Raymour eyes Big Apple
Retailer expects big sales boost from NYC metro stores
By Clint Engel -- Furniture Today, August 15, 2004
Liverpool, N.Y. — Raymour & Flanigan Furniture plans to enter metro New York by early next year, eyeing Huffman Koos locations, among others, in an aggressive growth push that could propel the Northeastern retailer to $1 billion in sales within four years.
The 53-store Top 100 company has been operating on the fringes of greater New York for five or six years. It will expand along that track with openings in Lawrenceville, N.J., and Brookfield, Conn., in November and Middletown, N.Y., early next year, said Neil Goldberg, president and CEO.
But that's "just the start of our plan to become a leader in this lucrative region," he said.
Raymour is seeking locations in northern and central New Jersey, in Rockland and Westchester counties and Long Island in New York, in Connecticut's Fairfield County, and other sites in the metro area.
Raymour could "someday enter the five boroughs of New York," he said.
The timing isn't definite, but Goldberg said greater New York is where the retailer will concentrate its expansion efforts over the next five to seven years. He anticipates opening 20 to 25 stores in the metro area over that period, including some by the first of next year.
If all goes as planned, metro New York could quickly become the largest market for the fast-growing, midpriced retailer, which ended 2003 with 52 stores in Connecticut, Delaware, Massachusetts, New Jersey, New York and Pennsylvania.
Raymour did an estimated $462.9 million in furniture, bedding and accessories last year, a 17.2% increase that easily outpaced the 7.5% sales growth for Furniture/Today's combined Top 100. This year, Goldberg expects the chain will do about $550 million, then reach $1 billion in three to four years.
Much of that growth should come from greater New York, which Goldberg estimates is three to four times larger than the Philadelphia home furnishings market, currently Raymour's largest sales area with annual volume of more than $200 million, he said.
"Our hope is that some day our market share in metro New York will be similar to the market share we've earned in all of the other markets we operate in," Goldberg said, although he wouldn't say what that share is.
While Raymour's management has been talking about the move for more than a year, Goldberg indicated the recent collapse of competitor Breuners Home Furnishings Corp. played into its decision to move ahead.
Lancaster, Pa.-based BHFC filed for Chapter 11 bankruptcy protection in July and plans to liquidate all stores, including its 17 Good's Furniture stores in Pennsylvania, Delaware and New Jersey and 20 Huffman Koos stores in New York, New Jersey and Connecticut.
In court documents, BHFC said the aggressive Raymour & Flanigan played a role in its demise, pointing to its rapid expansion in BHFC markets, including Philadelphia, where BHFC said Raymour outspent Good's Furniture eight-to-one in advertising.
"To some degree the timing was predicated on accomplishing the critical mass of stores we wanted to have in the Philadelphia market," Goldberg said. Raymour had entered the market in 1997 with the acquisition of Furniture Unlimited. "But the BHFC situation brought real estate opportunities to the forefront," he said.
Raymour is evaluating the leases of all Good's and Huffman Koos locations, he said, but added that it's too early to say whether any would work in its business plan. It's also studying other real estate options.
Goldberg said Raymour is "an aggressive marketing company and we've always had a strategy where, when we enter a market, we want to put showrooms in the most customer-convenient and friendly locations."
But he added that he believes Raymour's aggressive promotional tactics also help drive business to the industry in general and away from other options for disposable income.
Raymour has operated on the fringes of metro New York for years, with stores in areas such as Poughkeepsie, N.Y., Allentown, Pa., and North Haven and Orange, Conn.
Its just-opened Stroudsburg, Pa., store is the closest to New York City to date, but will be edged out by its Lawrenceville/Princeton,N.N., location when it opens in November.
Raymour expects it will have to build a third distribution center (supplementing is 191,000 square feet of distribution space at its Liverpool home base and the 296,000-square-foot center in Gibbstown, N.J.) within two years to serve the New York market.
Also, while the retailer's typical showroom is about 50,000 square feet, Goldberg said real estate costs and availability will force it to be more flexible with the size of its store footprint in New York.
He would not disclosed the projected costs of the expansion plan, noting that it will depend on several variables, including how many stores the retailer ends up opening.
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Raymour & Flanigan eyes metro NY area
Aug 10, 2004
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