RetailerNOW recently sat down with Dave Harkness, owner of Harkness Furniture in Tacoma, WA, and Sherry Sheely, owner of Sheely’s Furniture in North Lima, OH to discuss what is occurring in the home furnishings community, today.
RetailerNOW: What is your business doing to combat today’s economy? Are you waiting for conditions to improve in your area, or are you making changes anyway?
Dave: We peaked in 2007, then both 2008 and 2009 were negative years for us. 2010 was back a little more positive and then stabilized in 2011. The increase and plateauing has allowed us the opportunity to do some capital projects that we had been putting off. Over a four-year period, we didn’t have a lot of resources to do things to the building, trucks, and lifts, so we held off. The stabilization of the economy has allowed us to reinvest back into the store. We ended up putting over $100,000 back into the store, machinery and equipment in 2011. We have also done some other things promotional. We haven’t been waiting for the economy to approve—we are an advertising-driven industry, so we continue to promote as we did in the good times. We try to be event-driven and picked up some promotions from our counterparts in the industry. We belong to a lot of different groups and learn new and novel things from our relationship with others, which has helped drive traffic in through the door. Seems to be working—so far we are up in the first quarter of 2012.
Sherry: 2011 was our best furniture sales year in our 60-year history. We never stopped. Even though business came to a halt in 2008 and 2009, at that point, we sat down with our management and went over every penny we were spending, down to toilet paper and Kleenex. We changed everything and saved about $8,000 just on paper products. We reeled in things over time, got through that period and then expanded our advertising, hitting more in the Pittsburg area. We also started using social media, QR codes, changed our web design, and are working on a Sheely’s mobile app. We are finding new ways to reach the consumer, that 30-45 year old that is always on their smartphone.
We have been putting money back into the business, building, our computer systems, getting iPads for our salespeople—just trying to keep up and work with the new digital and social media world that is out there. We never really stopped, it was reeling in, becoming a little cleaner, reinvesting our money and being positive that we weren’t going to be a part of that recession.
RetailerNOW: What is the most common business excuses you have heard others use on why they might not be successful today?
Sherry: I don’t know what other businesses are claiming and blaming. It could change on any given day. We are in Northeast Ohio, which has been a very hard-hit area. We have had three furniture stores go out of business during the last two years and a lot of other businesses shut down. I see less advertising from our competition.
If you always try to find an excuse, it keeps you from moving forward. Companies that are blaming are companies that don’t have a vision for the future. You can’t sit around and blame the economy, 401(k)’s dropping, or whatever the reason may be, because the sky could fall every day if it wanted to. We started to look for other areas to get business around 10-12 years ago, and started to move promotions into the Pittsburg area—that’s where the people are and that’s what is important. It really kept us afloat. The stores that went out of business kept advertising in Youngstown, Moore and Akron, and those are the cities people are moving away from. You have to have a vision, and you have to focus on the positive when everything else if falling apart.
If you are in business and you are always negative, that deflects onto your salespeople, delivery staff, and warehouse staff. They are having hard times, and are struggling too. The owners have to have a positive attitude—your employees take the cue from you.
RetailerNOW: Do you think the negative attitudes that some retailers have been holding onto over the years has led to them eventually going out of business?
Sherry: I think some were in too much debt and others were just so small that they couldn’t hang on.
Dave: I think Sherry hit in on the nose. If you weren’t a long-established store and just come around in the last five to six years, were heavily leveraged and under capitalized, then this last recession probably did you in. At the other end of the spectrum was the stores that have been around for awhile but the ownership was maturing or matured to the point where they weren’t sure they want to remain in business anyway. So with decreasing sales and decreasing profits, it gave them the incentive to just walk away—they are done fighting it and are just going to call it quits.
Your initial question on whether people are just negative—we are retailers. If we have a bad weekend, we can say, gosh, was it too sunny, or did it rain too much? We are going to find a reason—it wasn’t us—we are going to find a reason for why business wasn’t good. If we take that burden off of us, then it does become a certain amount of economics. I actually believe that we get our share of what’s out there on a good weekend. My feeling is if we had a good weekend, then our competitors probably had a good weekend. And if we had a poor weekend, then our competitors had a poor weekend. We sink or swim together as a group—not that we don’t try to get our market share, but as a whole, the economy has been rough and the Northwest was hit just as hard as anywhere else. All of us have been down. I think for a lot of stores, whether they will admit it or not, a certain amount of business was just out of their control. Most of us that were lucky enough to have been around for awhile, have very little debt and we have been able to weather it. And that’s what I say, the last few years we have been in a survival mode. We battened down the hatches, trimmed expenses as much as we could. We were trying to hang out and make a few dollars here and there—not as much as we used to, but it is coming back to that point where we are profitable and things are heading in the right direction. It is easier to be positive. There have been a lot of stores that have gone out of business. I think for some of those stores it was just out of their control.
RetailerNOW: How do you move from being in a survival mode to reinvesting in your business? How do you get over the fear?
Sherry: You can’t be afraid. You have to be a good businessperson, but you also have to ask how you can improve your store and make the buying process easier for your customer. The customer’s time is so important and no one has time, how can we make the buying processes cleaner and smoother instead of buying at a counter? If you don’t have the money to invest, it is going to take some time to adjust the buying process itself. A solution is out there. If you’re afraid to do anything, then we wouldn’t have the electric light bulb. I always go back in time—If we were afraid, we would still be riding the horse. Someone has to take those initial risks. There has to be risk takers and if you don’t like taking risks, you shouldn’t own a business.
Dave: My dad had an old adage—he liked Blackjack and people would say, oh you like gambling. His response was, to be in retail, you are a gambler every day. That’s it. We make the conscious decisions as owners to reinvest within our business. Now that is an educated guess, but it is still a gamble. We are in a fashion business and if we don’t keep our store, our advertising and our websites up to date, we are not going to be competitive within the marketplace. For us, it is a matter of survival to keep as constant and current as possible. Reinvesting in our business is one of the best investments we could make.
Sherry: You hit the nail on the head there—we are in the fashion industry. If the customer walks in our store and they see inventory that looks like it is from 1999—it’s old, dusty, dirty, windows aren’t washed, your store is dingy—they are going to turn around and walk out. It has to look fresh and new. The cheapest thing you can do is paint. It doesn’t cost you much. We paint in here every month, our displays change daily—you have to do that.
RetailerNOW: It’s interesting that you both mention we are in the fashion industry, because so many retailers seem to forget that furniture is fashion for the home.
Sherry: You have to always look at what the new colors are for the year. We shared it with our customers on our Facebook page—tangerine tango! We have accessories in that color. You have to keep up and accessories so you draw the customer’s eye when they walk through your store. You need to pull them in.
Dave: That’s what drives me nuts when retailers don’t go to Markets. I cannot believe you would miss a market because we are such a fashion industry. If you miss one market, it will take you a whole year to catch up with the current styles and trends. I can’t afford to miss a market. Because of our type of industry, we have to be on top of things right away. You need to have the latest, hottest products because if you don’t, your competitor is and they will sell it before you. If you waste six months to get that stuff in, you’ve missed half of your selling cycle on those kind of products.
Sherry: And you know that the consumer has already seen it on their phone or iPad. It better be in your store too.
RetailerNOW: You both have touched on this a bit, but what does our industry need to do to move past the last few years and be successful in the upcoming year?
Sherry: You have to be aware of what the trends are, what the colors are, what the styles are. You have to keep moving forward and keep your business front in center of the consumer. Whether it is on Facebook, Twitter, television or radio. You have to be sure that you are out there every day. You need to know your customer—which is so important because what could be a great seller here at Sheely’s isn’t going to be for Dave. You have that learning curve where you really know who your customer is and be prepared to offer them what they want. Stay updated and on top of things, not waiting for someone to ask for something. The customer isn’t going to wait; she is going to go somewhere else if you don’t have it.
Dave: I think we need to be positive about our industry, and I am. I use statistics all the time and the fact that home furnishings industry was the third largest hit industry by the recession—right after home sales, cars and then we were the third hardest hit. I have heard all kinds of numbers but we were down like 22 percent as an industry nationwide over that two-year period.
It takes a little more of a shift to regain that confidence. So many of us are a little conservative—that’s why we are still around. We are independent business people, family run and operated stores. This is our livelihood and our retirement. Conservatism is our nature. But as conservative as I am, I have seen that we are trending up. I am going to have to step up to the plate and put more money into inventories. I was being conservative in my orders and now I am going to have to order more. I do a lot of container business because we are so close to Asia. A number of our case goods and upholstery come from there, and I have cut down and had a leaner inventory but now I think I need to ramp up—especially my best sellers. I think 2012 is going to be good and according to most gurus, 2013 is going to be very good. I have to take that in mind and be prepared for that in marketing, merchandising and displays. I need to be open to it, be willing to invest more dollars back into the store and do what it takes so we are competitive in the near future.
RetailerNOW: Thank you for your great insight and comments Sherry and Dave!