La-Z-Boy's strong start
First new-format stores generate high traffic, big tickets
By Clint Engel -- Furniture Today, January 6, 2002
MONROE, Mich. — MONROE, Mich. — La-Z-Boy is making hay today with its Store of Tomorrow program, with results from the first six new-format units outpacing the rest of the store network.
The company opened the first of the new La-Z-Boy Furniture Galleries in late June in Sterling, Va., in the Washington metro market. Five more have since opened — two more in greater Washington and one each in the Phoenix, Houston and San Diego markets. A seventh is expected to open in mid-January in Oxnard, Calif., in metro Los Angeles.
La-Z-Boy unveiled the new- concept gallery store this past June at its biannual dealer conference in Las Vegas. The Store of Tomorrow's features include updated interior and exterior signage, a revamped design center, higher ceilings and a larger showroom with a fresh contemporary look and a new traffic pattern.
Early results have been promising, with high traffic and positive feedback from customers, said Kurt Darrow, president of La-Z-Boy Residential. He said the stores are exceeding the company's sales projections, with some posting sales of more than $1 million in their opening month.
Darrow noted that the going is early and that the first stores are in some of La-Z-Boy's largest, strongest markets, where they naturally should do more business. That said, the new stores have outperformed the 300-store chain in several categories.
Average sales per square foot at the new stores have been running about $452 initially vs. $270 for the rest of the chain. The average ticket has been nearly $1,300 vs. $1,000 for the chain, and the percentage of sales coming from lamps, tables and home accents is about 16% compared to 12% chainwide.
La-Z-Boy also is selling more non-recliner upholstery at the new stores — 42% of the total business vs. 38% across the company.
"The (new) stores speak more to room environments and completing-the-whole-room sales," Darrow said. "Although we were moving in that direction already, the (older) stores still appeal to more of an item shopper."
He added that he believes the new centrally located design center and the stores' wider offering of home accents have helped create a whole-room atmosphere that has resulted in the larger-ticket sales.
"The new store is a huge hit with our customers," said Ed Breunig, who opened a 17,000-square-foot new format store — his sixth La-Z-Boy unit — in Glendale, Ariz., in August.
"They love everything about it — the layout, the design center and, of course, the furniture. This is definitely a new direction for La-Z-Boy and judging by our customers' reactions, it's the right direction," Breunig said.
La-Z-Boy plans to roll out the new design in a two-pronged approach, filling in key markets with more stores and renovating or replacing older units over time with the new look. About 20 new stores and several relocations are planned in calendar 2002 and another 25 new units in 2003.
"If we open an average of 25 new stores a year and remodel 15 to 20 a year, we would be making pretty good progress," Darrow said.
This year's openings will be fairly evenly distributed among La-Z-Boy's geographic regions and will include four to six stores in undisclosed markets in Canada; two in Chicago; and stores in Palm Beach Gardens, Fla.; Yorba Linda, Calif.; Waterbury, Conn.; St. Louis; and more in greater Washington.
The new stores will average about 15,500 square feet, up from the 13,500-square-foot average of existing Furniture Galleries stores.
The three Washington units opened last year are owned by La-Z-Boy. The company acquired the La-Z-Boy stores in the market from the former Reliable Stores of Columbia, Md., which sold most of its furniture stores to Heilig-Meyers.
The stores opened last year outside metro Washington, and most of the other stores to be opened this year, will be owned and operated by existing La-Z-Boy store dealers.
While the numbers aren't all in yet, La-Z-Boy expects total revenues for its gallery store network to reach about $915 million in calendar 2001, up from about $830 million in 2000. U.S. furniture, bedding and accessory sales will reach about $827 million for 2001, up 11% from $743.7 million in 2000, which placed La-Z-Boy No. 6 on Furniture/Today's survey of the Top 100 U.S. furniture stores.
This year the company should push $1 billion in total revenues at the stores, barring unforeseen disasters, Darrow said.
The Store of Tomorrow format focuses on the Design Center, which was moved to the center of the store to emphasize custom orders and design assistance. The area includes the La-Z-Boy Screen Test video catalog system and an interactive and educational play area for children.
Other new store features include an updated logo, a wide circular pathway done in wood flooring, and an expanded selection of home accents, including lamps, area rugs, wall art and accessories, and the Hidden Treasures Collection of accent furniture from Hammary, a La-Z-Boy company.
The new design continues to organize products by category galleries, including Living Room, Family Room, Leather and a new Sleep Sofa gallery.
Darrow said La-Z-Boy is evolving and that its growth and success depend "on our ability to consistently meet and exceed our customers' expectations. Early feedback indicates that the new store format more than delivers on that level."
| La-Z-Boy's new-format store in Springfield, Va., makes the design center a focal point. |
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