Resurgence of Home
Retailers are resilient with teams comprising everyday heroes.
The year 2020 threw the world a curveball, and home furnishings retailers stepped up to the plate.
As home took on a new level of importance during the pandemic’s “Safer at Home” period, consumers invested in their spaces to make their dwellings more sacred and functional places to spend their time. Retailers worked tirelessly to make stores safe for in-store shoppers and prioritize eCommerce efforts for those shopping from home, all while keeping their teams’ well-being top of mind. Home furnishings retailers answered the challenge of keeping businesses afloat and teams employed while serving as essential retailers for a world at home.
Market Factors Impacting 2021
“Companies must reimagine customer journeys to reduce friction, accelerate the shift to digital channels, and provide for safety requirements.” McKinsey & Company
The Pandemic Persists
As we begin 2021, the COVID-19 pandemic continues into its 11th month and the world monitors daily updates on vaccines. Retail experiences remain heavily impacted. Although the clock struck midnight on New Year’s Eve, the pandemic did not magically resolve. Instead, we head into another year better educated and prepared to handle the challenges ahead.
There has been a reversal to what comprises an exceptional in-store shopping experience. In the past, it was important to keep customers engaged and create memorable experiences to increase time in-store. The consumer mentality toward product discovery has shifted, at least temporarily, and is occurring primarily online. During the in-store portion of their shopping journey, customers value efficient product selection and expedient checkouts to shop quickly and safely.
“While normally retailers may have encouraged slower browsing behavior, retailers should provide value-added service so that customers can make better decisions more quickly.”
Harvard Business Review
Home at the Center
While everyone eagerly awaits resolution to the pandemic, this unprecedented challenge has awakened the importance of home. While home was once a place where families passed like ships in the night, home has been re-established as the center of our universes. Global travel and communal experiences were at the center of our economy. Today, home is the center.
The pandemic shed light on the impact of the furniture industry; helping people make their homes an outward reflection of themselves, a safe-haven for those they love, and a functional center for their lives. Homes became schools, offices, restaurants, gyms, and respites. Furniture, bedding, and appliances transform the functionality of spaces. As the furniture industry, let’s affirm the value of our customers’ homes because even as people return to their new normal, they will remember the key role their spaces played when they needed them most.
“Homeowners have a renewed appreciation of the flexibility of their home to accommodate new functions.” The Washington Post
A Nation to Unite
“40% of Americans say the 2020 election will impact which brands they shop.” Retail TouchPoints
The US inaugurates a new President in January, concluding a polarizing election. What remains is a nation that is divided. Something the nation shares is the trying experience of navigating the COVID-19 pandemic. Retailers looking to unite their consumer base can focus on marketing themes and philanthropic initiatives that speak to shared experience.
Further, as this is written, we are in the depths of the second-wave of the virus. As the virus surges, businesses may once again be mandated to revise operations and temporarily close their doors. There is a bi-partisan desire for pandemic-related economic support and the categorization as essential for home furnishings retail showrooms. The furniture industry is looking to come together on these efforts.
The Impact on Trade
The supply chain is a pressing global issue. The industry has adjusted to tariffs on goods from China by shifting manufacturing to other nations and altering pricing strategies. A new challenge is rising as Vietnam faces currency manipulation allegations from the U.S. Treasury, which could impede trade from the 2nd highest exporter of furnishings.
Impacts of the pandemic such as companies working with reduced labor forces, raw materials repurposed for PPE, and competition over freight resources are causing inventory delays. Unfortunately, opportunists are preying on vulnerabilities and charging furniture retailers high fees to secure goods at the ports, according to Jerry Epperson’s 2020 State of the Industry report for the HFA.
As conditions remain, retailers must control what they can. Competition for goods makes strong vendor relations imperative. Strained supply chains require precise inventory management across your operations and nimble inventory allocation to keep more customers happy and businesses moving forward until supply catches up.
“Agile supply chains require end-to-end visibility across the entire supplier ecosystem, relying on real-time data to identify shifts in demand or disruptions faster & adapt to sudden changes faster.” BDO
The economy and employment both took an inevitable hit due to the COVID-19 pandemic. According to financial and news site, The Balance, the US economy won’t return to its pre-pandemic level until 2022. They predict GDP for 2020 will end at -3.7% but have a better outlook for economic growth in 2021 at +4.0%. 2020 has been a year of weathering unpredictability. Cashflow remains a critical measure of business health. Continuing to preserve cash reserves provides a safety net as infection rates ebb and flow.
Across each measurement, employment, labor income & GDP contribution, retail’s total impact on the U.S. economy is growing. Retail supports more than 1 in 4 U.S. jobs.” National Retail Federation
A big challenge continues to be unemployment. The unemployment rate is expected to average 7.6% for 2020 and rebound to 5.5% in 2021. Retailers play a critical role in employment. Fortunately, temporary furloughs allowed retailers to plan to keep their employees as early restrictions were lifted. While in-store retail positions may experience a long-term decline due to eCommerce growth, new positions to operate websites, enhance logistics, optimize digital marketing efforts, and deliver virtual customer services may balance out employment numbers.
The State of the Home Furnishings Retail Industry
“Digital customer engagement is the norm. Virtually every sale has digital engagement to it. To become one of the fittest that will survive, it is essential for retailers to find their ‘essential’ value to the customer.” IBM
The $59B home furnishings industry representing 37,000 businesses had stronger sales than other retail sectors in 2020. Discretionary income shifted inwards as families gathering around dining tables for home-cooked meals made with new appliances. Although IBISWorld predicts revenue in the home furnishings industry will decline -6.8% in 2020, all things considered, home furnishings faired well, relatively.
Further, the furniture market shifted with closures of several Top 100 retailers due to unsuccessful private investments. Retailers that were digitally enabled and embraced change nimbly thrived against the odds and gained market share. The ability to cater to a multi-channel consumer, control inventory, and adapt experiences have supported success.
What’s ahead for the industry? Experts believe experiential spending will remain deterred in 2021. The challenge for retailers will be to responsibly capture the surge in demand, conservatively. When the economy does fully reopen, pent-up consumer demand will likely transition those dollars back into social activities. However, there is an opportunity to attract cautious consumers who are ready to shop in-store to prepare their homes to function better for their futures.
“In Q2 2020, 51% of views by urban residents of America’s 100 largest metros went to suburban properties.” Money
Real estate is trending from urban to suburban. With companies transitioning to remote working and the cancellation of activities that made proximity to cities desirable, urban living is on the decline. Mortgage rates in the mid-two percent range make it an ideal time to transition to homeownership. This migration will have a long-term impact. Suburban homes have larger indoor and outdoor square footage. Furniture retailers that cleverly merchandise multi-functional use of space can capture higher average ticket values from home buyers. Further, marketing furniture and appliance upgrades to sellers, that secured above asking price for their homes, can help retailers tap into another viable pool of buyers.
Regional and local companies are the heartbeat of the home furnishings industry. Time is of the essence to market the role you play in your local community and solidify brand connection. Local business communities can consider partnerships or cross-promotions to activate engagement in the local economy as a whole. For example, supporting local artisans and craftsmen by expanding the décor section of your business.
Take advantage of Google’s enhanced Local Search tools. Optimization of these tools is important in order to capture local attention, especially since Search Engine Land notes “available near me” searches have grown globally by more than 100% since last year.
“53% of consumers indicated they are more likely to buy from a local business during the COVID-19 crisis. 68% of those stated they will continue to make purchases at local businesses post-pandemic.” Zypmedia
The cost of conducting business in your home furnishings store has increased. As retailers took a crash course in how to safely reopen their businesses, new expenses impacted their bottom lines. From PPE and sanitizer to deep cleaning and air filtration, if your business is making the investments to keep your customers and employees safe, this is likely a central addition to your marketing efforts.
A research study shared at the Furniture Today Leadership Conference found safety in their shopping experience remains the top motivator for customers when choosing where to shop. Communicating key points about your showroom practices in your marketing will go a long way. With higher costs and reduced store traffic, it is fortunate conversion rates have increased. This makes it likely to capture more revenue from highly motivated buyers making the trip to furniture stores. As a retailer, it is imperative to make every opportunity with every customer count.
“Safety has become a pivotal selling point for retailers.” Furniture Today
eCommerce Growth Explodes
Necessity is the mother of invention for furniture eCommerce websites. This channel saw exponential growth almost overnight as stores closed. We now have customers that are comfortable shopping online for items at all price points. Wayfair’s foresight into developing online home furnishings experiences paid off when they hit profitability for the first time.
Traditional furniture retailers are following suit and raising the bar themselves. Many retailers doubled or tripled their website traffic and set record revenue results on their online channels. With trust in online shopping established, this trend is not reversing. The competitive advantage is no longer having a website, it’s designing a digitally-savvy eCommerce experience.
“A notable and disruptive shift is the rise of eCommerce in the furniture industry. Projections cited in the report ‘E-Commerce: United States’ expect furniture and furnishings to be the fastest-growing segment of e-commerce sales through 2022.” MarketResearch.com
In-person product launches are an industry staple that remains threatened by event cancellations and rescheduling. The High Point and Las Vegas Markets held in 2020 during the pandemic experienced depressed traffic to 20-40% of typical attendance.
In a time where inventory is desperately needed, the role of Market has changed. Initiatives like Pre-Market, First-Tuesday, and pro-longed show dates minimize concentrated traffic. Virtual formats have risen from video tours of showrooms to online catalog platforms. Time will tell how furniture Markets will be impacted permanently.
Diversification of vendor strategy helps. Which vendors you partner with, how you connect with your vendors, and what geographic regions you source from can directly impact your performance. Further, prices in the industry are expected to rise due to increased demand and supply chain restraints. Putting your eggs into fewer baskets could be leading to fulfillment issues. Re-evaluating supplier mix is a top initiative for retailers in 2021.
“Due to high consumer demand mixed with severe supply chain restraints and container shortages…furniture retailers are acknowledging…product price increases.” Home News Now
10 Retail Experience & Technology Trends for 2021
“The rapid migration to digital technologies driven by the pandemic will continue into the recovery. Refocusing and accelerating digital investments in response to evolving customer needs” is key. McKinsey & Company
Trend 1 | Focus on Convenience
Convenience influences decision making. Household responsibilities increased, particularly for millennials that lead in purchasing power. Convenience often wins over price when time is equated to money. Convenience manifests differently throughout the path-to-purchase.
In the research phase, transparent information delivers convenience. Lean into objections on your websites and in sales consultations. If you anticipate common questions and directly address those as selling points, your brand will gain trust while providing convenience. If your price points are higher than your competition, highlight your construction processes that lead to better quality. Product filters, comparison charts, reviews, and availability designations help customers make good choices.
During the transaction and post-purchase phases, convenience translates to ease of ordering, and reduced data entry with saved field values. Perhaps most timely, offer various fulfillment methods including “Buy Online, Pickup In-Store”, “Curbside Pickup”, or “Threshold Delivery” to provide convenient options.
“97% of customers backed out of a purchase because it was inconvenient. 52% say that half or more of their purchases are influenced by convenience.” National Retail Federation
Trend 2 | Seamless Customer Experience
Convenience is complemented by continuity. Seamless customer experiences have been a top priority for years. The disruption consumers experienced in the way they shop for goods and services have created opportunities for home furnishings retailers prepared with Unified Commerce before the pandemic. Retailers adding to frustrations will lose customers, while retailers solving challenges will grow their customer base. As customer shopping journeys meld across in-store, online, and mobile, technologies need to integrate. Providing your team visibility into the 360-degree view of your customers allows services to be uninterrupted. Customer Experience Management solutions centralize holistic customer history: a foundation for personalized engagement.
Inventory across your organization must be automatically managed in real time. Stock statuses, quantities, locations, prices, and availabilities that dynamically adjust enable your team to sell and fulfill from accurate inventory data. Finally, integrated Shopping Carts are imperative. This is the key technology piece that transitions the customers’ last activity to the next channel of engagement. Seamless bi-directional transitions result in higher conversions and reduce order abandonment.
“By eliminating data silos, connecting disparate technologies & mapping the customer journey across touchpoints, retailers can successfully blend digital & physical experiences.” MarTech Advisors
Trend 3 | Mobile POS
While Mobile Point of Sale was increasing in adoption, use is rapidly accelerating. Capterra’s research finds a 50% increase in Mobile POS adoption from 2017 to 2020. Mobile solutions enable retailers to engage in personalized sales. For new visitors, retailers can capture their information and build viable customer data during sales. For scheduled appointments, associates can refer to customers’ histories. The ability to search inventory, build carts, update customer records, and check out the sale, all without leaving the customer’s side, enhances the experience.
Mobile POS expedites both product selection and checkout times. The benefits of Mobile POS align with the consumer trend to reduce time in store. Further, eliminating the need to congregate at a stationary POS to take a payment allows customers to maintain safe social distances. Finally, by essentially eliminating the transitional checkout step, you are reducing the opportunity for buyer’s remorse. For the customer that isn’t ready to buy, the ease of sending a customer home with a ready-to-complete shopping cart empowers the consumers with all the information needed to complete the sale.
“87% of surveyed retailers agree or strongly agree that mobile payments provide seamless & frictionless checkout experiences.” Capterra
Trend 4 | Furniture eCommerce Direction
Today, most sales are digitally influenced. In many instances, your website may be the first or only engagement point a customer has with your brand. It’s important for your brand’s DNA to shine through to secure customer retention. Use the content marketing side of your website to showcase your brand, team, and the role you play in the community. Offer exclusive design content from your team, which can be repurposed as social media. For products requiring expert demonstration, host sales videos from your team on product pages. To bridge the lack of tactile experience found in-store, offer complimentary fabric swatches.
When sales transition online, it’s important not to forget about upselling. Showcase recommendations from your merchandisers. Cleverly display collections, items frequently purchased together, and top-rated products to assist your customers. Of course, social proof is a necessity. Provide ample reviews to inspire consumer confidence.
“Online doesn’t have to be impersonal. For larger purchases, like furniture, customers are still looking for the human element. They still want to interact with helpful, knowledgeable staff.” AdRoll
Trend 5 | Virtual Engagement
As customers gain comfort with digital interactions, applications such as chat, text, and video appointments continue to take off. Communication channels that offer immediate response replicate the conversation a customer would have with an in-store associate and enable you to tap into your design team’s expertise virtually. The ability to send photos via texts or join video consultations help customers make the right decisions. In some cases, a designer may have more access to the space the customer is furnishing than in a traditional selling environment. Online chat functionality can help customers with logistical questions such as product knowledge, delivery options, and warranty information.
These supportive digital engagement tools are important because the lack of a sensory experience has historically been a roadblock to web-only sales in home furnishings. Engaging with an expert through these channels helps inform consumer confidence in big-ticket purchases. Further, ensuring your associates earn commission on these orders, increases their adoption of digital features.
“48% of consumers have signed up to receive text messages from at least one brand, and the trend toward text as a marketing tool accelerated during COVID. Text open rates went through the roof.” YOPTO
Trend 6 | Digital Renderings
For the growing eCommerce segment, helping customers visualize products in their space is another form of convenience. Digitally-rendered photography is trending as a fast and affordable way to grow content libraries. Products can be scaled and placed into digitally-generated room scenes, without having to physically move bulky furniture around studio sets. You can showcase a product in various lifestyle vignettes to highlight stylistic and functional versatility. Digital renderings can also be used in virtual reality and room planning applications.
Likewise, the trend toward customer-generated content is growing. As many brands expand their social media and online reputation management strategies, they need greater volumes of unique content. Customer-generated photography supports the creation of authentic content retailers can share on their websites and social media.
“Shoppers expect to see at least 8 images per product page. eCommerce businesses are turning to 3D product photography platforms to generate the volume and variety of visuals necessary to appeal to their customers.” Three Kit
Trend 7 | Local SEO
Your SEO strategy is increasingly important as customers are searching for local businesses to support. Local search can capture the attention of residents getting to know their surroundings better and newcomers moving into the geographic locations you serve. In line with this trend, Google has made strategic tools and features available to business owners to capture local attention.
Google My Business (GMB) accuracy is more important than ever. Routinely check that your hours and closure statuses are up-to-date for customers. GMB has added timely Local Service Attributes, such as Appointments, Contactless Delivery, and Curbside Pickup to inform customers. Google has also made formerly paid tools free to support retailers, such as Product Listings, that will rank organically on Google’s Shopping Results. For traditional paid advertising options, retailers can also list products in Local Inventory Ads in the Google Merchant Center for targeted visibility.
“80% of US internet users prefer to use a search engine to find and look up information about local businesses. Converting research into sales is impossible if your business doesn’t surface in local search results.” Yext
Trend 8 | Logistical Sophistication
Logistics is a highly impacted area of home furnishings operations. Retailers must be strategic to handle the current challenges. Optimizing your internal supply chain is a first line of defense. Setting up a fulfillment hierarchy, alternate stock options, and auto-transfers of inventory across your internal distribution network can help you meet demand. Nimble management of open fulfillments helps meet delivery expectations as inventory becomes available. To best set initial expectations, vendor management settings must accurately reflect current lead times and pad days. Customers remain understanding about the current market conditions but expect frequent communications. Setting up reporting to ensure customers are updated in a timely manner can preserve satisfaction.
Separately, Modern Retail presented an interesting trend to managing logistic priorities: incentivizing customers that aren’t in urgent need of their purchase to select no-rush delivery for a discount. Retailers earn the satisfaction of these customers by recognizing their contribution to your supply chain and maintain the satisfaction of customers in a rush by prioritizing their orders.
“Accommodating consumer comfort levels for receiving goods at their home and broadening communications efforts on orders’ progress are among major changes retailers are making to re-invent the final-mile.” Furniture Today
Trend 9 | Dropshipping
“The global dropshipping market size is expected to register a compounded average growth rate of 28.8% from 2019 to 2025…significant growth is owed to an increase in online shopping.” Grand View Research
Dropshipping inventory directly from the manufacturer to the customer has become a key logistical strategy for both in-store and eCommerce orders. It solves two challenges impacting the furniture retail market. First, dropshipping preserves cashflow because the retailer never takes possession of the inventory. This frees up cash, human resources, and physical space needed for inventory. Second, dropshipping leads to logistical efficiency along constrained supply chains.
Operating a successful dropship program requires technological sophistication. Inventory management tracks which merchandise is warehoused vs. dropshipped. When fulfilling inventory by both traditional and dropship methods, provide a seamless customer experience by allowing the customer to checkout on the same sales order. Communication with vendors must be tightly integrated. Automatically generating dropship purchase orders ensures necessary customer and fulfillment information is relayed. The goal is for the experience to be consistent regardless of the shipping method.
Trend 10 | Consumer Security
Finally, with the interconnectivity of your business’ technology, security is of the utmost importance. Consumer privacy laws require careful care of consumer data. While it is everyone’s role to protect information, partnering with a technology company that takes this seriously is foundational. Technology needs to be continuously put through the rigor of Payment Card Industry Data Security Standards for both in-store and online platforms. Security management is a growing area of Information Technology to consider as part of your strategy. Security and safety go hand-in-hand when it comes to your customers trusting your business.
We discussed the renewed and fundamental human need to feel safe. Even though this year has taken us leaps and bounds into the future in terms of digital technologies, in many ways customer experience went back to a basic of Maslow’s Hierarchy of Needs: safety. Security is another element of your customer experience to ensure customers trust interactions with your brand.
“Companies are increasingly moving toward cross-functional trust & safety teams to oversee all the interactions, ensuring a standard level of safety across each space where consumers interact.” Gartner
“Information Technology Is the Backbone of most business functions, technology investments represent a growing percentage of corporate spending, & many organization stakeholders expect these investments to align with business strategy.” Deloitte
Here at STORIS, our resilient network of home furnishings and appliance retailers remains the voice behind our solutions. Our technologies are solutions that solve business challenges to meet the needs of our customers. We consistently listen and respond to our community with agility. When the retail market changed, our team dynamically adapted our development plans, reimagined important features, and delivered the solutions needed for retailers to thrive today. As we continue into 2021, STORIS is here to support and accelerate the industry’s continued success.
Technology is the foundation for thriving retail in 2021.
The STORIS team is here to support you. In 2020, despite the pandemic, 45 new retailers representing 1 billion dollars in retail revenue, and 200 showrooms choose STORIS to help them navigate the new world of home furnishings and appliance retail. STORIS has been a reliable technology partner to the industry for over 30 years, developing and adapting solutions to meet the market where it is. That has never been more important than it is today. Discover STORIS’ all-encompassing solution as part of your 2021 technology strategy.