— Furniture Today,
Details 10-step plan to boost business
KONA COAST, Hawaii — Last year was not a good one for Giff Gates. For nine of 12 months, sales at family-owned Gates Home Furnishings in Grants Pass, Ore., were down from a year earlier.

New competitors had opened, including an Ashley Furniture HomeStore in nearby Medford, Ore., and Winans and Rent-A-Center in Grants Pass.

Traffic at Gates was down about 12% and sales were off about 7% last year, to about $8 million.

“That to me said, ‘Hey, this is a trend,’ and you’d better get down to look at your business closely,” Gates, a longtime member and leader in the Western Home Furnishings Assn., told an audience at the WHFA conference here.

Look he did, and some of what he learned about his business surprised him. It spurred the company to take 10 significant steps to change the way it sold its products and presented itself to the public.

Is it working? That’s still unclear, he said. March was great but store traffic plummeted in April because the city temporarily closed a bridge for repaving, diverting drivers away.

Gates sized up his business after the weak 2012, learning that closing ratios and average tickets were up, while the drop in traffic was the problem.

He then did some market research. Working with another local business to split the cost — $5,000 each — the store hired a firm to determine how it was perceived in the community and how people bought furniture.
“The most important thing to our customer in buying furniture, we didn’t know,” he said.

It was something the retailer already had but didn’t publicize much — a liberal return policy. Gates Home Furnishings allows customers to return purchases within two weeks without a restocking fee, and the store will even refund the delivery charge.

Armed with new information, the company is pursuing a 10-part plan:

1. Delivery was changed to a three-tier service at different costs: same-day at $79, next-day at $59 or regular at $39. This emphasized that Gates could deliver more quickly than most competitors.

2. Financing. The store added a no-payment option through CitiFinancial, along with low-interest contracts with no minimum purchase.

3. Direct mail. “We had gotten lazy” on mailings, Gates said. The program was revived, with 80% going to people on the store’s customer list and 20% cold mailings.

4. A Web site update. The store doesn’t allow online purchases, but is making it easier for people to research its inventory and shop on the Web. It calls the approach “pajama shopping,” and its site shows a woman in pajamas using a laptop computer.

5. New TV spots, “very much institutional, without price advertising,” said Gates. These hit on features like the no-hassle return policy and the delivery and financing options.

6. Interior remodeling. The store has new paint and about 1,000 new decorative accessories — one product category the midpriced, 25,000-square-foot store was short on, said Gates.

7. Exterior remodeling. The company is spending $250,000 to create a rustic exterior using logs and faux river stone, in keeping with the community’s river town history.

8. New profit centers. One is “staging” homes, or filling unsold homes with furniture for real estate developers and sellers.

9. Fabric protection. The company has achieved nearly 100% sales of profitable fabric protection plans with a new policy: If the customer doesn’t use the plan within two years, she gets a full refund of the price of the plan, to be used toward another purchase in the store.

10. New truck graphics designed by TruckSkin that attract attention and promote the same-day delivery program.