When Mike Cairnes joined Kirkland’s in late 2016 as chief operating officer, he made a big push to drive e-commerce growth for the furniture and home décor retailer.

"I stood up e-commerce as a separate P&L department within Kirkland's," Cairnes, now acting CEO of Kirkland's, told Supply Chain Dive.

And the focus on e-commerce paid off for the retailer. In the first quarter of 2018, the store achieved record sales "driven by continued momentum in our e-commerce business," Cairnes said in a press release. E-commerce revenue grew at a rate of 39%.

With both e-commerce and the retailer's more than 400 stores proving profitable, Kirkland’s saw an opportunity to differentiate itself from competitors with a strong omnichannel strategy.

"We can offer the total experience," Cairnes said. The retailer will launch a buy-online-pick-up-in-store (BOPIS) initiative later this year.

Furniture lags in the e-commerce world

While it may seem Kirkland’s is late to the game, Michael Witty, director of the Retail/CPG Digital Practice at ISG, told Supply Chain Dive most furniture retailers haven’t implemented BOPIS, largely because of the logistics of fulfilling those orders and the slow adaptation to e-commerce.

"The percentage of e-commerce purchases in furniture, while growing, still lags some of the other industries," Witty said. "It's been a laggard because of the nature of the items, but it's catching up."

In part, the industry has been slow to adapt because of low consumer interest in purchasing furniture online. In addition, last-mile deliveries of bulk goods such as home décor or furniture are not as simple as shipping a small parcel containing a few T-shirts.

While Cairnes said Kirkland’s mostly sells accent furniture, the retailer has also had to figure out how to ship items such as large pieces of artwork and lamps. "It adds another level of complexity," he said.

Competition in the online space, however, has pushed furniture retailers to enhance their e-commerce offerings. Wayfair sells home goods exclusively online and has created competition in the furniture industry, Witty said. The e-tailer’s website features augmented reality tools, such as 360-degree views of a product and an application that virtually places an item into a customer’s existing room.

Stores are all about the customer

No matter how fun Wayfair's tools, it can't offer quite the same store experience as a brick-and-mortar retailer. With Kirkland’s rolling out BOPIS nationwide in the fourth quarter of the year, the retailer hopes it will drive additional foot traffic into its stores.

"By bringing [a customer] in the store, there may be other things that she'll get enamored with and purchase at the same time," Cairnes said. Furniture isn’t typically an impulse purchase, but Kirkland’s also sells several seasonal and home décor items in its brick-and-mortar locations. While a customer may have strategically planned to buy a side table online and pick it up in the store, a vase to place on the table could be a spontaneous purchase made in store.

To generate more of those impulse buys, the retailer has worked on designing its stores in a way that’s "all about the customer," he said.

"Our products aren't displayed on row after row of cold, metal shelves, Kirkland’s stated on its website. "We create inspirational environments that delight the senses, spark memories, and inspire creativity."

The retailer will stand up a next-generation concept store later in the year known as "Janus" — named after the Greek god of new beginnings, Cairnes said.

How BOPIS sets up logistics 'beautifully'

Stores that employ BOPIS need to make sure there’s "an ease of picking up in store," Witty said. That could be a separate counter in the store for online pickup, such as Home Depot and Walmart have, or a specific shelf with orders ready to go. If a customer has to search through the store and jump through hoops to find the order, it nullifies the convenience of BOPIS. "You might as well have bought it in the store," he said.

Kirkland’s plans to fulfill the majority of BOPIS orders through existing inventory in its stores, allowing customers to order and pick up same-day or next-day, and satisfying the desire for instant gratification.

As an added benefit to Kirkland’s, using store inventory "will ride along our normal logistics process," Cairnes said. "It will negate a lot of the freight costs that come with e-commerce ... This sets up beautifully in so many different ways."

The challenge for any retailer is making sure in-store inventory can accurately fulfill online orders.

Kirkland’s currently offers several items on its website for online sales only. "Their biggest challenge is going to be eliminating that line as best as possible, because if they're going to have a successful BOPIS experience, their consumers need to be able to get whatever's online in the store," Witty said.

Product inventory databases need to be accurate and updated as close to real time as possible, he said, to ensure a seamless transition from online order to store pickup.

To control costs, streamline the supply chain

Having greater control over inventory ties back to a separate initiative Kirkland’s has underway — sourcing directly from the factory.

One of the biggest advantages to going directly to the source is significant cost savings for the retailer. In a typical global supply chain, factories, manufacturers and import and export managers mark up a product before it reaches the retailer.

"Every single one of those links takes a piece of the pie," Witty said. By eliminating those links in the chain, however, mark ups are greatly reduced.

"We could see as much as a double-digit cost decrease on some of the items" that Kirkland’s is choosing to source directly, Cairnes said. The retailer will primarily directly source what it considers to be core products, such as mirrors or frames.

Witty said quality of products and inventory management can also improve, as the retailer has more direct oversight on the goods being produced. The supply chain overall becomes more streamlined, and bottlenecks are reduced or even eliminated. 

Direct sourcing does, however, require a specialized skill set from the supply chain team, and at times, awareness of foreign regulatory or cultural barriers to work directly with a factory.

Initially, Kirkland’s is using a third party to manage its direct sourcing, Cairnes said. Eventually, the retailer will consider working with suppliers on private label goods, although there aren't any firm plans or dates for that initiative.

While the retailer has already seen some benefits from direct sourcing, the program is in its early stages, and Kirkland’s expects to see more of the impact in 2019 and 2020.

"We’re early in the process, but we are now moving on it," Cairnes said. "That’s the key point, and that’s the good news."