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Bigger Bernie & Phyl's comes home

By Clint Engel -- Furniture Today, August 28, 2005

Braintree, Mass. — In a sense, Bernie & Phyl's has come back home with the recent launch of its store here.

But in the 22 years since founders Bernie and Phyllis Rubin opened their first full-line store in nearby Weymouth, Mass., it has grown so much that its earliest customers may not recognize it.

It used to be that Bernie & Phyl's stores were small, basic and promotional. Little attention was given to displays. Sofas retailing for $399 were big business.

Today, the showrooms average more than 50,000 square feet as Bernie & Phyl's has replaced smaller stores with a superstore format. Vignettes are sharply accessorized. Layouts and displays are sophisticated and regularly freshened by a full-time design team.

And prices have moved up from the promotional to the solid middle ground.

"As our company got more and more into the displays and merchandising of our furniture, we were able to increase our success at selling better-end goods," said Rob Rubin, president of merchandising and marketing and a son of the founders. "At this point, our lower-end product mix is very thin in order to make room at the other end."

Bernie & Phyl's upholstery price points now are mostly $599 and up.

The Braintree store, at Southeast Expressway and Route 128, is the latest shining example of where the retailer is going.

The design isn't all that different from others the retailer has unveiled since it made its leap to a big-store format in 1997, except for the use of murals in some displays and new colors and wallpaper. But it's these kinds of gradual improvements that have helped to keep the chain competitive in the hotly contested metro Boston market.

"This is a really terrific location," said Larry Rubin, CEO of the family-owned Top 100 company and Bernie and Phyllis' other son. "It has great visibility from the highways. It wouldn't surprise me if a quarter million cars go by (daily) seeing our store."

He expects the new store will do $25 million to $28 million a year, about four times the sales of the much smaller Weymouth location, which peaked at $7 million. With the Braintree opening, Weymouth has been converted to a Bedding and Clearance Center.

Calculating for some cannibalism of business at its 50,000-square-foot Raynham, Mass., store — but not a lot — Larry Rubin conservatively estimates that by year's end, Bernie & Phyl's sales will reach $115 million, up about 8.7% from $105.8 million in 2004, the first time the retailer topped $100 million.

Bernie and Phyl's made Furniture/Today's Top 100 just five years ago in the last spot, with 1999 sales of $45.5 million. It has posted double-digit sales gains each year since, and in the latest survey was ranked No. 61 based on 2004 sales.

The Rubins credit a talented workforce for the success of the company, and also the family-oriented philosophy that has enabled Bernie & Phyl's to hire skilled employees and keep them happy.

"We treat everybody like family, and we empower employees to make decisions on their own, so things get done quickly," Larry Rubin said. "It's basically the personality of my father, my brother and myself. It's a close-knit family business. It's not a bunch of partners. It's not a public company."

One example of this empowerment: Bernie & Phyl's customer care workers are given general guidelines on how to handle dissatisfied consumers, but within those guidelines they regularly decide when to give someone her money back or lead her toward selecting something else from the store.

Training also is taken seriously. Every week or two the company holds workshops and training sessions for salespeople and customer service staff on product and other subjects. Three or four times a year, it sends employees to various factories to learn more about how the furniture is made, "just to give them better insight," Larry Rubin said.

It has led to a staff that feels appreciated. Turnover among the company's sales, management and office staff is less than 1%.

"Once they come, they don't leave," Larry Rubin said. "They're happy, and if they're happy, that's going to spread." (He added that employees also are paid well, although he wouldn't provide figures.)

While Bernie & Phyl's plans to keep growing, it isn't seeking a huge amount of capital to fuel its expansion. It has no plans to take the route of one competitor, Manchester, Conn.-based Bob's Discount Furniture, which earlier this year sold a majority stake to private equity firm Saunders Karp & Megrue, giving the retailer financial backing to grow beyond New England.

Bernie & Phyl's plans to keep the business in the family, and its expansion plans are more modest.

Larry Rubin said the retailer's existing stores have the Boston area pretty well covered, and the company is looking at "some different markets." He wouldn't give specifics, but said they are in New England and south of Boston. He estimates it will take about two years or so to find a suitable site, but if something comes up sooner, "we would make the move," he said.

Meanwhile, Bernie & Phyl's aims to continue growing, but doesn't expect to sustain the rapid pace it has set in the past several years.

"We're looking at moderate growth for the next year or two," Larry Rubin said. "The double-digit growth has been great, but it has never been our planned strategy. Now that we are a $100 million company, it's unrealistic to expect that type of double-digit growth every year."

Bernie & Phyl's at a glance

Headquarters: Norton, Mass.
Stores: Seven midpriced Boston-area showrooms, including the recently opened 50,000-square-foot store in Braintree, Mass., a store in Nashua, N.H., and two Bernie & Phyl's Bedding and Clearance Centers.
Sales: Topped $100 million for the first time last year, reaching $105.8 million, up nearly 22% from 2003.
History: Started in 1982 by husband-and-wife Bernie and Phyllis Rubin as a sofa-sleeper specialty store in Quincy, Mass., called Convertible Castle. A year later they purchased their first building and moved to Weymouth as a full-service store. That 12,000-square-foot showroom was just converted to the company's second bedding and clearance center with the opening of its superstore in nearby Braintree. The Rubins are joined in the business today by their sons Larry Rubin, CEO, and Rob Rubin, president of merchandising and marketing, and son-in-law Bob Pepé, operations manager.
Key suppliers: Klaussner, England, H.M. Richards, New Generations, Viewpoint and Softline in upholstery; Vaughan-Bassett, Crawford, Progressive, Palliser, Universal and other importers for case goods. Bernie & Phyl's carries only Sealy bedding, with Sealy Posturepedic as well as Sealy's Stearns & Foster and Bassett Bedding brands.
Long-term plans: Now that the company has filled in the Boston market, it is looking at New England locations to the south, and hopes to open stores within two years.

Bernie & Phyl's keys to success

A top-notch shopping experience: The chain eschews high-pressure sales tactics and phony sales. "The company has never had a sale and never will because the goal is to give customers beautiful, quality furniture at a price they can afford every day," says spokeswoman Amy Blumenthal. B&P has emphasized its displays and upgraded its assortment.
A happy workplace: The company says the business is infused with the philosophy its founders learned as children: "Be honest and treat people the way you want to be treated." It prides itself on treating employees like family and empowering them to make on-the-spot decisions. Turnover among sales, management and office staff averages less than 1% a year.
High volume, low margin: Bernie & Phyl's aims to build mutually beneficial relationships with vendors and buys in volume. Some 80% to 90% of items on the floor are in stock, and the retailer offers next-day delivery on those pieces, and 30-day delivery on special orders.
Efficient, technologically sound infrastructure: In 2001, the company purchased 10 acres adjacent to its Norton, Mass., offices and began the expansion to a 200,000-square-foot facility, including a racked, high-tech distribution center. A year later, B&P added a radio-frequency inventory system, in which incoming furniture is scanned and instantly tracked and available for sale. The retailer is in the process of upgrading its wide-area network, which connects all stores and headquarters to give everyone access to the same real-time information.
Buy, don't rent: CEO Larry Rubin contends this is a big part of the company's success. Bernie & Phyl's owns all but one of its stores, allowing it to control what it does with the locations and locking in mortgage payments. In contrast, Rubin says, a successful leased store often gets hit with higher lease rates when it's up for renewal.
Give back: Through its Friends in Need program, Bernie & Phyl's regularly donates furniture to charities in greater Boston. It has given more than $2 million worth of furniture to Morgan Memorial Goodwill and Teen Challenge New England, the latter providing assistance to youths and adults fighting life-controlling addictions. B&P also has donated furniture for more than 25 Habitat for Humanity houses in Massachusetts and New Hampshire, holds annual blood drives in its stores for the American Red Cross, and takes underprivileged kids to a Boston Red Sox game and on a tour of Fenway Park during its Bernie's Baseball Buddies event.

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