The deep-seated sofa transformation
Much like with buying a new family car, test-driving a sofa at your local retail park or showroom used to be a mandatory part of the purchase process. It invariably involved grotty teenagers or naff middle-aged managers steering you through unappetising combinations of faux leather, ‘top of the range’ candyfloss pink suede, and confusing (if not immoral) credit payment options.
Today’s experience is very different. Depending on the retailer’s omnichannel maturity, families browsing new furniture from the comfort of their current sofa can take photos of their living room, upload them to the website, and place these virtual products into their own virtual homes.
Furniture retailers offering this service include IKEA, Loaf.com and DFS (with various levels of success – see reviews). Sofa.com also helps you to answer the anxiety-inducing question of whether your item will fit through your doorway/up the communal staircase by offering a simple, and very nicely branded, printout for the less DIY native amongst us.
Can I just couch-surf?
It isn’t recommended. Made.com’s original business model was to ship direct to customers, undercutting retail park and high street competitors. Yet it launched its first ‘endless’ showroom in 2015 after realising that customers needed to try their furniture before accepting the considerable price tag.
Creating a satisfying omnichannel journey is critical, says Sofology’s Chief Marketing Officer Andy Leadbetter. “We know that 43% of people end up dissatisfied with their sofa choice, so, that's why time spent in store with our fantastic team of Sofologists is such an important experience. The time spent in store, learning about and understanding customers' needs and wants helps us to identify sofa ranges with carefully designed features that deliver benefits to match expectations and lifestyle choices.”
Julian Neal, an interim who has worked in multichannel roles for Sofa.com and for The Lounge Co., told me that direct shipping is a smaller part of the market than you might imagine. “Research indicates it’s as low as 5%, and that represents the lower price market segment.” According to Julian, using online sales figures to weigh the importance of the digital experience is also dangerous: “the website plays a critical role in creating traffic that will then flow to the store. For many retailers it’s a challenge to recognise this and simply attributing orders to the channel the transaction was taken won’t accurately reflect the importance of the digital role in this omnichannel piece.”
Cushioning the blow?
Made.com have replicated their London showroom model in Birmingham and in the North, and it is working phenomenally well: they reported revenue of £127m in 2017, up 40% year-on-year (YOY). Made.com describe themselves as ‘anti-ordinary’, an identity to which many millennials have an affinity. They have just raised another £40m of equity from new and existing investors, challenging the commonly-held view that the furniture industry cannot withstand inflationary pressure.
In fact, this March’s YOY figures showed furniture to be the highest performing retail category overall, and fifth in terms of non-food retail online growth. This article goes into more detail, if you are interested.
Harveys, by stark comparison to the Made.com operating model, has 161 stores nationwide. It teetered on the edge of collapse over the Christmas period before a two-year independent finance facility was agreed, hailed by the then incumbent UK boss Stuart Machin as replacing the floundering Steinhoff’s undisclosed investment “in full”. Stuart Machin has now departed Steinhoff to join Marks & Spencer. Under the ‘Why Harveys?’ section of their website they state “because [they are] “wholly owned by Steinhoff International and as such we have the backing and infrastructure of a huge global furniture leader”. I’m not sure that shows it’s listening to the voice of the customer…
A few weeks ago, Debenhams announced a partnership with Swoon Editions, where the latter would occupy redundant store space in a win-win scenario. Nicki Lynch, chief customer officer at Swoon Editions commented that “our home-obsessed customers are increasingly requesting that they want to see our furniture in real life. In an online-only world it is harder to bring people into your brand in the same way you can with a physical store”. Can the department store-turned-showroom offering accelerate Swoon Editions’ already phenomenal success? It seems very likely.
Can the retail park bounce back?
DFS, with its 118 stores, posted an impressive 4.3% rise in sales (up to £396m in the 26 weeks to Jan 27th). Boss Ian Filby admitted this was mostly due to its purchase of Sofology, and indeed its profits have dropped in the interim, but that’s expected given the integration costs involved. Filby’s announcement was happily taken by the market, where DFS shares rose by 7.8%. Their latest advertising campaign is brilliant, and they deserve for this investment to pay off.
DFS can and will exist alongside online-skewed offerings where Warren Evans and Feather & Black failed against the mattress-in-a-box providers Casper, Simba and Eve.
What are you sitting on? Not a nest egg!
The latest statistics show that only 64% of Britons own homes, the lowest figure since 1986. Unsurprisingly this has influenced the home furnishings market, as millennials are less likely to invest in items that they have to schlep across town every 16 months. Incidentally, the e-furniture business Floyd spotted a business opportunity in the USA, creating a flat-pack furniture brand for urbanites to rival IKEA’s hegemony. Unlike the Swedish alternative, Floyd’s range is easy to disassemble, so it can move out when you move out.
When millenials do purchase their first home, they are likely to go for something stylish and comfy. I’d be very surprised if Made.com, Loaf et al didn’t make a considerable chunk of their sales from single/double occupancy first-home owners who are prepared to invest in quality, having spent a decade or more sitting on scratchy fabric upholstery.
Hard work & Hollywood heartthrobs
The nation is also working harder than ever, though sadly less productively than ever. We are therefore happy to pay for comfort at home. Time is short: get that Deliveroo order in - £35 but no worry - and put your feet up. You’ve only got 10 hours before you’ve got to be back in the office. Sofology bang-on-targets this comfort craving with its sponsorship of GoggleBox and its ad campaign showing Hollywood’s Owen Wilson ‘feeling at home on a sofa he loves’. According to Sofology’s Leadbetter, Owen Wilson was the perfect choice for the campaign. “Owen Wilson is a super busy, jet-setting A-lister, with limited time to spend at home, demonstrates this feeling and how important it is to him.” Whilst I don’t quite have Owen’s hectic travel schedule or A-list status, I identify with his view that sofa time is sacrosanct in the modern working world.
Unlike the Grocery sector, selling sofas is not a race to the bottom. There is still space for well-branded and well-oiled big box retailers. There is also still a huge opportunity for bespoke, designer and high -end products with a stronger digital footprint. Digitalising the in-store experience will be paramount to survival; as always, the differentiator is the customer journey. It can still be an exciting and lucrative space in which to play.