Furniture Outlets grows
Top 100 retailer to surround Twin Cities with stores
By Clint Engel -- Furniture Today, April 5, 2004
MINNEAPOLIS — Furniture Outlets USA is moving full-steam into the Minneapolis-St. Paul market this year with five new stores, including four Ashley Furniture HomeStores.
The retailer is looking to nearly double its sales to more than $150 million in 2005.
It will face tough competition in the area, which already has such high-profile stores as HOM Furniture and Slumberland. Gordy Wallenstein, Furniture Outlets general manager, said the market is expanding and added the other Top 100 players already have helped build consumer awareness of the home furnishings sector.
"We're thinking there's enough population growth that everyone will see good business, and we'll just bring the consumer more choices in home furnishings to that market," he said.
In July, Furniture Outlets, previously known as South Dakota Furniture Mart, will open an Ashley store and a full-line Furniture Outlets store in the southwest Minneapolis suburb of Shakopee. At 178,000 square feet — with a 45,000-square-foot Ashley store, a 115,000-square-foot Furniture Outlets and 18,000 square feet of warehouse space — it will be the Sioux Falls, S.D.-based retailer's largest complex.
Also coming in July is an Ashley store attached to a 150,000-square-foot distribution center in Fridley, a northern Minneapolis suburb. Furniture Outlets is converting a former Wickes warehouse and showroom there and adding another 50,000 square feet of warehouse space.
When the Fridley center opens, the retailer will convert an existing warehouse and delivery area to showroom space at its North Branch, Minn., Ashley store, nearly doubling the display to about 22,000 square feet. By the end of this year, the retailer plans to further fill out the Twin Cities with Ashley stores in Maplewood and Woodbury, Minn., north and east of St. Paul.
All four Ashley stores will be in the 40,000- to 45,000-square-foot range. The investment in the five stores and distribution center will total more than $50 million.
With the aggressive expansion, the 18-store Furniture Outlets will grow to 23 stores with furniture, bedding and accessories sales projected to top $150 million in 2005, up from nearly $80 million last year, Wallenstein said.
By that time, he said, business from the company's 10 Ashley stores could account for as much as 50% of the retailer's furniture, bedding and accessories sales, up from about 25% in 2003.
He said the company has been opening stores on the perimeter of the Twin Cities market for some time, in areas like Medford and North Branch, where land prices and advertising costs are lower than in areas closer in. These stores are large and highly visible on high-traffic routes.
While the new locations will have that same visibility, they are deeper into the cities and should give Furniture Outlets the physical presence and sales volume it needs to more effectively advertise, Wallenstein said. All the new stores are within a 20-minute drive of either Minneapolis or St. Paul proper.
"It's a growing market," he said, noting a report that projects the Twin Cities will add 500,000 households over the next 25 years. Scott County, where the Shakopee stores will be located, is the eighth fastest-growing county in the nation, he said.
While Ashley is becoming more important to Furniture Outlets, it's not at the expense of the retailer's other vendor partners, he added. Indeed, as more Ashley stores open, the company's full-line formats will have less Ashley furniture, opening space for other lines.
In Shakopee, for instance, the larger store will be a Furniture Outlets, designed by Connie Post Cos., which will include an England Comfort Center, Broyhill, Lane and Natuzzi galleries and a large bedding department featuring Sealy, Spring Air and Restonic.
"We are looking at other locations for both Ashley Home and Furniture Outlets," Wallenstein added. "We want to make sure we grow on both sides of the fence."
He wouldn't elaborate on plans beyond 2004, but said the company will be looking to further fill out Minneapolis-St. Paul and enter new markets.
With 18 stores in the Dakotas, Minnesota and Iowa, Furniture Outlets furniture, bedding and accessories sales increased about 12% last year to an estimated $77.9 million.
Its stores operate under various name, but mostly Furniture Outlets USA, Unclaimed Freight and Ashley Home.
Ashley and Furniture Outlets are the two names under which all future growth is expected to come, and Wallenstein said the company's goal is to eventually go with one of those two names at all locations.
