Download pdf - Can Interior Design Stores survive the ever increasing competition from online stores?

CAN INTERIOR DESIGN STORES SURVIVE THE EVER INCREASING COMPETITION FROM ONLINE STORES?

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CONTENTS

Abstract ................................................................................................................................................... 4

Objectives ........................................................................................................................................... 4

Definition of Stores ................................................................................................................................. 5

Traditional Store ................................................................................................................................. 5

Interior Design Store ........................................................................................................................... 5

Online Store ........................................................................................................................................ 5

History of Internet Shopping............................................................................................................... 5

The Impact of Online Shopping............................................................................................................... 7

Online Market Share ........................................................................................................................... 7

The Changing Retail Landscape .......................................................................................................... 7

Multi-channel Retailing ........................................................................................................................... 8

What is Multi-channel Retailing? ........................................................................................................ 8

How to implement a Multi-channel Maturity Model ......................................................................... 9

The power of Data ............................................................................................................................ 10

Is there a limit to online growth? ..................................................................................................... 10

Pure-Play Moving to the High Street .................................................................................................... 11

Oak Furniture Land ........................................................................................................................... 11

Made ................................................................................................................................................. 11

Other Issues .......................................................................................................................................... 12

The Green Issue ................................................................................................................................ 12

Location ............................................................................................................................................. 12

Price .................................................................................................................................................. 13

Promotions ........................................................................................................................................ 13

Supplier Exclusivity............................................................................................................................ 13

Store Experience ............................................................................................................................... 14

Windows ........................................................................................................................................... 14

Retail Design ..................................................................................................................................... 15

The Grey Matter ................................................................................................................................ 15

Interior Design Start-ups Businesses .................................................................................................... 16

EBay Accelerated Growth Programme ............................................................................................. 16

Not on the High Street ...................................................................................................................... 17


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Small Independent Interior Design Stores ........................................................................................ 18

Store 1 ........................................................................................................................................... 18

Store 2 ........................................................................................................................................... 18

Store 3 ........................................................................................................................................... 18

Interior Design Stores with Multi-channel Operations ......................................................................... 19

Conclusion ............................................................................................................................................. 20

I Want it Now .................................................................................................................................... 20

The Value of Consultancy.................................................................................................................. 20

There’s More to Exclusivity ............................................................................................................... 21

Own Range ........................................................................................................................................ 21

Invest in Multichannel ...................................................................................................................... 21

Store Design ...................................................................................................................................... 22

Can Interior Design Stores Survive The Ever Increasing Competition From Online Stores? ............ 22

Content of Figures ................................................................................................................................. 23

Front cover: ....................................................................................................................................... 23

Document: ........................................................................................................................................ 23

Bibliography .......................................................................................................................................... 23


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ABSTRACT

In recent years traditional retail stores have been facing tough competition from online stores.

Online sales now account for approximately 10% of retail sales and is predicted to increasing year on

year. The recession has hit the retail sector hard and this, combined with the ease at which

consumers can compare products and prices online to search for the best offer have been reported

to be major factors in shop closures. Whether a small independent store or a large High Street

name, retailers need to consider their options to compete against online stores as a result of

changing shopping habits. Customers who choose to use retail stores expect to be able to carry out

research online prior to purchasing. As a result, retailers can no longer charge a premium for

products without considering how much their competitors are charging for the same or similar

items. The success of online trading has significantly affected specific markets such as books and

electrical goods where direct comparisons can be easily made but with the ever increasing

advancement in technologies no retail business should remain complacent.

Town Centres in traditional market towns are losing their local shops and City Centres and Retail

Parks are filled with big High Street names. Is online trading further undermining the survival of

Independent stores and Town Centres, or can the internet transform businesses regardless of size?

Interior design stores will often display new lines of wallpapers, fabrics, furniture and furnishings

from suppliers and have a library of books for customers to browse through. In recent years it has

become apparent that many customers will use these stores to make their selection and then order

them online through discounted stores, making it ever more difficult for ‘niche’ retailers to maintain

a reasonable profit margin.

The purpose of this study is to establish whether independent Interior Design stores can survive the

digital age with the increase of pure-play (online only stores) and the rapidly changing retail

environment.

OBJECTIVES

Examine statistics relating to online sales

Compare overheads associated with both retail stores and online stores

Evaluate shopping trends to determine how multi-channel retailing can benefit Independent

Interior Design stores

Determine how suppliers and retailers can work together to protect brands and profits

Establish areas where ‘bricks and mortar’ stores gain the advantage over online stores

Conclude how Interior Design shops can offer a personal shopping experience and deliver a

customer focused service


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DEFINITION OF STORES

TRADITIONAL STORE

A traditional store can be defined as a shop where businesses’ display and sell goods to the general

public. This could be a local shop, a Town or City Centre store or a retailer in an out of town

shopping centre or Retail Park.

The cost of maintaining a retail store is high, with rent and rates being the main overhead. This can

vary enormously due to location but in any case would be a significant cost. Other fixed overheads

consist of staffing, heating, lighting, telephone and IT systems costs. This is before any other sundry

costs have been considered such as maintenance, advertising, marketing, transport, professional

services and, more recently, website management.

INTERIOR DESIGN STORE

For the purpose of this study an Interior Design store is considered to be a traditional ‘bricks and

mortar’ store that displays and sells design-led interior products such as furniture, accessories,

flooring, lighting, wallpaper and paint. These types of stores are typically established by individuals

with a passion for, or background in either in furniture or interiors and are often referred to as an

independent store. They may offer interior design services such as - custom made window dressing,

CAD assisted furniture plans or a complete project management service.

ONLINE STORE

Online stores have a short history and are a product of the dot.com era of the 1990s. Initial financial

outlay associated with traditional retailing, such as solicitor’s fees for arranging leases, the fit-out of

the retail premises and upfront payments for rent and stock was all but eradicated. The success of

online stores and the low start-up costs inspired many would-be entrepreneurs to ‘set up shop’,

which could viably be started from home.

The irresponsible pricing strategies of some of these new inexperienced traders would prove to be

costly to independent retailers who need to maintain a health margin to meet the overheads.

HISTORY OF INTERNET SHOPPING

Online shopping was invented and pioneered by Michael Aldrich in the UK in 1979. It was first

introduced as a business-to-business system used mainly by travel agents, car dealers and finance

companies. The idea of online shopping was developed from this when Tesco experimented with an

online shopping system in 1984. In 1990 Tim Bermers-Lee invented the World Wide Web as a way

of accessing information globally, but it wasn’t until 1995, when Amazon opened for business that

online shopping really began to take off. Originally trading from a garage in Bellevue, Washington,

Amazon has grown to be a world renowned company and one of the biggest online retailers.

From 1995 to 2000 internet shopping advancement was perceived as a phenomenon with huge

investments being made in what was collectively known as the ‘dotcom’ companies. This eventually

resulted in the dotcom crash in 2000, as non-profit making companies went bust and share prices

plummeted. This was the result of over confident investments in internet businesses that were

either trading at a loss or making very little money.


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Although this was a big setback for many online businesses, shoppers had begun to appreciate the

convenience of online shopping and so online stores were definitely here to stay. The technology

was now available and small businesses were exploiting the cost advantage of running an online

store, often winning sales at the expense of traditional stores, enticing customers with lower prices.

FIGURE 1


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THE IMPACT OF ONLINE SHOPPING

ONLINE MARKET SHARE

In a recent report the Centre for Retail Research put the size of the online market at 12% of sales in

the UK for 2011, compared with 8.6% for 2008. This figure is estimated to rise to 13.2% for 2012.

These figures amount to a 14% growth in the market year on year. (Centre of Retail Research, 2012)

Figures reported by Mintel were slightly more conservative with a total of 8.5% for 2011 and a

growth of 13%. Half of these sales were through multichannel retailers and the other half through

‘pure-plays’ stores. (Mason, 2011)

THE CHANGING RETAIL LANDSCAPE

There was an explosion of new retail shops opened in the 1980s and 1990s as consumers had more

disposable income and retailers responded by opening new stores. However, the economic

downturn and loss of sales to online stores over the last decade are often reported as being major

causes for store closures. Many Independent stores have failed and some high street stores are now

reducing their property portfolios in a bid to control costs. The current tendency is to have fewer

stores and to back this up with a strong online presence. This has resulted in empty properties in

many towns and cities leading to a general feeling that traditional shopping is doomed.

In a recent Retail Week report exploring the future of Britain’s high streets it was stated that shop

vacancy rates stood at 14% in 2011 and that multiple retailers closed 14 stores a day on average

across the UK. This situation is likely to get worse by 2015 when 50% of store leases will expire and

retailers could choose to dispose of underperforming stores.

The changes have resulted in many secondary retail units remaining empty or being occupied by

discount stores and coffee shops. This could be seen to have a damaging effect on Independent

Interior Design stores who are more likely to be situated in these secondary locations.

Whilst several retailers are reducing their retail space, others are resisting the trend for shop

closures capitalising on their quantity of stores to provide service points for click-and-collect which

can in turn generate sales.

However, predictions still remain that

in the next decade demand for retail

space will be substantial reduced.

Landlords are now looking at new ways

to fill their empty properties leading to

the popularity of pop-up stores, with

short term or rolling leases providing

more flexibility. This provides an

opportunity for independent stores to

negotiate more favourable terms and

rents.

FIGURE 2


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MULTI-CHANNEL RETAILING

WHAT IS MULTI-CHANNEL RETAILING?

Neil Mason, Head of Retail Research at Mintel explains:

‘The essence of multi-channel retailing is making the retail offer accessible whenever, and

wherever, consumers want to shop. This raises important issues about the future role for

stores, especially how much space and how many stores retailers need to deliver a multi-

channel offer, and also requires retailers to ensure consistent experience no matter how

many, or which, touch points they use.’ (Mason, 2011)

This can be defined as various ways for consumers to research and purchase, and could be a

combination of some or all of the following:

In-store

Online stores

Catalogues

Smartphone and apps

Social Media

Online is rapidly becoming the preferred

method of research for consumers, although

the majority still prefer to buy in-store. Store

catalogues are still popular and are likely to be

picked up in-store and used for further research

at home.

Smartphone shopping is expected to rapidly increase as technology progresses and more consumers

own the devices. The disadvantage is that they can be used to compare prices whilst in-store, which

is a problem facing retailers. However, advantages can be gained with the GPS feature on these

phones – information and offers can be sent to the customer when they are in the vicinity of the

store. Also, store dedicated apps can encourage store loyalty and provide a convenient method of

shopping.

Social media sites enable customers to click through to online stores to browse and purchase.

Although this has so far produced limited results, its use is predicted to grow in the future and is

seen as an area for retailers to gain exposure by offering reviews, advice and to engage with the

customer in a creative way.

Online conversion rates still remain relatively low, which could be indicative that online shopping is

still evolving and investment in this area is still required to maximise online sales. Click-and-collect

services, hassle free returns and ordering out of stock items online are areas to be considered when

looking to improve the multi-channel experience.

Retailers need to respond rapidly to changes in the market and the way consumers shop.

‘No sooner have retailers implemented strategies to integrate online into their store-based

businesses than new technology has shifted the goalposts as mobile devices are now creating new

FIGURE 3


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opportunities for ‘fast shopping’ – shopping on the move and social media generated shopping,

which requires retailers to devise and create imaginative and relevant shopping environments, both

real and virtual, for today’s technology –focused consumer.’ (Mason, 2011)

Traditional stores that have effectively implemented a multichannel business are currently gaining

an advantage over pure-play retailers. Physical stores can facilitate a click-and-collect service and

can also serve as a return point for online purchases without any cost or inconvenience to the

customer. On the other hand pure-play stores may only have one distribution centre to serve

customers from.

Multi-channel retailers are becoming the winners of the digital age as shoppers are unlikely to

distinguish between purchasing online and in store - to them it’s just shopping.

HOW TO IMPLEMENT A MULTI-CHANNEL MATURITY MODEL

A multichannel maturity model is the system used to simplify and complete the journey from a

single channel retail model to one that provides multichannel retailing in a proven systematic

approach. This involves complex analysis of all aspects of the business from branding through to

marketing and the way e-commerce is delivered. Each area needs to be considered individually as

well as how they work together to produce a customer focused business model to be accessed and

maximised through each of these channels. The crucial objective is to provide a flexible and

seamless shopping experience whether the customer visits the store, browses the website or uses a

mobile device.

This advanced approach is best implemented by a specialist consultancy business experienced in

channel integration and needs to be customised for each individual business.

Outlining the evolution of the multi-channel maturity model Deloitte demonstrates how a retailer

can be measured to establish their position in the market. To become a ‘truly multi-channel retailer’

the objective is to score high on both ‘breath of offer/service and number of channels’.

FIGURE 4


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Deloitte specifies four key requirements to become truly multi-channel to be:

Online channels need to be developed to offer a full and compelling proposition in terms of

product range, price, promotion, availability, service and delivery

To be fully integrated with stores in terms of click-and-collect, order management, stock

visibility and returns

Infrastructure needs to be improved to deliver all capabilities in a repeatable and cost

effective way

All channels and systems need to integration with mobile technology developments and

usage

With the overall goal being to provide consistency across channels, changes can be implemented in a

discrete and effective way by addressing specific areas individually to repair any operational gaps. In

the current economic climate any investment needs to be maximised to achieve a reasonable return.

It is therefore vital to build a programme which targets the highest value areas quickly whilst

ensuring longer term objectives are addressed and reflected within the plan.

What should not be overlooked is the fact that multi-channel is now at the forefront of retailing and

to ignore the advances in this area could prove to be detrimental to smaller independent retail

businesses.

Large and medium sized retailers have set the standard, investing in their multi-channel business

models. Websites and e-commerce services are now readily available for a realistic financial outlay

making it accessible for all businesses, regardless of size.

THE POWER OF DATA

Online stores have an advantage over traditional stores when it comes to collecting data. It can be

difficult for store-based retailers to collect personal information when customers make a purchase

in-store and pay by cash or card. On the other hand, online stores collect customer data in order to

complete a transaction. They can also monitor customers search behaviour prior to purchasing.

Multi-channel retailing creates an opportunity to collate data and can therefore use this facilitate

this information to implement targeted marketing strategies. (Jie Zhang, n.d)

IS THERE A LIMIT TO ONLINE GROWTH?

Although online retailers market share has been increasing steadily for the past decade, a recent

slowdown could indicate that there is a limit to its’ growth which may soon be reached. As multi-

channel is becomes the focus of retailing, it is becoming more difficult to differentiate between

where the purchase is being made, with customers researching online and buying in-store or

researching in-store to buy online. Traditional retailers have caught up with the pure-play stores,

and pure-play store are now branching into ‘bricks and mortar’ stores. The figures are likely to

amalgamate as traditional stores sell more online.


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PURE-PLAY MOVING TO THE HIGH STREET

Whilst traditional retailers develop their online offers, some pure-plays are responding by opening

physical stores.

OAK FURNITURE LAND

Oak Furniture Land, established in 2007, is one of the UK’s fastest growing private companies, and

has seen a 50% repeat growth. Having established itself as a successful online store, the first store

was opened in 2009 in response to customer demand. It now has seventeen retail outlets with plans

to more than double this figure by 2014. From profits of £3.8m last year, this is expected to jump to

£10-£12m this year.

Although Oak Furniture Land’s success was derived from a pure-play business model, its rapid

growth is down to the introduction of traditional stores on retail parks. The roll-out of stores has in

turn increased online sales which surprisingly still account for 40% of turnover. The ability to change

to meet market demands - from online store to physical retail outlets, and the power of multi-

channel retailing, has proved very lucrative for the company.

MADE

Made.com claim to save you 50-80% off High Street prices. Launched in 2010 with a £2.5 million

investment and backed by MyDeco founder, Brent Hoberman, their reputation is built on supplying

designer furniture and accessories through an online store. Their website explains how they work:

‘No warehouses. No physical stores. No middlemen. We're just a passionate team bringing a

new way to buy furniture: cutting out the fuss so you can get beautifully made pieces at a

price to suit you.’

In stark contrast to the majority of online retail stores who offer speedy delivery, Made.com

specifies a lead time of 2-12 weeks. It’s marketed as a pay-off with the customer, who is getting

designer furniture at discounted prices and it is vital to the structure of the business. They work

with 50 manufacturers, mainly in China and fill forty foot containers with goods to satisfy customer

orders. Any surplus items on the container can be sold ‘en route’ to the UK by lowering the selling

price, ensuring that goods are pre-sold prior to arrival in the UK. (Retail Insider, 2012)

They recently won the ‘Home and Home Improvement’ category in the Online Retail Awards (ORA)

2012, having previously won the title ‘Online Retail Launch Site of the Year’ in 2011 with the

accolade, ‘Customer feedback, opinion, engagement, and crowd sourcing of product point the way

to future retailing right now. (Online Retail Awards, 2012)

Following on from the success of the business, the company is set to open a physical store in London

later this year.


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OTHER ISSUES

THE GREEN ISSUE

In a report by the Centre of Retail Research, Retail Ethics it implies that many consumers believe that

it is more ethical to shop online. Some may claim that having something delivered rather than

driving to a shop is more environmentally friendly. If you are buying a number of items in one

shopping trip it may be more environmentally friendly to go shopping rather than have multiple

vehicles making deliveries to your door. On the other hand, if you live in the country it may be more

ethical to have home deliveries rather than driving a long distance to pick up a few items.

Of course, there are many other facts to consider at this point. In most cases the delivery or

collection of a purchase is the last stage of the journey in the supply chain. The item may have

travelled from the Far East, in which case the final journey could be considered irrelevant to the

case.

Home delivery requires the use of excessive packaging to reduce the risk of damages, but again, this

may be considered nominal in comparison to packaging needed to transport goods in containers

from overseas.

If consumers are concerned about environmental issues, the best practice could perhaps be to shop

with retailers who have environmental policies in place that are available for customers to research

prior to purchasing. Many manufacturing companies are keen to work towards reduce their carbon

footprint or becoming carbon-neutral and will detail this on their website.

However, some online stores have jumped on the eco band-waggon declaring that their products

are sustainable without any supporting evidence; selling mass produced imported goods that can be

purchased on any high street. If in doubt, potential customers should research further to satisfy

themselves of the claims made by suppliers.

Buying British could be considered more ethical than buying imported goods, particularly from the

Far East, as they have a much shorter distance to travel.

There are many other issues concerning ethical shopping such as, fair working conditions,

environmental issues, animal welfare and pollution. Therefore, the argument for whether online

shopping is ‘greener’ than shopping in-store should be considered irrelevant.

LOCATION

Location has always been considered an important factor when setting up a retail business.

Rents in premium locations are notoriously high and prohibitive for most small businesses.

Landlords are unlikely to consider independent retailers in these prime locations as they favour

businesses with proven financial backing. Independents are more likely to be located in secondary

locations.

In contrast, location is not an issue for online stores. Online stores can be run from one distribution

centre, or even from home, reducing or eliminating the substantial overheads associated with a

bricks and mortar store. However, with larger retailers investing in their multichannel models, it is

becoming more difficult for pure-play retailers to maintain their advantage. Pay-per-click and the


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use of keywords are crucial to ensuring that Google adverts will appear at the top of search listings,

or at the very least, on page one. This has become both more costly and a highly sophisticated

process, as established retailers are now likely to commit financial investment in this area. With the

cost of professional services from experienced marketers, it is no longer considered cheaper to run a

successful online store. One advantage that still remains is that online stores are more changeable

and overheads can be reduced more easily. As retailers are generally committed to long and

inflexible leases, the risks are still considered higher. In the worst case scenario, if a business is in

the unfortunate position of losing money, an online store can cease trading relatively easily whereas

a bricks and mortar store could end up in administration or bankrupt.

The size and type of home is a major factor in clients seeking Interior Design services. Larger

properties can overwhelm ‘cash-rich, time-poor’ owners. Period properties need a sympathetic

approach especially when modernising or converting to a contemporary home. Interior design

stores can capitalise on business opportunities by being located within close proximity to these types

of properties and potential customers.

PRICE

Many retailers have set their store prices to match their online offer and provide price transparency

and although people still look to online to be cheaper, the price differential is diminishing. The

reason for this is two-fold. Firstly online retailers have to invest heavily in marketing as they don’t

benefit from passing trade. Secondly, store based retailers have realised that they cannot survive if

they charge more than their online competitors. (Perks, 2012)

Deloitte reports that although shoppers have become very price savvy, convenience is the most

important factor when internet shopping and states that the majority of customers use the internet

to research products prior to purchasing in-store. (Deloitte, n.d)

PROMOTIONS

Many furniture stores use ‘reference’ pricing. This is where a comparison is made between the sale

or discounted price and the alleged full price. This practice has come into criticism recently from the

Office of Fair Trading where retailers use a reference point that was never actually charged.

Furniture retailers often use reference pricing even though a significant amount of retail sales are

actually made to order. Online retailers also use reference pricing, such as ‘typical high street price’

even when supplying exclusive products. Perpetual sales can have a detrimental effect on retailers’

image and branding as they find themselves in a continuous promotional cycle, where customers will

only purchase discounted goods. An alternative approach would be to emphasise desirability and

affordability to engage customer interest. (Mason, 2011)

Historically the purpose of a sale was to dispose of surplus stock at specific times of the year and

over time has developed into extensive use on a tactical or reactive basis.

SUPPLIER EXCLUSIVITY

Supplier exclusivity is when an agreement is made between the two parties for the retailer to have

exclusive rights to sell a product or brand within a geographical boundary. In return, the retailer

would be expected to allocate dedicated floor space, promote specific products and sustain an

agreed sales target. This is a win-win situation as it gives the retailer the confidence to invest in the


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brand and maintain margins - and enables the supplier to ensure more control over pricing, branding

and displays. The retailer can benefit from traffic directed from the supplier’s website as well as its

own and is treated more as a business partner commanding commitment from both parties.

Suppliers maintain a prestigious image with products that can only be purchased through a valued

retailer who can be trusted to emulate the brand.

Exclusivity is especially suited to large ticket items such as furniture, in particular products that

require extensive product knowledge and impressive displays. Furniture manufacturers, such as

Hulsta, who offer complex modular ranges, will only trade with retailer partners they can trust to

present the brand in an inspiring environment as well as being capable of utilising all the possibilities

of the product to deliver a well-designed solution to the customer.

STORE EXPERIENCE

With a lot of expertise and creativity a website can become an enticing store and can be designed to

reflex a retailer’s brand. However, in reality, most successful online stores, although easy to

navigate and research, seem to follow a universal format which can appear generally bland or

impersonal.

This is an area where a physical retail store can win hands-down and should be exploited for

maximum impact.

Shopping is still perceived as a social activity often referred to as ‘retail therapy’. People enjoy the

buzz of the high street, having a coffee and getting out with friends or family. They like to touch and

handle goods. Colour, texture and quality cannot be appreciated online in the same way it can in a

store. Purchases can often be taken home there and then, supplying immediate gratification.

Helpful and knowledgeable staff can provide essential face-to-face interaction and should be

presentable and highly trained to emulate the brand values of the store.

Ultimately, a physical retail store can provide a much more emotionally satisfying experience than

shopping online.

WINDOWS

Windows are essential to retail branding

and enticing customers to explore. Online

retailers use windows, in the technological

sense. Relatively speaking, they are all the

same size, give or take an inch or two.

Shop windows, on the other hand, come in

all shapes and sizes but it’s not the size that

counts, it’s what you do with it.

Windows should be thought provoking

and inspirational and should entice the

customer into the store to explore further. They should be changed constantly to reflect current and

seasonal trends. Communication of the brand can be achieved through a well-executed and

stimulating window display.

FIGURE 5


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RETAIL DESIGN

Branding and store design is important to the shopping experience. Customers like to shop in

environments that reflect their personality and style, or one that they inspire to. As quoted in the

article ‘How retail theatre can drive consumers’ offline and in store’:

‘Online shopping is a bit like watching a play on a television screen. You’ll see the same

thing as you would in the theatre, but it will not be the same experience… So, how best to

grab some of this theatre action? Part of the answer lies in the use of retail atmospherics –

designing buying environments to produce specific emotional reactions that mean the

probability of customers making a purchase is increased. This includes the use of layout,

colour, scents, music, lighting and POP to create an atmosphere.’ (Gray, 2009)

Whilst online shopping provides convenience and functionality, retail theatre can provide an

interactive and exciting alternative, engaging the customer and providing a unique shopping

experience.

Retailers can communicate with customers in a way that online retailers cannot. Evoking all the

senses and creating a need to purchase and therefore, should capitalise on their advantages.

THE GREY MATTER

The over 50s account for one third of the total population, and nearly 40% of adults aged over 15.

They have a 30% higher disposable income than those under 50 and are also the fastest growing age

group in the UK population. (Wise Branding, n.d.)

Although this group of shoppers is widely ignored, they are more likely to be mortgage free and have

substantial assets.

‘The years immediately after children have flown the nest can be a prime time for spending money

on the home. Consumers tend to have more disposable income and may wish to make

improvements to rooms such as kitchens and bathrooms, which may be showing signs of the wear

and tear inflicted by family life.’ (Keynote, 2009)

They may alternatively be down-sizing their property and can therefore afford to spend the surplus

proceeds on their homes. Grand-parents are also inclined to make an ‘investment’ purchase for

grand-children setting up home.

Although some may lean towards traditional design styles, many over 50s like to keep up with

current trends and create a smaller, minimalistic contemporary home. They are likely to be well

informed, design conscious and influenced by quality as opposed to price.

Over 50s are less likely to purchase online than younger people, therefore traditional stores would

be well advised to target this lucrative market.


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INTERIOR DESIGN START-UPS BUSINESSES

Before the internet became widespread, for anyone wanting to set up a shop it was relatively

simple. A Town Centre store would be the obvious first step for a small enterprise, with relatively

low rents and a good catchment area aspiring entrepreneurs could make a reasonable living with a

little bit of savvy, product knowledge and dedication. The only additional expertise required was

probably that of a good accountant.

These days, setting up shop is more likely to be regarded as a minefield, filled with risk and

trepidation. If there’s a nearby buzzing town centre, it might beg the question, how much longer

will it be there? Thinking any bigger would probably require the financial assistance of relatives or

business angels, all with the particular areas of expertise needed and eager to take a slice of your

hard earned profits. Ten years ago shop owners were told they need a website and a brand to keep

up with innovation, anything else would appear ‘second rate’. Now they need apps, databases,

marketers and a multichannel model.

If the financial outlay of setting up a shop appears too much of a risk, there may be an alternative.

For independent retailers, the rise of internet stores proved to be challenging and often fatal to their

success. With multi-channel retailing now in its maturity, trialling a business idea online, using

initiatives such as the ‘EBay accelerated growth programme’ or ‘Not on the High Street’ could prove

a cost effective way of entering the market. With virtually no or very little set-up costs it could

provide the first step to a multi-channel retail programme, providing the cash injection needed to

open an interior design store. It would also provide experience in running a business, setting price

margins and gaining knowledge of which products customers want to buy.

EBAY ACCELERATED GROWTH PROGRAMME

A recent article in Furniture News set out to explain a new initiative from the online giant eBay.

Tailored towards the SME (small to medium enterprise) independent retail market eBay launched its

Accelerated Growth programme in June of this year, developed to provide a streamlined route for

the independent furniture and furnishing retailer to sell online.

Providing a solution that is much more affordable than launching and developing an e-commerce

site, eBay is aiming at attracting newcomers to the programme. One major issue for a new online

store is directing traffic to the site. EBay already has half of the UKs online browsers visiting its store

and realising that retail has moved on considerably in the last few years, continues with its

investment to keep up with the latest developments.

Initially retailers can offer multiple versions of the same product within one listing, for example,

colour, size, material rather than listing them separately, keeping costs to a minimum.

Subscription is free for six months offering the retailer an excellent opportunity to try out the

software. After this time the retailer can decide whether to continue with the programme. A 10%

fee is payable on the final selling price, which can be subject to discounts, along with a nominal

listing fee.

EBay offer assistance in setting up the account and on-going coaching and training all managed

through regular check-ins, training modules and learning steps.


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For a small independent Interior Design retailer this could prove to be an excellent opportunity to

gain experience and insight into online retailing through the coaching and training modules.

NOT ON THE HIGH STREET

Not on the High Street offers a similar package to small businesses.

The company was established in 2006 with around one hundred hand-picked British businesses on

board. The idea was to provide a means for customers to purchase creative, hand-crafted goods

from one website. Many of the suppliers started their businesses from home and have grown into

thriving companies as a result of the partnership.

All products offered adhere to a strict benchmark of quality, innovation and style, with an emphasis

on British design and production. Over 3,000 creative businesses (with more than 50,000 products)

now sell their products nationwide through the website.

Cabinet Maker recently reported that notonthehighstreet.com had recently secured a £10 million

pound investment from a consortium of companies to assist with the business growth both in the UK

and internationally. In the article notonthehighstreet.com CEO Holly Tucker welcomed the

investment stating that it provided the expertise, resources and connections to take it to the next

level. She vowed that they will be supporting more talented small UK based business in a bid to

become the number one destination for original and creative products online. (Cabinet Maker,

2012)

The cost of selling products through ‘Not on the High Street’ will cost more than the EBay

programme, however it fills a ‘niche’ in the market for creative products any may be more suitable

for design-led businesses. There are a number of other website where designers can sell handmade

goods such as Folksy, Etsy and Misi, all aimed at supplying crafted or creative products through

online stores.

FIGURE 6


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SMALL INDEPENDENT INTERIOR DESIGN STORES

Taking three local Interior Design stores as an example, it becomes apparent that smaller retailers

are failing to maximise the advantages of multi-channel retailing:

STORE 1

The store supplies a range of Scandinavian design-led products including fabrics by Marimekko,

glassware by Iittala and linens by Klassbols. They also supply furniture by Artek and G.A.D. which

can be tried out in the café at the rear of the store.

The website shows lots of designs, with full description and prices. Unfortunately, none of the

products can be purchased online, which could result in potential customers purchasing elsewhere.

STORE 2

The store offers an Interior Design service and supplies furniture, lighting, fabrics, wallpaper, gifts

and accessories. Some items have been photographed in-store and added to the online offer.

However, the online offers appear very random with no distinction of brands or ranges. This could

be improved by using high quality images and carefully selected products for the online store. The

website could benefit from a complete overhaul to bring it in line with current online expectations.

STORE 3

This store specialises in wallpaper and paints. The website is easy to navigate and shows

inspirational lifestyle images, the type that can be found on suppliers’ websites. However, this is

limited to four images for each category – wallpaper, paint, fabric, and curtains and blinds. The

store has a good library of wallpaper and paint, but the fabric selection was virtually none existent.

Considering that the shop offers a bespoke curtain and blind service, the shop would benefit from

extending its fabric range. This would not only provide the potential to increase the average sale

value from customers wishing purchasing co-ordinating products, but would increase sales of made-

to-measure curtains that can command a much higher profit margin.

No items are currently available to purchase online and the links direct the customer to the supplier

website. Considering that the main business is supplying wallpaper this could be expanded to supply

ranges online.


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INTERIOR DESIGN STORES WITH MULTI-CHANNEL OPERATIONS

With larger retailers leading the way in multi-channel retailing, established Interior Design stores

have also adapted to current buying trends.

Some good examples are:

Designer Guild, offers selected products to purchase online, such as rugs, bedding and

towels. It directs all other enquires to it local stockists.

William Yeoward sells bespoke furniture and exclusive accessories. Items such as cushions,

art glass, tableware and rugs are available through the online store. All fabric and wallpaper

enquires are directed to the Designer Guild website.

Lombok has only two retail outlets supplying exclusive ranges of furniture and accessories.

The full range is available to purchase online.

Dwell has touch point screens in-store so customers can search the whole product range

and order out of stock items whilst in-store.

Oka has multiply stores and also offers it complete range to purchase online.

Figure 7 demonstrates how an item not available to purchase on-line can be promoted on the

online store

FIGURE 7


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CONCLUSION

‘Stores will still be necessary as showrooms and already it is obvious that retailers that have

outlets are at an advantage to those who don’t.’ (Perks, 2012)

I WANT IT NOW

A potential customer who has visited an Interior Design store, looked through the fabric and

wallpaper books, may want to carry out research at home. They may visit the store website and find

that they don’t show the product they were interested in but instead may be directed to the supplier

website or find a list of brands with no link. They then might search for the product by code or

description and land on a competitor’s website showing images, colour choice and prices. They may

find that the prices were less than they have been quoted and they can order online and receive the

goods within 2 days. This scenario is reality and is one of the explanations how internet stores

capitalise on their advantage, investing in Google ads, and gaining sales from stores that invest in

bricks and mortar, advertising and store environments. An Interior Design store has satisfied the

‘want’, the online store has fulfilled the ‘now’.

Interior Design stores need to invest in their online stores to make purchasing both easier and

financially attractive for customers.

One option would be to remove all supplier codes from wallpaper and fabric samples, although this

is possible, practicality needs to be considered. Firstly, if the customer has been carrying out

research prior to visiting the store they may already have this information and secondly the

customer can search by description, colour, etc. to find the product elsewhere.

The empowered customer, once away from the store, makes the decision to buy the product. They

may have experienced a unique store environment and as a result, decided to buy the wallpaper or

fabric. They may be redecorating the following week, so prompt delivery may be crucial.

How does an Interior Design store keep this customer and make them want to buy from them?

Have an e-commerce store so customers can purchase selected products around the clock

Continually compare online offers to ensure that prices remain competitive

Price promise to refund the difference if the product is found cheaper within a specified

time period

Negotiate terms with suppliers to get the best prices in return for promoting their ranges

Implement a direct delivery service with suppliers to ensure immediate dispatch

Charge customers a minimal fee for consultation services, refundable against purchases

THE VALUE OF CONSULTANCY

Interior Design stores are likely to have a library of books available, not accessible to mainstream

stores. They will also have experienced consultants and designers who have extensive product

knowledge. Some customers are bold enough to spend hours in a store, browsing through pattern

books and gaining free advice only to take their business elsewhere. To counteract this, the majority

of books could be kept in a consultation room, with only new books available on the shop floor. This

ensures that the customer doesn’t monopolise the consultant’s time. By charging a consultancy fee

the customer has already made a financial commitment which could then be refundable against the


Page | 21

purchase of recommended products. A profit is made whether the customer goes on to buy the

recommendations or not, but in any case, they would be unlikely to go home and purchase from a

competitors online store.

THERE’S MORE TO EXCLUSIVITY

Supplier exclusivity can be beneficial to Interior Design stores and should be used to its maximum

potential. This should not be seen as being limited to furniture ranges. Although it may be more

difficult to implement when selling wallpaper and fabrics, it is still feasible and by being creative and

working in partnership, can benefit both supplier and retailer. New fabric ranges could be launched

by dedicating floor area complete with a lifestyle display. In return, a supplier could use a showroom

as a preview store prior to general release of a new range.

This ‘exclusivity’ period could be used to host an evening event, aimed at preferred customers, local

press and even a local celebrity. This could be executed in the same way that a gallery would host

an artist’s exhibition, champagne and canapés and perhaps an informative presentation by the

Interior Designer or design-house representative, providing customers with a free, entertaining and

informative mid-week evening out.

Local press agents are always very appreciative of these social events’ and in return are almost

guaranteed to give a glowing report of the store as well as coverage in their glossy magazines.

In the same way the showroom could be turned into a gallery for exclusive evenings where artists

are present and can display their work. The website can be utilised to preview the art prior to the

event.

When was the last time an online store offered it’s customers a free nights entertainment with food

and drink on the menu?

OWN RANGE

One way of ensuring exclusivity is by having an in-house range. There are many furniture makers in

the country who make their own furniture to order or bespoke items for Interior Designers. By

specifying a design the retailer can maintain a good profit margin and be confident that the item

cannot be found on a competitor’s website.

William Yeoward and Designer Guild are excellent examples of how this can be achieved. Working

with other skilled designers and artisans to produce exclusive lines further defines the store

branding and ensures that price comparisons cannot be made.

INVEST IN MULTICHANNEL

Customers still like to take a brochure when visiting stores as many people find it much more

enjoyable to flick through pages of a magazine when at home as opposed to looking at a website.

Websites should be informative and easy to navigate and it would be advantageous to have e-

commerce facilities, especially for smaller items. In-store screens that enable customers to access

the website are useful for customers to find products easily and view the whole range which may

not be available in store. Social networking sites and blogs are a good way of creating interest in the

store. The most important factor is to reflect the store values and branding through all channels.


Page | 22

Multichannel retailing is a complex system to implement and should be approached with the

professional advice of an experienced agency. This way all channels are designed to work together

and a single data bank can exist. The business will be ready to adapt to mobile shopping, apps, and

any future technological advancements.

Whatever stage of implementing a multi-channel retail programme a retailer is at, the collection of

email addresses should be considered a high priority. This will enable the retailer to use the data for

marketing purposes and will provide a databank that can be integrated into the programme when a

maturity level is reached.

Email advertising is a very cost effective way of communicating with preferred customers and

therefore asking for an email address should be as, if not more important than asking for a

telephone number.

For Interior Designers emailing can cut down time spent trying to contact or meet with customers.

How much time could be saved by firming up a proposed design by sending presentation boards and

quotes by email rather than attending an interim client meeting?

STORE DESIGN

Store design is off course important to any retailer, but for an Interior Design store can be tailored to

offer further services. Attractive flooring, wall-covering, fixtures and layered lighting can all add to

the store experience and can be included in the services offered.


All retail stores, large or small have been affected by the competition from online stores and many,

regardless of size, have ceased trading as a combined effect of online trading and the recession.

High Street stores have invested financial and professional resources and have fought back against

online stores and have proved to be been instrumental in developing multi-channel retail solutions

that are now affordable and accessible to smaller retailers.

As well as multi-channel retailing consultants, there are numerous retail handbooks that can give

expert advice gained from years of first-hand experience. With over 20 years’ experience working

with leading consumer brands Antony Welfare, in his book The Retail Inspector ‘offers the

independent retailer the opportunity to exploit thinking and techniques often considered the

preserve of big retail chains’. (Welfare, 2011) The Retail Inspector website also offers advice and

services aimed at independent retailers to compete against both high street and online stores.

Interior Design stores need to find the right balance of multi-channel retailing to suit their business

and are at a great advantage to offer a unique shopping experience and professional service,

combined with an interactive website and an e-commerce offer that a pure-play store cannot

replicate.

By embracing advancement in online trading and responding to ultimate changes in shopping habits,

the Interior Design store can not only survive but thrive in the new Digital Age.


Page | 23

CONTENT OF FIGURES

FRONT COVER:

Computer Image (Bright Futures, 2012)

All Furniture Images (Heals, 2012)

Shop Computer Button (DNA Digital News Agency, 2012)

DOCUMENT:

Figure 1 (Zippycart, n.d)

Figure 2 (Sillitoe, 2012)

Figure 3 (Reply Portaltech, n.d)

Figure 4 (Deloitte, n.d)

Figure 5 (William Yeoward, n.d)

Figure 6 (Not on the High Street, 2012)

Figure 7 (William Yeoward, n.d)

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