Retail Survival: Do You Have What It Takes?

The grim statistics come up frequently in conversation, in print, in the media. They are enough to dampen the courage of even the most stouthearted. Most businesses don’t even make it out of the starting gate. Its doors are closed within the first year with its owner sent home packing. According to statistics from the U.S. Small Business Association, only about half of new small businesses survive their first four years.

Retailers are especially vulnerable to failure during their start-up years. A study by Dun and Bradstreet discovered that of businesses that eventually fail, 85% do so within the first five years. That makes year five the pivotal ‘make-or-break’ year.

With this in mind, Futon Life has examined dozens of futon retail veterans who have survived past this benchmark. These established retailers defy statistics and have withstood the test of time. How were they able to outlast their competition? What strategy, resources or approach do successful futon stores have in common?

What’s their secret?

Is it merchandise mix? No. Proven retailers vary widely in the number of vendors they deal with. Some buy from up to ten; others deal with only two or three. Some continually change manufacturers, others are still buying from the supplier they started with twenty years ago. Some focus on promotional product; others average ensemble price points between six and seven hundred dollars.

Is there a secret size? Nope. Some successful stores are specialty stores with 700 square feet. Others are mainstream furniture stores with 6000 square feet. Some veteran retailers have expanded their stores numerous times; others are in the same retail space in which they started. Some have added additional stores. Others have both opened and closed additional futon stores.

Does the secret lie in coping with competition? Every store that has survived that critical fifth year has seen other futon dealers open and close up shop at a frightening rate. But going toe-to-toe with the competition isn’t the secret to retailers’ staying power. While some retailers are the only futon store in their market, others battle it out with other specialty stores and mass merchants every day. Some stores are even located right next door to their competition.

Merchandise mix, product selection, location, size, and competition are all important ingredients in the recipe for success. But underneath these factors are two important attitudes that every successful futon retailer surveyed holds. With startling consistency, these attitudes became apparent through interviews with each veteran retailer.

I’m stubborn!

Successful futon retailers are stubborn folk. They approach business with a long term perspective. They are tenacious, willing to ride the emotional roller coaster and the ups and downs of growing a young business. They are willing to stay the course through upticks and downturns. As Terri Treat of Cotton Cloud Futons maintains, “I think I’ve lasted this long because I’m stubborn!”

“You gotta work it,” is Steve Ray’s attitude. His seventeen store futon chain in the San Francisco/Los Angeles market reflects commitment and patience to let The Futon Shop’s customer base and visibility grow. “People think they can make money in a year. They think the product will just sell itself. You have to explain it, sell it, and be willing to educate consumers. Our product is not ketchup.”

Without exception, successful futon retailers surveyed are committed to slowly and deliberately establishing a reputation in their markets for selling quality products and going the extra mile for their customers. Completely customer-service oriented businesses, they bend over backwards for their customers more times than they can count. Their biggest form of advertising is word-of-mouth. They consistently get referrals from other customers and they stand behind what they sell.

Veteran retailers find that being dedicated to quality customer service also means establishing relationships with quality vendors. It is these vendors who ultimately make it possible for store owners to satisfy their customers. Successful retailers choose to buy from vendors who will make good on their product, whose product is consistently of high quality, and for which they can get replacement parts their customers may require.

Patient dedication to building a viable business takes time and energy. Veteran owners believe that many people underestimate what it takes to own a futon business. The promise of being your own boss and making your own hours may dazzle newer store owners, but in reality, successful retailers work long and hard hours. Rather than hitting the golf course, retailers routinely put in seventy to eighty hours a week of sweat equity into their stores.

Established dealers understand that there is an ebb and flow to the futon market and they are stubborn enough to see it through. Many report that they are experiencing a slower market now, but current conditions don’t dissuade them. “The door’s still open!” Michael Smith of Michael’s Futons and Frames stubbornly insists.

Changing with the category

Another attitude that futon veterans hold without exception is a willingness to experiment and flex in response to an ever-changing target. Because competition and other market conditions are in constant flux and as the category continues to mature, successful retailers are the ones who are willing to adapt.

Many veteran futon retailers recall the early days when demand for handcrafted goods was high and they ventured into the futon market with goods made in their garage or basement. A number of these pioneers began as waterbed dealers and made the shift to futons as the demand for waterbeds evaporated.

But now, “futons are like tofu,” remarks David Frederick of World of Futons in Athens, Georgia. “Tofu has become so popular that it is sold everywhere.” Unlike the bland bean curd, however, futon retailers have been able to diversify their marketing efforts through offerings at new price points, in new fashions and with construction from new materials.

Thirty year retail veterans Jack and Sandy Clarke have had to reinvent their store over the years. Begun as an apartment store they are now “The Home and Apartment Shops”, a boutique-style store featuring the ‘Dragon’s Lair’ showcasing a futon gallery, a ‘Jungle Room’ featuring comfort items and a ‘Natural Kitchen’ shop with real wood cabinets, dining and chopping items. “Condos didn’t even exist when we started our store.”

The Clarke’s have ridden the surge in futon popularity. “We’ve grown as the category has grown,” reports Jack, committing more floor space and more merchandising to futon furniture. But they have also had to be flexible as they deal with the growing competition in the futon market. “The ‘big boys’ actually send us customers…we carry niche items that they don’t want to bother with.” Promoting the fashion aspect of futons is another way he adapts to the changing market.

Responding to and being flexible in the face of competition has also been the secret to Jan Carpenter’s success at Third Coast Futons. “Competition can be bad but it can also be a life-saver,” she has learned. “We have always been faced with competition- now it’s online- it doesn’t matter who they are, they will always be there.”

So Ms. Carpenter has responded by moving right next door to an ArtVan store. This Midwest furniture giant advertises “like crazy” and brings an enormous amount of traffic to her area. “It’s scary, but space opened up in the busiest shopping area in town…We’re nervous about such a big expansion, but it’s been a great opportunity.”

Having a flexible attitude towards the new premium futon mattresses has helped Richard Sims at Sim’s Futon in Asheville grow his 14 year old store. He tries to “promote futons in ways not usually thought of.” For example, he is devoting more and more space to displaying premium futon mattresses on platforms and selling them as beds. Retailing at between $329 and $500, these mattresses are a “phenomenal value…they can be compared to mattresses regularly selling at over $1000.” He finds that a number of futon mattress styles are very popular as beds and taps into the interest. After all, “the mattress market is huge!”

Sometimes, however, being adaptable means realizing when something isn’t working. A number of veteran retailers have backed away from attempts to open additional stores. Jack Clarke’s story is typical. “I had four stores at one time. I thought bigger was better…I was very ambitious.” But he realized that running all of those stores wasn’t making him happy. It turned out to be “more work than I thought.” Other retailers, too, have found that the added profits weren’t worth the hassle of traveling between stores, of more employees, more taxes, and more overhead.

Like tofu, not ketchup

Do you have what it takes to beat the odds against new businesses that close their doors within the first five years? Beware: futons are a product that customers can buy anywhere, like tofu. So veteran futon retailers advise you to work hard to service your customers with attention and product they can’t get anywhere else. Remember, too, that futons don’t sell themselves. They aren’t like ketchup that can simply be put on the shelf and profitably be sold. Successful retailers are stubborn, smart and savvy, continually adapting to new products, new competition and new challenges to beat the odds and keep the door open. That’s what it takes.

FL