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CARTHAGE, Tenn. — Albert McCall Sr., president of D.T. McCall & Sons, loves a good recession.
The veteran retailer has been in the furniture business 44 years and says his best years have all come during recessions. "It's good for us," McCall said. "We make more money during a recession than any other time. People shop harder, and that brings them to us."
What they find at D.T. McCall's three stores are powerful promotions on closeout merchandise from mid-priced and upper end manufacturers.
An aggressive advertiser in Nashville, an hour west, and in other cities of Middle Tennessee, McCall provides small-town service and free delivery, his trucks regularly traveling up to Kentucky or down to Atlanta.
Low overhead — from carrying no debt and owning its stores and warehouses — combined with a committed team of family managers allows the company to maintain net profit margins of 15% to 20% — five times greater than the industry norm. At the same time, McCall says he can compete to an advantage with anybody who wants to match prices on furniture, electronics or appliances.
D.T. McCall & Sons dates back to 1896 when Albert McCall's grandfather, another Albert, opened a general store in Flat Rock, Tenn. His son, D.T. McCall, took the business through the next generation, relocating to Carthage and specializing in appliances. Albert McCall Sr. joined in 1956 and almost immediately added furniture.
In this tiny town of 5,000, D.T. McCall & Sons has an 80,000-square-foot store along with 300,000 square feet of warehouse space.
Also, the company has stores in Lafayette, 50,000 square feet, and Cookeville, 60,000 square feet. The Lafayette store is less than 20 miles from the Kentucky border, and about half its sales are from that state. Cookeville is almost halfway between Nashville and Knoxville, drawing business from that sparsely populated area.
This month, McCall will open a fourth unit in Lebanon, a 35,000-square-foot former Heilig-Meyers location. "It's the first time we've ever paid a penny rent, but it's so low, we're just about getting it free," he said. "It was an awful good deal."
Since Lebanon sits between Carthage and Nashville, it remains to be seen whether McCall will be taking business from his main store. About half of his total business is with Nashville residents at his headquarters store.
"The only reason we're going there is because they have a shopping center that needed an anchor like us, and they made it easy to get in there," he said. "The computers and the phones are still in there, and all we have to do is move in the furniture. We'll be operating in two weeks."
Say it with pride
As he talks about the company's infrastructure, McCall, who is 72, shows a feisty pride. That pride has been on display for years in Nashville, where D.T. McCall & Sons was a lead sponsor of the top-rated morning show for 20 years. The host of that program, Ralph Emery, is moving to a new station this fall, and McCall's is moving with him.
McCall does live commercials every day on the show. "It gives us a lot of flexibility," he said. "If it's warm in the morning, we can pull air conditioners out of the briefcase."
In those commercials or in the 10 pages of color advertising that it runs in the Nashville Tennesseean each month, the company does not talk about sales or discounts, although they will mention how much an item might normally cost at a more conventional store. Working with closeouts from Kimball, Universal and Lexington, for instance, McCall & Sons will offer beds at $299 up to $499, noting that the item was originally set to retail at more than $1,000.
At the same time, the company does not stick to a specific margin goal. "We sell it by what it will bring, not by what it cost," McCall said. He can do this because he specializes in trailer-load closeouts, buying odd lots and items at a fraction of their original cost.
"In the furniture industry, this is what happens where they cut a suite, and they wind up with too many king-size beds or some other piece. That's when they call us. Something like that crosses my desk every day."
In upholstery, these closeout opportunities are more rare but still available from time to time. "There's not many as many dumps because the upholstery is made when you buy it," McCall said. "We do buy some closeouts from manufacturers who are closing out a cover on a quick-ship program."
Manufacturers offer this merchandise to McCall because he pays cash, he buys large quantities, and he doesn't quibble about what he's getting. "It's a gamble sometimes, but it usually works," he said.
The recent failures of several major retailers have also opened new opportunities for McCall to buy some imported merchandise, including Italian upholstery. "We buy a lot of stranded containers. When Roberds or some of these folks go broke, there's a lot of furniture on the water. ... It's not closeout merchandise. It's Class A. The only problem is you can't dictate what's in the container."
Cost-saving buying
To save on freight and to maximize his savings, McCall buys in quantity. "We won't buy anything less than a trailer load," he said. "If we don't need at least a trailer load, we don't need it."
McCall controls his freight costs by working with local trucking companies that are willing to backhaul from factories in North Carolina and Virginia for $1 a mile. He also has his own trucks, which he sends out on distant deliveries that are coordinated with pick-ups from suppliers' regional distribution centers.
The company provides free delivery, another point McCall considers key to his company's success. The limit on this free service is supposed to be 200 miles, but those rules are often stretched to accommodate customers traveling longer distances. "We don't charge for delivery because we don't need to," McCall said.
Although Albert McCall Sr. is the driving force, D.T. McCall & Sons is certainly not a one-man band. His brothers, John and Dave are buyers as well as partners; his nephews, Cris McCall and Tom McCall manage the Cookeville and Lafayette stores; and Albert McCall II, a lawyer, is also a buyer.
"I brought every one of them into the business after they finished college, and we want them to stay as long as they're willing to work hard," said Albert Sr. "Family businesses will work ... if everybody has the same objective — making money."
With profit margins approaching 20%, D.T. McCall & Sons seems to have everybody pointed in that direction, although McCall acknowledges that to a large extent the company is benefiting from the reputation and the infrastructure built in the past 105 years.
"If you had to start from scratch, you'd never be able to do this," he said. "We built our reputation over the years. ... The beautiful part of it for us is that it's fun."
D.T. McCall & Sons at a glance
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| Albert McCall Sr., left, does live commercials every day on a top-rated Nashville morning show hosted by Ralph Emery, right, and sponsored for 20 years by D.T. McCall & Sons. |
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| D.T. McCall & Sons places 10 pages of color advertising each month in the Nashville Tennesseean. |
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Stores: Founded in 1896; three stores in middle Tennessee with a fourth to open this month.
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Niche: Closeouts and low prices on better and best furniture, appliances and electronics.
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Display space: 210,000 square feet, including 80,000 square feet at the Carthage headquarters store.
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Galleries: Berkline, La-Z-Boy and Thomasville.
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Other key vendors: Broyhill, Hickory Hill, Kimball, La-Z-Boy, Lexington, Natuzzi, Universal and Vaughan.
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Warehousing: 300,000 square feet in Carthage, Tenn.
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Salespeople: 35
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Projected 2001 sales: More than $30 million, with furniture comprising about 66% of the total.
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