It’s the start of a new year, a time when furniture retailers should think of how they will do things in 2012, and for many, put better plans in place to increase their lagging sales.
For starters, let’s consider the UK market leader Ikea, which plans to invest £27 million into its stores this year, despite a drop in sales during 2011. For me this is exactly how the leading retailers should be dealing with the ongoing downturn and low consumer confidence – continuing to invest in the customer experience, to keep shoppers fully engaged and visiting their stores.
To the big box furniture retailers that may not be investing similar sums in their stores this year, I ask this: would it be so damaging for them to reduce their dependence on the colossal, almost grotesque, headline grabbing promotional activity that most now seem to favour?
By this, I mean the constant ‘too good to miss’ sales, ‘buy now, pay almost whenever you like’ finance offers and ‘interest free’ and ‘payment holiday’ deals that characterise their key selling periods. These appear around Christmas, the New Year, Easter and (stop me if I’m wrong), what appears to be pretty much an ongoing sale throughout the year!
Whilst I recognise the importance of these ‘established’ methods of driving people instore and getting shoppers to commit, I think it is time for a change in ideas, methods and approach.
It’s a fact people aren’t buying as many sofas, beds, chairs etc. as before, and with the housing market remaining stubbornly stuck in the doldrums, those big ticket items don’t need to be, and won’t actually be, purchased like before either. So something has to change?
This industry has always unleashed its promotional onslaught at this time of year with huge reductions, the value of which are being propped up by artificially high prices maintained via ‘non-sales’ periods throughout the year. This ‘peaks and troughs’ mentality is damaging the industry in my opinion for a number of reasons. People know they are paying inflated prices in the (albeit rare) non-sales period, and there are so many sales that the actual sale value and point of difference is reaching the point of lethargy.
I believe this whole approach is distorting consumers’ view of the ‘real price’and, as this goes on, will damage consumer confidence in the retailers themselves. They will become cautious, nervous and start to feel misled (perceptions do count!). Free lunch anyone?
Surely it’s this trust in price integrity (amongst other things) that helps to keep John Lewis so admired, successful and on top of the service satisfaction rankings?
As the furniture market remains challenging, I suggest the big box retailers change their tactics, and start to think more like the major grocers and high street stores.
Why not adopt policies that give everyday low prices, year round – to restore faith, or offer added value elements that encourage loyalty and create regular visits to stores. Investing in better shops, with innovative and useful customer services such as home improvement, design advice and access to approved local tradesmen, could actually become a reason to visit the shop in itself – other than simply offering people the promise of another cheap sofa with three years free credit!
Why not launch a promotion with a big travel firm, to offer low cost summer holidays, an idea that would be appealing to many cash strapped people right now. What about a furniture recycling scheme similar to M&S’s successful tie up with Oxfam, where shoppers get discounts and charities can distribute items for a second use to those in most need? That would help to capitalise on the nation’s charitable DNA and the sentiment of the festive season.
Discount and finance promotions seem to be the only way the sellers of big ticket furnishings are trying to get consumers through the door. This is short sighted, as there are many more tools the retailers could use to drive traffic without sacrificing margin, credibility or trust.
I strongly believe a switch from constant discounting, and a confusing promotional stance as the main sales driver, should be replaced or at least aligned with an ‘added value’ approach.
In this difficult market the major players with their huge stores can offer discount and finance options that smaller and independent furnishers couldn’t dream of. That in itself means these retailers have to work harder at ‘running the shop’, and doing what shop keepers do to keep their customers engaged and buying. As we say here at Visual Thinking, happy shoppers buy more.
My advice for 2012, for all retailers in this space, is to review their store experience and see if it has the ‘wow factor’. And this isn’t just in a visual way, it means providing a great shopping experience, great customer service and never missing the opportunity to be big, bold and innovative about reminding customers why they should be shopping with them. Finding imaginative ways to add value to customers is my hot tip for 2012. You heard it here first.
I hope it’s a good one for everyone!
