IMPORTANT changes in Hancock & Moore-Jessica Charles-Councill furniture AUGUST 1

[drcollie]

Its no secret that I do a lot of business with the Hancock & Moore companies which include not only H&M, but Jessica Charles and Councill. I like the way they do business and the quality of their product line. When you believe in a product, its a whole lot easier to enthusiastically sell it. A large portion of this site discusses these brands and they are the primary sales engine for my store and livelihood as well. There are new policies in sales and distribution going into effect on August 1, 2013 that will change the way and price that I sell these brands. I knew last year it was coming, I could hear the drumbeats back in 2012. And now that day has officially arrived.

The H&M companies believe that sales are ideally done in a brick and mortar environment with trained sales personnel so you can see and test the furniture in person as well as much easier returns for issues/problems etc. The internet sales/phone orders have always been a sticking point because of heavy discounting of the products, and they have made a decision to exercise control in that regard. I am a team player with them and a partner in promoting and selling the brand so I will adhere to the policies they set in place and not waver from them. I do that not only for the terms of the policy, but for the respect I have for the gentlemen that run the companies. This will effectively shut down most all long-distance sales not only from my store - but all that sell long-distance, I believe.

Effective August 1, 2013 there is a new Sales and Distribution Policy that will effectively eliminate steep discounts on the Hancock & Moore family of brands. This is much more than a simple price increase, there will be a minimum selling price going into effect. It will also effectively eliminate the entire Town and Country promotion for mail order / internet sales. Here's what is going to happen on August 1, 2013:

* Minimum Selling Price that ANY dealer can sell to you will be 35% off MSRP for orders is taken over the phone, via computer, email, etc. Using an example... a $ 10,000 sofa MSRP can not be sold for less than $ 6,500. That cannot include free shipping or any other additional incentives. Dealers violating this policy will be in jeopardy of losing their dealership. That is a huge difference between what that $ 10,000 MSRP sofa can be currently ordered for. I will not post the price I sell that 'example' sofa for currently but it would currently be less than $5,000.

* Town and Country Items will also follow the 35% off MSRP pricing example. That, in effect, negates the Town & Country promotion entirely for those not buying brick and mortar locally.

* In-store sales within a dealer's trading area will not be affected by this policy. A dealer can sell to anyone in their store at any price they choose.

* What this means to you as a consumer: After August 1, you will most likely get a better price on any Hancock & Moore / Jessica Charles / Councill product by purchasing locally in your area from an authorized dealer.

I will continue to provide expert information on the H&M family of products via the forum - this has always been first and foremost an information forum done free of charge and as a service to those who have questions about furniture. After August 1st I will look to build up my local business around the Washington DC area in these brands as I expect long distance sales of this product line to slow considerably with this new minimum price policy going into effect, and less inclined to spend several hours per day to quote prices via PM and email for folks outside of my trading area (i.e., regional sales). One thing to note as well - this applies to every H&M dealer that sells long-distance, not just my store.

During the remainder of June, and through July 31st, I will continue to take orders on these brands at my usual discounted prices. A general price increase has arrived that goes into effect on July 22nd as well, but in looking through it its not too severe, certainly not compared to what goes into effect on August 1st.

[Judyg951]

They may be hurting themselves in the long run with this new policy. If I had to go to a local retailer H&M would not be on my list as it would have been far out of my budget. More and more people are used to Internet shopping these days as well and are always looking for the best way to save money.
I wish them all the best with their new policy, but don't be surprised if they find it hurts their bottom line and they change it.

[shawnsisco]

Duane, what other product lines do you/will you have that an internet customer would find to be a good value?

[drcollie]

Duane, what other product lines do you/will you have that an internet customer would find to be a good value?

I may have to begin looking around for another 'internet sale-able' product line that meets my quality standards and is priced right. That won't happen overnight as I will have to be sure of the quality and make a trip to production facilities to see how its made. Right now the only other line I carry that does not have those restrictions is Bradington Young.

[Snappy]

I agree with Judy, too; H&M may be shooting themselves in the foot. I would not have considered Hancock & Moore if it weren't for Duane and his expertise, so generously made available to everyone on this forum. While I have plans to purchase some additional pieces, I am not going to be ready to purchase them prior to August 1st. I have been to Duane's store in person, but any additional purchases would have to be made long-distance, and the Minimum Selling Price changes will cause me to look at companies other than H&M.

[DCGator631]

At least they allow you to still deal with your B&M customers as you deem fit. I understand protecting B&M stores, but H&M needs to be sure their dealers are really up to speed on their products and are promoting their products - not just lumping them in with other lower quality furniture they're trying to sell for less.

They may be hurting themselves in the long run with this new policy. If I had to go to a local retailer H&M would not be on my list as it would have been far out of my budget. More and more people are used to Internet shopping these days as well and are always looking for the best way to save money.
I wish them all the best with their new policy, but don't be surprised if they find it hurts their bottom line and they change it.

[johnstonamerica]

I agree with Judy - I would have looked to another brand if I wasn't able to find such excellent pricing from Duane...

[drcollie]

Here is the rationale as I see it as to why this policy is in going into force:

* Customers shop brick and mortar dealers for the products and use store resources and point of sale materials to decide on what they want to buy. Once they have a buy decision, they go to the internet and shop around, getting quotes. They will then either purchase from an on-line discounter or what is worse - take the other quotes they get from calling around to the original brick and mortar dealer and ask them to match the prices. This makes the B&M dealer angry and they call H&M to complain and/or cut back on showing and promoting the line.

* Warranty issues and shipping damages, either real or imagined by the customer, are difficult to service and the retail customer does not want to pay for return of the product and re-ship back. The dealer does not want to pay, and the maker does not want to pay. Some of these 2-way return ships can get quite costly using a White Glove Service. I would estimate that at least half of all returns are not viable issues and occur because the customer does not understand the product they purchased in some manner. In cases of shipping marks and damages, the shipper ALWAYS says they didn't do it, it came from the factory like that and the factory ALWAYS says that they didn't ship it like that. Who pays for the restoration and shipping? Slowing or eliminating long distance sales solves these issues.

* I have no issue with a minimum selling price for their product. You will see this in a number of consumer products and its legal to do so as per a 2007 Supreme Court Decision. A Rolex or Cartier watch, for example, are virtually impossible to get at a discount. So are things like current Apple products or a Dooney and Burke purse. However I was not quite prepared for the high level of minimum pricing at 35% off MSRP. And the kicker of course is that in the Brick and Mortar stores themselves the policy is not in effect for customers that walk into a store to make a purchase. For example, If John Doe calls me from Minneapolis MN to place and order for a $ 10,000 MSRP Sofa I cannot sell to him at less than $ 6,500 plus shipping (35% off MSRP). However, if John Doe gets on an airplane from Minneapolis and flies into Reagan National Airport, then drives to my store from there, I can sell to him at 50 % or 60% off MSRP while he is in the store and still drop ship it to him. That is not a violation of the selling policy. I'm not sure how that is going to be enforceable.....I understand what the H&M companies are trying to accomplish (protect their brick and mortar dealers) but not convinced this is the best way to do it. If the minimum selling price would apply equally to every sale no matter how it was done, then that would make for a level playing field.

* Not every sale is a "stolen" sale from a local dealer. I know a number of my customers that have no H&M dealer within a day's drive and have never seen the product prior to ordering, and do so from a "Leap of Faith" standpoint based on what they have read here on the forum and have been my customer from Day 1 - before they ever even heard of the H&M brand. These folks will be penalized most of all from the new policy because this is the only way they can shop the product.

It's still 5 weeks before this new policy goes into effect, plenty of time to brainstorm it and think it through and perhaps bend an ear to H&M management on certain aspects of it. Your comments appreciated and noted.

[cuse69]

* I have no issue with a minimum selling price for their product. You will see this in a number of consumer products and its legal to do so as per a 2007 Supreme Court Decision. A Rolex or Cartier watch, for example, are virtually impossible to get at a discount. So are things like current Apple products or a Dooney and Burke purse. However I was not quite prepared for the high level of minimum pricing at 35% off MSRP. And the kicker of course is that in the Brick and Mortar stores themselves the policy is not in effect for customers that walk into a store to make a purchase. For example, If John Doe calls me from Minneapolis MN to place and order for a $ 10,000 MSRP Sofa I cannot sell to him at less than $ 6,500 plus shipping (35% off MSRP). However, if John Doe gets on an airplane from Minneapolis and flies into Reagan National Airport, then drives to my store from there, I can sell to him at 50 % or 60% off MSRP while he is in the store and still drop ship it to him. That is not a violation of the selling policy. I'm not sure how that is going to be enforceable.....

Duane,
I would suggest that not many customers will actually get on the plane to visit your store to save a potential 15% that becomes much less after their expenses. In addition, as your long distance sales shrink you may find that your local in store margins may need to increase to offset the volume of sales lost. In essence the policy may become self policing by it's nature.
Eventually H&M will loose sales as net-net the overall average sales price will increase, driving many customers to the next lower quality product like BY or other product brands that allow discounts via the Internet. Likely BY or some new additional brands will become much more significant product lines for your business. I own both BY and H&M and enjoy both product lines and many of your customers will find the increased price differential between the two lines to advantage BY in their purchasing decisions.

The ability for Rolex, Cartier, Dooney & Burke and other quality brands to successfully enforce minimum pricing has some unique aspects that H&M does not share. First and foremost is the concern about fake goods for Internet sales because of ease of manufacturing fake watches of purses that is not nearly as easy with furniture. This discourages many from buying discounted Rolex, etc. on the net. Secondly, an Internet order of H&M is custom ordered and drop shipped from the factory or delivered by your truck rather than a warehouse, further giving comfort to the buyer of authenticity of the product. Also, there is a perception that certain fair price traded brands have a measurable and unique quality or reputation that warrants the non-competative aspect of minimum pricing. While H&M makes a great product, it does not have the same brand status or uniqueness with the general public as the examples sited.

One final comment regarding the changing marketplace and brick & mortar vs. Internet. I would suggest that H&M needs to understand that the very customer it serves with it's own Internet marketing (website, emails, etc.) wants to use the Internet for product education, convenience, and free market competition. It's a new world and the Keeping Room has very successfully adapted to serve it's customers and increase H&M's sales. H&M and it's B&M network needs to do the same if they want to prosper. For me, Jimmy Moore should be telling the B&M stores to wake up and smell the roses (or Internet sales in this case) and compete with the Keeping Rooms of the world on the net in addition to their regional B&M customers. The approach he has taken of minimum pricing will only serve to reduce his business instead of building it as you have done.

Larry

[Detyler]

Duane,

I'm sure you will find a new product line more friendly to internet sales. It seems very short sighted to limit internet sales. You had actually made furniture shopping a fair game with this forum. Now they want to force us back into a store with irritating salespeople? I don't have time to surf around all the furniture stores until I happen upon somebody that is actually honest and knowledgable. You do more to promote the brand than they know. They are taking a step backwards.

Anyway, is the 2013 T&C available for a few weeks before the August 1st stuff kicks in?

David