Retailer likes Ashley concept
By Clint Engel -- Furniture Today, April 4, 2004
SIOUX FALLS, S.D. — It's easy to understand why Furniture Outlets USA wants to add more Ashley Furniture HomeStores.
Since the company opened its first Ashley store in 2001, the concept has helped the retailer greatly increase its average return on sales, said Furniture Outlets General Manager Gordy Wallenstein.
That's because it doesn't have to inventory much Ashley merchandise, relying instead on the manufacturer's quick delivery — typically within four days of an order.
"So the turns are incredible on the product," Wallenstein said. And slow-moving goods are easy to dispose of quickly because there's no inventory — just floor samples — to work through. Ashley also supplies advertising materials for a fee and store design plans, which Wallenstein said have improved with each new store the company has opened.
Furniture Outlets now operates six Ashley stores and plans to have 10 by year's end.
Ashley Chairman Ron Wanek said his company has been doing business with Furniture Outlets and its president and CEO, Bill Hinks, for about 20 years.
"We're happy that we're growing with them," said Wanek.
He said the Ashley supply chain helps retailers focus on improving their gross margin return on investment. Wanek was preaching the benefits of tracking GMROI before the company launched the store network.
He added that the Ashley line is broad, and that he doesn't anticipate much distribution disruption in the Twin Cities resulting from Furniture Outlet's expanding presence.
He also said the retailer's expansion fits Ashley's strategy of growing the HomeStores network through existing accounts.
Last year, the Ashley Furniture HomeStores network grew by a net 19 stores, while estimated sales skyrocketed more than 70% to about $600 million from $350 million in 2002.
Likewise, Furniture Outlets' business with the Ashley retail concept is growing significantly. Wallenstein wouldn't provide projected sales for the new stores, but said the format has been a winner ever since the company opened the first small Ashley store in North Branch, Minn., in 2001.
He said the Ashley stores "enjoy some of the highest sales per square foot in our system," and he expects sales to increase even more once the company ratchets up its Minneapolis advertising.
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