Badcock to test RTO, kids
New formats aimed at keeping, adding customers
By Tom Edmonds -- Furniture Today, September 5, 2004
Orlando, Fla. — Searching for revenue growth, Top 100 store W.S. Badcock intends to test two new retail formats specializing in rent-to-own and youth furniture.
President and CEO Don Marks announced the plans at the Southeast chain's semiannual dealer meeting, which also celebrated the company's 100th anniversary.
The RTO experiment is further along than the kids stores. Marks, a 10-year RTO veteran from the Rent-A-Center chain, said the plan now is to test three rent-to-own units, which probably will not carry the Badcock name, starting early next year.
He said pilot stores will be in an urban location, a rural location and near an existing corporate-owned store to see how Badcock's credit-oriented retail operations are affected.
The RTO stores, with about 3,000 square feet of display, will offer a tight assortment of electronics, appliances and furniture from Badcock's existing catalog, with inventory from its warehouse. The Badcock corporation will operate the test stores, and Marks said the company is not sure how or whether the company's associate dealers will be able to participate in the concept.
"If we can make it work as a dealer-operated model, we would like to do that," Marks said, although he noted that Badcock pays dealers a commission on their sales, an arrangement that wouldn't work with RTO. "I suspect we may end up in a franchise situation."
Development of RTO is a response to recent changes in the Badcock Home Furniture & more retail format, which is attracting more affluent customers, as well as an effort to fuel the corporation's aggressive growth plans.
The Badcock & more format, which represents about half of the chain's 320 stores, isn't growing as fast with the company's traditional "cash- and credit-constrained" customer as it is with people who don't need Badcock's in-store financing.
"We've brought in a higher-end customer," Marks said. "Our credit business is growing, but nowhere near as fast as our cash business."
Badcock is looking to double its business in the next six years. The 320-store company closed its fiscal year June 30 with total revenues of $480.9 million, up from $443.8 million in fiscal 2003.
By the end of 2010, management wants to have 500 stores averaging $2 million in sales each for a total of $1 billion in revenue.
The youth furniture stores probably won't be tested until the second half of 2005, Marks said. These stores probably will trade on the Badcock image, with names like Kids & more tested with focus groups.
Marks said the stores are likely to have 6,000 to 8,000 square feet of display, with the first stores likely to be tested "in good Badcock markets where we are well known and trusted."
At the dealer meeting, when Badcock introduces merchandise to its dealer network, the company added a bevy of new youth bedroom collections to its catalog.
In addition to the existing groups from Founders Furniture, the retailer brought in paper-laminate suites from Standard Furniture and wood imports from American Woodcrafters and Kemp Furniture.
"This is a little higher-end product, and the target customer is going to be a little higher demographic," Marks said.
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Badcock to try RTO, youth retail formats
Aug 31, 2004
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