Issuu on Google+

business planning & forecasting

Journal of the Western Home Furnishings Association

westernreporter

october 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


Featured “Southridge” Dining Series Showrooms: Tacoma, WA Las Vegas, NV

www.emeraldhome.com

Customer Service (253) 922-1400 Fax (800) 605-6304


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

Feature Article:............................................... 10 Don’t Let Fear Drive Your Furniture Business

PRESIDENT ELECT Marty Cramer - Cramer’s Home Furnishings, Ellensburg, WA ..........(509) 933-2172

Developing a Winning Strategy — or Just Surviving .. 14

VICE PRESIDENT Claudia LeClair - Fiesta Home Furnishings, Scottsdale, AZ .............(480) 951-3239

Start a “Green” Dialogue in Your Store ...................33

TREASURER Angel Lopez - Dearden’s, Los Angeles, CA ......................................(213) 362-9600

Six Steps to Laying Out Your Competitive Strategy 36

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

Newbie Notebook .....................................................40 Retail Leadership

PAST PRESIDENTS Marvin Kerby - Kerby’s Furniture, Mesa, AZ .....................................(480) 834-3888 Cherie Rose - The Rose Collection, Los Gatos, CA..........................(408) 395-7773

departments

EXECUTIVE DIRECTOR Sharron Bradley - WHFA, Roseville, CA ...........................................(916) 784-7677

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

AT LARGE EXECUTIVE COMMITTEE MEMBERS Bob Ammirato - Design Galleria By Valentine, Sacramento, CA ......(916) 922-2200 Howard Haimsohn - Lawrance Contemporary, San Diego, CA.........(619) 291-1911 Lael Thompson - Broyhill Home Collections, Aurora, CO .................(303) 360-9653

Board Member Q&A ...................................................8 with Lael Thompson Legislative News ........................................................20 California Composite Wood Regulation

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.

Fast Forward .............................................................22 10 Strategic Questions for the Next Generation Member Profile .........................................................26 Fitterer’s Furniture, Ellensburg, WA Program of the Month ...............................................29 Cost Segregation Meet the New Members ...........................................31 Membership Miles .....................................................39 A Family Affair Industry Dates ...........................................................45 Fun Facts & Figures ...................................................46

contact Phone: (800) 422-3778 (12 western states) (916) 784-7677 est.1944

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

OCtOber 2008

3


ELIMINATING THE Profit Systems ad “Discombobulation” . September page 51

of the home goods industry. You’ve learned the basics, your business is growing, your needs have evolved, and the industry keeps providing disconnected solutions. PROFITsystems has the tools to put all of the pieces together: scalable software, manager’s reports, industry experts, and continued education. These are designed to stand alone or work together to provide a complete solution to complex business issues.

Call or Click now for a

FREE

Total Retail Success System CD “PROFIT “PROFITsystems helps us execute strategies that add $300,000+ to our bottom-line every year.” Shupei Chiao Thomasville and Drexel Heritage Phoenix, AZ

866.668.3342 www.profitsystems.com/tools

A


president’s message “The performance data shown represent past performance, which is not a guarantee of future results. Current performance may be lower or higher than the performance data cited.” How many times have we seen this statement attached to an ad for a mutual fund; in fact it probably should be attached to almost everything we do in our lives. We are all witnessing one of the toughest, if not the worst, economic climate for the entire furniture industry in several decades. This begs the question: Could we have forecast this downturn? The answer would be, “Yes.” Could we have known when it was coming or how severe it would be? The answer would be, “No.” In other words, history teaches us that there are business cycles. Although we should prepare for them, we cannot accurately foresee the future. Therefore, how can we budget properly? Confused yet? Most of us would agree that Ben Bernanke and before him, William Greenspan were two very, very bright students of economics. While Greenspan can now conjecture and Bernanke must act, they both have to be picking their collective brains to review past performances to make judgments about what to do today, tomorrow and in the near future. Don’t be too hard on yourselves if you cannot figure this one out because for the most part there are a significant number of variables beyond your control. OK; it’s a cycle and it will change so here’s a suggestion or two. How do you see your future? Do you love the industry, the challenge and are you young enough and capitalized to ride out the downturn? If the answer is “no” then take a hard look at moving on… but do it on your terms; don’t wait until your vendors stop shipping to you and your employees aren’t being paid. Now that I have said that, and it wasn’t fun, let’s assume the answer to the question is “yes.” This is where you have to forecast and budget. It is also when you have to be very pragmatic… how much volume can we do, not how much volume would I like to do. What costs can you live with that will allow a break-even operation. If we can break-even at this volume and overshoot sales the worst that can happen is that we make money. WHFA is following this example in our budgeting for next year. Just like our membership, WHFA is taking a hard look at every single line item. We all need to stay vibrant, and while the cutbacks are not pleasant, we must not let them overcome our thinking about the future. Try networking with friends and associates on ways to cut costs that don’t destroy morale. Consider new avenues of reaching your buying public. This is the time to try something new; most would agree, the old stuff isn’t working very well. My crystal ball is currently useless, it probably always was! I confess this was a tough column to write so I close with, “budget for the worst and plan for the better times.” Please do both.

Keith Koplan 2008 WHFA president Koplan’s Furniture Vancouver, WA KKoplan@koplans.com

ON THE COVER The 5th Avenue Upholstered Bed and Single Dresser from the 21st Century Collection by Stickley. For more information, please visit www.Stickley.com. Contact WHFA at www.WHFA.org or (800) 422-3778.

westernreporter

OCtOber 2008

5


editor’s message Train like an Olympian I have to admit, lately I have been coming into work exhausted — not from work or my family life, but because I have been staying up late every night to catch the Summer Olympics. I have become addicted to watching the games, eager to witness the next world record or gold medal winner. I have always been a fan of the Olympics. Every two years, I set up my DVR and get excited to cheer on my country and watch my favorite events. One reason I enjoy watching the Olympics is because of the heart and dedication each athlete puts into training for their sport. For instance, the most decorated Olympian of all time, Michael Phelps trained for 318 days in a row, swimming up to 50 miles during some weeks in order to prepare for his 17 different races over nine days in Beijing — that is dedication. And his training and dedication proved to be very successful during the summer Olympics, with him winning eight gold medals during the summer games. What if your salespeople trained like Olympians? While your salespeople aren’t trying to earn gold medals, they are trying to increase their sales. Wouldn’t it be great to have your salespeople show the same kind of dedication to your store that these athletes have to their sports? Help your salespeople train like they are about to compete in sales during the upcoming Olympics. Every day, have them do something small to keep them always thinking about how to improve — have them read an article, role play, take a quiz or do a fun activity. Once a week, hold a training meeting and go over a topic a little more in depth. Make it fun and interactive so people don’t feel like they are wasting their time and make the ultimate goal clear. Find new ways of training that help each learning type (auditory, visual or kinesthetic) connect to the material. Every month, sit down with each individual salesperson and go over their performance. Write down each salesperson’s goal and track their progress towards completing it. Give them tools on improving their sales technique. Have your “star” salespeople share their sales process and techniques. You can even create a competition out of the “Sales Olympics”, giving the top salesperson each month a gold medal (or a gift card). People are innately competitive — especially salespeople, and with the right sales training and a little competitive spirit, your sales team could earn your store many gold medals. This issue of Western Reporter looks at business planning and forecasting. There are many important things to look at when you plan for the upcoming year, including how you are going to train your employees. In this issue, you will learn how to not let fear drive your business decisions, develop a winning strategy and educate consumers about green products in your store. I hope you enjoy this issue and take away a few ideas to help your business prosper in 2009.

Melissa “Mel” Dressler Western Reporter managing editor MDressler@whfa.org

customer experience

Journal of the Western Home Furnishings Association

westernreporter

september 2008

looking forward

www.WHFA.org

Last month’s feature articles are available online at www.WHFA.org or view our new digital magazine at www.issuu.com/ westernreporter/docs/september_08.

6

OCtOber 2008

westernreporter

to November/December 2008

An entire issue devoted to you... the retailer!

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


You’re the boss, we’re your bank. For merchant card processing.

est.1944

Bank of America is your preferred merchant services provider. Take advantage of our reliable services, multiple terminal options, and the following preferred pricing for WHFA members.

1.71%1

Reduced discount rate on qualified Visa® and MasterCard® transactions of $500 or more.

$0.10

Per item fee for Visa® and MasterCard® swipe transactions.

Call WHFA at 1.800.422.3778. Please mention promo code #415 to take advantage of this special offer. Or contact Denise Langham at 1.916.861.9283.

Certain eligibility requirements may apply. A surcharge will be applied for key-entered and other non-qualified transactions. Merchant card processing is provided by BA Merchant Services, LLC, a subsidiary of Bank of America, N.A. © 2008 Bank of America Corporation. 1


industry

beat New Store Announcements Bedmart in Arizona celebrated two new store openings and their 20th anniversary. A new store in Fountain Hills, AZ replaced its

board

member

Q&A

with Lael

previous Fountain Hills location and Bedmart’s CEO, Chuck Kill, said it is, “In a location that will serve our customers better.” The second new location, which opened during Labor Day weekend, is in Surprise, AZ. With the addition of two new stores, Bedmart now has 27 locations in the state of Arizona. Silverado Home & Catalog opened a new store in Napa, CA last July. The new store is about 2,600 square feet and focuses primarily on accessories.

Q What is your biggest challenge in furniture retailing? A The biggest challenge we are seeing is keeping customers open to large ticket purchases. Everything with a dollar sign keeps getting bigger except peoples’ paychecks! We must keep adapting to the market’s needs, and the market’s constant change presents the true challenge.

Q What did you want to be when you were growing up? A I thought about the standard little boy types of things. I wanted to be a fireman or a police officer. I liked building things and thought about becoming an engineer, until I was told it required a lot of tough math. That changed that!

Q What do you value most in an employee? A When we hire people we ask two things of them. We tell them that if they don’t lie to us or steal from us we’ll get along great. So we appreciate a high level of character in an employee.

Q What are three words that describe you best? A Loyal, fun, problem solver 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

Q What are the rules you live by? A • I try very hard to live by the golden rule, do unto others what you would have

done unto you. • I was taught to always honor your commitments. • The other main rule is to enjoy life, live so you will have no regrets.

Q I wish I knew how to: A I wish I knew how to play the guitar. I also would like to become fluent in Spanish or a second language.

Q When I retire, I want to: A Hopefully when that time comes I will be fat and happy! I want to spend time Lael Thompson COO Sonshine Furniture Today/ Broyhill Home Collections PO Box 1155 Aurora, CO 80040-1155 (303) 364-3178 www.broyhillofdenver.com laelthompson@earthlink.net

8

OCtOber 2008

with my family, travel to beautiful beaches, and help other business people and their companies make it through to the next level!

Q Why did you join the WHFA board? A It was a big challenge for me. I realized that I needed to get involved with a group

as influential and forward thinking as the WHFA and their leadership. I wanted to know what those guys know. If I could get involved I would have no other choice than to grow and prosper both as a person as well as within my family business. Besides the board is a lot of fun and we go to cool places to meet — who wouldn’t want to be a part of that?

westernreporter

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


 E O J .  S V P &YQBOE: &TDBQFUP1BSBEJTF 009 2 , 0 2 7 1 y a M

pa i Resort & S u a M n ti s e The W aii Maui, Haw

The Westin Maui Resort & Spa (808) 667-2525 www.hawaiianair.com/affiliate Passcode login: AMWEBWHFA Click on: Book Now

FTU

Western Home Furnishings Association

916.784.7677 • www.WHFA.org


feature article

Don’t Let

FEAR Furniture Business Drive your

A 2. Andrew Winans area manager Planned Furniture Promotion

3. 4. 5. 6.

10

OCtOber 2008

bad day in the furniture business: 1. The overdue special order sofa which your customer has repeatedly threatened to cancel finally arrives, but the vendor mis-boxed the item and it’s pink instead of the blue which the customer ordered. Your delivery manager took a job for better pay and benefits at your mega big competitor, and is not coming in (no notice!). Your biggest supplier can’t ship to you because their factory reduced every retailer’s credit line by 50 percent. Your credit line will not be renewed by your bank, so suddenly the comfortable cushion is gone. Your primary delivery truck broke down mid-day so you gotta get a rental and make some phone calls. You have a $5,000 pending chargeback on your bank account from the credit card processor from a customer you’ve satisfied repeatedly. westernreporter

7. The store across the street, your primary competitor for the past 30 years announced they’re calling it quits and hung a gigantic GOB banner over their store. I’ve just given a broad stroke to paint a picture of the furniture retailer’s bad day. My friends, there’s an all out survival war in progress as the economy begins to squeeze out the cash weak with her unrelenting contractions. Many in the industry hold much disdain for the furniture liquidation portion of our industry. However, just as there are morticians, firefighters and hazmat cleanup crews, there is definitely a need for skilled liquidation companies to zero out all inventory at the highest possible salvageable return for the client and/or creditors. And so, how do you navigate through a GOB sale environment when your sales are already down 20 percent YTD, and now in the GOB environment the drop has become 30 to 40 percent? You’ve heard that a pessimist is an experienced optimist. If you go after the GOB sale the wrong way, you may lose. The best defense for a GOB sale is a good offense. Here is your checklist: Contact WHFA at www.WHFA.org or (800) 422-3778.


1. Have I lost my rhythm and enthusiasm for my business? 2. Did I ever start a customer loyalty program which I’ve read about, thought about, liked the idea of, over the past 10 years? (hello!) 3. Is my business healthy or vulnerable in this down business climate? 4. What are my goals to keep both my volume and margin up during and after the GOB? 5. Am I throwing good money after an unsustainable business model and can I afford to lose everything I’ve worked so hard for? It’s time to set aside pride and examine your viability. If your viability is surpassed by insurmountable odds then step up to make some dramatic changes. Unfortunately many retailers perceive themselves much differently than their customer base; they try to keep alive an empty/hollow personification of what their financial condition really is not. Yes I’m telling you what others won’t say and what you may not want to hear! Is image important? Yes. Is your perception in the community and among business leaders important? Yes again. So why when you are so good at these things is your bottom line punishing you? I’m not drifting off message, in fact I’m getting ready to give you permission to jump off the airplane, so count to 10 and pull the rip cord. Some of you have multi-stores. Some have an outdated retail furniture concept that doesn’t work anymore. Others have seen their glory days and the memories are enough, “Please show me the exit door!” Action steps may take trusted helpers, but I offer you a plan to wake up the retail giant within. 1. Shop your top five competitors on Saturday, and the GOB store. Then ask yourself why the store is closing? 2. Pay attention to price points, location, traffic, salespeople, selection and the competitor’s niche. 3. Take a physical inventory at your place, yes with paper and pencil the old fashion way. In my business I will tell you that nine times out of 10 the dealer’s inventory is much less than what your computer tells you. If you are sitting on a greater loss (deferred and not yet recognized on your books because the inventory is not there) than your books indicate, no wonder your cash flow stinks! 4. Put away the shotgun, and develop a merchandising grid. For example 10 Contact WHFA at www.WHFA.org or (800) 422-3778.

sofas, with targeted price points: 1-$399, 2-$599, 2-$699, 2-$899, 2-$999, 1$1,299. You get the idea. Start treating all categories of your merchandise line-up like your cereal cupboard at home. Get rid of the stale stuff you hate because it doesn’t sell, keep buying Cheerios, Cinnamon Toast Crunch and granola that everyone eats. And try some new stuff once in awhile — it’ll spice up your life! Whatever you do, don’t buy more than 10 (or whatever the number of SKUs you establish), and now it’s your goal to sell as many of each one as you can per month — but ya gotta keep track each month and part ways with any losers as quickly as you know the SKU is an under-performer. 5. Now that you’ve identified the merchandise that doesn’t fit into your dream line-up, get to work. Choose an advertising theme, (there are ad companies in the Retailer Resource Center at market, ready to help you with a high impact event to turn over some slow moving inventory), or call a reputable consultant to help you

westernreporter

October 2008

11


make the correct contacts. You will have the biggest sale event in your history, built around purging everything dead, and things which don’t fit into your new merchandise line-up. You can milk the sale for 14 to 30 days if properly planned and executed depending on your market size. 6. Do not fall back into your old habits. Kill your old habits (lock up the shotgun, or better yet donate it to Ducks Unlimited!). 7. Adjust your overhead to fit your new sales volume (not the “special sale” volume you are going to generate, but the “20 percent YTD sales decline” you are experiencing in today’s business climate which we discussed earlier) what is your breakeven? Please don’t keep hemorrhaging losses, eat your Wheaties one morning and show up with your payroll hit list and get ‘er done! (This is your life, remember!) No one cares about you, so why not be the first one to care about you. 8. If you discover you want to pull the plug because you left your heart in San Francisco when that market closed, you’ve lost your furniture libido, or you simply need to get your money out because you can’t risk losing everything; by all means don’t beat yourself up, call a reputable

liquidator and gather up your life savings, and be proud of what you’ve accomplished in this industry. There is life after owning your store and personal identity outside owning your store. Who knows, you may morph into something else within the industry that you end up loving even more. 9. You’ve shined up a new brass ring, and it sparkles. Go for it (If option eight is out). Notice you didn’t run an ad the day the old-warhorse-competitor’s GOB broke because you’ve spent about a month getting ready to jettison your old stale way, and implement a new furniture retail revolution (I love this stuff, so forgive me if I show it.) 10. Every company has roots, so think about the core foundational items in your company that you must incorporate into the new plan. What are those things? Keep them! 11. Perhaps you have a factory store or unique retail concept that doesn’t work anymore. Lest you are oblivious and not keeping up on furniture current events, many dedicated concept stores have failed and will fail. You love the industry, so do something about it. Get out of the old, join a buying group and develop something new that is in tune with profits and customers showing up to buy. 12. Join a buying group. It’ll make you money. Buying groups are like spouses. Find one that makes you happy and that you can show love back to — you’ll wonder how you ever made it without the relationship. Not only are they the future, but you’ll make life-long friends. You’ll hear more of what you need to hear (you won’t like it all, but you need to hear it), your bottom line profits will go up, and life will be better. My conclusion is that you don’t fight fire with fire. You dig deep, perhaps get a personal trainer (consultant), or maybe GOB yourself. If you stay in, utilize the partners of WHFA that will last beyond a strong weekend of sales: • Join a buying group. • Jazz up your ads with outside help. • Hire a merchandise consultant. • Evaluate your end game and maximize your financial exit strategy because you’ve worked to hard to screw up the final payoff. • Make some wholesale changes that you’ve put off for too long. Long after your competitor’s GOB is over, you’ll be gaining altitude and developing your store into something you never dreamed possible. Sometimes the loneliest person on earth is a furniture retailer, so pick up the phone and get connected!

Andrew Winans is a third generation furniture retailer and former owner and president of Winans Furniture in Northern Nevada, which closed in 2005. He has personally run the day to day operations of a fast growing furniture company which expanded to three units. He has experienced victory and defeat during his tenure from 1987-2005 and has personal knowledge, and experience in family furniture business, and all the dynamics (good & bad) associated therewith. He currently represents Planned Furniture Promotion (formerly Gene Rosenberg and Associates), as area manager throughout the U.S., but primarily in the Western United States. Visit his website, www.andrewwinans.com, or the company’s website, www.pfpromotions.com. Or, contact him directly at: andrewwinans@yahoo.com or (775) 220-2670. Andrew continues to have a passion for the industry and loves to see furniture retailers succeed and realize their dreams.

12

October 2008

westernreporter

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


Take your business to the next level

A State-of-the-Art Retail Financing Program From American General Financial Services Can Take Your Business to the Next Level  Competitive Pricing to maximize your profit  dvanced Technology Solutions increase efficiencies  A  lexible Promotional Payment Options build  F store traffic

 argeted Marketing Programs help you retain  T customers with add-on sales  3 Levels of Support-National, Regional & Localguarantee satisfaction for you and your customer

With our quick-start registration, you could be ready for customer financing in days. Contact us today for more information.

800-599-2347 www.agfinance.com


Developing a Winning Strategy – Or Just Surviving Robert George managing partner Impact Consulting Services

F

or the last five years, pundits have talked about how the furniture industry has grown. However, in certain segments, there seems to be little evidence of this growth. We can add the “almost” recession which has eliminated that pronouncement of growth and, for many, the top line is falling…like a rock! Most people want to know what is causing this plunge. Could it be attributed to a.) your company’s individual performance, b.) the economy in general, or c.) a major change in industry structure? How do we get to the answer? Well, it’s really a matter of dissection. To use a television reference, we could think of it as the “CSI of Home Furnishings” where we start with a general picture, drill down to the specifics, and solve our mystery. Now follow along with our story. You, Mr./Ms. Retailer, have just finished a long day filled with one “exception” after another. You complete each of these unforeseen tasks mouthing your mantra, “I must work on my business, not in my business.” Now the store has closed for the day and everyone has left the building. As you lean back in your chair, you close your eyes and your mind begins to reel off one concern after another.

• • • • • •

Do I need lower priced merchandise? How can I eliminate some expenses? Is the day of the “Mom and Pop” stores over? Should I pursue a single-brand store? Do I deserve “exclusivity” from my vendors? Is there another way besides “No-No-No” promotions? • Is the real estate model still correct? As you dart between states of semi-consciousness and mounting frustration, the exasperating thought keeps coming back to you — “All I have are questions. Where do I get some answers? There has to be a solution in here somewhere!” In fact, there is. And you can get there, by getting a clear picture of your business (looking at all the facts, good and bad), setting your goals (knowing where you want to end up), formulating a strategy (A + B = C), and reaching your objective (happy day of accomplishment!). So, let’s start.

Getting a Clear Picture of Your Market and Your Position In It The first level is the landscape of your specific market.

Questions/areas to explore • Are my sales down because of the economy or is some competitor outperforming me? 14

October 2008

westernreporter

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


While you recognize there was $250 million in furniture sold in the first two quarters of the year in your market, you realize that consists of everything, including ready-to-assemble tables. You have moved your merchandise to higher price points in order to avoid those alternative channels. You know there are 590,554 households in your market, but only 11.12 percent have more than $100,000 in annual household income. Now, what about the sales in your price points?

case goods is a false economy.” With a dogged sense of purpose, you will unearth other questions. You are proud of your store and believed you were doing a good job. The facts, however, speak for themselves. Of the consumers who purchased furniture in the last 12 months, almost one third thought you were the “best” retailer in most areas. That’s something to be pleased about. Yet, more consumers felt your service and reputation were the worst. The next steps are to consider what you know and determine the areas that you should explore.

Questions/areas to explore

Twenty-one point nine percent of the total sales this year have been in what you consider your market and that represents $22.7 million in sales. The questions then become, “How many of those dollars did I get? What was my market share?” As the picture becomes clearer, you feel a degree of comfort. Your market share at 6 percent has been holding steady over the last several years. Never one to leave stones unturned, you find new questions surfacing. “If my market share is 6 percent, who has the balance? Why is my upholstery market share two times what my case goods market share is? Could that be because I have an upholstery buyer who spends time researching new vendors and conducting training on the floor? I buy case goods, but the other demands of running the business do not allow me to spend very much time on this category. Perhaps not having a dedicated buyer for

• Have I weighted my advertising expenditures heavily to one product category, for example upholstery? • What is my percentage of sales in each product category and how does it compare to the industry? • What is wrong with my service? Is it something taking place in the store or after the sale? • My sales associates are getting mixed reviews. Is it everyone or only a few? • I believe I am in the upper/premium segment, but what are the price points? I sell a lot of $699 sofas. • What consumer is buying in the warehouse clubs? These clubs have some of my vendors. Should I drop those vendors? • What is defined as “my” market? Will consumers drive more than 20 miles to shop? This process of asking the always tough questions and distilling the often-challenging facts allows you to face some decisions that you may have avoided — quite possibly to the detriment of your business. It is now time to move to the next stage.

Do I Really Understand Who My Consumer Is? You just declared yourself to be in the upper/ premium segment of the market. You realize it was a retreat from some of the competition that has moved in because it wasn’t that long ago you would have said you were mainstream. While you added the more expensive lines, some of your customers look the same. You know, however, you can’t always tell by looks. While all of the data discussed in this article comes from www.furniturecore.com, there are other sources. The Department of Commerce provides demographic data as well as industry sales data. While Furniture Core is based upon a proprietary data model that is more refined and timely, the Commerce Department can provide strategic considerations. The source of much of the data in this article is from the retailer’s internal records. These are records that can be created by the retailer organization. Obviously, there are other vendors that can develop specific data sets. The important criterion is that all data be comparable. The most essential point is that a forward direction be based on quantitative information, thus minimizing the qualitative, subjective information.

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

westernreporter

October 2008

15


incomes over $100,000 and your original middle consumer? There are a million things you want to discover, a million questions to ask. Well, perhaps not a million questions, but well over 400.

This Consumer Segmentation matrix gives you your answer. You have your feet in both the upper/premium and the middle markets. Although you sell to everyone, statistically your primary customer is in these two market segments. The question you must ask is, “What does each segment buy?” You know your best sellers, but you need to know more.

The information gained shows you what is important to the upper/premium consumer about the furniture buying process. Often the things you discover surprise you. Sometimes you just drift into a strategy without assessing the implications of it.

Questions/areas to explore • Can a store bridge two distinct markets? • Is having two market thrusts diluting my advertising? • What is the impact on profitability if I choose one market or the other? • Does my consumer need more “design assistance”? Is that what is causing the negative rating for my sales personnel? • Do my vendors not offer what my consumers want to buy? Now we must reverse our thinking process and become more introspective in our analysis.

Is My Team or I Executing at a High Performance Level? The merchandising information gives you the answer. Hidden within the numbers are the products that the upper/premium customer wants. At first you thought these consumers were buying value with the $699 sofa. Actually, this was the purchase of that previous middle price point customer. Having identified your two consumer segments, you now look to find the differences. Is there a difference in the shopping process for the upper/ premium consumer, those with annual household

16

October 2008

westernreporter

In the spirit of strict openness, we now must speak of financials. That’s what bankers want to talk about. The first question that comes to mind is, “Did you complete the NHFA 2008 Retail Performance Report Survey?” I hear the answers. “Yes, I did.” (Thanks, we appreciate it.) “No. I really intended to, but I got waylaid elsewhere,” or “I will next year.” We will share what we found. continued on page 18

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


FTG International Import • Provides dealers and retailers, regardless of size, the ability to facilitate an economical consolidation of orders from Asian factories • Allows individual orders (as small as 300 cubic feet) to ship directly to final destinations in US through FTG • This process removes the expense of warehousing and the costs associated with it • International Import allows small and mid-sized dealers who lack the volume for direct containers and are too far from US warehouses to realize cost effective delivery • Import Solutions - FTG International Import

Furniture Transport Group CALDWELL

FOOTHILLS

MGM

FREIGHT LINES, INC.

TRUCKING CO., INC.

TRANSPORT CORP.

www.caldwellfreight.com 800-438-8244

www.foothillstrucking.com 800-562-7428

www.mgmtransport.com 800-333-6105

The Best In Furniture Transportation And Distribution Solutions Start Here

www.furnituretransportgroup.com


The results will point you to those areas for potential improvement while comparing this information to the 2007 results through the most current quarter. The picture keeps getting clearer, enabling you to eliminate your own excuses (a gratifying experience). Let’s take a look at how the sales associates may impact the high sales expense. Culprits found… Sales Associate X was burning through the UPs, selling lots, but not effectively using the traffic as measured by the Performance Index. You probably had a feeling about that one. Then, there is Sales Associate Y — a nice guy, but he can’t close. Sometimes you just don’t want to know the answers to the questions you ask. The old “ignorance is bliss,” head-in-the-sand syndrome kicks in with a vengeance. Your logic says that if Impact Consulting is correct in stating that consumers are visiting fewer stores today (2.1 compared to three to four, 10 years ago), your close rate should have doubled. Compare your numbers to those of best practices and high performers. Your close rate and average ticket are poor. Don’t let the problem get you down. Look for the cause. You are certain you are not alone in facing these dilemmas. It is good to be able to compare

18

OCtOber 2008

westernreporter

your results with industry numbers, but you may need to discuss with others. “How did you achieve that? What are some of your “Best Ideas? I would be glad to share with others.” Somewhere you have read about Performance Groups. You have always thought that is would be scary to share your financials, your strategy, and your concerns. On the other hand, other members also share. The cost is not that much. It is just the investment of time. Becoming a part of this organization will help you to get questions answered and to develop ideas. It allows you to begin that process of working on your business. And this leads us to your continuing list.

Questions/areas to explore • Why is my advertising expense high? • Maybe my decision to outsource delivery was not a good move. Cost is up and I have a service problem. • I have the performance numbers for my sales associates, but never get around to reviewing them. Perhaps a sales manager would be a good investment. • I need to join that Performance Group ASAP!

Am I Open to New Experiences? Advertising expenses are high; however, promotions just have not brought in the traffic. Therefore, you try more advertising. Welcome to your own “business vicious circle”. While you know you are not an early adopter, you know you must address these issues and perhaps, consider other ways of doing things. Since there is a lot of buzz about the Internet, you decided to let your nephew (who is in high school) put up your website. Have you taken a critical look at it recently? Does it “work” for you? Based upon research done by Impact Consulting, we found that during the first half of 2008, 63.5 percent of all consumers did research on the Internet before shopping for home furnishings. This brought about a reduction in the number of stores shopped to that average of 2.1. It is an important area to address.

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


The picture becomes clearer. Internet analytics tell you that you had 316 unique visitors to your website last quarter. There were 8,000+ purchasers in the upper/premium market. Therefore, you had an estimated 4 percent of these purchasers who visited your website. This is great information, but not a good report card for you. Your job now is to compare the cost of getting a website professionally designed, hosted, and maintained to the cost of commercials (radio and TV), direct mail, newspaper inserts, etc. You will probably put the World Wide Web on your list. What kind of store traffic do you have and how can your Internet strategy improve it? There are opportunities to purchase traffic to your website from the major search engines. If your advertising cost for each UP who walks through the door is $36, would using the Internet be a less expensive and highly efficient alternative? Add to your list some of the new ideas in our industry.

Questions/areas to explore • Explore purchasing traffic on the Internet. • Consider the cost of a professionally designed website — or at least professional hosting in order to get those analytics. • What about email campaigns? • What does it take to be at the “top” of the search engines’ results? • Should I put prices on my website? • Should I sell on the Internet? It is invigorating to consider new ideas, innovations, technologies, etc., those areas that go beyond the day-to-day duties of running of a store. It begs the question, “Do you think about the future of the industry?” Are you someone who accepts the old “givens” about the industry, such as housing starts drive the furniture business? Think carefully. We have built many houses in the last five years. Did they translate to furniture sales? What does drive our business?

Consumer Confidence is the major factor. Now with consumer confidence “in the tank” (less than 60 percent), this may be a long downturn. Perhaps not as long, however, as waiting for new home sales to return! It is important for you to realize there are opportunities to grow are out there. The industry association conferences explore interesting topics. The industry publications have much to offer if you look beyond the often-sensational going out of business articles. Try not to hit Delete on every industryfocused newsletter on the web. Some have substance. These areas offer you events and ideas to may help you develop a broader focus on our industry. If you have followed us through this exercise, you have taken Step 1 to developing your strategy. In this phase, you are compelled to face the facts about your company. It entails looking at the good and the bad and acknowledging both. It is probably the hardest stage of strategy development, but one that demands your complete candor in order to be successful. Once you have completed this, you must explore and amplify your lists and statistical information.

Robert George is the managing partner of Impact Consulting Services, a firm specializing in the furniture industry. Impact Consulting provides strategy consulting based upon documented facts. www.furniturecore.com is an industry portal solely owned by Impact Consulting. www.furniturefan. com is a consumer portal solely owned by Impact Consulting.

Interested in developing your own winning strategy? Purchase the 2008 Retail Performance Report to see how your company stacks up to others in the industry.

Call (800) 422-3778 to order yours today.

RPRcove

r08FINAL.

indd 1

6/23/2008

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

westernreporter

OCtOber 2008

2:56:36

PM

19


legislative news Enforcement an Integral Part of California’s Composite Wood Regulation In the September issue of Western Reporter, we featured an article examining the new composite wood product regulation in California. Basic elements of the regulation were described focusing on retailer responsibilities. This article will explain the California Air Resources Board’s enforcement program.

C

alifornia is implementing a regulation that will limit formaldehyde emissions from three types of composite wood Angela Csondes products — hardwood plywood, particleboard California Air and medium density fiberboard. Formaldehyde is Resources Board a known carcinogen and California is required by law to reduce public exposure. Beginning in 2009, businesses that manufacture, sell, use or supply composite wood products to California must comply with the state’s new regulations. These businesses include panel manufacturers, importers, distributors, retailers and fabricators of finished goods. The regulation requires t n e m e that compliant composite wood c r o f En t c products be used in the fabrication e f f E o of finished goods, such as furniture, Goes Int 9 0 0 2 , 1 cabinets, etc. Responsibility for y r Janua compliance is borne at each level of commercial distribution. The Air Resources Board’s enforcement division and personnel from the 35 local air districts will be monitoring and enforcing compliance. There are several key components to California’s enforcement strategy. First, composite wood product manufacturers are required to enlist the services of an Air Resources Board-approved independent third party certifier. These certifiers will verify that a company’s panels intended for California’s market meet the state’s formaldehyde emission standards and that the manufacturing mill is capable of producing products of consistent quality. Third party certification is fundamental to assuring fair competition and low-emitting products for the California public. Second, to inform and provide assurance to California’s public, manufacturers of composite wood panels and fabricators of finished goods using composite wood products are required to label their goods as containing only certified products. Along with labeling, chain of custody documentation is required and can be established through invoices and bill of ladings. This documentation links the possession of goods 20

October 2008

westernreporter

back to the origin and provides evidence that the composite wood products or finished goods contain only compliant wood product. A chain of custody mechanism has been added to the regulation to require businesses to include a statement of compliance on invoices and bill of ladings as a confirmation of compliance for downstream customers. In the course of an investigation, Air Resources Board enforcement personnel will use the chain of custody information as an auditing trail to verify the emission characteristics of the products and to identify the commercial distribution pathway for the inspected goods. Third, retailers, distributors, importers and fabricators must document the “reasonable prudent precautions” they take, which not only affects their supply chain management, but provides additional assurance that the composite wood products purchased and destined for sale in California comply with applicable emission standards. Reasonable prudent precautions include communicating and instructing suppliers that they must supply goods that comply with California emission standards and documenting this exchange. Recordkeeping is yet another important aspect of the regulation, which links all composite wood products and finished goods in commerce to qualifying emission tests. Some retailers may need to update their recordkeeping systems to ensure that the required information is maintained. These records must be kept in electronic or hard copy form for a minimum of two years. The first set of emission standards become effective January 1, 2009, and the Air Resources Board’s enforcement team will then commence its operations. While it is anticipated that most companies will comply, violations may still occur. In these cases, notices of violation will be filed and fines levied according to the California Health and Safety Code. Typical investigations will cover the spectrum of distribution in California and include facility inspections, examinations of records and securing samples for compliance testing. In the course of an inspection, staff would first seek appropriate labels and then ask to see chain of custody Contact WHFA at www.WHFA.org or (800) 422-3778.


documentation and verification of the emission characteristics of the products. Enforcement officials will purchase panels and finished goods for laboratory testing from: retail outlets; institutional, industrial and commercial market suppliers; regional chains; small scale and close-out stores; strip malls and Internet sites. Enforcement staff may secure samples for emission testing, which will be carried out by the Air Resources Board’s laboratory. In cases where a violation is uncovered, an investigation will be initiated to identify the party or parties responsible for the noncompliant products. The chain of custody documents will be followed back from the retailer to the panel manufacturer to verify that proper procedures were followed at each link in the distribution chain. The responsible party, extent of the violation, and possible penalties will be determined on a case-by-case basis. To facilitate compliance with the new emission standards, the regulation provides a sell-through period allowing businesses an opportunity to clear inventories of noncompliant panels and finished goods. Under the sell-through provisions, panels manufactured before respective effective compliance dates (Phase 1 or Phase 2) may be legally sold in California for limited periods of time after the effective date. These periods vary by each sector of the distribution chain. Finished good retailers, fabricators, distributors and importers have 18 months beyond the applicable effective date to sell products made with noncompliant materials. Sell-through periods are not additive; in other words, a retailer may not purchase non-compliant finished goods during the 18 month sellthrough period and legally sell these goods in California beyond the end of the 18 month period. Noncompliant composite wood products or finished goods may not be sold after the 18 month window. It has long been Air Resources Board’s practice to consider all relevant factors when deliberating violations. The extent to which an entity has taken “reasonable, prudent precautions� and used good faith efforts to avoid Contact WHFA at www.WHFA.org or (800) 422-3778.

violations is always strongly considered. The Air Resources Board has decades of enforcement experience on a wide variety of clean air regulations and a long track record of treating the regulated community fairly. This practice will continue when enforcing the composite wood products regulations.

For additional regulatory information, please visit the composite wood products website at: http://www.arb.ca.gov/toxics/compwood/compwood.htm, or contact Ms. Angela Csondes at acsondes@arb.ca.gov. For enforcement questions, please contact Mr. Darrell Hawkins of CARB’s Enforcement Division at dhawkins@arb.ca.gov.

One of these people had an HH “GRAND HH&A

CLOSING SALE SALE� ...

...the other one spent a “GRAND� For over 48 years we’ve consistently delivered to businesses like yours shopping there! profits up to 50% over cost by

selling a year’s volume in approximately 90 days. We’re Hoyt Highfill & Associates, one of the largest, most reputable sales promotion companies in America. With your approval each step of the way, we organize every aspect of your sale, from our copyrighted advertising program and great inventory support by America’s finest manufacturers to our highly motivated, professional sales team of furniture experts who strive to uphold your professional image and integrity. Let our expertise, experience and energy make your “Grand Closing� sale a profitable pleasure!   sHIGHlLLCOM

'OINGOUTOFBUSINESSs2ELOCATIONs,IQUIDATIONs2ETIREMENT All inquiries handled in strict confidence.

westernreporter

October 2008

21


Ten Strategic Questions for the Next Generation

A

mong the many issues that confront family businesses in times of generational transition, strategic direction can be crucial. The strategy that has provided direction for the business during the incumbent generation’s watch may be faltering or tired or largely completed. Strategic modifications, reinvigoration or even a reinvention of the business may be required with the aging current leadership unmotivated, unwilling or unable to lead the process of change. Craig E. Aronoff, Ph.D. Strategic stagnation may set in with what can co-founder and principal sometimes be disastrous consequences if the Family Business business loses its ability to compete. Consulting Group, Inc. Next generation managers may recognize the problem but be in a poor position to do much about it. Their elders, still in control, may resist change and the risks that change implies. They simply may not wish to challenge established practices. Or they may fear being seen as lacking answers and the power to lead — but still not ready to let go. Next generation managers also can have their own difficulties. With heavy operational responsibilities, they may be focused on the present with no time to consider the future. The next generation may be lulled into false confidence by accepting the status quo or by their respect for their elders. Or perhaps they’ve fought for change and lost their battles. Or maybe the strategic differences among members of the next generation have not been addressed. The result of any of these problems may be a lack of strategic leadership which can leave a business, its management and employees adrift. Our strong recommendation is that the next generation of family business owners come together early in the process of generational transition in order to achieve consensus on strategic direction. Interested in becoming Once that consensus is achieved, a part of Fast Forward? it should be communicated to top management, which has Visit www.WHFA.org and click on responsibility for developing Community > Next Generation: the business’ strategic plan Fast Forward or contact Kaprice for approval by the board of Crawford at (800) 422-3778 or directors. kcrawford@whfa.org. You can When the next generation also participate in next generation convenes to discuss strategic discussions on the WHFA direction, we suggest that the discussion board. conversation be guided by a 22

OCtOber 2008

westernreporter

number of questions. Indeed, individual members of the group should spend time in advance thinking about these questions so that each will be prepared to make effective progress toward the goal of being able to articulate strategic direction. 1. The most basic and fundamental question confronting each successive generation of family owners is: Are we committed to continuing our family business together? While basic, the question is not simple. Different family members may have different answers. Some may wish to cash out. Others’ participation may be conditional (“I’m in, but only if I have a top management job.”) Some may dream of their own children inheriting the business. Others may not have children. These matters and the liquidity issues that may ensue should be worked through. 2. Next question: Are we satisfied with our current strategy? This is actually a very complicated question. To answer it, participants in the discussion must know and understand the current strategy and must be able to assess its effectiveness. That knowledge usually requires some rather in-depth discussions with the business’ leadership and board of directors. Sometimes the conclusion is that the strategy is not clear, that it is inadequately effective or that the strategy is good but poorly executed. Such conclusions require many more questions to be asked. 3. Are we satisfied with our rate of growth? To answer this question, next generation leaders should understand the positives and negatives associated with growth. Sometimes, growth is required to remain a viable competitor. Sometimes, more growth means increasing risk or reducing quality. These issues must be carefully examined. 4. How does the availability of capital constrain our strategic choices? The willingness of owners to provide capital to the business and to reinvest profits in the business has significant impacts on growth, diversification and other strategic options. 5. What is our orientation toward risk? The next generation should consider the financial structure of the business and their willingness to use leverage (borrow money) to pursue the strategies adopted. Contact WHFA at www.WHFA.org or (800) 422-3778.


6. How patient are we with our capital? Are the owners looking for current or quick returns, or are they willing to wait for the strategies to come to fruition? Reaching consensus on this question has a significant impact on strategy selection. 7. What are our expectations about liquidity? The group should reach consensus on their desires for distributions and the ability to sell shares. 8. What are our business’ strategic strengths and weaknesses? What opportunities and threats confront us? These questions are the basis of a widely used strategic planning tool called S.W.O.T. analysis (Strengths, Weaknesses, Opportunities, Threats). The exercise is one that owners should go through to sensitize themselves to the strategic planning process and to improve their ability to offer strategic direction and feedback. 9. Are there strategic avenues recommended or precluded by our family’s values? Family owners may support or deny certain strategic directions because of family values. Reach agreement among owners on this issue and make such constraints clear to management and the board. 10. What does our family business history and traditions tell us about how we’ve handled strategic change in the past? All business-owning families have had differing historical experiences relating to such matters as change, consistency, quality, risk, discovering and taking advantage of opportunities, and other strategic issues. These are worth reviewing for lessons learned or so that thoughtful departures from the past can be accomplished. Your family may come up with additional strategic questions to consider. But it is important to encourage the rising generation of family business owners to engage sincerely in the complicated and time-consuming discussion required to reach consensus on strategic direction. The next generation must speak on this crucial Contact WHFA at www.WHFA.org or (800) 422-3778.

subject with one voice — to each other, to the board, to management and, someday, to their own children.

Reprinted with permission of the authors from the August 2005 issue of The Family Business Advisor®. ©2005 Family Enterprise Publishers®, www.efamilybusiness.com. All rights reserved. Craig E. Aronoff, Ph.D. is a co-founder and principal of the Family Business Consulting Group, Inc.® and can be reached at (678) 277-9865 or aronoff@efamilybusiness.com.

westernreporter

OCtOber 2008

23


Design Tools for Professionals Industry Professionals who know the true value of their time use The Board™ to communicate with clients more effectively, develop ideas faster and turn those ideas into SALES quicker than with any other tool on the market. Your sales and design team can establish lasting relationships with customers while using one

of our highly effective sales and design tools. Retail Sales Consultants - can offer room planning services with conďŹ dence. Interior Designers - use them for whole-home and in-store consultations. Clients can visualize ideas - which makes the purchasing process easier than ever!

MP-003-RES

Visit www.spaceplanning.com or call 1.800.449.9984 for details


Dream•Design•Deliver 3Dream.net is a user friendly, powerful 3D space planning and design tool. This incredible visualization tool lets you show your customers how all elements of a room will work together. 3Dream™ simplifies selection and purchase decisions drastically reducing mistakes and returns. Take the guesswork out of room planning for customers.

Make your customers vision a reality by taking them on a virtual guided tour of their new room. Space plan in 2D, then instantly switch to 3D to choose from a large variety of furnishings, fabrics, rugs, art, lighting, paints, floor coverings, etc. all added by using simple drag & drop commands.

Go from plan view to fully rendered 3D walk though mode at the click of the mouse.

Sign up for a FREE trial at www.3Dream.net Accounts start at just $39.00 a month – with no up-front or upgrade fees!

Innovators of Design Tools for Professionals 800 449 9984 www.ViewITtech.com

• IDS Booth at market suites • Furniture Library kiosks throughout the market


member profile Fitterer’s Furniture Ellensburg, WA

Jon and Brad Fitterer, owners of Fitterer’s Furniture

I

n 1896, gold was discovered in the Klondike, Cracker Jacks and Tootsie Rolls were first introduced and Philip and Frank Fitterer opened Fitterer Brother’s Furniture in Ellensburg, WA. Prior to opening their own home Melissa Dressler editor furnishings store, Philip and Frank managed a popular Ellensburg Hotel, the Horton House. Once the hotel closed in 1896, the brothers realized they had a considerable amount of furniture and household goods on their hands. They decided to open their own furniture business to dispose of the excess goods. The business was an immediate success, and Philip and Frank began to acquire more furniture from traveling salesmen and catalogs. When the Milwaukee railroad finished with their most northern line, Philip and Frank purchased the surplus of furniture. Eventually, the road to Seattle and Tacoma was completed, which provided Fitterer’s Furniture access to many more products. In 1909, Fitterer’s Furniture moved to its current location at the corner of Fourth and At a Glance Main streets in downtown Store Location: Ellensburg, WA Ellensburg. Type of Store: Full-line Today, the fourth generation of the Fitterer Year Founded: 1896 family continues to operate Number of Employees: 15 the store. Cousins Jon and Number of Store Locations: 1 Brad Fitterer are co-owners Annual Sales Volume: Over 2 million and continue to place emphasis and respect on Website: www.FitterersFurniture.com their family history and Top Manufacturers: Flexsteel, traditions. “One thing our Sealy Mattress, Broyhill Indistries, family has instilled in us is Tradewinds and Klaussner the pride that you have as WHFA Member Since: 2005 a family-owned business,” Jon said. “The honesty and 26

October 2008

westernreporter

integrity that the family has was instilled by my great grandfather. Those are historic and enviable qualities that a family can have. We are a pretty unique furniture business.” Fitterer’s attention to honesty and integrity is apparent in every aspect of their business, from their welcoming store environment, to home staging and delivery. Their attention to the customer is also evident through the generations of family members that visit the store.

A Welcoming Environment The first thing you will notice when you walk through the doors of Fitterer’s Furniture is the sound of two parakeets. As the guardians of the store, their pleasant chirp often attracts the attention of children and adults. “If you came in and you had your children with you, that is the fist place they would focus on and it creates a bond that would start an immediate friendship with the birds and the store,” Jon said. To make customers feel more welcomed in the store, everyone is greeted and offered refreshments and an Otis Spunkmeyer cookie. Customers can either sit down and enjoy their refreshments or start their journey through three-stories of furniture. “Our store is a lovely 1907 brick building that has a lot of unique character involved in it including a second floor that is suspended by steel rods. We have gallerized and individually roomed that area so it spider webs you through very desirable bedding and dining rooms,” said Jon. “We have done a focus on our third floor — which is by no means an attic — that is our sleep area. We have very subtle lighting which casts a nice, relaxing ambience on the area. When you come into our sleep area, it is developed for relaxation.” Through creating different experiences throughout the store, Jon and Brad have tried to

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


create a store atmosphere that is sensitive to the needs of the customer. They focus on what the customer will see, feel and hear throughout the experience and address these components to make it the best shopping experience for customers. Even the customer’s interaction with Fitterer’s employees is sensitive to the customer’s feelings and needs. By taking the time to learn about each customer’s life, employees develop relationships with each customer and are able to understand and address their wishes.

Free Delivery Anywhere within Washington Fitterer’s Furniture offers customers free delivery anywhere within the state of Washington. This service has become a helpful tool in closing sales and creating loyal customers. In order to provide this service free of charge with today’s high gas prices, Fitterer’s batches their orders dependent on where it will be delivered. “We don’t just deliver to the Seattle area, which is 150 miles away, every day,” Jon said. “What we have done is batch things so we can go to Western Washington and then go North on one day. The next we will go to Western Washington and go South.” By batching their orders, they are able to deliver items all in one trip. Jon also makes sure each trip out to Western Washington is worthwhile by picking up items from their suppliers that are located in the region. “We have learned to make sure the truck that is coming back [from Western Washington] comes back with a back haul on it from three of our warehouse suppliers,” he said. “We will bring our freight back with us, so that offsets our fuel costs because we are picking up the freight ourselves. It is a big selling point and a huge closer for many customers.”

new home without any furniture, home staging has become an important aspect of the sale. Recently, Fitterer’s in-house interior designer, Amanda Johnson, staged multiple homes for a large company in the area, “Amanda just finished one of the most accomplished home stagings that we have ever done. Rather than staging the home and charging the company on a monthly basis, the business actually bought all of the furniture,” Jon said. Occasionally the new home buyer will want to purchase the furniture that the home has been staged with. When Fitterer’s Furniture staged a preview home in the Suncadia Resort in Eastern Washington, they were delighted that one of the buyers purchased a large amount of their furniture as well and it added a little extra to their bottom line.

The Legacy of Fitterer’s Furniture Through the 112 years in business, Fitterer’s Furniture hasn’t faced anything as tough as the next challenge Jon and Brad face — finding a successor of the business. With no family members interested in taking it over, that is the tough task the two will be focusing on in the next few years. “Both Brad and I are maturing, and we don’t have a family representative that appears to want to take over the business,” Jon said. “So that is where our goals are set, to see what the future is for Fitterer’s Furniture and make sure that we plan a succession. I don’t think either of us wants to see this business closed and the assets sold.” No matter what happens with the future of Fitterer’s Furniture, their great family history and legacy of being respectable, honest people will remain in Ellensburg for generations to come.

Home Staging Fitterer’s Furniture offers home staging which assists their customers in selling their homes more quickly, while also getting the Fitterer’s store name and products out to a new audience. Since only 10 percent of home buyers are able to visualize the potential of a

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

westernreporter

October 2008

27


For legal advice you seek an expert...an attorney. For financial advice you seek an expert...a CPA.

For employee benefit expertise you seek... Bob Aita

AITA

and associates

the full service employee benefits agency

insurance marketing, inc.

We have been in the business over 20 years, bringing employers solutions to the age old problem, "How do I provide valuable benefits without breaking the bank?"

Call Aita and Associates and we'll show you how. Bob Aita is an Exclusive Rep for Q & A Insurance Marketing Inc. 707.829.8606 phone 888.829.8606 toll-free 707.829.8924 fax 7005 Hazel Cotter Court, Suite G3 Sebastopol, CA 95472 License# 0E22529

www.aitaandassociates.com

28

October 2008

westernreporter

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


program of the month Commercial Building Owners Can Save Significant Tax Dollars With Cost Segregation

P

urchasers of commercial real estate can gain tremendous tax benefits by using a popular asset depreciation technique called cost segregation. Cost segregation provides purchasers with tremendous tax benefits from accelerated depreciation deductions and easier write-offs when an asset becomes obsolete, broken or destroyed. CPA’s can recommend using the cost segregation technique when a taxpayer constructs a building or buys an existing one. It can be used even if a structure was acquired several years earlier. Buyers of real estate should obtain an engineering report that segregates assets into four categories: personal property, land improvements, building components and land. The advantages of cost segregation include the value of front-loaded depreciation deductions, writeoffs of building components that need replacement and lower local realty-transfer taxes.

How the technique works: The process of cost segregation begins at the time of purchase, remodel, expansion or construction of leasehold improvements. Accounting professionals should advise clients or employers buying real estate to use an engineering report to segregate assets into four categories: • Personal property • Land improvements • Buildings (which should be further broken down into component parts). • Land This allows a purchaser to achieve faster depreciation deductions as well as possible and easier subsequent write-offs, so its cash flow will be increased. Assets allocated into the first two categories enjoy relatively short useful lives and, thus, Contact WHFA at www.WHFA.org or (800) 422-3778.

accelerated depreciation methods. Furthermore, if the components of a building have been separately valued and a component subsequently becomes worthless, the taxpayer can write it off more easily.

Cost Segregation Example of Savings A thorough analysis of the facts of each situation helps CPAs quantify the present-value tax savings associated with using cost segregation. Consider the following example based on an actual cost segregation engineering report. Suppose a taxpayer purchases a nonresidential building for $12,135,000 (assume the land is owned by an independent third party). If the taxpayer does not use cost segregation, it must use straight-line depreciation over 39 years. In contrast, suppose the accounting professional advises his or her client or employer to retain an engineering consultant (WHFA’s program with Cost Segregation Services) to prepare a cost segregation study. The engineer’s report shows that of the total purchase price, $11,285,000 should be allocated to the building, $50,000 to 15-year property and $800,000 to 5-year property. Allocating part of the purchase price to these two additional property categories results in tremendous tax savings. Assuming a 35 percent tax rate and a 5 percent discount rate, the cost segregation

Kaprice Crawford WHFA marketing director

study produces $133,563 of tax savings.

Call WHFA today to receive member only discounts and a no-cost benchmark analysis. This free, no obligation, analysis will give you an estimate of the benefits you will receive. Ring in the new year with extreme tax savings.

For a complete program outline and pricing call (800) 422-3778.

through WHFA’s partner

westernreporter

October 2008

29


Property Liability Commercial Auto Commercial Umbrella Workers Compensation Employment Practices Liability

WHFA and Argo Select Specialized insurance services for the furniture store industry The Western Home Furnishings Association is pleased to endorse Argo Select as the preferred provider of insurance and loss control services to its member stores. As a specialist in retail insurance, Argo Select offers unique coverages, such as our Retail Furniture Advantage endorsement, and safety resources customized for the furniture store industry. Call to learn how Argo Select can help protect your store against common industry exposures. For additional information, please contact: Jerry Landers 866.428.0730 n jlanders@argogroupus.com WHFA n 800.422.3778 n mbrship@whfa.org www.grocersinsurance.com

est.1944


meet the new members New Members Who Joined WHFA in August 2008 Artizen Gallery McCall, ID Founding Year 2006 Carpet Exchange Denver, CO Founding Year 2000 City Life Home Furnishings Brea, CA Founding Year 2004 Complete Comfort LLC Idaho Falls, ID Founding Year 2008

est.1944

Electronic Home Lifestyles Monterey, CA Founding Year 2006 Furniture Depot Santa Maria, CA Founding Year 1976 Josephine Homes San Francisco, CA Founding Year 2003 King’s Mattress Everett, WA Founding Year 2003

?

Luxury Home Furnishings Beaverton, OR Founding Year 2008 Milano Home Furniture San Jose, CA

S & G Discount Outlet Inc. Santa Clara, CA SDS Furniture Inc. Visalia, CA Founding Year 2008 UR Home Furnishings Los Banos, CA Founding Year 2007

Park View Furniture & Appliances Rupert, ID Founding Year 1975 Rest Smart Boise, ID Founding Year 2008

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

est.1944

Western Home Furnishings Association 800.422.3778 • www.WHFA.org westernreporter

October 2008

31


CDS Solutions Pick up from September 08 page 48


y l d n e i r eco-f

green

Start a “Green” Dialogue in Your Store

e l b a n i a t s u s

I

have had several conversations over the last three months with retailers about “green” eco-friendly merchandise. Some of that dialog happened with a few of you in Tucson at the WHFA Conference. The comment that I frequently get is, “I can’t talk about green or even introduce something green on my floor because it will make everything else in my store look bad.” Another is, “Green is just a fad, and I don’t care about it. My furniture comes from China anyway!” or “People don’t ask for ‘green’!” I hear you but I don’t agree with the statements and here is why. “Green” is not just a fad. Whether it is because of the rising oil prices, the “World is Flat” industrialization or the climate shift, change is upon us. To think otherwise is to put your business behind the wave instead of in front of it and, personally, that is not something I want to do. But what would it hurt to try just one line? To begin, let’s set aside the word “green”. That may be part of the mental resistance with you as a business person as well as with your customers. To some literal people “green” is only a color so you can confuse the issue right there. For others, they think that makes you a closet owner of bell bottoms and love beads but you have not come out wearing them in the store yet. The word I use most often is “sustainable” because absolutely everybody can relate to buying furniture that they were disappointed in when it broke down within five years. Other words I use are “eco-friendly” and “healthy for your home environment”. Some customers don’t ask if you have any eco-healthy furniture because you haven’t opened the door on the topic. Perhaps it is because it hasn’t occurred to them until they see a banner

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

or a DVD about it. That’s when they become interested! Give your customers a chance to be interested. They might surprise you. If you have just one green line, you can set aside a corner on your floor that is your absolute green zone. Put up eco-banners and make a statement. It opens the dialog with the consumer. When they ask about other furniture outside of your green zone, talk about what ecofriendly aspects other pieces may have. There are different shades of green. You may be a very pale yellow green in areas of your store. Perhaps you have nothing on your floor that is totally green (deep forest green), but there may be parts of your lines that are greener than other lines. That is where the dialog starts. Explain that much of our industry is “emerging green” (not deep forest green but light to leaf green). Perhaps you have a mattress that has natural latex or soy foam or you have something made domestically that is solid wood. Those would qualify as green shades. As long as you know your lines, how they are made, where they are made and what they are made of, then you have fuel for talking points. Let me make myself perfectly clear – no way am I recommending “green washing”! You really need to be knowledgeable about your lines and transparent about your level of green, even if it is a really pale yellow green. That is the first step: Know your lines inside and out. It is an important part of the conversation to know that there are three parts to green: Materials, Construction and Carbon Footprint. It is the “Green Scale”, for lack of a better term, that I came up with. I run a short, looping,

westernreporter

Holly Barbo Barbo Furniture

OctOber 2008

33


DVD in my store called It Can Be Easy Being Green (WHFA and the Sustainable Furniture Council sell it). I also have the green scale that the DVD talks about up in my store. It really helps in the green conversation. Each piece of furniture will fit that green scale a little differently. So let’s look at your pieces. For the materials part of the scale, is there anything on your floor that is organic, natural, certified by the FSC, recycled or made from reclaimed wood or a post consumer product? For instance, do your mattresses use springs from recycled steel or are the end tables over there made from Mango wood from old, nonproductive Mango trees? Something can be made from lovely green materials but not be built in a strong manner so it still falls apart in a short amount of time. That is what the construction part of the scale is all about and it addresses sustainability. Look at your pieces. Do they use strengthening techniques in their construction? Are there corner blocks with screws connecting real wood pieces? Is there wood glue in the mortise and tenon connections. Are there dovetails? Inside the cushions is there ticking around the foam? Are the seams lock stitched with a 5/8 inch selvage? All of these examples are sustainable construction techniques and there are others. The idea is that the piece must be able to hold up over a decade. On the “not sustainable” side, do your tables, chairs and beds wobble or flex? Look for the positive green elements you have and use them as talking points. For the Carbon Footprint part of the green scale the information may be harder to nail down. Ideally furniture made within 500 miles has a green carbon footprint. That doesn’t mean that furniture made offshore is bad. Those container cargo ships use a lot of fuel, yes, but the fuel to freight weight ratio makes the mode of transportation fairly economical. It is not the greenest option but not the worst either. If the materials come from here cross an ocean then cross back as furniture that drops the “score” out of the green color. The fuel the factory uses to generate electricity can add to your green talking points if that fuel is an eco-friendly type. Be honest with your customers. Explain about the emerging green industry. Manufacturers are doing the same thing. If they can do it, why can’t we? There are manufacturers that are totally green. Some have been doing it for years. It is just the way they have always been (Harden, Canal Dover, South Cone and Palecek are a few). There are some that have switched to doing things in an ecofriendly way for their whole line (Vanguard is one example) and even more who are putting a section of the line into green (Precedent as well as others). Stores can do the same. Become completely informed about your own lines and what is eco-friendly. Make sure your sales staff is up to speed on the topic. Have information for your customers. Perhaps run a DVD and put up the green scale like I do. Maybe put up some banners, but do something to open the dialog. Since I have done that my sales have gone up. Hey, in this economy, that makes the idea worth considering by itself!

Holly Barbo married into a family of custom furniture makers. Her husband, Chris, continues the long tradition (70 years) of furniture designing, building, refinishing and antique restoring. She worked in the family business for 18 years along side her husband before opening Barbo Furniture nine years ago. The store sells quality manufactured furniture as well as custom Barbo pieces. She still works on the manufacturing side of the business fifteen hours a week and is one of the few furniture store owners who has torn apart, repaired, designed and built furniture. Barbo Furniture’s focus has always been on sustainable practices and products. Her email is hollyb@barbofurniture. com. For further information please Call (800) 422-3778 to order a copy check the website: of It Can be Easy Being Green. www.barbofurniture.com.

DVD price: $29.95

34

OctOber 2008

westernreporter

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


Do you want a computer solution? We are now delivering PROFITprofessional, the industry’s most popular software, as a subscription model. PROFITon-demand is a remotely-hosted Software-as-a-Service that is reliable and easy to implement without the headaches associated with managing a computer network. Along with lower start up cost, you can escape the expense and complexity of running your own network. Learn how to simply enjoy the benefits of this revolutionary new option for PROFITprofessional in your business. No aspirin required.

Call or Click now for a

FREE

Total Retail Success System CD

“PROFITon-demand fits the scale of our operation perfectly. It is straightforward and you get everything you need.”

Ken Sissons Domaine Fine Furnishings and Design Calgary, AB, Canada

866.668.3342 www.profitsystems.com/hosting

A


Six Steps to Laying Out Your Competitive Strategy

Jeff Schein CGA Company Works

36

W

hy do so many companies languish and watch as their business turns into a zero profit zone, while others seem to thrive? When you look at your business, whether it’s a new venture or a company with a long history, can you answer the following questions? • What does my company do better than anyone else? • What unique value do I provide to my customers? • How will I increase that value next year? Companies that fail to answer these questions and don’t believe they are of paramount importance, relegate themselves to marginal profitability at best and failure at worst. But companies that can answer these questions are able to raise the value bar for their customers and reap the benefits of success. Of course, being able to answer three simple questions does not ensure success, but it is an important step in creating a strategic and focused operation which leads to a successful business. With today’s business environment being so competitive, businesses need to re-invent the rules on which they compete in order to be successful. Companies like Wal-Mart have figured this out and have redefined competition in their market by delivering a unique value to a selected customer group. By maintaining a focus and discipline, they make it difficult for other companies to compete under old competitive terms. Simply, competitive strategy has never been more important to success in today’s business environment. It does not matter what type of business you are in or whether you are small, big or just starting out, a company cannot survive without an adequate and focused strategic plan to beat the competition. Yet many companies fail to execute

OctOber 2008

westernreporter

a successful strategy; it is these companies that languish in the zero profit zone. In simple terms, for a company to achieve success and enter the profit zone it must first decide where it will stake its claim in the marketplace and what kind of value it will offer its customers. A company needs a clear marketing thrust, a precise knowledge of its customer base, and a product or service with a niche or some competitive advantage to be successful. Unfortunately, many entrepreneurs and business owners get stuck in the process of defining their competitive strategy. They often have the idea and the product, but being the technician they are not sure how to define its market. Even worse, many entrepreneurs assume or guess their target market and often glaze over a competitive strategy, usually to the detriment of the business. So what are the steps to laying out a competitive business strategy? While there are different methods you can follow, I have laid a series of six basic steps to help you.

1. Financial Perspective This step may not seem to have much to do with strategy, but it is important to determine the value of success quickly. Why? Because, in simple terms if the venture can’t deliver significant returns, it may not be worth the risk, and you have to ask yourself if it is worth continuing with your business. In this scenario you complete a reverse income statement. You start by defining how much profit you want to see at the end of a certain time period, and then determine the amount of revenues needed to generate that profit and the costs to deliver that profit. Do the numbers add up and make sense? The goal here is to be objective, if the expected revenue contact WHFA at www.WHFA.org or (800) 422-3778.


is not sufficient to generate your required profit at the end based on an estimate of costs, don’t simply fudge the numbers and assume you can reduce costs or increase revenue. Be diligent in your assessment.

2. Understand the Industry and Competition In Step 2 you are going to assess your industry and the competition. This basically comes down to assessing five factors. Understanding who your competition is including factors such as competitor strengths and weaknesses, market position, pricing, new product development, advertising, marketing and branding. You should determine how you compare to your competitors. • Assessing the threat of new entrants into the industry (which may include you) and any potential reactions from existing companies. There are basically six barriers to entry you can evaluate: economies of scale, product differentiation, capital requirements, cost disadvantages, access to distribution channels, government policy. • Assessing the threat of substitute products (existing or future) that can place a ceiling on pricing. • Assessing the bargaining power of suppliers who can increase prices, lower the quality of products or limit the quantity of supplies

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

one can purchase. This all has an impact on profitability. • Assessing the bargaining power of customers who can force down prices or demand better quality, more services and play you off versus a competitor.

3. Understand the Customer Perspective In Step 3 you assess your customer. This is a key step, get it wrong and you may not be able to recover. In fact, the customer value proposition and how it translates into growth and profitability for the company is the foundation of strategy. Start by asking yourself a couple basic questions: To achieve my vision, how must my customers look? Who are the target customers that will generate growth and a profitable mix of products/services? Next, ask yourself what is the value proposition which defines how the company differentiates itself to attract, retain and deepen relationships with the targeted customers? There are basically three value propositions or disciplines that you can choose from: • Cost leadership – In this discipline you choose to provide the best price with the least inconvenience to your customers. • Product leadership – In this discipline you offer products that push the performance boundary (i.e. newer and better than competitors).

westernreporter

October 2008

37


• Best total solution – In this discipline you deliver what the customer wants, cultivate relationships and satisfy unique needs. In this case, you may not be the cheapest or the newest, but the total package you deliver to the customer cannot be matched. In order to help you determine which of these value propositions you decide on, you may want to work through a value chain: 1) Determine your customer priorities 2) Determine the channels needed to satisfy those priorities 3) Determine the offering (products) that are best suited to flow through those channels 4) Determine the inputs (materials/knowledge etc) required to create the product 5) Determine the assets/core

GET INTO THE E-COMMERCE GAME Jake Jabs, President of American Furniture Warehouse

Your store. Your website. 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

For more information about our retail partner affiliate program, contact Andrew Zuppa, andrew@discountfurniturenet.com 303.957.6800

38

OctOber 2008

westernreporter

“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

competencies essential to the inputs (ask yourself, in order to satisfy my customer at which processes must I excel? For example, product design, brand and market development, sales, service and operations and/or logistics).

4. Finish the Business Model The business model shows how all the elements and activities of a business work together as a whole by outlining how the business generates revenue, how cash flows through the business and how the product flows through the business. By this time, you should understand the revenue capability of the business, how the industry works and your competition, who your customer is, what you are going to offer them and how you are going to offer it. By drawing a flow chart that shows how these activities are linked together you will understand how the business activities flow to generate projected profit, which you determined in Step 1. This is also a good step to see if something is missing in your analysis.

5. Construct the Business Plan By the time you get to this step most of your work is done. If you are looking for financing, a formalized plan will have to be completed. If you do not need financing, simply make sure the preceding tasks are documented so that they can be reviewed and changed as time progresses (strategy is an ongoing process, not a one time task).

6. Learning and Growth Perspective In this last step, you ask yourself how/where the organization must learn and improve in order to become and remain successful. For example, determine the skills, capabilities and knowledge of employees needed, the technology needed and the climate and culture in which they work.

Jeff Schein is a CGA and offers consulting and advice in the areas of business planning, business modeling, strategic planning, business analysis and financial management for new ventures and growing small businesses. Visit www.companyworkshop.com or email jeff@companyworkshop.com.

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


membership miles A Family Affair I never noticed how different it feels when you walk into a familyowned store until I visited Washington last July. I can’t quite put my finger on it but I think it must be the strong sense of ownership and commitment that you feel. In beautiful Washington state it seemed that every store I visited was family-owned, sometimes for many generations. Whether it was great grandfather and grandmother who started the store or a newly formed family enterprise in its first generation there is definitely a special feeling in these wonderful stores. From Ellensburg and Cle Elum to Everett and Lynnwood it was quite obvious that these family-owned businesses provide their owners a rich, rewarding and involved social community. That sense of belonging is passed right on to their customers, many who have frequented these businesses over several generations. Isn’t it amazing to realize that stores like these can still exist and be successful in our corporate world? Well not so amazing after all. In difficult economic times what is better than family you can rely on? The bond between families makes us strong and able to fight the battle every day no matter what difficulties may arise. Families bring support, laughter, love and certainly great insight into the future as you watch the next generation move into the business. Intensity of life comes from great relationships. Don’t miss out on one exciting moment. Take advantage of the validation and caring that your own family can bring to your business life. And next time you are in the neighborhood stop by and visit, you’ll certainly see that it is truly a “Family Affair” in the furniture industry of Washington.

ckson, d Clay Erio, n a n o rr a Sh urniture C Erickson FA. W t, Everet

Pat Rieckelman, Sharron and Pat Isaak of Isaak’s Home Furnishings.

written by: Sharron Bradley executive director WHFA

ramer, d Marty CEllensburg, n a er m ra Michelle CHome Furnishings, HFA Cramer’s Sharron Bradley, W WA and

and Lori Julian Lopez, Sharron rniture, Fu ay eew Fr of Thompson A. Union Gap, W

s Jon Fitterer, Fitterer’Sh arron. Furniture, Inc. and

Jay Behar, Behar’s Furniture, Everett, WA and Sharron.

Tired of spending good money on bad advertising? Let B&B help you make your advertising pay off. � �

Direct Mail Promotions Fully Customized Circulars

Ads OnLine Advertising Service Unique Gift & Traffic Items � Window Signs & POS � �

Visit us in High Point:

NHFA Retailer Resource Center, 12th Floor, Main Bldg., IHFC

Banker & Brisebois Advertising

800.456.0210

bbcmk.com

© 2008 B&B


newbie notebook

Retail Leadership Unlocking Your Team’s Potential

L Melissa Galt publishes Interior Destinations

eadership starts at hiring. Too often we hire when we are in dire need and don’t take the necessary steps to finding truly qualified candidates that fit not only our needs now but offer growth potential for future leadership. Regardless of how large or small your operation is, it is vital to have thorough detailed job descriptions in place with job titles, understanding of compensation and benefits by position and how they fit in the organization. A simple organization chart is an essential business building block.

Use assessment analysis for effective screening. Do some research (before you need to fill the position) of the assessment tools currently available on the market that you can use as either in-house tools and do the testing yourself or have your human resources director do it, or hire an outside firm to perform the analysis on these. Well-crafted and customized assessments, designed for your organization or shop, your unique culture (family or corporate), and to suit your company’s needs are a valuable and efficient objective means of evaluating applicants.

Scheduling more than one interview can provide a variety of feedback. It also gives the added advantage of ensuring a real team fit. Multiple interviews, including one or more with the co-workers the candidate will have, can serve to reveal strengths and weaknesses that could be longterm deal breakers. Do your homework at the beginning and you will reap the benefits of 40

OctOber 2008

westernreporter

reduced turnover, decreased training costs, and determining leadership potential at the start.

Thirty days for indoctrination is a vital tool in managing expectations and retention. This period allows the new hire to get accustomed to the work routine, personalities and business flow. Often, particularly in smaller companies and family-owned operations, it is tempting to just throw the new person into the mix and see how they do. If you are looking for future leaders, don’t do it. The new hire deserves a 30 day indoctrination period or, in friendlier terms, welcome period. During this time, it is recommended that you provide a leader or coach to this individual to show them the ropes, introduce them to everyone and be available to answer questions and clarify details. This is also the ideal time to ensure they are fully aware of all details in your employee manual (you do have one, don’t you?) This can be coordinated with training but is not the same as training; that comes next.

Extensive training maximizes performance and increases job satisfaction. Again, while you may not think what you do is rocket science, to ensure the success of any new hire, training is necessary. Review the basics completely and watch their progress to ensure they are getting it right. Even if they come on board with previous experience, you may have different procedures that they need to learn. If you are lucky, they may bring techniques that can improve your operations, but they will need contact WHFA at www.WHFA.org or (800) 422-3778.


Team visioning is a fun and rewarding tool to reveal and build leaders from the inside. This is a terrific chance to find out what matters most to each individual and how to create additional and alternative means of compensation that will genuinely answer your employees’ needs. It can often be challenging to determine if they are money motivated, time based or recognition driven. Visioning is a way to determine these critical factors and build consensus at the same time. This will need to happen when the store isn’t open, a half day retreat is recommended in an outside location. Make it easy to get to and relaxing; provide lunch. Bring a wealth of magazines and catalogs, industry related, lifestyle, design and decorating, sports, travel and more, include catalogs also. Have glue sticks, poster board and scissors. Give everyone (you included) the assignment of pulling together words and pictures that portray their life vision and their vision for their career (or your store). Give a couple of hours for this, and then allow another hour for this to be coordinated on a single board as a single vision for everyone there. If you have a large company and want to have them work in teams that is effective also. Once complete you will find that there is a synergy that develops around the “big picture”. It is a winning way to get everyone on board with a group focus and vision and everyone contributing and feeling involved and appreciated. As the employer you will learn a lot about your employees, new and existing. contact WHFA at www.WHFA.org or (800) 422-3778.

With the knowledge gained, it becomes simpler to keep everyone on track and find out fun ways you can creatively compensate them for going the extra mile and performing beyond expectation. Consider giving restaurant gift cards, a week or weekend away could be earned for a sales contest, perhaps a spa day for exceeding sales quote. You get the idea.

Developing leaders is about coaching and mentoring. Coaching is about guiding and directing them on their path, and ensuring that you or your chosen coach is continued on page 43

Fact: Customers buy more when they SEE a special Sales Event/Promotion!

ur Yo b e r u t m s! bo e t A A M efi sk F n A WH Be

to be made aware that you are open to this. During this time it can be easy to mistake eagerness for skill and initiative for knowledge. Both are wonderful traits but only when the new hire has gained the necessary skills and knowledge. When they eagerly botch something because they didn’t know how to do it correctly and in their enthusiasm either failed to ask or it appeared they should know, the employer (that’s you) bears the responsibility. Review the obvious as you never know entirely what they do know and what they don’t, and guessing costs too much time, money and risks customer dissatisfaction.

Ask Yourself: Does it look like anything special is happening at your store? Available in 5 Packages for Any Size Showroom

Ch o o

se Fr om

3 Prov5 e

Even n ts!

Our most popular Event includes:

2 Giant Banners

25’ x 3’ Indoor/Outdoor

200 Price Tags

8.5” x 11” Double-Sided

50 Posters

18” x 12” Double-Sided

25 Pens

12 Giant Posters

Ballpoint with Event Logo

5 Pennant Strings

24” x 36” Double-Sided

288 Jumbo Balloons

100’ Strings

17” Heavy-Duty Latex

250 Adhesive Badges 3” Round

Copyright © 2008 Sale-in-a-Box, Inc. All rights reserved.

Delivery as fast as overnight. Order an Event today, sell more at your store tomorrow! ENHANCE YOUR EVENT WITH CUSTOMIZED MATERIALS

Add-On Signage 2’x2’ Outdoor

Add-On Media Elements • 30-Second TV Ad • 60-Second Radio Ad • Newspaper/Print Templates • Website Animation

Call us Toll-Free or Order Online

(800) 894-8234 saleinabox.com

SIB-080828-PE-ADV

westernreporter

OctOber 2008

41


SAVE uP To

est.1944

Warehouse Products

10%

PrEPACkAgEd kiTS*

WHFA has assembled complimentary warehouse and delivery items into pre-packaged kits to make ordering easy. In addition to simplifying the ordering process you save money too! Ordering a kit saves you up to 10 percent when compared to ordering the same items individually. Kits include: • White Glove Delivery Kit (Items needed to give that delivery the professional touch) • Lift & Move Delivery Kit (Items to help you safely move your merchandise during a delivery) • Warehouse Dolly Kit (Outfit a new truck or resupply your warehouse with the most popular dollies and hand trucks)

• Basic Wrap & Pack Kit (Assortment of supplies to prepare your product for delivery) • Tag-N-Sell Kit (Application of your merchandise tags has never been easier with this kit) *Sorry, no kit part substitutions available. Discount on pre-assembled kits only. Call your WHFA representative or consult your Fall WHFA Product Catalog for complete kit descriptions and pricing. (800) 422-3778. Western Home Furnishings Association 500 Giuseppe Ct., Suite 6 • Roseville, CA 95678 • (800) 422-3778 • www.WHFA.org • jspencer@whfa.org

Tour the WHFA website at www.WHFA.org > This month’s stop . . . Programs and Services Western Home Furnishings Association

About WHFA

Membership

HOME

Education & Events

Community

Store

MEMBER LOGIn

Resources

DEALER LOCATOR

Advocacy

SITE SEARCH

Get Involved

Benefits Join

your business life

Member Spotlight Members Only

View over 50 WHFA Programs and Services Online @ www.WHFA.org

Membership FAQ My Account Request Membership Info Testimonials

To view a complete listing of WHFA’s Programs and Services, visit www.WHFA.org and select Membership > Benefits > Programs and Services.

You now have access to information on over 50 WHFA programs and services, any time of day, at the WHFA website, www.WHFA.org. When you visit the Programs and Services section, you will gain access to valuable programs in areas of advertising and marketing, finance, insurance, human resources, management, operations and freight and logistic programs.

Western Home Furnishings Association • www.WHFA.org • (800) 422-3778 42

OctOber 2008

westernreporter

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


continued from page 41

available on a regular basis to check in with the potential leader. Keep up with their progress in training, and make sure that you provide cross training to balance their skills and fully tap their potential. Often a leader is simply someone who hasn’t been given the chance to truly shine as we presume they are only good at one thing and unable to take on added responsibility. By coaching them, cross-training and providing willing mentors, you will exponentially increase the likelihood of finding your next leader within your company. The top salesperson at a colleague’s wholesale art and framing company is his former lead art framer. She started in the back of the operation worked her way up and had to ask to be allowed to move to outside sales rather than remain the leader in the back of the house. She is excelling in outside sales too. She had a lot of time, while honing her skills in framing, to mentor the outside sales representatives. They brought in the work and she understood what they needed to get it completed and out the door. When at the showroom, she watched and listened to how they presented to and sold customers. She was hungry for a new and bigger experience and the owner was open to her request having seen her climb rapidly through his ranks behind the scenes. He ensured her success by providing her with a coach/supervisor and she found her own mentoring opportunities.

Inviting customers and clients to be part of your leadership evaluation process just makes sense. After all, anyone you want to consider for a leadership position needs to be able to satisfy the demands of the life blood of your business, your customers. Implementing a customer success survey or game can also boost traffic and ultimately sales. Imagine if at your check out you had a clear bowl of gold stars and a decorative chart or individual bowls for each employee. While customers can give any employee (sales or otherwise) a gold star, fellow employees can do the same. It is a great example of catching someone doing something right! A gold star could be for being extra helpful, smiling warmly, being genuinely gracious, whatever you determined or leave it up to the customers. It is the equivalent of tipping in a restaurant except there is no expectation, just a desire to accumulate gold stars! Yes, it will foster competition and that can be a positive way to reinforce successful and productive behaviors and actions. Remember leadership potential starts at the hiring process with thorough assessment and multiple interviews. It requires time in indoctrination and in-depth training. Visioning for the entire staff or by teams ensures a cohesive focus and reinforces coordinated efforts. Coaching and mentoring keep leadership potential on track. Customer surveys and feedback are invaluable tools in selecting the best candidates for promotion and future direction. Online entrepreneur, home furnishings industry consultant, and design trade mentor Melissa Galt publishes “Interior Destinations” a monthly ezine with 3,500+ subscribers. If you're ready to work with a true professional to invigorate your career or ignite your business, get greater financial rewards, improve your health, find time for family and friends and live the life you always imagined, sign up now at www.melissagalt.com. Design your business for your best life now!

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

westernreporter

October 2008

43


œ&$$,Kcf`XAUf_Yh7YbhYf@@7"5``F][\hgFYgYfjYX"GcZU.=hU`]UbUGU`chh]


industry dates Market Dates October 14 – 16, 2008 Train the Sales Trainer Course — IAS Training Holiday Inn at Los Angeles International Airport (800) 248-7703 info@iastraining.com

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

November 23 – 25, 2008 October 20 – 26, 2008 High Point Market High Point, NC www.HighPointMarket.org (336) 869-1000 Future dates: April 27 – May 3, 2009

Long Beach Furniture & Accessory Market Long Beach Convention Center Long Beach, CA www.kemexpo.com (800) 605-7440

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 RETAILER (800) 888-9590

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

March 29 - April 1, 2009

NHFA Retail Manager’s Workshop Renaissance Denver Hotel www.NHFA.org (800) 888-9590 x6151

May 17 – 19, 2009

2009 WHFA Conference & Expo Westin Maui www.WHFA.org W HFA (800) 422-3778 maui 2009

C ON F E R E N C E & E X P O

For more industry dates, visit www.WHFA.org and click on EVENTS & EDUCATION.


fun facts & figures Books to Read 1. Furniture retailing 101: FURNITURE The Next Best Thing to RETAILING101 real World Experience by Jim Green This book series will help bring new entrants into our industry up to speed and help them become far more productive and effective, faster. This series JIM GREEN should be required reading for anyone entering the furniture industry with its practical, nuts and bolts information that is timely and accurate. Members may purchase this book through the WHFA Store, www.WHFA.org for only $54.95. 2. The Business Planning guide by David H. Bangs The Business Planning Guide provides three complete sample business plans and offers expert guidance, including information on how to: THE BUSINESS, THE MERCHANDISE, AND STRATEGIC CONCEPTS OF THE RETAIL FURNITURE INDUSTRY The Next Best Thing to Real World Experience

• Collect relevant information from inside and outside your company. • Analyze current market conditions as well as your business’s strengths, weaknesses, and opportunities. • Determine the appropriate amount and kinds of financing you will need. 3. recruiting, interviewing, Selecting & orienting New Employees by Diane Arthur Nothing is more important to the productivity of an organization than its hiring program. For almost 20 years, this book has been the go-to reference on every aspect of the employment process. Known for its practical and down-toearth approach and jargon-free tone, Recruiting, Interviewing, Selecting & Orienting New Employees is now in its Fourth Edition, with fresh information on today's recruitment challenges, interview methods such as peer interviewing and video interviews, documentation issues, reference-checking guidelines, and new orientation programs.

advertisers index

Please support the advertisers that support your magazine. Advertiser

Page

Phone

Aita and Associates .......................................................... 28 ................................. (800) 422-3778 American General Finance .............................................. 13 ................................. (800) 422-3778 Argo Select ....................................................................... 30 ................................. (800) 422-3778 B&B Banker & Brisbois Advertising................................. 39 ................................. (800) 456-0210 Bank of America................................................................. 7 .................................. (800) 422-3778 CDS Solutions Group ....................................................... 32 ................................. (888) 309-8002 Citi Retail Services ............................................................ 47 ................................. (800) 422-3778 DiscountFurnitureNet.com .............................................. 38 ................................. (800) 422-3778 Emerald Home Furnishings .............................................. 2 .................................. (800) 685-6646 Furniture Transport Group............................................... 17 ................................. (800) 438-8244 Furniture Wizard ............................................................... 23 ................................. (619) 869-7200 Hoyt Highfill & Associates................................................ 21 ................................. (318) 322-3846 JRM Sales Management .................................................. 34 ................................. (678) 574-5541 Karel Expo ......................................................................... 43 ................................. (305) 792-9990 Las Vegas Market.............................................................. 44 ................................. (800) 962-7469 PROFITsystems, Inc. ......................................................4 & 35 ............................. (866) 453-5010 Retail Manager’s Workshop............................................. 28 ................................. (800) 888-9590 Sale-in-a-Box ..................................................................... 41 ................................. (800) 894-8234 ServerLogic ....................................................................... 12 ................................. (866) 835-6932 Simmons Company .................................................. Back Cover ......................... (510) 357-2230 TruckSKIN .......................................................................... 37 ................................. (877) 866-7546 ViewIT Technologies ..................................................... 23-24 .............................. (905) 639-8609 WHFA 2009 Conference ................................................... 9 .................................. (800) 422-3778 WHFA Membership.......................................................... 31 ................................. (800) 422-3778 WHFA Warehouse Products ............................................ 42 ................................. (800) 422-3778 WHFA Website ................................................................. 42 ................................. (800) 422-3778

advertising inquiries & rates 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. October 2008, all rights reserved.

Western Reporter:

Read by Retailers in the West

distribution: 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.

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.


M`j`kfliYffk_Xkk_\E?=8I\kX`c\iI\jfliZ\:\ek\i @?=:$DX`e#()k_=cffi$JgXZ\.


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


October Western Reporter