransomed for the cash flow needs of today. You can promote heavily to increase traffic, but those Contact WHFA at www.WHFA.org or (800) 422-3778.
who have a history of heavy price-supported promotional advertising are noticing the Law of Diminishing Returns is still fully functioning — the good ole’ ads that usta pull ‘em in just don’t work as well as they used to. It seems as if the customers just don’t care anymore. There are no quick fixes. A business that is suddenly less profitable can sometimes be made more profitable if expenses can be reduced dramatically — provided retail services do not subsequently drop to unsatisfactory levels. It may be time to contemplate “downsizing” and ask the question: How many people and resources do I need to run my business? The concept of downsizing states that, if we could make a company smaller, we might be able to bring it back into profitability. If market conditions have produced a reduction in traffic and sales, then a corresponding reduction in expenses could help the company maintain its bottom line. While most companies in these times are taking a long, hard look at all expenses, it might be useful to take that same long, hard look at our employees — our largest expense. In prosperous times, when our businesses are buoyed along by the rising waters of a healthy economy, marginally productive employees, merchandise, advertising initiatives and entire stores are also swept along — that is, their unproductivity (failure to meet minimum standards of westernreporter
James Grandillo senior retail consultant JRM Sales & Management
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performance) is either less conspicuous or, at the least, overlooked by management because overall growth and profits have been satisfactory. However, in these discouraging times, responsible managers must take steps to ensure the sustained profitability of our businesses. What was marginally acceptable performance in prosperous times must now be viewed as unsatisfactory performance today. And if we have never established them, now is the time to identify our company’s standards of performance. Standards of performance for individuals help to quantify how productive our people need to be. Employee productivity can be measured objectively — by quality, quantity, timeliness or cost. And if something can be measured, it can be managed. Standards can be extended not only to sales staff, but also to warehouse, delivery and administrative staff — what these folks do can be measured objectively and managed. We can have standards for merchandise (how many should we sell, at what price, in what time period, etc.). We can have standards for advertising (how many people came into our store during a specific time period). We can have standards for everything! Well-run businesses have always had such standards for employee performance. By using job descriptions, which spell out in clear, measurable terms what is expected of an employee and by giving caring and frequent performance appraisals, employees are given
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an understanding of what is expected of them and the consequences of both good and poor performance. These businesses have identified marginal performance and mechanisms are in place to ensure that the weak employee improves, accepts additional training, or is replaced. Downsizing in terms of marginally performing staff in these businesses is less stressful because the entire operation is and has always been performance-based. However, where standards are not established or enforced and in the culture of the company weak performance is customarily overlooked (read: sanctioned), needed staff reduction is shocking and frightening to the company at large. In tough times, when the company needs employee loyalty to weather change, morale will clearly suffer. And low morale is the last thing the downsizing company needs. Since well-run companies operate from budgets, productivity is reflected numerically in the measurement of sales, margins, expenses and other mathematical benchmarks. A budget, which is a blueprint of a company’s expense structure and revenue expectations, is designed to give management early alerts as to trends and outcomes. The activities of an employee generate revenue or expenses (or both), and these numbers are each reflected in a properly constructed operating budget. When profit objectives are not being met, the budget helps us to understand why. Are we spending too much? Where? Can we control this overspending? Are we less profitable because certain employees cost us more than they earn for us? Or is it because they are producing less than they should? Is our sales staff performing adequately? Who among them is not? Since every task an employee performs can be measured, a budget can show us what’s going on and where the problems are. It teaches us what should be managed better. Properly used, it can help us reengineer work processes or expenses to help bring the businesses’ numbers back in line. Companies without operating budgets — more “seat-of-the-pants” operations — do not have the luxury of clear understanding when it comes to proposed expense reductions. They cannot forecast the actual impact that proposed expenses (or lack of same) will have on profitability; budgetless companies cannot accurately see what has happened, is happening, or will happen. In these operations, when under stress from low traffic and sales, typically discretionary expenses will be cut to save money: advertising is reduced, company gas cards or cell phones are called in, travel and entertainment expenses are curtailed. Usually these simple cuts do not produce enough long-term dollars to ensure a company’s sustained profits and growth. Since staff productivity in these companies is poorly understood, any reductions in staff that are contemplated are either done emotionally or not at all. Companies decide to “ride it out.” In the past this may have worked. Today it will not. All authorities agree: this one’s going to last for a while. Contact WHFA at www.WHFA.org or (800) 422-3778.
Downsizing efforts can take many forms: • Reduction in staff • Reduction of inventory • Reduction in advertising • Elimination of unproductive operating units • Reduction in benefits Reducing staff is stressful and can cause poor morale, especially if the company culture is not performance-based. Obviously, once staff cuts are made the workload has to be spread out over the remaining employees. This never wins kudos. However, those remaining feel they’ve “made the cut” and are usually grateful that they have. They may be eager to embrace the change, to be shown to be part of the solution and not part of the problem. As management, we should encourage this response and reinforce the efforts of the staff towards making this difficult change work. It is not out of the question to reward monetarily those whose work behaviors aid in making this difficult situation better. In situations where stores in a multi-unit operation must close, among the staff of the closing stores there are definite “keepers” — employees whose superior performance qualifies them to be added to stores where cuts have had to be made. Thus, the remaining stores are stronger because we have added capable, productive employees from closed stores to their staff. Prolonged soft traffic and sales and subsequent loss of revenue creates cash flow issues, and reducing inventory is one way to get some cash back into the bank. Professionally merchandised companies constantly monitor their inventory levels, their GMROI (Gross Margin Return on Investment), and their inventory turns. These companies watch their obsolete (i.e. too old, not selling, etc.) inventory carefully, have disposal plans at the ready, and as a result rarely have major cash flow problems. They constantly refresh their store displays to reflect the marketing agenda of the company in the best possible way. They utilize an open-to-buy formula and stay between the lines when they purchase inventory for resale. Companies who are less sophisticated in the area of financial controls can have large inventory buildups, which ties up their cash and — when business is slow — they can have huge cash flow problems. Downsizing means “getting smaller” — and this means letting the inventory get smaller also. Getting better at turning the inventory is a science unto itself and discussing this issue fully is beyond the scope of this article. However, making better use of the inventory is a never ending quest. In a downsizing environment, it is a critical aspect of a company seeking to redefine itself as a smaller and leaner entity. Advertising — that Black Hole into which our money is sucked — is almost always poorly done by small to medium-sized companies. No one knows much about advertising, most of us Contact WHFA at www.WHFA.org or (800) 422-3778.
are unsophisticated in marketing, and we just do it because we know we should and leave it at that. We buy the radio stations we listen to, the TV shows we watch, and a few pages in our children’s yearbooks because we want to be viewed as local folk supporting local initiatives. We do what we are told. If our buying group produces a flier, we buy into the flier, etc. In reality, advertising because it is so hard to judge how well it works, is a difficult thing to cut without anxiety. If you cut it all, you won’t notice anything for a few months. When you do, if you start it all back up again, you won’t notice a positive change for many more months (market share, once lost, takes twice as long to recover — if you ever do!). Yet reducing advertising can and should be part of our overall downsizing strategy. Advertising initiatives should be scrutinized very carefully and fat should be trimmed. How much of your advertising is ego-driven? Is your face on the billboard? Are your kids in your TV ads? How much money is spent supporting the local Little League or the Boy Scouts? Re-think all advertising based on one criteria: how many times can I attribute the door of my store opening to a particular ad or mode of advertising? Once again, it is necessary to measure this, “How did you hear about us?” or “What made you visit our store today?” Questions like this can be incorporated
Store Procedures Manual The Store Procedures Manual is the only guidebook of its kind for the home furnishings industry. This comprehensive guide was written for retailers, by retailers and $299 Members industry experts. $399 Non-Member Use the Store Procedures Manual to help your business run smoother, more efficiently and increase profitability with this easy-to-use, step-by-step guidebook on creating your own company's operational procedures.
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To place an order or if you have questions, contact your WHFA membership representative at (800) 422-3778.
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into our at-the-door conversation with customers and can be recorded, tabulated, and measured. The goal of downsizing your advertising should be either to reduce the cost of advertising while improving its effectiveness — or to reduce the cost without changing its effectiveness. Any reduction of employee benefits — like any salary reductions — should be last resorts at best. Companies that have superior benefits packages will find it morale-destroying to start reducing costs by cutting these expenses. Good employees — i.e. those who are productive and could find good jobs elsewhere — sometimes leave companies when their benefits are reduced and move on to work with your competition. Weak employees who cannot jobjump easily will remain — and thus you have now strategically
weakened an already challenged retail company by allowing its best talent to be siphoned off. If downsizing must include salary or benefits reduction in order to work, understand that this is a perilous path to go down and be forewarned. So here’s what we can’t manage: • The overall economy • What our competitors do • The political climate • Oil prices • The war in the Middle East • Consumer confidence Because we cannot control or even understand the intricacies of the above and how the back-room machinations of those in power ultimately impact the retail home furnishings industry, let’s just agree to ignore them, all right? To engineer the kind of future we can survive in, let’s focus on things we can control: • The competency of our selling, delivery and office staff • Our company’s profitability and expense controls evidenced in our operating budgets • The productivity of each operating unit (if multi-store) • The merchandise displays in our stores • Our dollars invested in inventory • Our advertising and marketing initiatives Simply stated: If you haven’t been managing your business responsibly up till now, you’d better get busy. If you aren’t yet thinking about downsizing, then you should be taking a serious look at the above six points. If you do, maybe you can avert downsizing altogether…
JRM Sales & Management is a powerful team of consultants and trainers to the retail home furnishings industry. Visit their website at www.jrmsales-mgmt.com for additional information or call them directly at (678) 574-0937. James Grandillo, senior retail consultant, has over 30 years hands-on retail experience in all aspects of the home furnishings industry. As a consultant, he has helped to improve the performance of nearly 100 independent retailers.
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Contact WHFA at www.WHFA.org or (800) 422-3778.
Family Business "In-Laws"
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ome call themselves “outlaws” — they feel so remote from the family’s business. Parents feeling helpless, cross their fingers and hold their breath. They worry that unpredictable and uncontrollable spousal additions to the family might disrupt the already challenging task of family business continuity. They remember the oft-noted adage, “In-laws are the Achilles heel of the family business” and wish for the days of arranged marriages. But we urge business-owning families to view the situation from the perspective of the in-law. With empathy, understanding, acceptance and education, business-owning families can help spouses support the family business rather than distrust or even disrupt it.
Culture Shock In-laws enter their new families with the experience of culture shock. Unless they come from a business-owning family, they have very little basis to understand what to expect. As one new daughter-in-law put it, “The family business is the central topic every time family members get together. If you aren’t closely involved in the business, you feel left out. I know my husband’s brother-in-law agrees. It’s like they have a secret language!” This feeling is common. Most businessowning families have used the business as the center of conversation for decades. Talking about it and relating to it is instinctive. The in-laws, most likely, come from a very different background. They are more likely the offspring of school teachers or government workers or doctors than of entrepreneurs. They don’t have experience that prepares them for the dominance of a business in peoples’ lives. Differences in values and expectations can create marital conflicts. A business-owning family’s expectations related to observing holidays, free weekends, or regular dinner times can lead to real strain in a marriage where the spouse’s expectations significantly differ. Conflicts can be magnified when the in-law struggles to maintain equivalent relationships with his or her own family of origin. The Contact WHFA at www.WHFA.org or (800) 422-3778.
business-owning family often has greater influence over where and how the young family will live. The business family has business reasons to be in-touch nearly everyday. And the successful business family can usually be more generous with holiday gifts and vacation support. Sometimes in-laws resent the great influence of the business family on their lifestyles. We offer a few basic recommendations: • Spend patient time educating in-laws about the family’s business. • Explain business finances and requirements for business success. • Involve in-laws in regular family meetings and encourage lots of basic questions. • Ask new in-laws to clarify their families’ holiday and vacation traditions. Work to honor traditions on both sides. Sometimes unselfishness or creativity are necessary. • Establish times where discussing the family business is off limits. • Encourage in-laws to share their interests and encourage occasions when the business-owning family can appreciate what new family members can contribute. • Be open with family member compensation policies and facts so no one is “guessing” or assuming there are reasons for secrecy. The long-term strength of the family business depends on the support of in-laws. The ability of the family to be sensitive to new family member’s background and to include in-laws on the family team is not only good business, but sets the stage for future generation’s mutual respect. After all, the “outlaws” are parents to the next generation of “family”!
Reprinted with permission from the Family Business Advisor. ©1996 Family Enterprise Publishers, www.efamilybusiness.com. All rights reserved.
John L. Ward and Craig E. Aronoff
Interested in becoming a part of Fast Forward? Visit www.WHFA.org and click on Fast Forward or contact Kaprice Crawford at (800) 422-3778 or kcrawford@whfa. org. You can also participate in online message boards on the WHFA website.
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member profile Furniture West La Grande, OR
N
ineteen years ago, Gene DeMeerleer graduated from college with a degree in business finance and a financial job lined up in San Diego, CA. Little did he know Melissa Dressler editor at that time that he would turn down his job in the finance industry to start his own home furnishings business. Having grown up in a small Idaho town, Gene was familiar with the family business. His dad, Jim DeMeerleer still owns and operates two furniture stores, Furniture Center in Moscow, ID and Furniture West in Moses Lake, WA. During Gene’s college years, Jim was buying and liquidating other furniture stores and occasionally asked Gene to help him run liquidation sales. Once Gene graduated college, he was given an opportunity to open a new store and if he successfully ran the store for a year, he could purchase it from his dad. Gene was intrigued by the opportunity for sole ownership of the store and decided to stay in the family business. Together, Gene and Jim opened Furniture West in La Grande, OR in 1990, and since 1991, Gene has At a Glance been the sole owner of the store. Store Locations: La Grande, OR “My dad mentored me a little bit, Type of Store: Full-line but really it was a trial and error process when I began,” he said. “I Year Founded: 1991 mirrored his image as far as running Number of Employees: 8 a financially conservative business.” Number of Store Locations: 1 Today, Furniture West is a successful furniture store that Website: www.furniture-west.com has grown and evolved as much Top Manufacturers: Sealy, Ashley, as Gene. With nine employees, Best Chairs, Restonic and Stanton including Gene and his wife WHFA Member Since: 1994 Velma, Furniture West has become a well-run and successful home 26
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furnishings business. This has been accomplished by creating a welcoming environment for customers, listening to great advice, finding new ways to motivate and train employees and keeping family first.
A Welcoming Experience When customers enter the newly remodeled Furniture West showroom, they are greeted by fresh colors on the wall and consumer friendly displays. “We pride ourselves on keeping our showroom easy to shop and maximizing our selling opportunities,” Gene said. One way of making the customer feel welcomed and comfortable in the store is by inviting them to visit the Welcome Center, which offers fresh baked Otis Spunkmeyer cookies, coffee, bottled water and balloons for customers’ children. “We want to become their friend and earn the right to sell them furniture before we ask. You want to make them feel welcomed,” said Gene. “We want the customer’s experience to be an excellent one, from the time you walk in and are welcomed to our store, to when our delivery service delivers your furniture and gives you their card and thanks you for doing business with us.” Another way of creating a welcoming, no pressure environment is by paying salespeople a salary instead of commission. “Our no pressure environment is fueled by a salary paid sales force. We do have an UP system, and my sales personnel are expected to meet close-ratios and add-on sales minimum standards, but it is more of a team environment and less of a cut-throat, high pressure environment. We get comments all the time on how nice it is to shop in our environment! It is relaxing to the customer,” Gene said. Contact WHFA at www.WHFA.org or (800) 422-3778.
While Gene doesn’t pay employees a commission, he still uses sales incentives to keep them motivated to sell and improve their performance. The combination of a comfortable salary coupled with incentives, spiffs and bonuses has helped Gene have a low employee turnover.
Pick Gene’s Pockets This year, Gene started a new program to motivate his employees called Pick Gene’s Pockets. Gene puts an assortment of money — $1, $5, and $10 bills — into a box and when an employee exceeds certain expectations or does something well, they get to pick something out of the box. “Brad Huisken suggested the idea during the last WHFA conference and I thought it was great,” Gene said. “It is a great reward for promoting the efficiency of your employees. Recognition and immediate gratification are powerful motivators.”
Staying Conservative Over the years, Gene’s received a lot of great advice, but the advice that has and continues to pay steady dividends came from his dad, “Dad always preached that in the long haul the best course of action was to stay financially conservative. Do not extend yourself further than your comfort level. You’ll live longer! In today’s market, that advice is priceless.” Even during this current economic downturn, staying conservative has helped Furniture West remain profitable. “We are not in a financial vice, we have the freedom to breath and ride through these tough economical times,” he said.
One way he is able to do both is by coaching his son’s sports teams. Gene is currently coaching his son’s soccer team, which allows him to spend more time with him. When Gene isn’t in his store or coaching soccer, he finds time to be an active member of the local chamber of commerce, the Rotary, the local search and rescue team, Boy Scouts Eagle Board, hospital foundation board and a lifetime booster of the Eastern Oregon University and La Grande High School.
The Future In the future, Gene would like to see his company continue to grow and be progressive. He feels that the next hurdle for Furniture West is to be more proficient on the Internet. “This electronic super highway has changed the way we communicate and do business. I’ve been slow at adapting to this change. My website, my communication with my customers through email and my advertisements need to be improved. I’m putting forth a lot of time and money to catch up,” he said. Gene sees Furniture West being present for many years to come, “Our future looks good. I’d like to say we’re on track for continued success. I’ve got to stay optimistic, this store is ultimately responsible for support eight families and in my world, my son and daughter will be attending college soon,” Gene said. By staying financially conservative and being progressive to change, Gene is sure to be taking care of the Furniture West family for generations to come.
Family First Gene considers his entire business and community a part of his family and has always stressed the importance of it. “You get one family in a lifetime — embrace it for what it is,” he said. “Everyone’s family is different as well as the relationships within.” Gene has always welcomed and encouraged his employees to take time off for family functions. “Never get between an employee and their family. You will lose every time! A happy employee is a productive employee,” Gene said. He uses this rule with his own family as well. While Gene is very active in the local community and with his business, he remembers that his family is first. “My philosophy is to always give back to the community you do business in,” he said. “But I have to keep it in check, because family is first and spending time with my family is the No. 1 priority. I give as much time as I can to the business community without jeopardizing my quality of life with my family and store.”
Contact WHFA at www.WHFA.org or (800) 422-3778.
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Discount Paint and Customer Reward Program
Payroll Services
Employee Uniform Program Business Cards 24-Hour Vehicle Monitoring and Safety Management System
Online Sales and Product Training WHFA's eNewsletter
Long Distance Phone
Conference
Computer Purchase
Academy
education & training
Video/DVD Rental & Purchase Management Development Institute
Freight Discount Program FedEx Shipping Program
Sale-In-A-Box
Import Container Program
Direct Mail New Movers Direct Mail Customer Rewards Program
advertising & sales
Truck Signage Marketing On Hold Website Development & Internet Marketing Service Traffic Builders Personalized Promotional Products
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freight & logistics
Start saving today! (800) 422-3778
eNewsletter Program Western Home Furnishings Association
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Online Furniture Sales
Detailed descriptions available online at www.WHFA.org
August 2008
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Contact WHFA at www.WHFA.org or (800) 422-3778.
program of the month Do You Know the Fine Print in Your Bankcard Processing?
O
ver the last decade, I’ve had the pleasure of assisting a wide variety of retailers with their credit card processing needs. I’ve also had the unfortunate experience of having to witness the pitfalls that many retailers have unwittingly fallen into when setting up and maintaining their accounts. I’ve seen it all... retailers that were mislead, misunderstood and misinformed! For your business and your bottom line, it’s important to make an educated decision when it comes to credit card processing. For your protection, I’ve put together a list of warning signals to watch out for. Take a moment to review the following and save yourself money, a headache and hassle. 1. Selling Equipment You Don’t Really Need. Most of the bankcard representatives still make their money with a hefty mark-up on equipment. Some are all too anxious to oversell new equipment despite the fact that your existing machine will work fine. The WHFA program is compatible with the majority of existing terminals and can be programmed right over the phone for processing. 2. Binding you to a Three-Year and $300 Cancellation Fee Contract. I have seen so many retailers get stuck into binding agreements, fluctuating rates they cannot do anything about and stiff penalties for cancellation. With WHFA’s program, there are no contracts or cancellation fees. You process month-to-month with no cancellation fees. 3. Unusually Low Quoted Discount Rate. Ever heard the phrase, “Too good to be true?” Quoted or advertised rates in this industry are often misleading. The reality is Visa/MasterCard has set interchange rates that are set industry wide and are the exact same for all resellers. Watch out for the bait and switch and low advertised rates, because they will surely be making money from you somewhere! Based on the volume of WHFA members, we have negotiated a standard program for all retailers with no surprises. 4. Low Authorization Fees. These fees can be quoted in different ways, to make it appear as though your transaction fee will be lower than it is. Some will quote it as an authorization fee, but then there will be an added interchange fee per occurrence. The important thing to find out is what your total cost will be per card Contact WHFA at www.WHFA.org or (800) 422-3778.
swipe, aside from your discount rate. This is another area that processors will try to make extra money from you. The WHFA program Kaprice Crawford has a flat fee of 10 cents per swipe for Visa/ WHFA MasterCard and no additional per item fees. marketing director 5. Inexperienced Bankcard Representative. Less than 1 percent of the individuals in this revolving door industry stay for more than six months. And, there is no standardized training or certification in the industry. Protect yourself by learning how long the rep has been in the industry and check references. The rep should be able to offer you the names and numbers of several long term clients. Denise Langham with Bank of America has been the representative for WHFA serving retailers for over 20 years. She knows your business and how to help you streamline your processing needs. 6. Surprised with Confusing Statements and Billing. There is not a standard statement in the industry. It seems as though most of them are created to confuse you so that the merchant doesn’t know what rates he’s really paying. On top of this, many bankcard processors charge the discount rate as the transactions are processed daily as well as a lump sum at the end of the month for the rest of the fees. Denise Langham can give you a statement analysis and tell you what you are really paying. She can also compare your current program with the WHFA program and see how much your membership can save you! Cash flow and payment processing is the beating heart of your business. You wouldn’t make a hasty decision when choosing a heart surgeon if your life was on the line. Don’t let your business suffer or possibly die — choose a processor that has had over 20+ years working with furniture retailers by keeping them healthy and alive. WHFA’s partnership with BA Merchant Services is the right choice. For more information contact WHFA at (800) 422-3778.
For a complete program outline and pricing call (800) 422-3778. through WHFA’s partner
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Western Home Furnishings Association
Overstock Sale
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Warehouse Products
Stretch Film and Tape at Truckload Pricing Your WHFA Delivery and Warehouse Products Program offers a selection of Banding Film, Stretch Wraps and Tape for your furniture warehousing and delivery needs. Banding Film is used in securing smaller items together, keeping drawers closed during delivery and keeping small or delicate parts from becoming separated from the main piece during delivery.
Only need one or two cases?
Stretch Wrap is used on larger items to hold furniture pads in place, keeping drawers and cabinets closed and also provides a protective barrier from dirt and can reduce damage from abrasion. Packing Tape is useful for sealing boxes and securing furniture and mattress bags around your products.
Purchase ANY quantity of Stretch Film or Packing Tape and receive the 8+ case price during the month of August.
Call Jef Spencer to place an order. (916) 960-0386 • (800) 422-3778 WHFA • 500 Giuseppe Ct., Suite 6 • Roseville, CA 95678 • (800) 422-3778 • www.WHFA.org • jspencer@whfa.org
Com
ing S
oon!
A New and Improved WHFA.org! We are redesigning our website to make it easier for you to find the information you need. Complete with a new look and feel, it will feature intuitive navigation, educational content and expanded resources. Here’s what you can expect to see on our new website: 1. Clean home page and banner navigation: You can easily find what you are looking for on our home page and drop down banners. 2. Convenient Access to Membership Information: Our membership information is easily located and all in one spot. 3. Tools at your fingertips: You can access numerous industry resources and tools in the new Resources section.
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Contact WHFA at www.WHFA.org or (800) 422-3778.
meet the new members New Members Who Joined WHFA in June 2008 Bozeman TV, Furniture and Appliances Bozeman, MT Founding Year 1975 Casa Linda Furniture Los Angeles, CA Founding Year 1987
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Clure Brothers Furniture Cheyenne, WY Founding Year 1990
Mattingly Home Furnishings Tumwater, WA Founding Year 2006
Furniture Revolution Gilroy, CA
Relax The Back Sacramento, CA Founding Year 2007
Luxe Furnishings Las Vegas, NV
?
WN Stone & Tile Pacomia, CA Founding Year 1980
To join WHFA call (800) 422-3778 or visit www.WHFA.org for more information.
how
do you
recognize a
WHFA member they’re
All
smiling Contact WHFA at www.WHFA.org or (800) 422-3778.
Bottom Line Programs and Services
Advocate for Home Furnishings Retailers Peer-to-Peer Networking
Education and Industry Resources
Simplify Your Business Life
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Western Home Furnishings Association 800.422.3778 • www.WHFA.org westernreporter
August 2008
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Embracing Electronic Payments to Stay Afloat in a Downturn Economy Part 3 of 4
William Randall client manager Bank of America
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n our modern world, technology is everpresent, and we are becoming more dependent on it every day. Only a brave soul would be willing to go a day without talking on a cell phone, checking email or instant messages, or surfing the Web. And few among us would willingly throw out the modern tools for tracking business performance, from simple spreadsheet programs to sophisticated customer relationship management software, and go back to the days of management by pencil and paper. Yet even the most wired furniture retailers aren’t taking full advantage of what the digital age has to offer. Nowhere is this more true than in the area of cash management. Most of us are still pushing purchase orders and lugging checks to the bank when switching to electronic payments would save time, reduce costs and streamline accounting. Fortunately, a slow economy is a great time to begin taking this quantum leap in efficiency. By eliminating unnecessary expenses, electronic payments can immediately relieve some of the pressure on profits you’re probably experiencing. And at a time when cash is critical, it can speed up access to funds and boost your float. When conditions improve, your business will be leaner and more nimble and poised to make a faster recovery. Best of all, you can do it without making a major investment in new technology or training, so even a small business can make the switch without feeling like a risk-taking early adopter. A prime example is remote deposit of checks. Banks are now required by law to accept electronic images of checks in place of the actual paper items. As anyone who has written a check westernreporter
at the supermarket recently can attest, some businesses are scanning at the point-of-sale for conversion into ACH debits. But your business can get the same benefit by simply using a small scanner provided by your bank and the PC in the back office. When you feed checks through, the easy-to-use software automatically captures the key data such as amount and account number off each one. Then it bundles the check images together into a single electronic deposit. When you’re ready, a click of the mouse will securely transmit the deposit to the bank over your existing Internet connection. Imagine being released from the burden of manually processing all the checks that you collect. No more entering each one by hand in the general ledger, copying and filing them, and leaving work during business hours to deposit them before the branch closes. Remote deposits can be made at any time, which frees up employee time for more important tasks. But you’ll actually get access to funds faster and reduce your days sales outstanding, and bad or problem checks will be returned quicker. The data about each deposit can be downloaded directly into your accounting software, helping avoid errors and fraud. And are you maintaining accounts at multiple banks because of the need to make physical deposits? With remote deposit, you can consolidate with just one, which should also save time and money. Encouraging customers to eliminate check payments can save you even more. Credit card and debit card payments, both which your bank can assist you with processing, are generally faster Contact WHFA at www.WHFA.org or (800) 422-3778.
GET INTO THE E-COMMERCE GAME Jake Jabs, President of American Furniture Warehouse
Your store. Your website. and cheaper to handle than paper checks. That can reduce costs and streamline processes in your accounts receivable function. And if you ring up sales over the phone or the Internet, your bank can help you set up electronic blocks and filters that reduce the risk of fraud associated with accepting ACH debits. Moving your own payment processes from paper to electronic can give you an efficiency boost, too. Chances are many of your suppliers will accept card-based payments that can be handled completely online, speeding up remittance and eliminating the cost of printing, signing and mailing paper checks. As an alternative to giving employees expense accounts or access to petty cash, purchasing cards also reduce paperwork while allowing you to consolidate, monitor and control spending and take advantage of extended payment terms. And wages and travel and expense reimbursements don’t need to be paper, either, thanks to direct deposit. With today’s technology, electronic payments are faster, cheaper and easier to manage than paper ones. So why wait to take advantage of these benefits?
If you are interested in learning more contact William Randall, Bank of America Client Manager at (888) 852-5000 ext. 8251.
Contact WHFA at www.WHFA.org or (800) 422-3778.
30,000 online products 1.5 million sq ft of warehouse huge delivery fleet free nationwide You set the pricing Delivery! $65 million of in-stock inventory Inexpensive setup. we handle the orders...you cash the check!
It’s that SIMPLE
“Every single piece that we sold is something that I would not have sold in my store. If this becomes the future of our business then I’ll be along for the ride.” Marty Cramer, President of Cramer’s Home Furnishings
For more information about our retail partner affiliate program, contact Andrew Zuppa, andrew@discountfurniturenet.com 303.957.6800 westernreporter
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Company C – Sachi Black Bean
Company C – Honeycomb
Company C – Wentworth Black
Company C – Prescott Rug
product focus
Start with the Rug! A Bottoms-up Approach to Building a Room
A
s customers embark on their furniture buying journeys, they are faced with an overwhelming number of choices. Often it is the sales associate who is best able to simplify the process and painlessly lead them through the sea of manufacturers, colors, cushions, fabrics and styles. As a sales associate, where do you begin? Most consumers know their preferences, but many lack the industry vocabulary to articulate their personal decorating style. Start with the rug! First, identify a rug the customer loves. The rug choice provides the clues necessary to determine how customers want their room to feel, providing the information needed to guide customers in their furniture buying process. Whether their preference is warm and cozy, bright and playful or dramatic and edgy, the information is all there on the floor. For many salespeople, an area rug is an afterthought, an add-on once the real decisions (i.e. furniture) have been made. But by beginning with the rug, the focus is on making selections that build upon the color, style and feeling of the rug. Now, the furniture buying process is streamlined, and the subsequent choices to be made are dramatically reduced. For example, when a customer chooses an area rug with a modern, oversized geometric design for her living room, it is safe to skip the checkered and floral fabrics when designing her custom sofa. While she may have difficulty describing her personal style, her rug choice points in the modern direction. Likewise, if a pastel hooked rug pulls at a customer’s heart strings, chances are the sleek little loveseat covered in black micro-fiber is not an option. By effectively narrowing the customers’ options to only those pieces that build on the rug they love, the process is given direction and the end result is a complete look. Rather than an
Becky Gilbert Company C
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afterthought make the area rug the foundation of your transaction; your customers are sure to be impressed by how easy it is to create the look they wanted, but had difficulty explaining.
Here are some rug basics: Hooked rugs are hand-made of wool. The wool yarn is looped and hooked repeatedly through the canvas or cotton backing to create a pattern. Available in various sizes, shapes and colors, hooked rugs are built to last; they are sturdy and complex, providing long-lasting beauty for high-traffic areas. Tufted rugs are hand-made of wool. The wool yarn is pulled through the backing to create a loop, which is then cut to create a plush, soft pile. (The loop is not cut in hooked rugs.) The pile height can differ, depending on the quality of the rug. One of the most popular handcrafted styles, hand-tufted rugs are available in a variety of styles and colors, from contemporary to traditional and everything in between. Flat Weave rugs are typically made of cotton or wool. They are produced by tightly interweaving the strands of the fabric to create a flat surface with no pile. Flat weave rugs are typically made of wool or cotton and are reversible. This category includes Kilims and Dhurries.
About Company C A designer and manufacturer of hand-crafted area rugs and home textiles, Company C creates extraordinary rugs with a refreshing design twist and inspiring color combinations. Soon after Company C was founded in 1994, it expanded its product line to include bedding, decorative pillows and throws. Today, Company C’s brightly colored rugs and textiles can be found at over 1,200 specialty retailers and catalogs nationwide. For additional information, please visit www.companyc.com or call (800) 818-8288.
Contact WHFA at www.WHFA.org or (800) 422-3778.
Safety Corner
Early Return to Work Helping employees return to work after a job-related injury or illness When employees suffer job-related injuries or illnesses, you will want to do everything you can to help them recover and return to work. Return to work programs help ensure smooth, earlier transitions from injury or illness to productivity. This is also one of the best ways to keep workers’ compensation costs under control. Returning your employees to work as early as possible can help your company: • Gain control, direction and an increased opportunity for a positive resolution of the claim. • Retain the services of your valuable trained employee. • Avoid the replacement and training costs of hiring a new employee. • Reduce temporary disability payments, one of the most expensive components in workers’ compensation. • Promote quicker recoveries, since injured employees typically recover faster when they are back at work. • Reduce medical costs. • Reduce or avoid litigation. • Reduce claims costs. • Discourage the filing of fraudulent claims. • Promote better morale among employees. • Increase the awareness of safe work practices and injury prevention among all employees.
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Creating a Return to Work Program Need guidance on how to create a return to work program contact your WHFA Membership representative for a step-by-step guide or go to www.whfa.org > Industry Resources > Safety Spot.
Abridged from the State Fund pamphlet: “Return to Work.� This pamphlet helps employees return to work after a job-related injury or illness.
Contact WHFA at www.WHFA.org or (800) 422-3778.
For generations, California employers have depended on www. scif..com State Fund to meet their workers’ compensation needs. 'PS HFOFSBUJPOT $BMJGPSOJB FNQMPZFST IBWF EFQFOEFE PO 4UBUF 'VOE UP NFFU UIFJS Since 1914, through good times and bad, we’ve always W W W S C XPSLFST¾ DPNQFOTBUJPO OFFET 4JODF UISPVHI HPPE UJNFT BOE CBE XF¾WF been on hand for California businesses. Call your BMXBZT CFFO PO IBOE GPS $BMJGPSOJB CVTJOFTTFT broker, or Patty Garcia of State Fund Group Programs $BMM ZPVS CSPLFS PS 1BUUZ (BSDJB PG 4UBUF 'VOE (SPVQ 1SPHSBNT BU at (800) 423-0303 and let us show you how we’ve BOE MFU VT TIPX ZPV IPX XF¾WF CFDPNF TVDI B SPDL TPMJE QBSU PG UIJT HSFBU TUBUF become such a rock-solid part of this great state.
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ComfortCare
®
Sleep Sets
Magnetic Collection
for a healthy lifestyle RESTONIC
The TM
health rest
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latex mattresses
GUARANTEED RESULTS When You Choose Restonic Idaho!
Here’s what our dealers are saying: “Restonic Idaho has designed and developed our mattress program. Annual marketing plans created have increased our market share in our trade area. Due to the success with Restonic Idaho, we have added additional models and increased the profitability of our furniture store.” —Bob Hanni Abbey's Furniture Showcase, Butte, Montana
“Restonic Idaho has helped our mattress sales grow in a slower economy! Restonic Idaho programs dedicated to Sales Training, establishing selling processes, marketing support, floor displays and creating performance based benchmarks our volume has grown 21% (Year to Date) and our average unit selling price rose 25% (Year to Date).” —Gene DeMeerleer Furniture West, LaGrande, Oregon
If you would like to grow your mattress sales and stop margin erosion contact: Chris Sanders 1.800.521.3985, ext. 105 or CSANDERS@EVERTONMATTRESS.COM
“Annual Marketing plans created and implemented by Restonic Idaho have increased our store traffic, sales volume and average ticket, during a time which most retailers have found a down turn in sales.” —Guy Redder Redders Showcase, Burley, Idaho
“During the first five months of 2008, Restonic Idaho has helped our store increase our mattress sales volume by 61% and average unit selling price by 23%. Sales training and marketing support have contributed to the success of mattress offerings.” —Jeff Lindsley Lindsley Furniture, Grangeville, Idaho
“Restonic Idaho has helped our operation control and gain optimal GMROI by establishing processes that gauge efficiencies found within our inventory controls.” —Jon Berg Beds to Go, Helena, Montana
“Restonic Idaho has taught us how to sell mattresses, This profit center was non existent within our operation until they designed, created and installed our mattress gallery.” —Tom Coates Salmon River Propane, Salmon, Idaho
NW Furniture Bank Helps Families in Need
T
he NW Furniture Bank came to be because of a vision that began in 2005 when the founders, Bill Lemke and his wife Joelene accompanied their son Brian and his youth group down to California for an inner city mission in San Francisco with the Center for Student Missions. They saw many people who came from shelters living in apartments without furniture. Having been in the furniture business for 30 years and seeing lots of furniture going to the dump or sold at a loss, Bill began to think of the possibilities of gathering furniture from stores and donors and giving to those who were in need. That was a nice “mission moment” that ended with the return home and realities of life, even though Brian kept encouraging his father. That fall Bill and Joelene’s son Brian was diagnosed with cancer. A furniture store that is a client of Bill’s called and informed him that they were taking donations for Brian’s medical expenses. Sadly Brian’s condition worsened and in just five weeks he passed away. Meanwhile, the store that had been collecting funds contacted the Lemkes to tell them that $30,000 had been raised and they wanted to give it to them. Bill tried to refuse indicating that Brian had passed so quickly that the expenses weren’t as great as they had anticipated. The company encouraged Bill to accept the donation and use it in a way that would honor their son who kept urging his dad to do something “meaningful.” Thus the NW Furniture Bank had its seed money to begin. The idea of a furniture bank is not new, but none operate in the Tacoma, Pierce County area of Washington. Bill and Joelene attended a national furniture bank conference and became aware of others who shared the same mission. They traveled to see two of these in action. After seeing these furniture banks in operation and meeting with their directors, they came home and began to set up their own. They The National Furniture applied for and Bank Association’s mission is to were granted open new furniture banks and a 501c3 expand the services and capacity non-profit of existing furniture banks. To license. become involved and learn how They you can start your own furniture connected bank, visit www.Help1Up.org. with 27 agencies in the area and have a working relationship with social Contact WHFA at www.WHFA.org or (800) 422-3778.
workers that represent individual clients deemed eligible to receive the furniture. Bill and Joelene have spoken in front of civic groups, philanthropic organizations and churches. The NW Furniture Bank got the attention of a reporter, Kathleen Merriman from TNT and she wrote some very complimentary articles. One article caught the attention of a gentleman who called and offered his delivery truck for a short period. Another gentleman contacted Bill and said he would like to donate a truck. Bill began getting donated furniture through his many contacts in the furniture business and Sleep Country and Emerald Home Furnishings has partnered with the NWFB in donating used mattresses and furniture. The furniture bank clients are people referred and screened by agencies that serve kids from foster homes, those suffering loss from fire and natural disasters, victims of domestic abuse and families coming from transitional housing who are trying to rebuild their lives. The goal is to provide furniture to people in real need, to give them a sense of dignity and stability while in a time of transition. At this time NW Furniture Bank occupies a small donated space in The Old Cannery Furniture Warehouse. There furniture is collected from local stores and individuals and then distributed to clients who have been screened and meet the criteria for a once in a lifetime gift of free furniture. NWFB currently operates with no paid staff, and collects and distributes after work and on weekends with volunteers. NWFB started with just two families in August of 2007, and as of June 2008 have served 145 families and given away 1,800 pieces of furniture. That is 31,000 cubic feet of furniture that was kept out of the local landfills. Estimated value of all furniture given out is $75,000. westernreporter
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Creating the Perfect Delivery “Y John McCloskey president Profitability Consulting Group
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August 2008
ou never get a second chance to make a first impression!” This simple yet powerful saying is very applicable to home delivery. The impression your customer has when they first see the truck and meet the team will set the tone for the rest of the delivery process. In my younger days, I worked for a moving company. At the end of a move, we would bring back that huge truck with over 500 blankets in it. If any of the blankets were not folded a certain way, the owner of the company would tear down that stack and have us redo it the right way. His reason was simple: When the back doors open and customers look inside the truck that will soon be carrying all of their worldly possessions, they need to be impressed by the condition and neatness of the truck. If customers see a mess, they will be worried during the entire move. If an item gets damaged, they will be harder to deal with. But when they see an orderly truck, neat, clean, well-dressed men and a ton of pads, they will relax in the confidence that their first impression inspired. If an item does get damaged, they will know that it was an accident and be less demanding when filing a claim. The same is true when your customer comes out, as they often do and looks inside your truck. If they see a mess, they will worry, and if a problem is found with the furniture, they will be harder to work with. So what can we do to set the best possible tone for the delivery? Here are several methods that can help create the best possible delivery environment. A successful delivery starts the day before delivery. You should never send out a truck unless someone contacted the customer the day westernreporter
before and confirmed the delivery. I often hear the person at the store making these calls and they typically go like this, “Hi, this is Kimberly from ABC Furniture Store. I wanted to let you know that your delivery will take place tomorrow between 10 a.m. and 2 p.m. Thank you.” Now this did accomplish the goal of making sure the customer was going to be home, but the opportunity to prevent many problems was lost. Here are eight things that you should always review with the customer before delivery. 1. What is the correct address? The customer could have purchased from you in the past at a different address, but now has come back to the store after moving. If the salesperson failed to catch this, you could be headed to their old house. If the address is wrong, make sure to change it in the computer system so that future mistakes are avoided and the mailing list is accurate. 2. What items are being delivered? You may have paperwork for a sofa, loveseat and chair. But the customer added an ottoman and cocktail table and it is on a different sales order. If you knew that you were missing something the night before, you have a chance to add it, but finding out you are missing items while standing in their home is way more annoying to the customer and very costly to you. 3. What is the COD amount? Many stores have done away with CODs in the first place. They are annoying and add many possibilities for problems. However, if you are going to accept CODs, you want to find out if there is a discrepancy between Contact WHFA at www.WHFA.org or (800) 422-3778.
how much the customer thinks they owe and what you think they owe before the merchandise is in the home. 4. How are they going to pay? You don’t want the customer to try to use their American Express card for the COD when you don’t take that card. Some companies do not want the drivers to carry cash. If the customer decided to give you a credit card over the phone the day before, check with your processing company for ways to verify their account so that you don’t have to pay a premium for not swiping the card. 5. What time is the delivery going to take place? The smaller the time window, the happier the customer. Morning or afternoon is too vague, and the customer feels like they are going to loose half a day. A two hour window is very reasonable and should be met most of the time. Important Tip: Don’t give a two hour window for the first few stops. If you tell the first stop that the drivers will arrive between 8 a.m. and 10 a.m., and the truck normally departs from the warehouse at 8 a.m., the team will know they have two hours to get there and will wind up having a nice, leisurely breakfast at Denny’s, on the clock! 6. How can we reach you? Get as many phone numbers as you can and make sure the ones you do have are accurate. Area codes change all the time and people change cell numbers too. But don’t just write these numbers on the run sheet, enter them into the computer system. You may have to call the customer in the future and having these numbers is important. 7. Does the customer know your policies? Maybe you don’t remove the old furniture,
or don’t move items in the home that you are not delivering, or don’t remove your shoes if it is raining. Whatever policies you have that seem to cause problems during the delivery should be reviewed before the drivers get to the home. 8. Would you like to protect your purchase? If you sell furniture protection plans and you see that the customer did not buy it, ask why and try to sell it on the phone. I will never understand why it happens, but far too often the salesperson never brought it up in the first place! I have seen many delivery confirmers across the country make an extra few hundred dollars a month selling protection on the phone and the No. 1 reason they hear from the customer for not purchasing it in the first place is, “I didn’t know you offered it.” Now that the customer and the store are in sync, it’s time to have a successful delivery day. Here is a list of 11 things you can do to assure clean deliveries and happy customers. 1. Wash the truck! Pretty simple. If your graphics are faded, worn and torn, replace them. Your truck is a very expensive rolling billboard. Spending some of your advertising budget on a good looking truck is far less expensive than an actual billboard. When the customer sees a great looking truck pull up to their home, they start getting excited about their new purchases. We want to keep that positive excitement going throughout the whole delivery. Remember, you make furniture deliveries all the time, but many Americans go for long periods of time between deliveries. If we make it a really great experience, they will want to do it more often. 2. Protect their driveway and mailbox. Unless it is impossible to do so, you should leave the truck in the street. Backing over
Can we help you move some furniture? Call B&B for advertising that will do the heavy lifting: � �
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their mailbox or flower bed is a quick way to create a very bad first impression. Leaving oil spots on their white concrete or tire marks in their asphalt will leave a bad impression after you leave. 3. Be in uniform. It does not have to be an expensive uniform, just neat and clean. If the days are very hot where you are, you may want the team to bring extra shirts with them. The only hats they should be wearing are ones with your company logo on it. Belts should not have a large buckle as this can damage the furniture they are carrying. Work boots look much more professional than sneakers do. Shorts are OK in the summer, but take a good look at the FedEX, USPS and UPS uniforms. Very comfortable, yet very professional looking. 4. The driver should present his business card to the customer during his introduction. This is a very inexpensive way to make a very good first impression. The driver hands the card, introduces himself and his partner and reviews the paperwork with the customer. These first few seconds will set the tone for the balance of the delivery. Having a professional looking card also instills pride in the driver. It may be the first business card he has ever had. 5. The driver should ask the customer to walk him through the path that the furniture will follow. Look for items that should be moved out of the way to
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ensure a clear path. If there is something breakable in the way, ask the customer to move it so that it will be safe. 6. While the driver is doing the above, the helper should be unwrapping the furniture and looking for any damage that occurred in transit. It is a good idea to train the delivery team in basic touchup and make sure they have the materials needed on the truck to work with. I have a client in Virginia that asked us to train his delivery staff to make minor repairs. Once the training was complete, they reduced the number of damaged items that were refused by over 50 percent. 7. Install a door jamb protector and put down a carpet or pad in the entry way. If it is raining, put on disposable booties before entering the home. Lastly, put on your white gloves. All these items are available through the WHFA, just call (800) 422-3778. 8. Carefully bring the items into the home and place them where the customer asks. If an item appears to be too big to fit, there is a clever device called Check-A-Fit. It is a set of aluminum poles with inch marks on them. They snap together and quickly form a box the size of the item in question. If the six pounds of aluminum will not fit, the 400 pound armoire will not either and the customer understands this and will not ask you to “try anyway.� If the driver thinks he can get the item in, but the walls may get damaged in the process, have the customer
Contact WHFA at www.WHFA.org or (800) 422-3778.
sign a damage waiver form. This allows the driver to attempt the delivery, but without having being responsible to repaint the scratched wall. 9. Heavy items can be moved easily with the help of the Forearm Forklift™. This set of straps, also available through WHFA, allows the team to lift a heavy item just inches off the floor. This keeps it steady and prevents you from hitting the ceiling or top of a door jamb. EasyMoves™ can help you get a heavy item against the wall in a tight room setting. 10. Clean up after yourself and clean the furniture. Don’t leave any trash in the home. Clean all glass and mirrors, dust wood and sweep fabric if needed. The customer should not have to do anything to the furniture after you leave. 11. Thank the customer and give them a gift. Many of my clients have a small gift they present during delivery. It does not have to be anything fancy. I have seen small boxes of candy, a live single rose, a small paperweight or accessory, and a coupon for a free pizza or movie. A gift should be a gift, so a discount coupon to your store will not be received as well.
4. Don’t argue with the customer, even when they are wrong. Let store management make the decision and do what they suggest even if you think it is wrong. You can complain to your manager when you get back to the warehouse, but arguing in front of the Buy the products customer is never the right discussed in this thing to do. 5. Apologize again. The last article and much more thing the customer should at the WHFA store. hear from you as you leave is Visit www.WHFA.org how sorry you are that there was a problem and reiterate or call (800) 422-3778. the solution that store management has already agreed to solve the problem. Follow these simple guidelines and your first time delivery success rates should be in the high 90 percent range.
Comments and questions can be directed to John McCloskey, president of the Profitability Consulting Group, High Point, NC. John assists furniture retailers with operations, warehousing, delivery, service and computer utilization and customization. He can be contacted at JMC@ProfitabilityConsulting.com or (336) 255-5300.
Oops!! Something went wrong. Unfortunately, problems happen. Although the customer is probably not very happy right this second, what we do to resolve it can turn that customer into a life long loyal repeat customer who tells their family and friends to shop at your store. Here is a list of what to do and what not to do. 1. Apologize, then apologize again. Regardless of who is at fault, the customer, the factory, the salesperson, the warehouse, or the delivery team, apologize and assure the customer that we will do what we can to resolve the problem and make them happy. 2. Call the store immediately. The faster the customer is in contact with a supervisor at the store the better. This takes the delivery team out of the role of customer service quickly. Now you may be one of the lucky ones who has a driver who is great with customers, but in many cases, it is best to let a supervisor speak with the customer. 3. Act as if whatever just happened hardly ever happens. In other words, don’t say, “We have the same problem with that bed all the time.” While this could be true, telling that to a customer only makes things worse. After all, if you have that same problem all the time, you should have been prepared for it and prevented it from happening in the first place.
Contact WHFA at www.WHFA.org or (800) 422-3778.
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industry dates Market Dates September 13 – 15, 2008 Total Home & Gift Market Dallas Market Center Dallas, TX www.DallasMarketCenter.com (800) DAL-MKTS
October 14 – 16, 2008 Train the Trainer Course — IAS Training Holiday Inn at Los Angeles International Airport (800) 248-7703 info@iastraining.com
October 20 – 26, 2008 High Point Market High Point, NC www.HighPointMarket.org (336) 869-1000 Future dates: April 27-May 3, 2009
November 23 – 25, 2008 Long Beach Furniture & Accessory Market Long Beach Convention Center Long Beach, CA www.kemexpo.com (800) 605-7440
October 26 – 28, 2008 Ryan’s Furniture, Art & Decor Market Palm Springs, CA www.ryanexpo.com
February 9 – 13, 2009
Las Vegas Market — World Market Center Las Vegas, NV www.LasVegasMarket.com (866) 229-3574
WHFA Educational Events October 20 – 26, 2008 High Point Market — Free Business Seminars Retailer Resource Center IHFC Main Street, Floor 12 High Point, NC www.NHFA.org (800) 888-9590 RETAILER
RRC RESOURCE CENTER
National Home Furnishings Association Western Home Furnishings Association
February 9 – 13, 2009
WHFA Educational Events Las Vegas Market — Free Business Seminars Retailer Resource Center WMC Building B, 16th Floor www.WHFA.org (800) 422-3778
RRC RETAILER
RESOURCE CENTER
National Home Furnishings Association Western Home Furnishings Association
May 17 – 19, 2009
2009 WHFA Conference & Expo Westin Maui www.WHFA.org (800) 422-3778
For more industry dates, visit www.WHFA.org and click on EVENTS.
tips & tricks
Gas Saving Tips for Furniture Retailers With diesel topping $5 per gallon in several states, it has never been more important to take every opportunity to reduce your usage. Here are several ways you can cut down on miles and gallons right away. • Deliver fewer days. If you are currently offering delivery six or seven days a week, consider cutting back to four or five. In many cases, carefully planning your weekly delivery stops can allow you to get the job done with less trucks or less days on the road. Take a good look at the back of the trucks when they are finished loading. Are they full? If not, why not? If you are going to spend several hundred dollars on fuel in a day, you must get the most production from the delivery crew.
Better planning includes the following: • Predetermined geographic areas are to be serviced on certain days. That way you don’t send a truck 40 miles west every day when it could get those stops done in two days. • Do not accept a deliver time request without a fee. If the customer can only be home after 4:00 p.m., then offer a timed delivery package where we will be there when they want for only $20 more than the standard charge. Think like UPS and FedEx. The faster you want the package to arrive, the more they charge for the service. • Let the warehouse call the customers who did not set up their delivery at the time of purchase. They will be in a position to know what areas are in need of more stops and will try to fill them accordingly. The salespeople can only offer the days we go to that area and it may be better to offer a certain customer Wednesday or Friday rather than Wednesday, Thursday or Friday because we are not going anywhere near her home
Contact WHFA at www.WHFA.org or (800) 422-3778.
on Thursday, even though she lives in that zone. Many of my clients have zones that cover over 50 square miles. One stop at the far corner of a zone could result in 50 miles driven just to serve that one stop. • The best way to reduce miles is by filling the truck with stops that are close to the route that has already been committed to. Purchase Microsoft Streets & Trips 2008, available at Wal-Mart for under $40. Enter the stops that you have already committed to and route them. You will now have a nice blue line where your truck will be traveling that day. Next, add to the map all the customers who need to be called to arrange delivery. You will see customers that are practically right next to the roads you will be on. Try to fill up the truck with these customers so that you add stops, but very few miles. Just last week, a client of mine was able to add three stops which added $150 in delivery fee income, yet only six miles to the route. Not only does this save on gas, buy payroll too! If you have too many customers to hand key into the program, you can access your data from your system and import it directly. Feel free to call or email me for specifics.
John McCloskey, President, Profitability Consulting Group, Inc. High Point, NC (336) 255-5300 or email John at JMC@ProfitabilityConsulting.com
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fun facts & figures Books to Read: Retail Operations 1. Warehouse Distribution and Operations Handbook by David E. Mulcahy
The handbook provides a step-by-step approach to reducing operating costs, enhancing inventory control, increasing profits, improving customer satisfaction and controlling assets. In addition, the book fully examines and evaluates the array of practices, methods, equipment applications and current technology that contribute to the effective operation of any type of warehouse — including industrial, mail order, and retail facilities. 2. Management of Retail Buying by R. Patrick Cash, Chris Thomas, John W. Wingate, Joseph S. Friedlander
There is more to retail buying than simply forecasting consumer demand. The successful-buyer employs a complex constellation of skill, art and careful study to plan and manage the flow of merchandise from the wholesaler or marketer to the consumer. This book contains the
combined wisdom, knowledge and hard-won savvy of three of the worlds foremost authorities on managing retail buying, each of whom brought a lifetime of experience to the creation of this third edition of the most important book in every retail buyers library. This comprehensive volume covers every aspect of retail buying, from targeting desired consumers and purchasing goods tailored to their tastes and needs, to negotiating with vendors, managing inventory and using computers to expedite the buying process. 3. The Time, Space & Cost Guide to Better Warehouse Design, Second Edition by Maida Napolitano
Save time, improve space utilization and reduce costs with the newly revised and expanded second edition of The Time, Space & Cost Guide to Better Warehouse Design. The guide provides a wealth of information that will help you benchmark your operations and test new ideas and concepts before you implement them.
advertising inquiries & rates
advertisers index
Please support the advertisers that support your magazine. Advertiser
Page
Phone
American General Finance................................................ 4................................... (800) 422-3778 B&B Banker & Brisbois Advertising................................. 39.................................. (800) 456-0210 Bank of America................................................................. 18.................................. (800) 422-3778 CDS Solutions Group........................................................ 44.................................. (888) 309-8002 Citi Retail Services............................................................. 15.................................. (800) 422-3778 DiscountFurnitureNet.com............................................... 33.................................. (800) 422-3778 Emerald Home Furnishings............................................... 2................................... (800) 685-6646 Furniture Transport Group................................................ 9................................... (800) 438-8244 Furniture Wizard................................................................ 22.................................. (619) 869-7200 High Point Market............................................................. 42.................................. (336) 869-1000
Contact: Cindi Williams, WHFA Events 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 sales people. Distributed to retail merchants 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 Reporter are not necessarily those of Western Home Furnishings Association. Western Reporter magazine is copyrighted by Western Home Furnishings Association. August 2008, all rights reserved.
Western Reporter:
Hoyt Highfill & Associates................................................. 13.................................. (318) 322-3846
Read by Retailers in the West
PROFITsystems, Inc........................................................7 & 47............................... (866) 453-5010
distribution:
Restonic Mattress.............................................................. 36......................... (800) 521-3985 x105
Western Reporter is read by more than 10,000 home furnishing retail store personnel handling furniture, accessories, bedding, floorcovering and specialty home furnishings in Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming.
ServerLogic........................................................................ 41.................................. (866) 835-6932 Simmons Company................................................... Back Cover.......................... (510) 357-2230 State Compensation Insurance Fund.............................. 35.................................. (800) 422-3778 TruckSKIN........................................................................... 15.................................. (877) 866-7546 ViewIT Technologies...................................................... 24-25............................... (905) 639-8609 WHFA Membership........................................................... 31.................................. (800) 422-3778 WHFA Warehouse Products............................................. 30.................................. (800) 422-3778 WHFA Website.................................................................. 30.................................. (800) 422-3778
marketing philosophy: Western Reporter focuses on western market trends in the furniture, bedding, flooring and accessories industry. It highlights industry finance, state legislation, retail store layout and design, transportation, retail advertising trends, retail store computerization, insurance, succession planning and industry social events.
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A
coil density, expect sales to be even stronger.
Because we believe that even the best mattresses can be improved, we made some important upgrades to this year’s Beautyrest ® line. The collection now features increased coil density of Pocketed Coil ® springs for even better conformability and motion separation. We added fabric with natural fibers to provide more comfort and a better sleep environment. Foam encasement on World Class ® and Exceptionale ™ models adds to their durability. And we simplified the step-up story between all classes of the Beautyrest ® collection, which should make them even easier to sell. To find out more, contact your local Simmons representative or visit www.simmonsdealers.com.
©2007 Simmons Bedding Company. All rights reserved.
With a greater