Art Van: On toward $1 billion
By Clint Engel -- Furniture Today, March 17, 2002
WARREN, Mich. — Top 100 powerhouse Art Van will continue its aggressive growth in Michigan this year with the opening of a big replacement store in Port Huron, the remodeling and expansion of two other units, and the beginning of construction on a new store in Chesterfield Township.
The work will add more than 150,000 square feet of showroom space and boost the store count to 29 by the time the Chesterfield store is completed next year. Combined with some additional distribution capacity, this should put the retailer on a steady path toward reaching the $1 billion sales mark in three years.
In Chesterfield, one of the fastest-growing communities in metro Detroit's Macomb Country, Art Van will begin work on a 75,000-square-foot showroom in May, with the opening expected about the same time next year, said President Bill Barto.
Meanwhile, the company will finish work on a 75,000-square-foot store in a fast-growing commercial area of Port Huron this summer, replacing a 45,000-square-foot unit in a less-desirable downtown location.
In Grand Rapids, Barto said the retailer will remodel and add 12,000 square feet to its 70,000-square-foot store, with completion set for October. And in Southfield, Art Van will double its showroom to 70,000 square feet, with work beginning next month and completion expected around Thanksgiving. About 10,000 square feet will be developed into a clearance center, giving Art Van outlets in 27 of its 28 stores.
In all the new and remodeled stores, Art Van will be adding interior and exterior design elements that it began rolling out in 1998, including dramatic 110-foot wide by 50-foot high glass atrium entrances, Kid's Castle play areas, Clock and Curio galleries, a Pembrook Chair special-order chair gallery, new home office galleries and other special touches.
In addition, in Grand Rapids this year, the company will be upgrading its Italian leather gallery with its take on Natuzzi's new gallery format. The gallery will be about 2,900 square feet and will include hardwood floors, new lighting and graphics and the new Natuzzi logo, said Art Van Elslander, chairman and chief executive officer.
The galleries, ranging from 2,000 to 2,900 square feet, will be installed in all the new and remodeled stores on tap for this year, and the rest of Art Van's Italian leather presentation will be contiguous to the galleries.
Also, where it can find the space, Art Van will expand its youth furniture offerings with goods from key suppliers Lea, Palliser, Ashley and Broyhill in a youth department that wraps around the Kid's Castles.
Van Elslander said the company is taking a page from such companies as Rooms To Go and Seaman's, which have developed successful youth specialty concepts. Art Van first broadened its offering in the category with a 7,800-square-foot presentation that was part of a remodeling at its Westland store this past fall.
Sales last year were flat at about $575 million, Van Elslander said, and he conservatively estimates that sales this year will be a little over $600 million. He said the company recently has been able to recruit the high-quality people it needs to grow its already dominant Michigan market share.
In January 2001 — after years of preparation and study — Art Van completed an expansion of its distribution center in Warren to 750,000 square feet. The facility now includes a new 53,000-square-foot, state-of-the art "automated storage and retrieval system," with racks up to its 100-foot-plus ceilings.
A handful of employees are needed for the system — a first for the industry in the United States — that identifies, loads, stores and retrieves bar-coded merchandise (see story below).
The system processes about 100 pallets per hour and holds about $10 million of merchandise at cost, Van Elslander said. He would not disclose the investment.
With the first automated warehouse in place, Van Elslander said the retailer only has to duplicate it to handle more volume. There's room for two more of the units, providing another $20 million in inventory capacity and taking total distribution center inventory to about $70 million at cost.
"By doing two more, we will be able to service $1 billion (in retail sales), which we think we'll accomplish in the next three years," he said.
| The Warren, Mich., flagship store sports Art Van's new exterior look. |
| The special-order chair gallery, above, and the Kid's Castle play area are standard features in all new and remodeled Art Van stores. |
Art Van's automated warehouse
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Size: 52,800 square feet, attached to its 700,00-square-foot distribution center in Warren, Mich.
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Racks: 105 feet high by 395 feet long, with four aisles, seven doors for receiving and 10,000 bins for furniture.
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Capacity: About $10 million in inventory at cost, about 15,000 pieces of furniture. Comparable to a 180,000-square-foot, 35-foot high conventional warehouse.
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The process: Furniture is received at docks during a first shift, identified, bar coded, scanned and loaded on pallets. Automated 100-foot cranes with optical readers place goods in bins on the racks. Orders come in from the stores and, during a second shift, merchandise is automatically retrieved from the bins, loaded onto carts and brought to shipping docks for delivery early the next morning.
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Speed: About 100 pallets per hour, some 30% faster in receiving and 20% faster is picking than conventional methods.
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Accuracy: The system finds 99.99% of the goods.
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Employees: One manager and one mechanic for the warehouse, two dispatch receivers for bar coding and scanning, two distribution handlers for outgoing goods, and four helpers split between receiving and outgoing.
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Damage: With limited human handling, damage is virtually eliminated. Merchandise continues to be checked for quality upon delivery and before shipping.
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| A model of the automated storage and retrieval system installed in Art Van's Warren, Mich., distribution center. |
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