If the past two years have taught us anything, it’s that unpredictability rules the day. Still, as 2021 comes to a close, it’s worth taking a look at the ups and downs of home furnishings retail in this tumultuous year and exploring how those market forces will shape the year to come. In this four-part series, Retail Watch columnist Warren Shoulberg is taking stock of the current state of play, the characteristics that will define success in 2022, retail winners (and losers) amid the current climate, and which companies are on track to make waves in the new year. Here, he reveals the seven “it” factors that will define a successful retail brand in 2022 and beyond.
While making predictions about what’s going to happen in the next 12 months is a risky endeavor, that didn’t stop your intrepid retail correspondent from offering up not one but four forecasts for 2022: Last week, I looked at the factors that suggest that business for the furniture and home products sector should remain rosy going into this new year. This week, I outline what I’m calling the “Magnificent Seven”—the characteristics that successful retailers in the industry must possess to prosper in the current environment. They cut across several disciplines and provide a punch list for companies looking to do well. How many does your retail business have?
Omnichannel may not be the most elegant word out there, but until something better comes along, it is the best way to describe the strategy retailers need to service their customers. The idea is to be everywhere—in physical stores, online, on social media and in other direct-to-consumer channels—and retailers that aren’t wherever their shoppers are won’t be well positioned to make the sale. Likewise, the ability to get purchases into the hands of those shoppers efficiently, quickly and cost-effectively is critical.
A few more omni offerings:
- Fully integrated online and in-store operations.
- Buy online, pick up in-store (also, unfortunately, known as BOPIS); curbside pickup; and in-store ordering.
- Same-day delivery.
- In-store order fulfillment.
- Single inventory management.
- Online customer service through in-store personnel.
2. The Store as Destination
Physical stores aren’t going away, and anyone who says they are just doesn’t get it. But boring stores are in serious jeopardy, so redesigning these spaces to make them interesting and exciting places to go is the key. Experiential retailing is nothing new: Early 20th-century department stores had restaurants, events and demos—one even had an indoor velodrome to test bicycles it was selling. Today, the challenge is getting customer away from the screen and into their car to actually walk in the door.
The characteristics of a destination-worthy store:
- Provides a reason why shoppers want to come to the store.
- Throws events, events and more events.
- Arranged as a giant store full of convenience—or a small jewel box offering charm.
- Presents products in an engaging way.
- Offers a delightful experience.
3. The Good Stuff
Too many retail assortments look like they were ordered straight from the wholesale showroom. While smaller businesses may have more difficulty developing or finding special products, the task is not impossible. Again, it’s about giving the consumer a reason to select buying from you that goes beyond price. Though, by the way: The price had better be good, too.
A look at products that feel truly special:
- An assortment that is unique, proprietary, popular—or better yet, all three.
- The products on display can also include national brands in the mix, if they are the right ones.
- There is fair pricing.
- The goods are fair-trade.
- A little whimsy never hurts.
4. Contented Cows
Don’t be fooled (or offended) by the headline—we’re talking about your employees. There’s a reason retailers like Costco and The Container Store, among others, have held on to workers during the “Great Resignation”: Their employees are happy, engaged, fairly paid and treated well. The excessive turnover from employers that are not creating that kind of environment is a huge cost of doing business. And investing in your people pays off big-time. After all, happy workers make for a happy shopping environment, which makes for happy customers.
Some things contented workers have in common:
- They are referred to as workers or employees rather than associates, guest relations agents or cast members.
- They feel valued because of how well they are treated (and paid).
Again, the idea of offering food and beverages inside a retail store is nothing new. It’s been done for more than a century. But somewhere along the line, the concept became an afterthought. The new wave of restaurants, bars and coffee shops inside stores are destinations unto themselves—not to mention profit centers.
The attributes of winning hospitality within a retail space:
- Food and beverage are the new “it” services—whether you offer coffee, wine, donuts or full-blown meals, if you feed ’em, they will stay.
- Or, think of food as the new candle: It’s consumable, which drives frequency.
- It’s also an entry point into a whole new retail segment.
6. Supply Chain Management
Yes, supply chain has become the dirtiest phrase in the business, but the fact of the matter is that logistics management has taken on incredible meaning these past two years, and a company’s ability to successfully navigate how and where to get merchandise determines much about its success. This will remain true even as the pandemic’s acute effects eventually (hopefully) go away.
The features of successful supply chain management:
- Realize that knowing whom you buy from is as important as what to buy.
- Recognize that this is not a temporary problem but something that will last into 2023 (at least), and adapt accordingly.
- Grasp that shortages for goods like toilet paper and computer chips will be seen for many more products, and stock up as needed.
Companies with the ability to be flexible have a certain inherent advantage. Call it yar, a nautical term meaning ready for action. Attributes on the water would be a vessel that is quick, lively and easily maneuverable—all vital for businesses, as well. In retail, this skill is characterized by speed, agility and responsiveness. It’s something the best businesses had to learn—and learn quickly—these past two years.
The way of the yar:
- Make it easy for employees, customers and owners to interact with your business—and make that your top priority.
- Embrace the pivot—many that haven’t are not around anymore.
- It’s kind of like umami—you’ll know it when you taste it.
It’s worth noting that the Magnificent Seven assume that the basics of a company—from its balance sheet to management and operations—are solid in the first place. But for any business on solid footing, these are the characteristics that define the retailers that rise above the rest.
Who’s getting it right? Next week, Shoulberg is naming names with a look at the furniture and home furnishings retailers that most adhere to the Magnificent Seven principles.
Homepage image: ©Adragan/Adobe Stock
Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.