By Andrea Mainardi

Imagine hearing about a business opportunity that offered the ideal constellation of features: a growing demand, an uncomplicated product, a limited number of competitors, and relatively high and stable profitability. This opportunity doesn’t even take much of an investment to get into. To top it off, let’s say selling’s a snap and customer service problems are minimal. Too good to be true, you’d probably say.

Uncovering the Scoop

Yet that’s more or less how retailers described their cover business when we asked them last month. After conducting a nationwide telephone survey of a broad base of both specialty and other futon furniture retailers, we learned a lot about the product selection, what’s hot and what’s not, what works and what doesn’t, and how much they charged for it. What we were looking for was firsthand information about the trends, opportunities and challenges of the cover or fashion aspect of the futon retailer’s business. What we found out was a lot of good news. What lingered on our minds were some questions about the next phase of futon cover marketing.

The Cover: A Retailer’s Best Friend

Futon covers are a growing and profitable part of retailers’ annual trade. They bring in an average of one fifth of a retailer’s annual gross revenue and carry a relatively handsome margin. “It’s a captured part of business,” explains Anne Mali, owner of Itsa Futon in Port Richey, Florida. “Everybody who buys a futon buys a cover. And in order to buy a good one, they’ve got to buy it here.”
It is precisely because the product line is not a commodity that it is so valuable. Unlike other home furnishing accoutrements often carried by specialty stores, quality covers with matching accessories are not available at furniture, gift, or department stores. In fact, retailers told us that they not only sell to people who purchase frames at their store. Many customers want to purchase covers for frames they purchased elsewhere. They come to a specialty store to choose from a broad selection of colors, patterns and quality fabrics.
Covers are also a valuable product for the retailer because they enhance the image of the futon product. For example, the beautiful fabrics that adorn futons in a store window offer a strong emotional appeal. They’re often what cause a customer to stop, look, and eventually walk into a store. “The quality and design of today’s fabrics and covers allow us to better compete within the furniture business,” commented Kyle Cherek, owner of Innovative Spaces in Brookfield, WI. “In fact, these fabrics are so great we even successfully advertise under upholstery fabric in the yellow pages.”
The wide selection of patterns, colors, and fabrics also make the futon a more versatile piece (of furniture). I think that selling covers brings out the decorator in the retailer,” commented Anne Mali of Itsa Futon. “You can really work with the customer to help them find the right look for so many different decors.”

Choices
Long gone are the days of choosing among solid shades from a handful of different manufacturers. Today’s retailers can choose from over twenty-seven different manufacturers. And when you consider that a typical cover manufacturer offers between 100-150 options (a few with even twice that number), the consumer can potentially choose from among more than 4000 different designs!
Our survey found that the average futon specialty store carries seven lines and approximately 600 different design choices between swatches and covers on hand. Over 20 percent said they offer over 1000. “We find that the consumer wants as large a choice as possible,” said Peggy Danson of Casual Room in Jacksonville, Florida. “In fact, we now carry about 800 different designs. Our goal is offer 1000 before the end of the year in order to offer the largest selection of futon covers in Northeast Florida.”
And offering a large variety does appear to provide a competitive advantage. Our research showed that the greater the number of designs offered, the larger the retailers’ overall cover sales. One Southern retailer summed it up: “Customers are very particular. They want to look through as large a selection as possible to find exactly what they want.” A number of retailers mentioned that they explicitly advertise the breadth of their cover selection in order to draw customers.

Custom or Factory Selects?

Retailers choices are clearly not limited to custom designs from swatch books. With rare exception, retailers stock and sell factory selects, odd lots, seconds or discontinued items which are selected by the manufacturer and shipped based on retail orders. In fact, 83 percent of retailers offered factory selects to their customers. These factory selects allow the retailer to offer the customer a better value, a less expensive product, and the opportunity to take the cover home the same day. This availability can make the difference between selling and not selling a cover. For those retailers that carry them, factory selects represented 47 percent of their total cover sales.
Despite significant sales of factory selects, many retailers are well aware of the downsides. Customers who purchase factory selects cannot purchase matching accessories such as pillows or bolsters and retailers often feel stuck with unpopular styles in inventory that they didn’t choose themselves. For that reason, 17 percent of retailers surveyed chose not to carry factory selects.

Who’s Buying What - and Why?

Like the demographics of the futon buyer, the typical cover buyer is a woman between the ages of 35 and 50. Surprisingly, most retailers reported that the customer’s choice of cover is based primarily on color and design rather than price. Price was ranked second, closely followed by machine washability.
But what design does the typical customer choose? Our research showed that the most popular style is contemporary. More specifically, the most popular styles are “casual contemporary” a la Pottery Barn, rather than the more boxy, geometric or artsy designs popular in the eighties. Traditional styles ranked a close second, with many pointing to the growing popularity of the mission or craftsman style.
There are a number of styles reportedly on the decline. While still quite popular, Southwestern designs are generally falling from favor, as are handpainted, floral, and country designs.
What about the new leather offerings? Opinions were evenly split. Just over half of those surveyed (52%) felt that leather covers would sell and actually had pieces on order based on customer interest and their own interest after seeing the product in New Orleans.
Skeptics fears about leather were based on the retail price point: $300-$400. “Even our customers who might want it won’t pay the expensive price,” commented Brendan Huhn, owner of Urban Accents in Alexandria, VA. Others expressed concern that customers wouldn’t feel comfortable with leather because they don’t know how to care for it. Still others questioned the compatibility of leather and the futon design. “I’ve only have one expensive frame that looks like leather belongs on it,” commented Gordon Simons, owner of Bedding Loft, Waterbury, CT. “It’s a very masculine wrought iron frame that would be perfect in a den.”

Merchandising

Inventively displaying, inventorying, and pricing futon covers allows retailers to differentiate themselves, gain a competitive advantage, and increase their business.
With regard to displaying samples, sample books, swatch rings, and sample racks are the stock of the trade. According to Bernie Berch, Arise Futon, the sample racks are quite effective. “People gravitate towards them and, at a glance, realize that they have many beautiful options to choose.” The racks and swatch books also offer the added benefit of being easy to move. “We like to change the look of our showroom frequently,” explains Allen Jackson of Futon Furniture Company in Metuchen, NJ. “We primarily use the sample books because we can easily rearrange them.”
But there are some obvious liabilities to the racks. They take up valuable floor space - the only place for the frames. “You can get great racks from the vendors - but clearly there’s not enough room to put out all of these racks.” said a Mid-western retailer. “You need a way to display more samples in less space.”
So where does one put all those samples? A number of ingenious retailers shared their creative solutions with us. One retailer who keeps 200 covers on hand folds the covers lengthwise and hangs them on children’s pants hangers that hang on a chrome closet pole. The poles are in a dedicated cover room. Chet Stoler, owner of Futon Gallery, Roseville, MN, explains. “We have a cover room in each store that we made ourselves. Based on our experience, what the customer sees, he buys. And the larger the sample, the easier it is for him or her to feel comfortable with their selection.” A number of retailers solved the space problem by hanging the racks or sample books on the wall. Kyle Cherek of Innovative Spaces designed his own racks to more efficiently display samples - and to differentiate his store from other retailers’. “We hinged three oak doors together like a large screen. We then attached poles to the doors and hung the swatch books from them. It’s a lot better looking than the dealers’ racks and, unlike those racks, it allows customers to look at many samples at one time. We find that the rack itself attracts customers.”
Another merchandising issue arises when the customer wants to take swatches home to see them in the context of their existing decor. Letting the samples out isn’t the issue. It’s getting the customer to return the swatch that’s sometimes tricky. Store policies range from taking the customer’s telephone number, to taking a deposit of five dollars, to taking a credit card impression for $25.00. “We do not take a deposit, but we always ask for the customer’s name and phone number,” comments Dale Dean, owner of Dean’s Sleep in Lei, New Hampshire. “It’s not that we have to call (the customer) in order to get the sample back. It’s just that we’ve found it’s a good way to get the customer’s mailing information. Then we can follow up on the sale - and send them promotional mailings.” Other suggestions included offering customers the option of taking any on-hand cover they liked home with an open invitation to just return the ones they didn’t want. The retailer charges all the covers with a credit card and just issues a credit when the customer returns the selections they decided not to keep.
What about after the custom cover is purchased? Does the retailer ask the vendor to drop ship directly to the customer or does the customer come back to the store to pick it up? We found retailers who did both. It’s really a question of whether the retailer wants to offer the convenience of the drop ship and give up the advantage of having the customer come back into the store to pick it up, and possibly gain the opportunity of making another sale.
How much to have in on-hand inventory is reportedly the trickiest merchandising issue. The futon retailers we spoke to had a wide range of full covers on hand - from 10 to 1500. On average, retailers keep 200 covers in inventory. David Smith, owner of Celestial Futons in Ann Arbor, MI, explains. “We keep about 500 factory selects and custom covers on hand. We have to. So many of our customers want that immediate gratification. Or they have an immediate need. People come in saying ‘Company’s coming. We need something today.’ If we didn’t have what they wanted in stock, we’d lose the sale.” Allen Jackson of Futon Furniture Company, agrees. “A lot of the business we have is cash and carry. Without a doubt, keeping a lot on hand is a competitive advantage.”
Kyle Cherek, of Innovative Spaces, disagrees. He keeps about 10 full covers on hand and doesn’t carry factory selects. “Why tie up inventory and money? My customers can get anything they want in five to seven days.” Dave Maserjian, owner of The Rare Bird in Wappingers Falls, NY, doesn’t think he’s missing any sales either. “The fact is, most people are willing to wait for something they really like.” Minimally, most retailers keep the patterns they have on the floor on hand. Statistically, our research said retailers who had the made the largest commitment to covers with on-hand inventory and swatch programs sold the most covers.
Nationwide, the price for a full size futon cover also varies widely. When asked to categorize their average selling price, 41 percent of respondents selected $60-$89. 40 percent of respondents selected $90-129! In general, the higher the percentage of factory selects in a store’s cover sales, the lower the average price, since the majority of retailers offer factory selects at a lower price.

Keeping the Customer Satisfied

By and large, when asked about customer service issues we could practically hear the retailer smile. “It’s amazing,” summed up Laura Anno at The Futon Store in Memphis, TN. “There are customer service problems with just about everything else. Covers are great. I wish every product we offered were this easy.”
Although very rare, a few retailers mentioned a few problems and offered some simple solutions. “When someone comes in with a popped corner because they pulled too hard, we just ask the seamstress we contract with to take care of it,” explains Rachel Dortch, owner of Beyond Futons in Charlotte, NC.
According to Sharon Graves at Arcata Exchange in Arcata, CA, “Sometimes there’s a problem with fit because of the growing number of mattress choices nowadays. Staff need to be trained so they can help the customer order the cover which has corners deep enough to accommodate their mattress thickness.”
When availability becomes an issue for impatient customers, Chet Stoler at the Futon Gallery in Roseville MN, has an easy answer. “We lend the customer a cover to carry them over. But that’s really an uncommon problem since we only work with manufacturers who ship within two to three weeks.”
For most retailers, returns and exchanges are no problem. Bernie Berch from Arise Futons, however, has a more proactive approach. “I found that the most common problem is that customers order the wrong size cover. They think they have a queen when they have a full - or vice versa. Since I don’t allow returns or exchanges, I strongly suggest that they go home and measure the dimensions of their futon before ordering a cover.”

Building a Better Mousetrap

Our research has led us to be optimistic about the futon cover business and the opportunities that have developed as a result of higher quality fabrics and the widening selection of sophisticated designs. Retailers are benefiting from this part of the business, which delivers a solid profit to hassle ratio. Customers are benefiting from high quality materials and a selection that allows them to create their own unique style.
Are there ways to improve on this good thing? What does the growth of this segment tell us about potential new ways to market futons?
One patent opportunity emerges when the right questions are asked. The retailers we surveyed reported that only about 10 percent of cover customers are buying replacements or seconds.
Why is this the case when the ease and economy of changing covers is clearly one of the most valuable benefits of owning a futon, and is one of the most important advantages futons offer over upholstered furniture? For the price of a new sweater or blazer, a customer can update the look of their room the way they would their wardrobe. Think of how much it costs to reupholster a couch! Collectively and assertively promoting this benefit would obviously increase cover sales. But more importantly, it would also enhance the value of the futon over conventional sofas and bedding.
Anne Mali of Itsa Futon offered part of the solution. “We need to promote the ease and economy of changing the cover. I think people need to be educated. We remind all of our customers that you can easily change the cover and by doing so change your whole decorating scheme.”
One of the first steps in promoting replacement covers is to collect the names and addresses of your cover customers. And then why not hold a cover sale once or twice a year - prompting a return visit by sending a postcard or mailer to these folks? It reminds them that their futon cover can be updated as easily as a comforter and gives them a time limited incentive to do so.
Let us know how our suggestions work. And if you’ve got others, give us a call or e-mail us. Let’s keep a good thing growing strong!

Andrea Mainardi is a freelance writer who works out of her new home in Providence, RI. As a new home owner she boasts some serious, first hand experience regarding decorating a new place-on a budget. This is her first article for Futon Life, and I know she would love to here from you.-Editor