Retail Observer

RETAILOBSERVER.COM MARCH 2015 52 W hat's new?" is one of the most common questions in any social situation. Yet, I am amazed how often I hear, "Nothing much … same old, same old." If we ask the same question in a business context, how would you reply? We are living in a period of accelerated change so "same old, same old" should be the last thing we hear! We often refer to furniture as a fashion business. As in the apparel world, "new" is where it's at. There are color trends, hot styles, new fabrics, new finishes and always the next sought-after designer look. But how many of us work our showrooms like a fashion floor? How frequently do we change up the look to keep the store fresh and on trend? Consider Nebraska Furniture Mart*, a model of inventory management. It changes out 30% to 40% of its selection each year—an assortment of 1,000 recliners, 400 sofa styles and 200 bedroom sets. A remarkable feat! But more important, it keeps their stores fresh, on trend and their customers excited about the latest in home furnishings. So, how do you decide when it's time to transition your inventory? In apparel, an item that doesn't sell in the first 30 to 90 days goes on a scheduled markdown program until completely sold. Most furniture retailers wait at least 180 days before reviewing a program's performance. That's too long. Start reviewing at 90 days and transition before 180 days. Remember: the 80/20 rule applies here. Twenty percent of your SKUs will deliver 80% of your volume. But before you can make a decision, you must know your programs' benchmark numbers at the outset. An upholstery vignette requires, on average, a 10' x 10' space, or 100 square feet. Based on a reasonable sales target of $200 per square foot, a vignette should produce $20,000 in sales on an annualized basis. Let's assume an average retail value including accessories of $1,599 for the vignette. Divide that value into the annual sales goal and the vignette should sell 12.5 times per year, or slightly more often than once per month. Not an unreasonable target. If it's not selling, you have to get tough and move it out! One quick and effective way is a floor-model clearance tag with a substantial 30% to 50% clearance price. If your normal promotional pricing is 15% to 20% off, a deeper discount will be an eye catcher and move floor models quickly. Be prepared to replace them immediately. The flow of new products will give your sales associates something fun and fresh to sell on an ongoing basis. Some retailers keep a clearance area, usually a junky, cluttered space at the back of the store. This is not a good solution. Instead, create a one-of-a kind, floor-model clearance event once or twice a year. Tent sales have proved the most successful. Tents have visual impact and you can even buy manufacturers' clear-outs to support the event – and your margins. "New" generates interest for your customers and for your staff. So, create focal points in your store that feature a key furniture collection. Dress everything up with accessories. Investing a few dollars in accents is one of the best spends you can make. You'll create living spaces that scream fashion and trend. Change these up on a regular basis to stay current. There is always one member of your team who loves to keep up with the latest styles. Give her the task of decorating the space and you will be amazed how good it will look. None of us buy dogs; all of our furniture are winners. But, at some point, 80% of our inventory will not perform. We need to be ruthless in our product performance reviews and do what needs to be done. Yet, many retailers are reluctant to take a proper markdown. Don't let cost drive your markdown decisions. Productivity is far more valuable. The sooner you transition, the sooner you drive productivity. Don't wait to get your money back. You can't afford it. Get the new product in and get producing at an acceptable rate. Then, when someone asks, "What's new?" you will have a show- room full of the latest, hot products to brag about. * "The Innovators: Furniture/Today Salutes Five Champions of Change," a Furniture/Today supplement, December, 2014. See also: www.furnituretoday.com/article/493858-five-retailers- reshaping-furniture-industry RO Pat Kelly Furniture Trends Pat Kelly Assistant Vice-President, Home Furnishings Cantrex Nationwide "SO… WHAT'S NEW?" HOW TO KEEP YOUR SHOWROOM HOT, HOT, HOT! "

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