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LEAD Innovation Blog

Read our latest articles on innovation management and innovation in a wide range of industries.

Date: 04-Oct-2018
Posted by: Angela HENGSBERGER

How the furniture trade is moving into the digital age

 

For a long time, digitization was not an issue for the stationary furniture trade, but this has changed rapidly in recent years. This development is driven by the changed behaviour of customers, who today not only use the Internet as a convenient source of information, but are also increasingly making their purchases in the online shop. A comprehensive digital strategy, new business models and modern marketing channels are therefore increasingly becoming a question of survival for the stationary furniture trade.

Online providers make printing

At present, about seven percent of the industry's total turnover in Austria and Germany is accounted for by online commerce - with a strong upward trend. According to experts, it is therefore only a matter of time before the Internet business outstrips stationary furniture stores.

Onlinehandel: Gesamtbedeutung bei Möbeln

For example, the retail research institute ECC forecasts that one third of the approximately 30,000 German furniture stores will be closed by 2020 in the paper "Digitisation in the furniture trade: revolutionary changes by 2020". According to the paper, only furniture retailers with a comprehensive digital strategy, whose product range is consistently geared to the wishes and requirements of consumers and combines the best of the stationary and digital trade for the customer, would survive. After all, the need for comfort (comfortable choices, an enormous range of products, no towing) is greater than consumers' reservations about buying furniture online.

Case Study Business Model Innovation
This development is also confirmed by the "E-Commerce Study Austria 2017". At EUR 7.6 billion, Austrian distance selling expenditure reached an absolute record high. Mobile commerce (smartphone shopping) accounted for EUR 530 million, an increase of 25 percent. 21 percent of Austrians already buy directly from smartphones and 42 percent use it for product research on the Internet. Between 2012 and 2017, the number of smartphone shoppers has increased sixfold.

E Commerce Studie

The mobile phone is becoming more and more the dealer's best friend. Young consumer groups in particular are open to smartphone shopping. "The increasing number of buyers is mainly due to young consumer groups. The greatest leap in smartphone shopping in the current analysis period was made by the age cohort 30-39 years - from 24 percent in the previous year's period to 33 percent. However, it is only a matter of time before the next consumer cohort will follow suit", says study leader Dr. Ernst Gittenberger of KMU Forschung Austria.

One of the biggest challenges facing the furniture trade is therefore the "mobile shift": More and more people are looking for suitable furniture or furnishings on smartphones or tablets. Decisions are made before the furniture shop is visited, unless the order is placed on the Internet. Mobile, attractively designed websites, multi-channel strategies and attractive digital marketing concepts are becoming increasingly important.

Augmented Reality as Game Changer in the furniture trade

In the future, it will be crucial for furniture retailers to offer the consumer added value at every touchpoint of their Customer Journey. Dealers must be where the customer is, i. e. also at home, where he gets information and inspiration. With the help of Augmented Reality (AR), furniture retailers want to meet this demand.

The customer simply loads an app onto his smartphone or tablet and can then look through the camera at the environment in which the new pieces of furniture are to be placed. He then inserts virtual objects such as tables, chairs or shelves on the screen and can immediately see how the piece of furniture looks in his own four walls. This means that the consumer can comfortably choose the right piece of furniture from home and the furniture dealer can save expensive returns. According to experts, augmented reality applications of this kind will fundamentally change the way furniture is purchased in the long term.

As one of the first in the industry, IKEA began experimenting with Augmented Reality applications a few years ago. In September of this year, the company launched the new "Ikea Place" app.  With a precision of 98 percent, the new technology should enable the furniture to be placed. Users can not only take pictures of the virtual furniture at home and share it via social networks, but can also buy it directly from the app with just one click. According to Michael Valdsgaard, Head of Digital Transformation at IKEA Systems, the app will therefore continue to play a key role in future product releases.

app ikea

But smaller companies also use AR technology. For example, the business model of the Polish shelf start-up Tylko is based on AR. Customers can put together and order individual shelves using an app. For this purpose, it does not even take a tape measure to measure, but only a DIN A4 sheet that is laid on the floor as a reference surface.

Click & Collect gains importance

More and more Austrians buy products online and then pick them up directly from the stationary shop. The Click & Collect function is therefore now also offered as a supplementary option on many dealer websites, such as IKEA, Mömax, Butlers or DEPOT. Essential advantages for customers are the elimination of shipping costs and flexible collection options.

Showrooms - Staging of the living spaces

Many customers still like to go shopping in the shop, because the screen can't replace the haptic experience of furniture and personal advice. Stationary retailing needs to create sales experiences to stand up to online vendors and strengthen customer loyalty.

The German furniture retailer MACO Möbel is one of the pioneers in the production of living environments. The company relies on an exceptionally designed furniture exhibition and expert advice. Inspiration and planning takes place on large touchscreens and projectors project living landscapes or kitchens lifelike as 3D animations. This gives customers a life-size, spatial impression of the planned facility and enables them to interactively intervene in the planning process.

"We have to be aware of the opportunity to sell atmosphere and use it. Because most customers buy, not because they need something, but because they want something", says Matthias Utermark, authorized signatory MACO.

maco möbel

MACO Möbel - Virtual tour of the furniture store

The concept of the showroom is also used by online providers. Because the furniture business presents pure online shops with great challenges. Not only the possibility of experiencing the haptic experience of the furniture, but above all the difficult logistics up to the design of the returns problem is problematic. Based on these considerations, the originally pure online furniture brand "Fashion For Home", for example, has now opened seven showrooms.

Digital technologies at the POS

The furniture industry offers an ideal experimental environment for improved customer experience through digital media. In principle, non-interactive media (e. g. digital posters) and interactive media (e. g. digital walls, terminals) for informing and advising customers can be distinguished. The technology start-up Store Analytics, for example, shows which added value Beacons, purchasing apps and Apple Watch can offer for the service quality of a furniture store. With the Store Analytics Assist, the customer has the possibility to request advice at any time in the desired department.

 

 

 

Influencer marketing as a new form of cooperation

In addition to modern websites, social media activities, image films and testimonials, the furniture trade is increasingly discovering influencers for its online marketing activities. An effective strategy, as a significant number of people now base their purchasing decisions on bloggers and influencers. For more detailed information on this topic, see the Retail Report Furniture Dealers 2018.



Conclusion: How the furniture trade is moving into the digital age

Digital transformation is currently by far the biggest challenge for the stationary furniture trade, but it also offers many opportunities. Ultimately, customers show how they want the optimal shopping experience: consistent and beyond the categories online, offline, mobile. For the customers of tomorrow, there is no longer any separation between the real world and the digital world. The sooner a stationary furniture store is modernised in this way, the better prepared it will be for the challenges of the future.

"The Internet is like a wave: either you learn to swim on it, or you go down," Bill Gates.

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Angela HENGSBERGER

Born and raised in Vienna. Since 2012 she has been in charge of Business Development at LEAD Innovation with the functions marketing, sales and communication.

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