NEW YORK— Market and retail technology trends have helped shift home furnishings purchasing toward the mass market for several decades, but developments may provide smaller home furnishings retailers who may have lost market share with a chance to turn things around.
Michael Rittler, head of retail card services at TD Bank, noted that the advent of mobile commerce could generate significant change and provide an opportunity for a range of home furnishings purveyors.
Although major furniture stores already are deeply involved with Internet-based operations, smaller retailers have flagged, particularly as regards mobile commerce, and TD Bank is trying to help them with fresh ideas and approaches. Otherwise, those retailers are looking at a difficult future facing changing shopping habits that have a corresponding generational element.
A study conducted by TD Bank suggested that many furniture retailers haven’t felt compelled to embrace emerging retail technology because their shoppers skew older and many maintain traditional shopping habits. Furniture store operators responding to a TD Bank survey identified their key customers as consumers 35 to 54 year old 64% of the time, consumers 55 year old or older 19% of the time and consumers 18 to 34 years old 16% of the time.
Still, the home furnishings future belongs to the young as Millennials move through adulthood. With that in mind, TD Bank is encouraging furniture retailers to make financing a key element in expanding Internet-based initiatives.
In the TD Bank study, those store operators who said that most of their customers were ages 18 to 34 had varying demand for credit, but, in some cases, the need was significant. In the study, 43% of the furniture operators said 0% to 10% of their customers sought financing, 9% said 11% to 25% of their customers sought financing, 14% said 26% to 50% of their customers sought financing and 5% said 51% to 75% of their customers sought financing.
Almost a third of those participating in the study didn’t respond, which suggested, Rittler said, that they didn’t offering financing at all.
Many furniture store retailers lag behind mass market operators in building online operations, particularly mobile.
In the study, 59% of furniture retailers said their brick-and-mortar store was their most important channel when it came to furniture sales, followed by online, at 31%, and mobile application, at 4%. The survey indicated that 58% of furniture retailers do not offer a mobile application for their customers, and 47% do not see the business impact of having one.
Yet, of all the statistics, Rittler said the first numbers that jumped out at him from the study were the 59% in relation to bricks and mortar stores and the 31% related to online operations.
“Just five years ago, that 31% would have been significantly lower,” he said.
He noted that RTA furniture certainly has helped push the proportion of people shopping online for furniture, which has led to a change in consumer attitudes.
“People are more comfortable assembling furniture today,” Rittler said. “That has driven online as a viable channel of furniture sales. The 31% number surprised me.”
The study indicated that more furniture store operators have become somewhat appreciative of the potential online operations as business tools. That holds true in marketing as well as sales, as 27% of respondents cited websites as their most popular forum for offering deals and promotions, followed by the brick-and-mortar stores, at 23%, social media, at 22%, traditional mail, at 20%, and, bringing up the rear, mobile apps, at 8%.
“Retailers know that online is the first stop before coming into a store,” Rittler said. “People who will make furniture purchases online are mostly younger, but most people who come into a store probably have been online looking at offers.”
Rittler noted that retailers in general have to consider carefully how smartphones are changing the consumer relationship to the store operations and the Internet.
Digital retailing is, he said, “more powerful when you carry it in your hand.”
As time goes on, mobile will only become more important as a primary vehicle retailers need to maintain customer engagement.
As a service, TD Bank is laying out “the value a mobile app can have in some type of special offer, maybe a special finance offer. Shoppers can apply for credit online right from the store. We think that it’s a great opportunity,” Rittler said.
TD, through its own bank branches, even can suggest where mobile has acceptance based on its own business activity, he added.
At the same time, the bank is encouraging customers to look at online and mobile more comprehensively and see how they can establish effective business strategies. For example, Rittler said furniture store retailers, and, indeed, whoever is selling home furnishings, needs to consider using the technology to generate ancillary purchases.
“Mobile technology makes for a fuller market basket, so the purchases are no longer just the sofa but the accent table, too. Retailers can make those special offers in real time at the point of purchase by getting shoppers engaged with their devices and apps.
One of the things we’re trying to do with our partners in the furniture space is to offer them some forward thinking, some idea innovation to help drive bigger tickets, more sales and better performance,” he said.
Millennials now expect a retailer to provide products and services outside of its core merchandise assortment, in support of their lifestyle priorities. As their domestic arrangements become more complex, as some urban-oriented Millennials consider moving to or back to the suburbs as they have children, retailers selling products such as furnishings will get points for making adaptation easier.
“That’s where, with an app, you not only think about the brick-and-mortar store but what you can offer online as well,” Rittler said. “You can use both channels to drive traffic. You can create loyalty. You can make purchases more affordable by offering financing they can get right away. Smart retailers know how to engage and build loyalty over time, now they have to do it on both ends to appeal to younger consumers especially, who are moving through their consumer lifecycle.”
Rittler noted that a Millennial who have thus far favored RTA furniture may become more attractive to case goods as they mature, and furnishings manufacturers and sellers of all stripes need to consider how they might respond to such a development.
“RTA is a newer phenomenon,” he said. “People who are viewing ready to assemble options are likely looking at them as more disposable. They’re not buying for 20 years. You have to see if, as the consumer matures, the mindset that welcomes RTA prevails.”
