Thank you to those that reached out after last month’s article since it was a more frank discussion than normal. I appreciate hearing from you because sometimes we don’t know if what we write is being read or falling on deaf ears. Since last month there has been even more change to write about and we continue to try and digest it all as to what it means for our home furnishings industry customers as well as our rep organization. Here are just a few of the headlines to consider:
Supreme Court Rules Online Retailers Can Be Required to Collect Sales Tax – South Dakota Vs. Wayfair is being hailed as a equalizer for brick and mortar retailers because now every-one has to collect sales tax on internet purchases over a certain dollar amount. But the cat is already out of the bag and the big internet players are set up or have been collecting taxes for a while now. Now that brick and mortar retailers will have to do a fair amount of business online, they also will have to play by the same cumbersome reporting rules for anything they sell outside of their own state. This just furthers the ad-vantage of the big players who have the reporting systems in place to comply. Customers are not going to stop buying at Wayfair or Amazon because of sales tax. But Brick and Mortar retailers looking to sell online are now going to have to handle a multitude of sales tax laws. I believe it’s only going to make the big internet players tougher to beat because anyone that sells on the internet is going to have to juggle multiple state’s taxing rules and rates. The bigs are already setup to do it.
Amazon Go Means Goodbye Status Quo by Chris Walton on Forbes.com – Per the author “Amazon Go is quite simply awe-some. It is a welcomed consumer experience, and, more importantly, it may be the first step on the path to a new American retail experience…” A consumer downloads an app on their phone and walks into the store and takes anything she wants without talking to anyone.” As Amazon perfects the experience, marries into their Whole Food purchase, and rolls it out across other retail formats it will be very interesting to see how it will affect home furnishings shopping. Keep an eye on these stores as they mature. It’s the next step in the bricks and clicks revolution.
Amazon’s Prime Day: Deals at Whole Foods are on the Menu as reported on cbsnews.com MoneyWatch – By the time you receive this newsletter, Amazon’s July 16-17 Prime Day will have occurred. It is the biggest day of the year for Amazon. This year Whole Foods discounts will be available, it will run 30 hours, there will be new product launches from various vendors and more countries will be included. But here is where it gets dicey for furniture retailers is that Amazon has been in-creasing their private label furniture brands with this year discounts reported of 25% off for their Rivet furniture brand.
Furniture: The Amazon Effect by One Click Retail – Amazon has more than tripled sales in furniture since 2015. Their largest category was mattresses at around $1.1 billion. So if you are wondering why mattress sales might be off, consider that along with all the Caspers and other mattress brands to realize people do buy mattresses sight unseen on the internet. Furniture was Amazon’t second fastest growing category behind groceries (which they bought Whole Foods). One last note on this was a quote in the Wall Street Journal from Veenu Taneja the furniture general manager at Amazon who states “Amazon is expanding its offering, including adding more Ashley Furniture.” One more place you will have to compete if you carry lots of Ashley.
Now the Good News: Brick and Mortar Furniture Stores compete effectively with Online Retailers, especially in Furniture.
New to Texas Furniture Company Closes on 52 Acres, Plans 855,000 Square Foot Development – as reported by the Houston Business Journal discusses Jake Jabs and American Furniture Warehouse move into Houston. I report this here because American is not resting on their recent successes with big box furniture stores in Arizona or their continued success in Denver. Instead they are looking to make an imprint on a new market suggesting they don’t think all the growth in business will be on the Internet. In fact I have heard Jake tell others in public forums how much of an advantage brick and mortar furniture has over the Internet Retailers. He has signage in his stores telling customers the same.
So now you know why I can’t figure out if I should be nervous or excited about the future of furniture retailing and repping.