The historical renaissance period between the 14th and 17th centuries, was witness to the emergence of realism, philosophy, humanist art and scientific studies that are credited with triggering a seismic upheaval in both society and politics.
It might be said that we have entered into a new age renaissance that is fueled by technology, lifestyle, and shopping trends which is primarily driven by Millennials and is revolutionizing how home furnishing products and services are purchased.
To this point several Canadian brick-and-mortar home furnishings stores no longer exist. Retailers like Sears Canada, Home Outfitters, the Art Shoppe, and dozens of furniture retailers have closed their doors – proving that only operating in the traditional way of doing business is no longer sustainable.
Like the arrival of Gutenberg’s printing press in 1439 that introduced the era of mass communication, today’s Internet offers unlimited connectivity and boundless choice for consumers. Combined with a seemingly endless supply of online merchants like Amazon, Wayfair, Hayneedle and Article, the traditional home furnishings retailer faces significant challenges if they don’t recognize the advantages that consumers have gained with new technology.
It appears that there are two options available.
The first option, maintain the status-quo; focus on the traditional business model of buying competitively, driving traffic while heavily promoting the sale of commoditized merchandise and the retailer will be stuck on this treadmill while trying to avoid the inevitable result – a GOB sale.
Even the historical advantage of location, size and scale no longer protects retailers. Technology has lowered the barriers to entry and allows new entrants to capture market share simply because they are nimbler and better equipped to meet rapidly changing customer needs.
Embrace the Renaissance
Alternatively, home furnishing retailers who want to survive and thrive in this new retail world must join the retail revolution. Where to begin?
- Value proposition – A clear understanding of the target market is essential. By trying to cater to all consumer segments using a middle-of-the-road combination of product and promotion, the retailer loses its ability to differentiate itself and is exposed to the majority of other competitors – both traditional and online. Alternatively, home furnishings retailers who focus on being either a price-based retailer (value pricing) or is positioned to offer unique curated products (premier offerings) are able to address their well-defined target markets.
- Omnichannel distribution – The ability to provide customers with an online shopping option in addition to the traditional showroom has become “table-stakes” for the successful retailer. A “brochureware” website doesn’t cut it any longer. However, adapting to the ecommerce world is not an insignificant effort. The challenge is to ensure the online experience is seamless and consistent with in-store practices. Most important, retailers should seize the opportunity to offer an “endless-aisle” of curated products (those not carried in-store). Ideally, suppliers who can direct-ship merchandise to customers on behalf of the retailer can significantly expand sales and revenue opportunities.
- Personalised Experiences – Today’s consumers also demand personalised experiences. While strictly ecommerce retailers can offer powerful online capabilities (guided searching, favourites list, shopping reminders, etc.) nothing beats the face-to-face consultative buying experience. Smart bricks-and-mortar retailers are also seizing the opportunity to introduce innovative in-store technology. With augmented reality, room planning and ability to customise product to meet personal design and material choices, retailers can enhance the consumer’s buying experience.
- Lifetime relationships – The long sales cycle between major home product purchases makes it particularly challenging for furniture retailers to establish lifetime relationships with their customers. It is therefore necessary to provide an exceptional customer service experience at point of purchase (in-store or online); follow-through at time of delivery, and most important, providing post-purchase support is essential to retaining customers (ensure you use a high-quality, customer-focused protection program). With the ability to retain customers, the retailer gains larger share of wallet and repeat sales.
- Revenue diversification – Retailers who create additional revenue sources (beyond the sale of merchandise, financing or delivery fees) can build sustainability and boost the bottom line. With complementary fee-for-service or subscription-based offerings, such as interior design, product installation or home service and maintenance programs, together with innovative reward programs; home furnishings retailers can build long-term customer relationships while also driving increased financial results and competitive advantage.
For an industry that is notoriously slow to change, it will be those retailers who embrace the renaissance and work to transition to the new retail reality that will have the potential to thrive. Unfortunately, even though the home furnishings industry will continue to be important and needed by consumers, not all retailers will have the opportunity to meet those needs.
President & CEO, ZucoraHome
Brad Geddes regularly shares insights gleaned from ZucoraHome’s interaction and support of Canada’s leading home furnishing retailers. Read more SmarterInsights on our blog.