Hometown heroes succeed in variety of ways
Five retailers tell how they thrive in tough times
Clint Engel -- Furniture Today, December 14, 2009
Talking about everything from their start to what makes them successful today were Terry Leon of Toronto-based Leon's; Mark Mueller of Mueller Furniture in Belleville, Ill., Tim Harris of Knoxville, Tenn.-based Knoxville Wholesale Furniture; Kyle Johansen of Coon Rapids, Minn.-based HOM Furniture; and Michael Forde and Bill Griffin, partners in Four Corners Home in Asheville, N.C.
With annual sales approaching $1 billion, Leon's celebrated its 100th year in business this year. Planning for the milestone began more than a year ago, said President and CEO Terry Leon, and with such a poor economic climate the retailer had to decide whether it should move forward with big spending plans.
The company wanted to hold parties in all stores and provide gifts to each associate. It was going to spend an additional $1 million on charity. Terry Leon was planning trips to all 65 corporate and franchised stores.
"All told, the expense we were looking at was close to $5 million, and that ... was going to come right off the bottom line," he said.
In the end, the fact that Leon's is conservatively capitalized, owns most of its real estate and is debt-free enabled it to go through with the special promotions planned all year. And Leon said the company was more than rewarded for the decision by appreciative employees who "went to great lengths to make their stores look fantastic."
Among the highlights was the release of hundreds of yellow helium-filled balloons, each containing a gift card, including one for a flat-screen TV. The balloons floated across Canada and a few even made their way to the United States, where curious consumers looked up Leon's online.
The retailer also is well known for its clever commercials, and Leon shared a few of the amusing spots with the Leadership Conference audience, including a dead-pan Santa Claus audition (click here to watch) and another "Ho! Ho! Hold the Payment" holiday spot in which a child wonders why his toys say "made in China," when Santa lives at the North Pole. (Click here to see the youtube video).
Mark Mueller, a fourth-generation retailer, said the typical customer for his one-store business is "somebody who values quality and style over price." He noted his core consumer base skews older than might be expected - ages 50 to 75. While that may seem like scary territory to some, Mueller said it's actually a great demographic.
"We have a lot of empty-nesters with a lot of money," he said. Often, after the kids are away at college, these highly credit-worthy consumers are in the market for furniture again.
Mueller said that many stores similar to his have gone out of business over the past 10 years and more will follow, "unless we join the 21st century and try to figure out what our customers really want."
The Mueller team has worked hard not to become one of these statistics. Since 2007, it has managed to increase sales by 21% (to $3.1 million projected this year) while cutting its advertising costs by 27%. The retailer developed a more "personalized" television campaign featuring Mark Mueller as the spokesman. It also features more tech-friendly furniture on its floor, including product with iPod docking stations, wire management systems and Internet connectivity.
Mueller is finding success with product such as Latitudes from Flexsteel, Howard Miller's Ty Pennington collection and upscale products from Bradington-Young and Justice.
Five area billboards have been updated to reflect the company's current offerings, including goods with a transitional to contemporary bent, and Mueller has worked hard to improve its online presence as well.
Indeed, www.muellerfurniture.com has "really been a cornerstone to our growth," Mueller said, noting how the company started getting aggressive in 2006 and now dominates local online search fields, generating traffic to its sites and, ultimately, its store.
But Mueller furniture does not sell online, he added. "I'd rather have a lead generating site that's going to get customers into my doors."
An updated site will launch next year with additional tools such as a fabric-to- frame application and room planner. Consumers also will be able to create wish lists -- great for "be-back' business," he said.
And Mueller's radio, television and print advertising will be integrated online since consumers are spending less time with traditional media.
Mueller said he's excited about e-marketing in 2010, because "there's so much we're still not doing," including Facebook advertising and text messaging.
Knoxville Wholesale's Tim Harris brought his former background as a public school teacher and football coach to his conference presentation, emphasizing one cornerstone for success that he finds lacking at many stores - a focus on people.
When Harris tours other stores, as he did here before the conference, he often sees unmotivated salespeople, he said. At Knoxville Wholesale, Harris focuses on "creating a culture of winning" and getting everyone on the team to buy in.
It starts with dedication at the top and works down to every level.
"We unashamedly try to make our people better," Harris said. "We're interested in our guys being better fathers and husbands and on down the line.
"We're going straight into that heart, straight into that mind, because we know that if we make that connection, we're not going to have to ... do as much instruction because they're going to want to do these things on their own."
That said, employees are charged with a series of block-and-tackling tasks. For example, all salespeople are expected to arrive at the store a half hour before the the regular 9 a.m. Saturday morning sales meeting. They each have a section of the store to keep tidy, and they're expected to come to the meeting "ready to learn, ready to be motivated," Harris said.
The meetings are followed by a thorough walk of the store, where Harris may point out a new item or a lowered price. He might tell a success story about a certain item or surprise a sales associate with a gift certificate for an outstanding job with a particular product.
"When I talk to them, they know I care about them," Harris said. "It makes a huge difference because their mind is going to be receptive."
Harris said he sees "tremendous opportunity" in this industry to attract, motivate and teach great people." And those efforts to attract individuals with the "right attitude" at the front end pay off on the store floor, where salespeople are trained to greet consumers with respect, enthusiasm and confidence.
In his conference presentation, HOM Furniture's Kyle Johansen shared some of the Top 100 retailer's success strategies, including the concept of departmental branding. That program began a few years ago, when HOM introduced its Passages department as a way to reach higher-end customers interested in something more than $399 to $599 sofas or $999 bedroom groups.
"It worked out pretty good for us," Johansen said, and HOM slowly began branding other departments.
The retailer created World Rugs and Sleep Express. It bought The Design Doctors name and integrated it into its operations as the umbrella for design services.
After HOM acquired outdoor and seasonal goods retailer Seasonal Concepts earlier this year, it folded it into HOM as a store-within-a-store. Today, three HOM stores feature separate entrances for Seasonal Concepts from the parking lot and the rest feature exterior signage letting consumers know the brand is inside.
Johansen said HOM's Web site is another "important part of our business" that will continue to grow as the retailer upgrades features and eventually adds e-commerce capabilities. Among the tools on the site is a bar with a button that consumers can use to hone in on price ranges. There are new simple ways to shop by materials, style and other categories, too, which have enabled consumers to find what they are looking for more quickly and shorten their stays on the Web site.
Any product on the site can be shared with a click of the mouse to a variety of social networking sites, including Facebook and Twitter.
Johansen, 24, who serves as lead buyer for both Seasonal Concepts and World Rugs, said anyone trying to reach his generation needs to be networking online.
"You need to get on Facebook," he said. "You need to get onto Twitter or we're not going to find you."
Wrapping up the panel were Bill Griffin and Michael Forde of Four Corners in Asheville, who told the story of how they left careers in the corporate world in 2001, traveled the world for nine months and found accessories, crafts and other gifts almost everywhere they went for what would become Four Corners.
The venture started as an Internet-based business in 2002. The two opened their first store in 2004. They introduced case goods a year later and upholstery in 2006. Today, Griffin and Forde operate two Four Corners locations selling "organic modern," upscale home furnishings, as well as Mobilia, a European contemporary store they acquired in Asheville earlier this year.
They are projecting sales to hit around $1.6 million this year, with an average gross margin of just under 60% and pretax profit of about 10%.
Among the retailer's strengths is a culture of continual improvement. Everyone in the organization is thinking of ways to make extra money and save on costs. Once a year, the stores are closed for a one-day brainstorming session with employees, where Forde and Griffin say they get their best ideas.
Forde said they've adopted a lesson from the Calvin Klein business model and that is the realization that while some consumers can't afford the $4,000 or $5,000 suit (or the $5,000 to $8,000 sofa), they can experience the brand through a $50 bottle of Calvin Klein perfume or cologne or, in Four Corners' case, a $30 to $50 vase or $25 scented candle. Those sorts of sales build a relationship for that later, large-ticket purchase, he said.
Griffin also said the company embraces "customer-focused selling - listening to what the customer wants and needs as opposed to what we have to get rid of."
Four Corners tries to create a friendly environment with music and candles, and there's no pressure to buy. It's not uncommon to hear a Four Corners employee say, "Don't decide today." And the store has never held a sale.
"We do that so the customer doesn't get used to us having sales," Griffin said. That's good for margins but also good for the consumer, he added.
"They're buying it when they're ready to buy it rather than when we're ready to sell it."