Retail Observer

RETAILOBSERVER.COM JULY 2018 52 T he furniture industry has traditionally not been involved in offering extended service programs, but now is the time to begin. Extended service agreements have long been an important—if not critical—part of the merchandising plan of major appliance and consumer electronics dealers. As profit margins shrank, the extended service agreement became the source that many successful retailers relied on to provide a needed margin. It also became the vehicle to support customer service. Selling extended agreements to consumers can be relatively easy, especially if presented properly. The furniture business has enjoyed — and has been able to maintain — more robust margins. The furniture dealer has traditionally absorbed the cost of customer service and consumer accommodations. However, as today's market has become compressed and more players are competing for the furniture buyer, we are challenged to maintain customer service and profitability. Due to this challenge, the furniture industry needs to expand and put to use profitable extended agreements. With an extended agreement, the consumer will leave the store feeling confident that if a problem arises with their furniture, it will be covered under the warranty offered. The consumer will feel secure in knowing that accidental stains, tears, rips, punctures, burns, scratches, or gouges in their leather, wood, or upholsted furniture is protected. The time has come for a comprehensive extended service program for the furniture industry in order to raise profits and increase profit margins. Most furniture dealers are involved to some degree in the fabric protection business, yet few offer a full-service program. Fabric protection, leather care, and finish coverage on case goods are very important, but fail to address the majority of the customer service issues that arise. A comprehensive extended service program not only addresses these issues but also does so profitably. Consumers will feel more confident knowing all of the accidental stains and damage done to their furniture will be covered under a warranty. Extended service attachment rates are rising. Consumers are looking for assurance that the products they purchase will function and maintain structural integrity. Their buying decision is being influenced by the availability of all of these assurances. It will build a cvustomer's confidence knowing that the retailer offers a program to cover the cost of maintaining a product, and more importantly, will provide that service by qualified specialists. With management commitment and minimal training, many retailers are achieving better than 50% attachment rates at better than 50% net profit. No program can cover every issue that arises. Fortunately, a properly managed extended service program will cover most problems and provide the funding required to cover the accommodations that fall outside the norm. There is no better vehicle to tie the customer to the store. If they have a problem, they must come back to you and you get to be the hero that makes the problem go away! It is an essential component of exceptional customer service. The program is designed to be offered at a point-of-sale and sold as part of a package. As pricing is based on retail price tiers instead of individual pieces, it encourages group sales; sofa and love seat, chair and ottoman, cocktail table and end tables, etc. Extended service sales are traditionally commissioned on the sales floor and provide additional income for associates. There are several established and emerging partners for furniture extended protection, and for many independent retailers, buying groups have vetted these providers and established compelling partnership programs that allow the retailer to sell these protection plans with great confidence. Extended protection for furniture retailers is a true win-win proposition, leading to increased customer satisfaction, increased loyalty, and increased profits. RO Bill Bazemore is the Vice President of Furniture for Nationwide Marketing Group. Call (770) 442-9726 or visit furniture@nationwidegroup.org. EXTENDED SERVICE AGREEMENTS— THE HIDDEN HONEY HOLE Bill Bazemore Furniture Trends

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