Regular Retail 2024

Furniture First’s CEO, Andrew Kauffman outlines ‘regular retail’ strategies furniture & mattress retailers should consider to get better results in 2024.

Interview with Andrew Kauffman, CEO, Furniture First

Andrew Kauffman, CEO of Furniture First, has been on both sides of the desk as a supplier and a retailer. These experiences have been helpful in his current position at Furniture First, with over 230 members, each doing from $2 million to $200 million in sales and operating over 500 storefronts. “Furniture First,” he said, “was founded in 1994 as the National Furniture Dealers’ Alliance, a group of like-minded retailers who believed they could successfully compete against the big box stores. They knew that they had an advantage in providing customers with superior service and great products in a more personal, connected way. What they lacked was the benefit of cooperative buying power. Today,” said Kauffman, “Furniture First offers almost everything our members need on the product side. We also act as a back office for some smaller retail members, offering various services, including an exclusive agreement with TD Bank, credit card processing and marketing.”

Kauffman’s Career Path

While in college, Kauffman got his start in the furniture industry, delivering mattresses, then moving to the sales floor at a locally owned mattress chain in central Pennsylvania.

“From there,” he said, “I got headhunted by Edison Brothers Stores out of St. Louis, Missouri. I worked my way up in the company and did quite well, but I missed the mattress and furniture industry. When Edison Brothers filed Chapter 11, I took that as a sign. I was hired by a large independent furniture and mattress store. Then I worked my way into management and brought my wife on board when an ownership opportunity was presented by the current owner. Unfortunately, my dream of owning a furniture store was hindered by the Great Recession of 2008 and other factors I won’t go into. A good friend told me that a buying group in Harrisburg was looking for a mattress guy. I had to do what was right for my family. So, in 2011, I left that dream behind and I joined Furniture First as the Director of Mattresses, was promoted to Chief Operating Officer in 2016, and became CEO in 2017. “

Along the way, he’s been supported by an unusually engaged board of directors. “You hear of organizations where the board of directors only shows up twice a year for a fancy meal and a check,” he said. “The all-volunteer Furniture First board, however, is hands-on, engaged, smart and down-to-earth. I can’t tell you the number of hours they put in this past year to help make our new building in High Point a reality.

“Our performance groups are a part of those services, administered by Mike Kordik, a former Board Chairman. Lorri Kelley facilitates our sales manager group. A difference between Furniture First’s performance groups and those that some of our members belong to and are run, for example, by David McMahon, who is a Furniture First Partner, is that ours are comprised exclusively of Furniture First members.”

Furniture World asked Kauffman to share some challenges, opportunities and mindsets Furniture First members face at the start of 2024.

2024 Inventory Challenges

Kauffman noted, “There’s no secret sauce, no recipe for success in 2024, but the most significant challenge our members report is a drop in retail traffic. Somewhat balancing that is that closing rates and average tickets are up. Those realities have put pressure on our member stores to make sure they have the right merchandise assortment at the best pricing. Most owners and buyers I spoke to during the most recent High Point market were there to find good products at fair prices. Manufacturers’ warehouses are still stuffed, but our members have trimmed inventory. Many can finally see the top two rows of their racks.”

“Will they start using digital price tags to help save money and tag their floors? Are they using the same point-of-sale system they had when Nixon was president?”

Personal Relationships are Key

“One thing that separates the best-performing retailers from the rest is that they learn from other folks. New ideas, opportunities, and information about deals to be had spread quickly among Furniture First members through personal relationships and attendance at performance group meetings, and a best-of-market session we had in our new building,” Kauffman said. “We are known as the buying group that networks personally and professionally.”

Back to Regular Retail

“The economy turned around quickly following the initial shock of the pandemic. In 2021. Business took off, retailers expanded showrooms, bought trucks, and improved systems. Going into 2024, we’ve seen some tightening up of wallets.

“When traffic slows, retailers need to focus on getting back to the basics, what I call regular retail. Their salespeople need to double down to learn about store policies, procedures and what makes what they sell the best value in town. They also need to be taught how to manage customer expectations. Early in my career, a colleague told me that the only rationale for opening a store is to believe you can do it better and differently than others. Shoppers must be convinced to believe that, too. These are topics that our performance groups talk about constantly.”

Managing Expectations

“Managing cash flow in any retail organization is tied directly to managing the expectations of the people working there,” Kauffman suggested. “Retailers need to bring their managers and line employees into conversations about their businesses upfront. The more they do that, the more people feel like they’re part of the company and its mission. Letting them know ‘every delivery counts more now than it ever has before’ is a much better option than management or ownership waiting six months to complain, ‘I can’t believe delivery satisfaction has declined by this much! What have you people been doing?’ Instead, it’s best to get ahead of problems to ensure customers are cared for. I’m reminded that a former Furniture First board chairman supplies her delivery people with shirts that say, ‘Director of Last Impressions.’ That,” Kauffman observed, “helps them remember one of their most important job functions. I’ve seen stores where there’s an imaginary barrier between sales teams and delivery guys. That doesn’t help anyone. Aside from handing out tee shirts, I’m a big believer in requiring new employees to spend some time observing what goes on in other departments, except finance, to build coherence throughout organizations.”

Hiring & Retention

Kauffman said, “Finding and keeping good employees has been challenging, and I think it will remain a factor in 2024. Increased wages for delivery and warehousing personnel will continue to be reflected in retail margin needs.

“Sometimes the simplest ideas are the best. One is to ask trusted employees to carry a company recruiting card wherever they go. When they receive great service from someone at a local clothing store or restaurant, they can let that person know, ‘You did a great job of helping me. If you’ve ever thought about changing careers, the home furnishings company I work for would love to help you make more money.’

“Retaining sales managers has become a bit of an issue. When a retailer has one that’s exceptional, you can bet that some other retailer is trying to recruit them. I’m not suggesting there will be a mass exodus, only that this situation will continue. In 2023, when one of our members told me they were too busy to attend a meeting or hop on a call, more often than not, the cause was that their sales manager got headhunted.

“There are some practices that can help with retention. One is asking your essential employees to come to you before they accept an outside offer of employment. That’s a sign of respect, but it doesn’t mean you will always be able to match the offer or provide sufficient incentives to stay. Sales managers have a lot of responsibilities. They need to know financing plan details, keep up with advertising schedules, and prepare for upcoming sales events. They must teach, train, and support their teams, pick up salespeople when they have tough days and dust them off. They must be motivation specialists and part-time psychiatrists.

“Every Furniture First member knows that having a good sales manager is crucial. Treating them right, respecting and appreciating them, and providing some quality-of-life flexibility may keep them from saying yes to a few extra bucks. Tiny things that don’t cost a dime can have value for retail workers. It can make the difference between them staying or leaving. It is also crucial to perform a structured exit interview when a valued team member resigns.”

“Retailers and apartment leasing agents work together to sponsor a couples’ or ladies’ night out event that attracts renters, especially new movers. Imagine a mixer or a meet-and-greet event wrapped up with a friends and family sale at the tail end offering special discounts.”  

Technology

Furniture World asked Kauffman if he had any ideas to share about how Furniture First members are using new technologies.

“I started college as an English major,” he replied, “so I usually pass most tech questions to Lark Shirley-Stevens, our Executive Director of Marketing and Membership. Bill Parcells said, ‘If they want you to cook the dinner, at least they ought to let you shop for some of the groceries.’ I prefer to stay in my lane, but I will say that Furniture First members have vast differences regarding their level of technological implementation. Some are skeptical about AI, and others are considering having it write ads for them. Our members using Tools 2B First (Tools 2 Win) are light years ahead in data analytics.

“I’m more focused on helping members look at their options. Will they start using digital price tags to help save money and tag their floors or are they using the same point-of-sale system they had when Nixon was president? The current generation has to be transparent with the next generation regarding standard operating procedures or problems that may arise. They also have to be willing to change.”

Succession

“Regarding the next generation, succession is a topic near and dear to my heart. It’s something that the Board and I spent quite a bit of time talking about at the last meeting following the opening of the new High Point building. The biggest threat to small businesses isn’t the economy or the next presidential election. It’s not any of the stuff we’ve been talking about. Statistics say that the lack of succession planning is the number one threat to small businesses. That’s true for lumber cooperatives, hardware cooperatives, small medical practices and furniture retailers. Furniture First recognized this issue among our members early on and started a next-gen group of family members and store employees on leadership tracks. Not all our store owner-members will pass their businesses on to family members. The group has a couple of meetings a year and goes on an annual trip focused on churning through ideas and having fun. This has also led to a few of our NextGen members being on the Board. We have a succession planning consultant they can call to get the process started. Beyond that, we encourage the current generation to talk about succession with the next generation. One of the most difficult conversations an owner can have is also with a son or daughter who never wanted anything to do with the business. I’ve seen plenty of families and businesses torn apart when a patriarch or matriarch passes without having this conversation and then all family members have their hands out.”

Group Shops

Moving on to the competitive pressures facing Furniture First members and how they deal with them, Kauffman explained that performance groups meet at a different host store each time. “Often,” he said, “they work together to shop at competitive stores, including big box stores in the host store’s trading area. Each attendee might be assigned five stores to visit and then present to the rest of the group. These group shops uncover lots of interesting information. Sometimes, members who attend may have ordered a product from a major online retailer. They might find that the product was misrepresented or arrived damaged. Several members have displayed mattresses purchased from online retailers in their mattress departments so customers can compare. There’s a way to do it tastefully by letting customers compare with a ‘This is what they said, and this is what was delivered’ approach. One member did a ‘blindfolded taste test.’ Their customers comfort-tested a bed, purchased a well-known bed-in-a box and compared it with a brand-name partner’s bed that cost the same. Every shopper picked the brand-name partner’s bed, and it was a huge hit on their social media channels.”

“There are some practices that can help with retention. One is asking your essential employees to come to you before they accept an offer of employment.”

More Ideas for 2024

1. Retail owners and managers need to keep up with and invest in the technologies they need to be successful.
   
   
2. They should make sure they know about, and their department heads understand, how to collect, use and share important retail metrics within their organizations. It’s an essential part of getting back to basics.
   
   
3. It’s a statistical fact that the salesperson who takes the first ‘up’ of the day will get about 10 percent more ups that day. So, ensure this lead salesperson knows how to greet and perform all the subsequent steps of the sale. Then, take it one step further to ensure that every team member performs up to their potential.
   
   
4. We will see a supply-and-demand cycle play out in 2024. Mixed in with what’s happening overseas, the constant negativity people see on television and in an election year will likely make everyone in our industry a bit nervous.
   
   
5. More people are renting. Some Furniture First members see this as an opportunity to develop relationships with apartment leasing agents who work together to sponsor couples’ or ladies’ night out events that attract renters, especially new movers. Imagine a mixer or a meet-and-greet event wrapped up with a friends and family sale at the tail end, offering special discounts. Furniture First has developed a program in some states that ties member stores and real estate agents together to bring in customers.
   
   
6. It’s hard to let team members go. If you have an employee who is not performing, you’ve got to cut bait. If you don’t, it will disrespect the work of those who pull their weight. The first job I landed at 14 was as a stock boy/janitor at Woolworth’s. When I moved to Sears as a cashier, I thought I had the world by the tail. Along the way, I’ve observed that it’s tough, often impossible, for people who perform poorly to change. I think that most successful retailers have learned the same lesson.

Conclusion

Kauffman re-emphasized the importance of getting back to retail basics. “If there’s one thing furniture retailers need to keep in mind in 2024,” he concluded, “it’s the need to continue to focus on ‘regular retail.’”