A. Competitors’ StrategyA look at Family Furniture’s competition requires us to take a look at some primary and secondary threats. Primary threats to Family Furniture include Crate & Barrel, Pottery Barn and IKEA. Secondary threats include independent furniture stores, big box stores, Costco and Sam’s, and the Internet websites.Crate & Barrel and Pottery Barn are similar in their market strategy and target audience and both have locations in the area Family furniture compete in. Both sell higher end contemporary furniture and have great name recognition as a national chain and portray an image of providing good service, high quality products, and sell a lifestyle. They are extremely successful in portraying their product in a lifestyle of casual sophistication that their target audience aspires for and is drawn to. Their weakness tends to be in the form of price, especially with college students, recent grads and first-time homeowners. I have heard of a number of people who visit these stores to get ideas and go elsewhere to purchase something similar for a substantial savings.IKEA is also viewed as a primary threat by Family furniture, despite being 125 miles away. IKEA’s are so large, catering to families with children’s play areas and food courts that it is an “event” to go there. People are willing to travel great distances to purchase furniture and Cheryl, the owner of Family Furniture, has learned that some of her customers have been driving to shop there. IKEA caters to a large group of people and their vision, per the IKEA website, “is to create a better everyday life for many people…by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” Their biggest weakness reside in their distance from where Family Furniture competes and because they target the masses with low prices they may be viewed as having lower end and lower quality merchandise.Pottery Barn, Crate and Barrel and IKEA are all primary threats to Family Furniture because they all successfully target customers that are important to Family Furniture.

There are also some secondary competitors of Family Furniture that need to be discussed. These secondary threats include independent furniture stores, big box stress like Wal-Mart and Target, Sam’s and Costco, and the Internet websites.Independent furniture stores, although none are as large as Family Furniture and or have the customer loyalty that Family Furniture possesses. Many of these smaller competitors have closed or merged together over the last several years. Their lack of name recognition combined with the other factors render then a low-end threat.Big box stores such as Wal-Mart and Target do sell furniture, but they sell lower priced and quality product that do not appeal to the more affluent consumers that we are targeting. Costco and Sam’s sell high-end leather furniture, but lack overall selection of a full service furniture store. If a customer sees a piece of leather furniture in a store like Sam’s that may even spur that customer on to go to Family Furniture to look at a larger selection of leather furniture.The final competitor that needs to be discussed is websites on the internet selling furniture. The main advantage these sites enjoy is the consumer being able to look at their entire inventory from home without having to go to a store. Also the consumer’s have the overall perception that buying items off of the internet is less expensive than buying the same item in a store. However, in the case of many of this websites this perception can be untrue. Many sites do not have local warehouses, which means they have to ship furniture via freight, which is very expensive. For example, on www.furniturefind.com a $869 leather sofa cost $465 to ship and has a $85 fuel surcharge.

All of the sudden a great leather sofa that a consumer thought they were getting for less than $900 is now $1400! While some sites have more regional centers they ship from, this is the exception not the rule. Due to the shipping expense, many consumers may shop on the internet, but not actually make a purchase. Finally, many consumers’ want to sit onfurniture they are going to purchase and see how it feels. These two factors help reduce the threat offered by internet stores.The two methods of credit that Family Furniture’s competitors offer are a store credit card and the “No, No, No” style of credit. That is to say no down payment, no interest and no payments until next year.B. Value of SubstitutionsThere are an abundance of substitutes including retail stores to purchase from, styles of furniture, and type of furniture. Additionally, typically the furniture sold by one store can be found in another store or at least a similar product can be easily found. Finding what you want and locating it at the best price has become much easier with the advent of the Internet. What may become more difficult to substitute would be the feeling or image one buys into from purchasing something from a particular store. C. Entry BarriersThe furniture retail industry is fairly competitive with many players ranging from large retail chains, independent furniture stores, big box stores like Costco and Sam’s, and Internet websites and even electronic stores like Best Buy sell furniture. Sometimes even driving down a country road you will see a truck on the side of the road selling chairs, bookcases, and some other locally handmade furniture. Barriers to entry are fairly weak and to compete successfully in the furniture retail business one needs to differentiate it effectively. One such way is to have exclusive products and designs. Other methods of differentiation include customer service, price, promotion, and place.SWOT ANALYSISStrengthsFamily Furniture has been in business since 1953 so the company possesses great reputation for providing good customer service, an inviting storeappearance, extensive selection and great prices. Since the company is located in a small town, it has built over the years a large long time customer base which can transcend through generations (family of procreation concept).

The store occupies 80,000 sft with a large warehouse and shipping facility. It also owns an extensive fleet of delivery vehicles which can provide service to other cities. WeaknessProfits have declined since 2001 in part, due to increase in inventory and logistics cost. Family Furniture marketing strategy has been to focus on middle to higher income families, who were usually above age forty-five. Historically, the store targeted married females making purchasing decisions for the entire family. As a result, they have overlooked the younger generations that have recently graduated from College and take jobs around the area, as well as the rapidly increasing minority groups. Their promotional program relied heavily on newspaper advertising. OpportunitiesThe unemployment rate in the city has been low, in the four to five percent rate, because of the employment base consisting mostly of white-collar, well educated workers that have high monetary power. The store hometown had grown to an area of 600,000 people, a prosperous community that is also near bigger cities with over 1 million residents located within 150 miles from Family Furniture. This creates a huge market potential, knowing that 72% of the reasons people buy furniture are because of relocation and need of new furniture. With a huge store space, the style selection needs to appeal to Gen X, Gen Y while maintaining the baby boomer customer base. ThreatsFurniture is a cyclical business which typically tracks housing sales. Even though the demand for furniture never goes away, the consumer’s desire to spend for big items can fluctuate significantly. Lately, the World financial system has been in the edge of panic due to the recent collapse in the residential housing market. The industry has high unsold inventories of completed new houses. Because of the chaos in the mortgage lending, a further decline in housing market is expected in early 2008. During economic downturns, the furniture industry tends to experience longer periods of recession and general decline than the general economy. Furniture industryis highly competitive with many furniture items carried by major mass merchandise stores like Wal-Mart, Target and Ikea.RETAILING MIXA. ProductFamily Furniture offers a wide selection of sofas, loveseats, sofa beds, sectionals, occasional chairs and accent chairs. Choose from traditional, transitional, casual, country and contemporary styles available in many quality fabrics and a lot of top grain leathers. Each piece of Family Furniture is constructed with solid hardwood frames, eight-way, hand-tied springs, and highly resilient foam cushions. All of the fabrics, leathers, and trims are picked for their distinctive look and durable quality. To attract more of a younger professional currently increasing in numbers, Family Furniture also provides products that are fashioned from sturdy yet attractive materials that will certainly compliment just about any decor that’s already in place. For instance, our customers can choose a storage bench that is constructed from an array of fine woods.

These pieces fit in nicely in almost any bedroom configuration as well as elsewhere throughout the home, and also offer additional space to store blankets, a seasonal wardrobe, and even precious keepsakes. Other furniture which our customers may want to consider for their bedrooms includes bunk and day beds, a hope chest, nightstands, vanity sets, etc.B. PriceAt Family Furniture we combine the experience in the retail furniture business with an unparalleled dedication to service to offer our valued customers superior products at affordable prices. To attract more of potential younger generation, Family Furniture positions its price and quality in between low-price-product stores like IKEA and high-end stores like Pottery Barn and Crate&Barrel. This also corresponds to the above variety of products offered to attract Family Furniture’s new target segment, yet still able to maintain old customer base of forty-five and upsegment. C. PromotionHistorically Family Furniture leveraged newspaper advertising, but has started shifting its advertising budget toward television. It tends to places its commercials in prime viewing times during local news programs. Their television and newspaper advertisements feature their location and product selection and emphasize the store’s helpful, friendly and experienced staff and targeted middle to higher income, forty-five and up females who made the purchasing decision for the family.Times have changed and for Family Furniture to increase revenue, they need to adapt to the changing makeup of their community and expand their promotion to include college students, recent grads, first-time homeowners, and the growing number of Latinos. To do this effectively they need to broaden their advertising space to include community involvement, redesigned website, and some more creative advertising techniques.More specifically, Family Furniture needs to be more involved in the community and can do this by donating furniture to the university for student lounges thereby obtaining exposure to college students. Target selling furniture at reduced cost to model homes and apartments where their products can be displayed with price tags so that when home or apartment shoppers are looking at the models and see something they like they know how much and where (Family Furniture) it can be purchased including their website, which needs to be enhanced for easy navigation, product display and price along with shipping cost to facilitate on-line and secure shopping.

They also need to change the way they use and advertise in traditional mediums such as TV and newspaper. In TV they need to broaden the programs they advertise on to garner exposure to the expanded target audience including advertising on some Spanish television programs and magazines, include younger television programming targeted toward college students and twenty to thirty something. Establish a loyalty or reward program for their customers who refer a friend by providing them with a gift card redeemable at Family Furniture or a dinner at a local restaurant. D. PlaceFamily furniture occupies an 80,000 square-foot facility, with a large warehouse and shipping facility, located in a prosperous community of 600,000 people and is within 150 miles from three other cities with over 1 million residents. There community has one major state university and several other smaller universities. Family furniture also operates a 50,000 square-foot satellite store in a fast-growing suburb. They also currently have a small presence on the web, which they need to enhance and better leverage. E. PeopleEven though many formats promote self-selection of products, consumers still rely on personal sales assistance when available. Particularly in the furniture business, sales assistance is one key factor in influencing consumer’s final purchasing decisions, as well as after-sale services. Family Furniture has long been known for its high-quality customer service. In the case Family Furniture desires to expand its target customers to a segment of younger professional people, it may need to add more varieties to its sales forces. Besides the perceived knowledge, expertise, and trustworthiness of the salesperson, several recent studies have shown that the more familiar a salesperson with his or her customer, the more likely he or she is to close a sale. In addition to the personal characteristics of effective salesperson, i.e. personality, temperament, age, and appearance, Family Furniture can help promote their skill levels and motivation by influenced through increased training and experience, visionary, leadership, and corporate culture. F. PresentationThe store is 80,000 sqft large and three stories high. The first floor will incorporate a restaurant and a kids play area where parents can leave their children while they do their shopping. There will also be a design center with professionals ready to assist with decorating alternatives. To make it easier for consumers to shop around, the floors will be divided into furniture styles (Country, Asian, Caribbean, Casual, Contemporary, Formal, Traditional, Transitional, Victorian, and Modern). At the entrance, there will be a receptionist/information area welcoming the clients, with bi-lingual sales associates ready to assist them. There will be campus mapsavailable at the store entrance so consumers can locate themselves. Since Hispanic families enjoy having big dinners, there will be dinner room displays with colorful accessories and flatware that will be inviting and warming. All showrooms will use lighting effects to highlight the merchandise, and will have many accessories like throw pillows; lamps and other accent pieces that will not only complement the furniture, but can also trigger ideas for impulse buyers. The store will play slow music to maintain a warm and calm environment which will make consumers spend more time. See Appendix E for more details.