Solve Today’s Nine Most Urgent Retail Challenges |

Retailers that consistently win aren't those that wait for a boom. They build systems that allow their businesses to thrive under any market conditions.

After 25 years of consulting in the home furnishings industry, I’ve come to recognize a consistent set of challenges. While temporary economic booms, such as the real estate and COVID bubbles, created exceptions, the following nine fundamental issues persist across time, geography and business models. This article outlines the top recurring challenges and practical solutions that businesses can apply today.

1. Traffic is a Perpetual Challenge

Traffic is the number one issue retailers discuss. When traffic slows, since retailers cannot build sustainable businesses by relying on economic bubbles, they renew their quest to find the “holy grail” of advertising to attract shoppers.

Here’s the truth: the best advertisers in our industry already spend 3%–10% of every sales dollar on advertising. If there were a magic bullet, they’d have found it. The real solution to traffic-building is to generate quality traffic organically by focusing on building better traffic by attracting:

Returning guests.
Referrals.
Past customers.

These groups close at much higher rates than cold prospects. Want more of them? Focus on connection and professionalism. Book follow-ups, impress shoppers from the start, and never waste their time. Utilize appointment booking tools and follow through intentionally.

For past customers, instead of sending out mass email blasts, try using:

Personalized communications.
VIP offers.
Product-specific follow-ups.
Relevant service messages.

This requires a CRM that tracks activity and automates follow-up. Your best salespeople are your best communicators—and often your cheapest, because they generate their own traffic.

2. Find and Retain the Best People

Recruiting and hiring salespeople, warehouse personnel, delivery teams, office staff, and service representatives has become a universal challenge for home furnishings retailers. The difference between companies that struggle and those that don’t often boils down to one word: turnover. High-turnover companies are always hiring. Low-turnover companies don’t need to invest resources in that pursuit. Employees leave for a reason, and it usually has more to do with a company’s business than the individual who is hired. Solutions to recruiting and hiring problems start with a focus on corporate culture and core values. When store values are authentic and lived every day, people stay because they want to:

Feel valued.
Be recognized.
Grow professionally.
Work with good managers and like-minded people.

Great managers are the glue. When they leave, good people follow. That’s why going the extra mile to retain managers who are committed to sustaining rewarding work environments should be a priority for every retailer.

3. Best Cash Flow Management Practices

Some businesses continue to struggle to maintain adequate cash flow. Cash is generated from gross margin dollars, smart expense management and inventory control. Cash is preserved by:

Maintaining inventory levels in proportion to sales.
Avoiding despised inventory (returns, damages, theft).
Keeping capital investment and debt in check.
Not draining cash by pulling money out prematurely.

The best-run businesses establish guidelines storeowners should follow regarding the withdrawal of working capital. Whether the rule is to keep at least three times monthly expenses in the bank or based on a quick ratio, maintaining at least a minimum level is essential. Other considerations:

Margin matters (55%+ on financials is a winning number).
Manage sales and operations headcount based on sales volume.
Keep occupancy expense under 10% of worst-case sales.

Across-the-board cost-cutting isn’t the solution to cash flow problems. It’s much better to review every expense item to make sure it delivers an associated return on investment.

4. Inventory Systems That Work

Every retail operation has limited dollars to work with and finite showroom space. The goal is to stock what sells and avoid what doesn’t.

A percentage of buys are always bestsellers; the rest need to be marked down and cleared out. The key to doing this well is dynamic inventory management, plus AI and data analysis:

Double down quickly on bestsellers.
Mark down and liquidate the dogs.
Match new products to bestsellers.
Find trending SKUs that customers are buying elsewhere.
Search vendor databases by unique criteria.

Buyers now have tools to augment their instincts. The job isn’t to find what looks good—it’s to determine what customers want at margins that can be sustained.

5. Retail Promotions Proven to Consistently Work

Let’s be honest: there isn’t a promotion formula that’s a perfect fit for every retail operation. However, the following non-advertised, employee-driven VIP event formula has worked well for many of the retailers I consult with. It’s a professional selling system disguised as an event. Here’s the formula:

Set a weekday event (Thursday/Friday before a weekend).
Have each salesperson book 4–7 personal appointments using a shared calendar link.
Provide a concierge-level experience when guests arrive.
Offer a gift or drink as a thank you.
Treat every walk-in on an event day as a guest of the event.

This works because appointment traffic is the best traffic. The close rate is higher, and salespeople feel responsible for the result.

6. Choose the Right Technology

Carefully select core platforms and partner with teams that support seamless execution. Here are the essential systems every retailer needs:

Website platform.
CRM for lead capture and customer journey.
ERP/POS for inventory and sales.
Accounting system for financials.
Internal communications and file-sharing tools.
Marketing content production tools.

These systems should be integrated and communicate with each other. Always remember that the success of any system depends on flawless leadership, execution, and vendor support.

7. Best Ways to Stay Ahead of the Curve

Retailers get blindsided by new ideas and market changes when they become isolated. The most successful companies prevent this from happening by:

Joining industry associations and buying groups.
Attending peer-based performance groups (owners, sales, operations).
Investing in ongoing external consulting or coaching.
Seeking regular industry networking opportunities.

These aren’t short-term activities; they’re commitments. If you fall off the map with any of these, you’ll eventually miss a key opportunity or trend.

8. The Secret to Better Sales Productivity

Overall sales productivity is driven by sales leadership, not individual salespeople. The best sales managers:

Hire the right people.
Implement consistent selling systems.
Set expectations and enforce standards.

Selling systems work when they’re followed. Most salespeople will follow if they’re managed well.

9. Warehouse & Operations Inefficiencies

Warehouse problems are usually the result of poor process execution. These include inventory errors, damages and service failures. These aren’t problems, they’re symptoms. Fix operations by:

Defining processes.
Training people.
Using technology to track and support those processes.
Holding managers accountable.

I’ve seen warehouses transformed by installing better leadership. When this happens, sales also improve, as operations make selling easier.

Final Thoughts

There’s no single magic solution to these nine challenges. However, there are consistent and proven ways to improve. Start by focusing on leadership, execution, and data. Build from there. Never forget that winning retailers don’t just wait for the next boom. They build systems that allow their businesses to consistently thrive under any market condition.

About David McMahon

David McMahon is founder of PerformNOW Inc. PerformNOW has three main products that help home furnishings businesses improve and innovate: Performance Groups (Owners, Sales managers, Operations), PerformNOW CXM (Customer eXperience Management systems and processes), Furniture business consulting. Your can reach David at [email protected].