This year, the most important priority for Minneapolis-based HOM Furniture isn’t just one priority; it’s several.
Kyle Johansen, executive director of merchandising and marketing for HOM Furniture/Gabbert/Dock86, which markets to five states in the Upper Midwest, says that a combination of effective merchandising, product assortment and improved lead times will be required to set the best stores apart from their competitors.
“Great assortment but no inventory? That’s going to be a problem,” says Johansen. “Lots of inventory but the wrong product — an even bigger problem. I think the most important single priority for retailers in 2024 should be focused on their marketing and getting foot traffic into the store. It’s no secret over the past several years we have seen declining foot traffic since the pandemic peak, and harvesting more customers/opportunities for your sales teams in 2024 is going to be critical especially with the challenges that will face marketing managers with the elections going on taking up so much ‘marketing inventory’ with what seems to be unlimited campaign budgets to pay any price for the most desired spots.”
Kyle Johansen
Within the outdoor furniture segment, the biggest recent challenge, hands down, has been inventory and keeping a qualified sales team in place.
“In 2020, we couldn’t get product from Asia or even domestic suppliers due to the supply chain issues during Covid, then in 2021 business was very strong but we had crazy shipping costs which continued into our 2022 assortment,” says Johansen. ”Unfortunately, we didn’t get out of enough product at higher costs and we had to focus very hard on our inventory in 2022 and 2023 so we could get the open to buy needed for goods for the next season. This also pressured margins more than we would have liked to see.
“Another major challenge has been retaining our sales team. With business lagging the past few years, it’s been difficult to maintain a seasoned sales team in our specialty categories such as outdoor. We are focusing this spring on training with the hope we can maintain more staff going forward as we know it takes a season for someone to really understand how to sell the category as it’s unique from furniture and mattresses.”
The goods themselves always make a difference on how well sales will go. HOM carries Tropitone, Homecrest and Pleasure Garden, while the Gabbert’s division carries Summer Classics, Brown Jordan, Gensun and Lane Venture.
But Johansen is quick to add that the store sources the bulk of its outdoor offerings directly from factories in Asia.
“HOM Furniture has always been a leader in our industry for direct sourcing and product development,” says Johansen. “We market most of these goods under our private-label brands Thomas Cole Designs and Furniture Creations Direct. Many aspects go into choosing a manufacturing partner such as factory lead time and capacity, special-order ability, giving us exclusivity on goods for our markets, quality versus value analysis. Since we try to sell the entire market, we have to be sure to have a diverse vendor mix so we can sell someone a custom patio set where price is not an objection to someone looking for a ‘space filler’ on the back porch at a strong value.”
To get the word out, HOM Furniture uses a mix of marketing, with about half its marketing dollars in the online digital space and the other on a combination of traditional broadcast, streaming ads, newsprint inserts, magazines and outdoor.
In the store, HOM Furniture sets itself apart through training its sales associates to be specialists.
“We believe a few things that set us apart would be having specialty selling associates for our outdoor products,” says Johansen. “This is unique compared to other furniture retailers who often set patio on the floor and then ‘anyone can sell it’ often without any training. We also have a much broader mix of goods than most everyone because of our partnerships with both domestic and international manufacturers. We have competitors that seem to focus either on the ‘high end’ or the ‘low end’ but not many can do or even attempt to do both with any lasting success.
“Because of the amount of direct sourcing we do, we are able to undercut our competitors on pricing on similar goods purchased through importers and at the same time, our decades-long relationships with our domestic suppliers allow us to get their best prices and we stay aggressive on these as the ticket size is often very large. For example, if you want to sell ‘X brand name’ in my market, get ready to sell it at a 35% gross margin.”
Any advice for struggling casual retailers today?
“I have always been reminded by our chairman and founder that ‘cash is king,’” says Johansen. “Be sure you have some dry powder in case 2024 ends up being as challenging as 2023. Having cash will help you weather the storm or take advantage of opportunities when they do arise.
“Other than that, be sure to take full advantage of every customer walking in your front door. Are your associates ready to give world-class service to every single customer or are they busy on their cell phones and just give customers the old ‘Let me know if you need anything’ from their desk chair?”
