Retail Observer

RETAILOBSERVER.COM MARCH 2014 52 B efore you opened the doors to your dream furniture store, you slaved over your financial plan to ensure your store's viability. After the opening celebrations, reality soon hit: the number crunching never stops! Sales figures, margins, payroll, delivery times, advertising expenditures – there's no end to the figures you need to constantly monitor. As an independent furniture retailer, you wear many hats, including that of buyer, merchandiser and marketer. These are probably the roles you find the most exciting, fulfilling and fun because you get to work with the newest styles and latest trends. But it's still a numbers game! Furniture is a fashion business, so you know what's hot and what to move off your floor. But do you really know how well your overall layout is performing? Are you "flexing" your space sufficiently to keep up with the changing marketplace? In short, are you maximizing the Return on Investment (ROI) from your merchandising? No matter how attractively you set up your showroom displays, your creative instincts could be working against you. Even if sales are good, perhaps you could be doing even better. The only way to find out is to crunch the numbers, once or preferably twice a year. OPTIMIZE YOUR RETAIL SPACE Category Management (or Retail Space Optimization by Category) is a simple but powerful tool to help you tweak your merchandise mix. • Start by defining your furniture categories: Stationary Upholstery, Motion Upholstery, Master Bedroom, Casual Dining, Formal Dining, and Youth. • Do a quick sketch of your sales floor with the categories indicated, then pace off the square footage dedicated to each category, in every location. • Total the square footage for each category and calculate its percentage of your total floor space. • Next, calculate the percentage of total sales for each category. • Now compare the two percentages. It's easy to see at a glance whether a category is pulling its weight on the floor. If a category's percentage of floor space is higher than its percentage of sales, you need to make some adjustments. WHAT'S HOT & WHAT'S NOT Of course, you also need to know what's on trend and how to work it. Motion Upholstery (one of the biggest growth categories in the U.S. furniture industry for the past five years, according to GLG Research) is on the fast track for growth, along with Youth Bedroom and a new category, Outdoor furniture. Consider showing a power option on most or all of your Motion pieces— a great way to upsell. Many of our retailers report that up to 50 percent of their Motion sales include a power option. Outdoor now features great styling and a higher ticket price. Independents can't compete with big box stores on imports so stock the upper end of the lines. You will be surprised how well this category will do for you. Stationary Upholstery still produces the largest share of sales and takes up the most floor space. Custom options drive loyalty and price, so consider stocking a gallery that is fully customizable. Losing ground is Master Bedroom, Casual Dining and Formal Dining. It's worth reviewing your sales and the space dedicated to these categories. Industry statistics for the Canadian market are few and far between. However, there are other ways to get a feel for the market. You can analyze your own category management statistics to see if the numbers correlate over time. Ask around. Many sales representatives have industry statistics that they will share with you. As a buying and marketing group, Cantrex Nationwide is constantly gathering as much industry data as possible, including using data available on the U.S. market as a guideline, to help our retailers with their analyses. The furniture business is challenging, and your success depends on the right merchandise mix. To stay fresh and on trend, you need to know where your profitable dollars are coming from. Crunching the category numbers will point the way. Even a small change to your floor plan can make a big difference to your store sales. RO CATEGORY MANAGEMENT – THE KEY TO MAXIMIZING YOUR SALES FLOOR'S ROI Pat Kelly Furniture Trends Pat Kelly Director, Networks and Retail Programs –Furniture Cantrex Nationwide

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