October 8, 2014 —
The future of furniture is an enormous showroom with trapezoid display windows and a moving sidewalk (there are always moving sidewalks in the future) pushing shoppers along. Eventually a 30-something woman in a jumpsuit steps off the human conveyor belt to view several sofas displayed on a large screen. When she finally finds the right style, she pushes another button and—voilà!—that blue sofa now has stripes. Another button and the decorative pillows turn from green to coral pink. The woman smiles and pushes another button. Sold! By the time she gets home later that day, the sofa is waiting for her. No messy boxes or shrink wrap to bother with—just an angry-looking husband—who told her to stop spending so much money—sitting on it.
OK, technically that vision of furniture’s future came from a Jeston’s cartoon my daughter watched on a rainy day at the beach this summer, but admit it: Just for a minute you thought it all possible. And isn’t that the point of predicting the future? That no mater how crazy or far-fetched the notion, anything’s believable? Hologram catalogs? Drones dropping off sofas in the driveway? Same-day delivery on custom orders?
If you’ve been to your share of furniture markets, you’ve heard, seen or discussed our industry’s future. Perhaps in retrospect, those versions are sometimes quaint, always telling. Year after year home furnishings’ future has been dreamt, designed, drawn, described and usually discarded for a newer future. Some splashy visions belly flop, some slowly sink to the bottom; a few have actually sailed their way into the present.
We asked five industry experts to peer into the future and tell us what they see about the economy, manufacturing, the workforce, operations, and technology. The good news for our industry is there are no eulogies. The bad news is there’s still no jet pack.
ECONOMY: Furniture isn’t going away anytime soon.
Jerry Epperson
I remember visiting the “Phoenix House of the Future” back in the 1970s. It was a compact, efficient home where all the furniture was built-in and served many purposes. Will we see this in the future? Sure, but today we have 133 million housing units. If we build 1 million new dwellings this year, that’s only 0.8 percent of the total home base. It will take a long time for our homes to change so selling furniture seems a sure bet for the future.
The easy assumption about furniture retailing is to claim the Internet will dominate in the coming years. But a recent Bain & Co. study believes otherwise. The study notes that the Internet is growing by about 15 percent a year. That sounds impressive until you realize that figure is half the annual rate for the last decade. Today, e-commerce is 6 percent of all retail, and 11 percent of Forrester’s top 30 product categories. Forrester predicts this 11 percent will triple by 2030.
Further, that figure will be higher in some categories like music, books, movies and entertainment and less in more difficult items like perishables and large bulky items.
The best retailers will be “omni-channel”, offering the best of assortment, pricing, convenience and logistics in both brick-and-mortar stores and Internet. Digital devices help us discover, evaluate, purchase, use and return product, but they cannot provide the touch and comfort of your store. And on larger ticket items, who will service and stand behind the product?
The coming years will see the three distinct consumer universes (the 77 million Baby Boomers now 50-68; the 47 million Generation Xers aged 36-49; and the 75+ million Millenials, now 17-35) and each will have distinctive needs and tastes—a dramatically different market from the last 40 years when all retailers chased the Boomers.
This will create opportunities not just by age, but also by incomes and by our increasingly diverse ethnic mix. We are all seeing foods, apparel and brands we’ve never seen before. Expect more of the same for furniture in the future.
Here’s what else you can expect:
Smaller, highly focused specialty stores
A rebound of high-end stores offering custom, and one-of-a-kind elegance for the top five percent incomes
Many more variations as to what days and hours stores will be open, more mixing of new and consigned furnishings, more integration of floor coverings, appliances and consumer electronics, and lower gross margins that will level the field with internet sources.
Does this scare you as a home furnishings retailer? It shouldn’t. Don’t be afraid of the future, embrace it. And while you’re embracing it, be glad you’re not selling clocks, land-line phones or cameras.
Jerry Epperson has studied the furniture industry for more than 40 years. His monthly newsletter, The Furnishings Digest, publishes detailed studies on the economy. He can be reached at 804-644-1200 or wwe@maeltd.com
LABOR: Millennials won’t have your work ethic. Hire them anyway.
Bob Phibbs
The employees you’re going to be hiring for your furniture store in the future? They’re going to be completely different from the ones working for you today.
The Millennial just isn’t going to want to put the time and effort in like you did. They’re not going to want to work a full week, maybe 20 or 30 hours tops so they can have time for themselves.
I sold greeting cards door to door and had a paper route in Toledo, Ohio growing up. I knew if I had the initiative I would be rewarded. A Millennial doesn’t always think that way.
I just got back from Portugal. There were a bunch of 20- and 30-something men and women, mostly Americans, over there. All they wanted to do was work just enough to get some wine and lounge around. They’re not as concerned with the rat race as Baby Boomers. They want to live their lives now.
Now here’s the thing: That doesn’t mean you shouldn’t hire them. The opportunity in the coming years is going to be great for smart retailers. If you want to survive, you need the fresh blood, the new perspective Millennials can bring to your store. They’re going to see the world of furniture differently than you—and that’s good because they’re going to see it like their peers who will be shopping with you. They are passionate. They’re not going to have the company loyalty we grew up with. If they stay with you three, four, five years you’ll be lucky. But the good ones will have a passion for it while they’re there.
I think furniture stores are going to have to be smarter than ever with their hires. There are too many people selling furniture today. You simply can’t have the same staff five or 10 years from now that you have now. If you do and you’re successful, you’re doing something the rest of the world will pay you to teach them. So if you’re working with a smaller staff, you need to make smart hires.
When I interview a Millennial for a job, I tell them, ‘Look, I don’t care if you’re here three months or three years, I’m going to help you no matter where you want to go. You want to join the Peace Corps and bring fresh water to Africa? Great! I’m going to give you the skills to convince others to put you on that team. You want to work with Spielberg on a movie? I’m going to teach you how to sell yourself.’
Bob Phibbs, aka the Retail Doctor, is a frequent guest on MSNBC’s Your Business. He has been featured in Entrepreneur magazine, the Wall Street Journal and the New York Times. He can be reached at Bob@retaildoc.com
MANUFACTURING: Laws that limit us.
Andy Counts
When I try to envision what the future holds for our industry, I look through the lens of unsettled regulatory issues.
Today there are measures being debated that will impact every company that markets home furnishings in the United States. Somehow, the industry must remain a visible and vigilant participant in these discussions. A few of the most pressing issues include:
PROPOSITION 65. Last year, nearly 200 notices of Prop 65 violations were filed against furniture companies for failing to notify California consumers that the furniture they purchased contained a chemical “known to the State of California to cause cancer.” This year, month after month, bewildered companies doled out tens of thousands of dollars in settlements. Without intervention by industry associations working on behalf of their member companies, that fleecing will continue. Fortunately, AHFA, NAHFA and other industry associations are working with the state to identify a “general retail warning.” Five years from now, we predict this general warning, along with a better understanding of Prop 65 on the part of manufacturers and retailers, will at last keep the litigation wolves at bay in California … at least on this issue.
UPHOLSTERED FURNITURE FLAMMABILITY. With the elimination of California’s open flame standard for upholstered furniture, the future holds fewer chemicals for our industry. Five years from now, look for the U.S. Consumer Product Safety Commission to follow suit, with a smolder-focused federal flammability standard in place. Unfortunately, every step forward on the health and safety front in our industry seems to come with a new required label or hangtag or sign—or all three. So, along with the revised California standard came an addition to that state’s compliance label—every manufacturer is now required to check a box indicating whether or not their products contain flame retardant chemicals. After a handful of states attempt to follow suit, we expect the California labeling requirement will become a de facto national standard, just like the original TB 117 did. And that will be among the measures leading to a …
LABELING BONANZA. Efforts to ensure that products comply with the growing number of federal regulations—from formaldehyde emissions to lead content to the origin of wood used—will result in the growing length and complexity of furniture labels. Transparency will be among the top industry trends over the next five years, as manufacturers and their retail partners strive to label products with a growing laundry list of product construction and content details—information in which our end consumers may or may not have any interest.
Andy Counts is CEO of the American Home Furnishings Alliance, which serves manufacturers and importers of residential furnishings for the U.S. market. He can be reached at andycounts@ahfa.us
TECHNOLOGY: Design, click, sit. All before lunch.
Bill Decker
Here’s the thing about 3-D printing. It’s like the Internet. By that I mean it’s coming and retailers who ignore it are going to be left in the dust.
Think of 3-D furniture and 3-D parts for furniture much like iTunes when you go searching for a song. You can search, download and be listening to that song in two minutes. A few years from now it’s going to be just as easy for your customers to buy an armrest for a broken dining room chair, or buy matching end tables or design their own sofa and have it ready in a day or two—maybe just a few hours.
This is going to be good news for retailers because they’re not going to be as reliant on manufacturers. When a lady walks into your store today and says, ‘I love that table! Do you have it ivory?’ Well, first of all you better hope the manufacturer has it in ivory. But then you have to tell her it’s going to take a few weeks to get the table and hope she’s still interested. 3-D printing will change that. When the lady says she wants that table in ivory you can send the design to the manufacturer or, if she has a printer, she can do it herself.
It wasn’t but a few years ago there were maybe seven or eight items you could print. These days there are thousands of applications. Dita Von Teese wore a 3-D dress to the Oscars. We’re already seeing designers creating their own pieces of furniture or accessories from 3-D printers. Retailers need to be the place customers turn to for those exact pieces or if they want to design something of their own.
Let’s say you’ve got eight inches between your sofa and the wall. The floor lamp at the store needs 10 inches to fit, but another retailer can give you a 3-D printed lamp that only needs 7½ inches. Who are you going to buy from?
Think about the thousands, in some cases, millions of dollars in furniture you, as a retailer, import from overseas manufacturers. Think about much you’d save with printing. The furniture industry has never been an early adopter of technology. Here’s your chance.
Bill Decker spent 30 years starting businesses on five continents. He is director of the Association of 3-D Printing and can be reached at bill@3dprintingchannel.com.
OPERATIONS: The consumer-driven supply chain.
David McMahon
The future of your brick-and-mortar home furnishings business will hinge on you making changes. If you’re like most furniture businesses, your store looks and operates almost exactly like stores did in 1957. Nothing much has changed. Except the consumer.
Today, customers want what they want, where they want it, when they want it and at the price they want it. They buy online, expect the product to be delivered to their home, and want to return it to the store. They window-shop online, and shop for price on their mobile phones while at the store.
Customers are in the driver’s seat, and innovators like Amazon continue to push the envelope and influence their expectations with disruptive service enhancements.
Over the next five years—if not sooner—new consumers and the shopping experience that they will demand will dominate your business.
Your supply chain will need to be completely integrated across multiple channels to accommodate the new purchasing process:
The consumer sees something they like somewhere.
She requests information through one of her many devices.
She only gets results within her desired minimum standards: quality reviews, price point, location and taste.
She views the product. (Yes, she’ll still go to a store and talk to a person.)
If she respects the product, the person and the store, she’ll make all her customized selections on her own mobile device and check herself out on the retailer’s web platform.
There is no sale written by a salesperson. There will rarely be any physical cash transacted. Forget paperwork.
With the fusion of technologies such as 3D visualization room planners and an integrated Retail Management System, brick-and-mortar stores will serve as places where customers can interact with the product and business in real life. However, actual transactions will be made online or through mobile devices, even while at the store.
As your business seeks to thrive in an economy driven by demand, you should look to build supply chains that are capable of rapid adaptation to market conditions, as well as new rules being set by consumers.
David McMahon, director of consulting & performance groups for PROFITsystems, has worked with home furnishings retailers for more than 15 years, helping them grow revenue, profit, and cash flow. He can be reached at 866-325-0020 or www.profitsystems.com.