Following the release of a new study about the luxury home furnishings market, “Home Is Where the Luxury Is: A Study of Luxury Consumers & Their Home Furnishings, Redecorating and Remodeling Purchases,” Michael Martin, President of Davids Furniture & Interiors and son of the company’s founders David and Nancy Martin, decided to seek help in finding new opportunities to build his business selling to high-end, luxury home customers. His central Pennsylvania three store retail home furnishing chain serves an extensive trading area including Berks, Lancaster, Dauphin, Cumberland and York counties.
Michael describes the company’s unique market position, “We position ourselves as a higher-end design business that caters to the top 15 percent of the population from a household income standpoint. What drives our business is design projects, which can range between $10,000-$15,000 for a room and go up to $40,000. All of our staff are qualified and trained interior designers.”
The demographics of those counties revealed about 150,000 affluent households (top 20 percent) and nearly 50,000 at the top 10 percent of national incomes. The Davids’ team recognized that they had significant growth opportunities, as some stores were underperforming. They believed the company had the potential to increase sales by one-third to one-half in a fairly short period. Further, the chain’s Berks county location borders on the affluent western suburbs of Philadelphia and offers an opportunity to reach those customers willing to travel west rather than east to the city for home furnishings.
So, Davids Furniture & Interiors had bright prospects on paper with Unity’s latest marketing research indicating affluent consumers have high purchase intentions for home furnishings, combined with the fact that Davids’ stores are located in areas where affluent consumers live. But their corporate balance sheet wasn’t showing it. Michael defined the opportunity succinctly, “We want to carve out a specialty niche in our marketplace that is high service, custom oriented and design driven.”
Strategic Marketing Plan
The marketing strategic plan for Davids began with a marketing audit where Unity Marketing studied the existing business and all its touch points with the customers, from store front, displays, advertising, website and its position in the local competitive market. Initially we decided customer research wouldn’t yield too many actionable recommendations, since we needed to branch out into the community to reach a new target customer. The marketing audit focused on the four Ps of marketing – Product, Price, Promotion & Placement—as well as the competitive environment.
To involve the staff in the process and make them feel invested in the future of Davids Furniture & Interiors, key members of each local store visited a competitor’s store with a questionnaire designed to help them evaluate and analyze each competitor critically.
A study of the competition found different strengths in various local retailers, but, most notably, many local retailers excelled in the effectiveness of their internet presence. Though there was some cross-over in furniture brands carried competitively, Davids lacked nothing on that score. In fact, Davids exceeded most competitors in the brands they carried and the company’s ability to deliver a customized design service. Rather than focusing on selling furniture as most of the competitors do, Davids sells a complete design package. “We are a one-store shop in that we sell custom window treatments, room accessories, rugs and installed wall-to-wall carpets. When someone comes into our store, we are all about understanding their total room and their styles and needs in order to develop a plan so that they can buy to that plan overtime, if need be,” Michael explains. And that design-intensive approach is what distinguishes Davids in the local market.
With the Product part of the marketing 4Ps covered, the audit revealed some key recommendations around the Placement side of the equation. For example, one of the stores displayed a sofa that was set up too close to the front door. The sofa crowded the customer, effectively pushing them back out the door, rather than inviting them in. In retail it is critical to provide customers a 12-14 foot decompression zone upon entering the store where the customer can transition from outside and get ready to explore a retail environment. Davids needed to push back that display and give the shopper room to get oriented to the store.
Next, special attention needed to be paid to what is displayed to the right after the decompression zone. The space to the right of the door is prime, as that is the typical way customers move when they come into the retail environment. Another of Davids’ stores was not effectively using that prime right-of-the-door retail space. Ekorne’s Stressless Collection is one of that store’s top-selling brands, which was displayed in a separate gallery toward the back of the store. Rather than have customers search out that line, it was moved to the highly visible location inside the right front door. In that way, they put their best ‘foot’ forward utilizing that high performing space to its maximum potential.
Pricing & Promotion:
The marketing audit revealed the main areas of weakness and need for improvement for Davids Furniture & Interiors were toward the Pricing and Promotion parts of the 4Ps marketing equation. These were intricately linked because discount pricing had become the mainstay for promotion during and after the recession. A key recommendation arising from the marketing audit was to break the company’s dependence on monthly discount promotions and become more selective with when and what to discount, in keeping with the company’s high-end positioning and design-intensive service strategy. Davids’ business is not to sell discounted or off-price furniture, like its competitors. While everybody enjoys getting a good deal, the sophisticated customers to which Davids aspires are even more eager to get a good value, and that comes along with superior style and design support.
Breaking the reliance on discounting promotions takes time and discipline, as Michael describes, “During the second part of the year we are starting to migrate away from monthly promotions. Our thoughts on this have evolved as we realized we needed to have our image, branding and logo, redesigned website and new advertising together before we could back away from monthly promotions. In the meantime we need to get our name out there for mind awareness and to keep us out in front of customers.” So, as the company backs off direct mail promotions offered to its customer lists and outside lists selected by geography and income levels, they are getting ready with a whole new brand image, new advertising, and new website that will attract the right kind of customers and welcome them into the store.
For that, they brought in an advertising and marketing firm, Verve Marketing & Design, headed by Diane Lemonides, that specializes in the affluent customer segment. Diane finds Davids Furniture & Interiors’ challenges more common than one would expect, “There was a big disconnect between Davids’ external messaging and the products that they had in the stores. So they were attracting ‘tire kickers’ coming in attracted by discounted advertising, looking for deals. They needed a total rebrand, new logo, tag line, color palette, collateral material to appeal to the type of sophisticated clients that their products and services appeal to. The new brand attitude is being communicated on the website, billboards and local lifestyle magazines to pull in their ideal client.”
New Look and Feel
To create a high-style image, the new corporate logo is clean and sophisticated. The new tag line, ‘Building Beautiful Rooms,’ focuses on the experience that Davids delivers to the customer, not the products or things it sells. Diane describes the concept, “We ask ‘What’s Your Style?’ and show a diversity of styles. Here (see ad at top of page 22) we have three chairs, but it could be three case pieces or other items that would attract different types of buyers. And because Davids doesn’t just sell furniture, we came up with language in the ad to describe the service so people wouldn’t feel intimidated about using a designer.” Michael shares, “We wanted to communicate that Davids offers a wide range of styles with three simple, clearly defined silhouettes that convey the message that this is a place that is doing things differently than other stores.”
Because Davids is a brick-and-mortar retailer, billboards will also be used in its three prime geographic locations, but with a simpler style-themed message that a driver can absorb in the blink of an eye.
Next in line for redesign is the website which is growing as a critical component of customer outreach and marketing communications. “Most customers start their shopping online,” Michael explains. “You must make sure that they find you there and that the website attracts them to visit the store. When we track sales we find that the internet is now the third most important reason why people come to Davids. First is still repeat customers or referrals from those customers and second remains driving by the store, but third used to be direct mail. As a result, we keep growing our budget on the internet, including google ad words and a new mobile app that optimizes the website for the increasing numbers of customers who primarily access the internet through hand-held devices.”
Next Generation Challenges/Opportunities
Davids Furniture & Interiors is currently in its 41st year of operation and had recently undergone the growing pains that transferring day-to-day management from the company’s founders to its next generation entails. Michael worked in the business since he graduated from college. In preparing himself for his new role, Michael explains, “It is important to learn all parts of the business, from the warehouse, the office and the store floor in a position of serving customers to progress to higher levels of responsibility, as well as having an extended period of mentoring. Too often there is a temptation to put someone in a management role before they have earned it or had the experience to learn how all the parts of the business run.“
Making sure that a company’s branding and marketing messages are transferred successfully to the next generation of customers is a common challenge companies like Davids face at this critical time, Diane Lemonides remarks. “When we studied Davids initially, the marketing materials had an outdated look and feel which is something I come across often in retail businesses, especially where a company is multi-generational and has shifted to a new generation, like Davids,” she says. “The company hadn’t done a clear review of who they want to be in the future and reflected that in the brand image. Rather, the marketing talked more about who they were 20 years ago. We found the external marketing messaging for Davids wasn’t consistent with who they are internally today.”
She continues, “This is a thread we see in many businesses passed down from one generation to another. If the external messaging doesn’t transfer to the next generation of customers, revenue will still come in the door but as that first generation customer base stops buying, the next generation of customers doesn’t necessarily come in. So the generational transfer must include both the internal and external messaging.”
Diane stresses the importance of Davids’ marketing targeting the specific customer segment for which the brand aims, “Carrying the finest of lines with an outdated message, image and marketing tools never translates to sales conversion, only confusion. Careful attention to branding is critical especially with a more affluent consumer."
As Davids Furniture & Interiors continues to evolve, Michael finds leadership skills are a top priority as he now is responsible to lead the company and its 34 employees to the 42nd year and beyond. “A family business is a lifelong commitment. In the organization you are learning merchandising, sales and other key operational components that are essential to making the organization run smoothly. But you always have to be analyzing how to change things to make them better and that is where leadership comes in. You have to lead people and model a willingness and openness to change. I am a student of leadership, attending leadership training, reading about leaders and how they have done what they have done. Unfortunately too many people resist change and that is one reason why you see fewer and fewer independent retailers. They get too bogged down in their businesses and don’t take time to look at how they need to be changing.”
About The Author: Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer segment. She is president of Unity Marketing, a boutique marketing consulting firm she founded in 1992. Pam received the Global Luxury Award for top luxury industry achievers presented at the Global Luxury Forum in 2007 by Harper's Bazaar. She was named to Luxury Daily's elite list of 25 "Luxury Women to Watch 2013." Contact her at 717-336-1600 or email@example.com.
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