My brother is a commercial realtor with International brand Colliers. He has indicated that there is definitely a sea change going on in the industry as it relates to retail space and malls. Lenders are not as excited about new mall construction, store traffic seems to be down, and the new retail formats seem to be coming from online retailers testing their concepts in physical stores.

We read headlines often promoting the storyline how shopping at home and technology are the death of retail. The sad fact is that many retail brands are no longer relevant whether by not staying up with current trends and fashions or by bad management.

There seem to be a number of trends that may be reshaping conventional retail. New distribution methods to accommodate same day delivery is one example. Many retailers are using new technologies to lessen the amount of in-store stock. Not only does this decrease inventory costs, but also requires less physical space that is rented. Realtors are calling this a “rightsizing” of space determining exactly what their needs are for each market. There is also something called a “Dark Store” where retailers take an underperforming store and turn it into a fulfillment center in an urban center where there a demand for same day delivery.

Internet retailers are taking a small brick and mortar store space in major metros, whether as a pop up or permanent space, and use that as a way to convert customers. There is a tremendous amount of competition online so this is a way to engage customers on the product in heavy traffic areas. They then try and drive customer online for sales. There is no inventory but samples of product to be delivered from a warehouse.
Retailers are gong to have to become much more experiential in order to get customers to come into their stores. Otherwise the customer will default to sitting in their living room and buying online. There has to be balance be-tween online and offline where the transaction is seam-less. This benefits the brick and mortar retailer that can execute in store and online versus online only.

People are using their mobile devices far more than ever. Mobile is huge and retailers need to invest because every-one is glued to a mobile device. A strong brand alliance can be created for those astute retailers who embrace it.

If there are any specific real estate questions you may have feel free to give Terry Root a call 402-578-1194.

As I foretold last month, there’s a couple of things I am watching develop in 2018 besides the rightsizing above.
1. Mobile will has become a very important ecommerce tool. How that plays for furniture transactions will be interesting. Stores need to be where the consumer is.
2. Mobile will be important for augmented reality. The tests Jay has been involved with AR suppliers indicate that 2018 could be a very big year for this technology. We showcased it over the holidays with family outside the industry and the Millennial generation thought it was the coolest thing. Call for a demonstration.
3. Enhanced websites with 3D images. Driven by consumers desires to pre-shop or buy online, the level of information and images has to get much better. Again, Jay is working with a supplier for enhanced 3D graphics that is very cool and economical.

Well here we are for a Christmas issue and a year-end windup. All I can say is THANKS! In spite of some of the most challenging landscapes 2017 was a success for most of our key retailers. Traversing the rocky road between their conventional business, and the mobile world that e-commerce has introduced, has left brick and mortar stores either energized like Jake Jobs at A. F. W, or scared stiff as many others profess. The Dec. 3rd issue of Furniture Today spotlighted the many sides of the internet retailing from analysis of 3 major web giants: Amazon, Overstock and William Sonoma. My take was that in each of their conference calls each talked about the necessity of blinding speed when the consumer clicks on it! But in their own way they indicate that a physical presence is going to be a part of the future of their business model.
It’s going to be fun to watch. Besides this giant struggle, I think 2018 is going to have supply chain interruptions. Whether it be China’s crackdown on manufacturers (and possible a mini trade war), to severe short-age of truck drivers, especially in the short haul business, and cost escalation as inflationary winds below in.

As always Mike, Jay and I are inordinately involved in study, attending conferences, and listening to astute retailers and leaders in the wholesale distribution end of the furniture industry. Please let us be your sounding board to trends and challenges! As your partner we will continue to bring you our best judgements on profiting from endeavors. Merry Christmas and Happy and Prosperous New Year.

It is no longer a secret—Amazon is moving into the home furnishings business. Quickly. Last year Amazon did over $3 Billion in furniture sales—and that’s with furniture not being the core focus! To strengthen their grip on the furnishings niche, there have been recent confirmed reports that Amazon is launching two new private label furniture brands: The Rivet– mid-century modern living room– and Stone & Beam– higher end upholstery, to further display the commitment Amazon is dedicating to the industry.
I would argue that Amazon selling furniture is more than just trying to sell product in another space. Recently I had lunch with a friend who works in the private equity field, specializing in technology companies. He made a very interesting comment when talking about trends he sees with his portfolio companies
He started by talking about how technology has/is removing many layers of competition. We talked about current businesses that will eventually be defeated by companies that do not exist today. Customers are agnostic about where they buy from; all the customer wants is a quality product, reasonably priced, with outstanding service. The key comment he made was that businesses really need to own their customer. This is not a cheapest price, most advertisement issue; it’s about owning their customer and providing the best possible service to keep them coming back to you.”
Going full circle back to Amazon: They know they own their customer. With their Prime subscribers, outstanding customer service and logistics always improving (faster, cheaper and able to ship larger items easily) Amazon owns their customer. It does not matter if their customer is looking for toothpaste, furniture, or groceries—Amazon knows that a customer will give them the chance at making the purchase through them.
Owning your customer is more than just putting out ads with special prices for the week; it is more than a pretty, transactional website. Those are elements (tools) to get the customer interested in your store. How you get them to buy from you one time and have such a great experience that they continue coming back to you repeatedly is the winning advantage. A couple things that come to mind are:
 – Customer service that is friendly, resolves customer issues quickly and offers the customer a reason to come back for their inconveniences (discount or other personalized offer)
 – Logistics that over delivers on customer expectations—think quick, cost effective delivery and setup (not curbside)
 – Product offers that customers have expressed they are interested in—either through their online product search or products they saw in your store.
All of the above concepts—plus more that are still being developed—are part of the Omni channel experience. This is how the best retailers—Amazon, IKEA, Wal-Mart—own their customer base.

There is no doubt that Amazon will be in a brick and mortar business beyond their Whole Foods acquisition at some point in the future. They struck a deal at Kohl’s as a place for consumers to drop off returned online purchases and to sell Amazon voice activated devices that allow customers to order products from the comfort of their own home. Alexa, send me a Serta recliner. With struggles at Sears, JC Penneys or maybe even Macy’s how long will it take before Amazon makes their next big storefront acquisition. Your only means of survival over time is to own your customer. Do what the customer wants or needs better than anyone else and you win.

This past year has been an interesting one for observers of the furniture industry. I dare say that 2017 could be one of the most trans-formative years for retail based on the immense pace that technology has thrust on the industry. 2008 was for some cataclysmic as retail-ers struggled to survive while others gobbled up market share. But today is different . Here are five of my takeaways from this past year. These are not meant to be critical of any operating model, just observations to consider as you plot out your plans for 2018.
1. 2017 threw many in our industry to a soul searching meaning for their companies future identity. The Omni Channel concept of having your online doorstep be the face of the business equal to the brick &mortar store is shaking things up. As I have written before, the Wayfairs and Amazons view themselves as tech companies and play by different bottom line rules than traditional retailers. But what they are doing is taking business out of the market like IKEA does when it sells a $49 entertainment stand. We can say that’s not our customer but at the end of the day the customer has met a need they had and they are out of the market until they have another need. They buy a few times from a vendor and a pattern emerges. Furniture retailers are scrambling to figure out their online presence to compete.

2. Door swings are down across most furniture retail storefronts. There is not as much need for the consumer to come into the store for pre-shopping because they now can go to the Internet from the comfort of their own living room. A friend who is successful as a mortgage broker for big projects has indicated that retail store financing is one of the toughest categories to get approved because most bankers want to steer clear of the death of retail. But people still need to buy stuff and that will be done thru retail in part in stores and in part online. The store of the future needs to give consumers a reason to show up physically. Christ Walton, an independent consultant and former vice president of Target Store of the Future brilliantly describes retail stores of the future like this “They will be one-part Amazon, one-part Starbucks, one-part Bonobos and one-part Ikea, shrouded in the customer-focused ethos of a casino.”

3. Ashley is to furniture what Amazon is to retail. Much like Amazon has deep pockets, huge customer bases, and great logistics for an online player, Ashley through its retailers & retail stores is equally dominant to the furniture industry. Personally Amazon makes it very easy for me as a consumer to buy. The more they are in the space, the more likely traditional brick & mortar stores will lose incremental sales needed to stay afloat. On the other hand, Ashley makes it extremely easy for retailers to do business with them. But Ashley is every retailers greatest competitor either by selling the same thing in your market through another brick and mortar vendor or by selling online and delivering through an Ashley Home store. The greatest threat to the furniture channel is every store looks the same with Ashley products. That sameness drives consumers online to find something different than what they see in every store in America. Be careful with the vendors you support. Just like Amazon is working diligently to capture customer data so they can sell more of your customers, there will come a time when Ashley realizes they do not need you and will be able to go directly to your customers through their website and store network.

4. In my dad’s era, Louie Blumkin was a master of working with vendors. He had his favorites but he would always be respectful of the vendors because he never knew when one might get hot. Retailers today should be mindful of nurturing vendor relation-ships rather than short term demands that put retailers at odds with manufacturers. At some point the pendulum will swing the other way with technology allowing manufacturers if they choose to sell direct to the consumer. If there is friction in the relation-ships, vendors may very well decide that is a better path. We are in a unique position to observe best practices on this because we work closely with quality vendors. For more details give me a call.

5. The competition is no longer selling furniture. Apple has sold more than one billion iPhones worldwide from 2007 to 2016. In the first quarter of 2017, iPhone sales accounted for more than $54 billion. On Nov. 3 Apple started shipping IPhone X, a $1000 cell phone. I could trade them a Hughes sofa, loveseat, recliner, a set of Progressive tables, media console, and dining set before I reach $1000. As goofy as this sounds, todays customer is a lot more excited about $50 a month for a phone than furniture. Furniture is just not as sexy or compelling as other options.

So that’s my list. As I wrote the column I realized there are several ideas to look forward into 2018 that I’ll report on in January. Hope you have a joyous and healthy holiday season. We look at all of our customers and factories as partners. We truly appreciate your business and look forward to building a prosperous 2018 together.

As I try to sum up High Point Market, I can’t help think of my earliest shows in Hickory and Lenoir, N.C. In those days, the American manufacturers were kings. The rumor was that the owners of Broyhill, Kent Coffey, Bernhardt, and sometimes Bassett would meet at the Lenoir County Club to set promotional prices for the upcoming season for their new dining room or bedroom offerings. May not be true but co-incidentally, if we had a $99 retail china or table and 4 chairs, your choice, our competitors did too! The real problem was that the demand for homes and furniture to fill them was overwhelming. So allotment and shortages were in vogue and cuttings were sold out, months out, on best-selling sets.
I still remember Henry Wilson Jr, the scion of one of the South’s premier furniture families, telling the sales force after hours of their bellyaching about late deliveries: “I can only produce what the cut off saw can cut up in a day.” I always wondered why he didn’t buy more cutoff saws!!!
Fast forward 60 years and all the saws are in China, or other Asian countries, and they are cutting up too much lumber causing brutal price deflation.
The major department stores, big credit family owned chains, and mom and pops are struggling. Large well financed furniture chains dominate most market places and are encroaching on competitors as we speak. Meanwhile menacing on the horizon a few giants have their eyes on grabbing a large chunk of home furnishings with dominant web presence.
The word MAP supposedly tells everyone not to worry because we all have the same price! How long will that last with 3rd party sellers and pirates sneaking look-a-likes on the internet? How many name brands in apparel footwear, and jewelry have succumbed to the siren call of amazon and Walmart? Should be 2018’s challenge to remain competitive in the shark infested waters. We will be your Coast Guard to help

After High Point I played golf with a guy that was buying a new car. When asked where he was buying the car from, he said, the same local dealership he purchased his last few cars from. The reason he was returning to that same dealership: he places a huge emphasis on personalized service.
Think about that: the car industry, like every other industry, has fierce online competitors with complete histories of all the car listings. The online dealers are able to be very aggressive on price; much more so than dealerships with commissioned sales people and inventory.
Yet this guy—and others out there with that mentality—would rather pay a little extra to be very well taken care of. Personal interaction goes a long ways.
It seems so obvious—treat your customers well, give them the best quality, best pricing and best overall service and you will earn their business.
It’s easier said than done though. At a retail conference in Au-gust, one keynote speaker said that customers are reporting a better personalized experience, and better service, with ecommerce accounts. That means that retail store sales people are not offering customers in store the same level of personalized service that technology tags, cookies and other browsing tools are able to offer.
Technology is intended to augment the customer buying experience; Not replace the in store retail store associates.
We, as reps ,work hard to train the retail sales people on our products. We can train them on everything our products offer and why our products are the best value for customers.
We don’t train the retail store associates on how to be friendly with their customers and engage. They need to be inviting, in-formative and entertaining. That’s what resonates with the customers. We believe the in-store experience should be better than the online experience; people are leaving their home for a live interactive experience. They should be able to get exactly what they want and enjoy the process.
How are you making the experience enjoyable for the customers? How does the retail store associates make the process enjoyable for the customers? What are you and/or the sales associates doing to make the customers want to come back for future purchases?
Brick and mortar retailers have the advantage. The human interaction advantage.