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What Is A Good Margin?

Furniture World Magazine

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40%, 42%? How about at least hitting 46%?

Well, here we are. Back into the comfortable zone. You remember. The one we never knew existed except in our minds. It's time to lay back, put the feet up on the desk and proclaim over all that is ours "We are the genius' of the world. We can do no wrong. We have conquered the impossible. We have made money while selling furniture."

Look at us. Well, here we are. Looking back at what got us here. Hard work. Great advertisements. Excellent merchandising. Good displays. Fertile imagination. Yep. We've got the whole package together.

We ignore the warning signs. Let's go over to the radio. Turn it on.


"...AND THE GOVERNMENT SAID THAT HOUSING INDICATORS WERE UP LAST MONTH TO RECORD LEVELS AND THAT JOBLESS RATES WERE AT THEIR LOWEST SINCE WORLD WAR II. THE SPECIAL PROSECUTOR IS ASKING THE SUPREME COURT TO BANISH THE ATTORNEY-CLIENT CONFIDENTIALITY PRIVILEGE AFTER THE CLIENT DIES. IN OTHER NEWS, ASIA IS STILL IN GREAT FINANCIAL DIFFICULTY. THE WEATHER OVER MOST OF THE COUNTRY IS UNUSUAL FOR THIS TIME OF THE YEAR. AND ALL FURNITURE DEALERS ARE EXPERIENCING THE TIME OF THEIR LIVES..."


So this week you're going to begin that sale the one you held last year. You know the one that didn't work so well but you came up with the idea and you thought it was a great idea so you're going to run it again? Or are you going to run that complicated travel campaign. You know the one For anyone who comes into the store you will give them a trip for two to somewhere but you won't foot the travel costs. They have to come up with that. Forget that they have to use discretionary monies to buy the airfare the same discretionary monies they need to buy furniture from you. But travel is unique. Forget the fact that you are promoting with your dollar other discretionary uses not only to those who could be your customers, but to those who should be your customers if you didn't plant it in their heads that they could use that money they were saving for a new sofa and instead, use it for trip to Illinois. "Visit Beautiful Galena Country". It can be yours when you shop at XYZ Duffous Furniture. No purchase necessary."

Yes, we learn by our past mistakes.

Let's give an extra five percent off, over and above the super discounts we have day in and day out and over and above the 10% discount we are offering on this Travel Campaign, for any accessory they buy. It sounds like a great idea. Wait!

Let's give away added pillows for the bed when we are selling that dog of a sofa we haven't been able to move in the last seventeen months. "Buy the sofa for the normal 40% off every day low price, and 10% off because it is the Travel Campaign and take an extra 5% off when you buy that beautiful (sic) sofaPLUS NO PAYMENTS AND NO INTEREST UNTIL AUGUST 2000. Remember, SAVE, SAVE, SAVE. And, you get a bunch of ugly pillows for your bed."

Yea. We learned a lot during the late Eighties and early Nineties. We learned that it takes more than just another wonderful headline in the newspaper and more give aways than a circus. But there is one thing that we can always be proud of somewhere in our industry there still is that bushel full of clowns. Label it comical, inventive, promotional or any other side issue you want to relate to. But the one thing is sure it will be a failure. The more you promote with gimmicks and give aways, the more severe the problem becomes.

It's called eroding margins. What is a good margin? 40%, 42%? How about at least hitting 46%? Could you hit 50%? There are dealers out there who are accomplishing exactly that.

It's time to break away and address the issues head-on. Buy the product right. Promote the product as part of your unique selling proposition your store. Display it perfectly. And, sell the product to the potential customer on the merits of the product. And if you don't know how to sell, bring in a sales manager or a sales trainer. Have them hold sales sessions three times a week in your store. Hold them on Monday, Wednesday and Friday mornings. Have them go through the whole "rejection" cycle. Have them learn about objections and the over coming challenges.

But what ever you do, don't advertise it in the newspaper. Reach a new audience the audience you have been missing all of these years.

Use television. That's where it's at. That's what's happening. That's all for this month.

And remember, "Nobody reads the newspaper any more.

NEXT MONTH: A Look Behind The Minds That Make Up Those Decisions To Bring Out THAT Product.

Lance G. Hanish is the President of Lance Benefield & Co., Inc. Worldwide, a leading marketing communications firm serving home furnishings retailers. Questions on any aspect of television media management or production can be direct to Mr. Hanish care of FURNITURE WORLD Magazine at lhanish@furninfo.com.