Unlimited Furniture licensing stores
By Clint Engel -- Furniture Today, April 12, 2010
BROOKLYN, N.Y. —
Unlimited Furniture, a retailer and distributor based here, is expanding into the licensed store arena after early success with its specialized concept in some major metro markets.
The company, led by partners Lenny Kharitonov and Thomas Corrales, has warehouse stores in New York, New Jersey and greater Boston, Chicago, Washington and Atlanta.
Company leaders have begun to license the concept to others. Kharitonov said two to three licensed stores will be in business by the end of this year and he hopes five to 10 more will open in 2011 as economic conditions improve.
Among the markets it's targeting are Los Angeles, Dallas and San Francisco, as well as the states of Washington and Florida.
Unlimited Furniture started in 2004 operating out of a 100-square-foot storage room — yes, 100 square feet — reaching out to consumers via online advertising and carrying a narrow selection of promotional to midpriced goods.
The concept worked so well that Kharitonov and Corrales quickly expanded to a 5,000-square-foot warehouse in Brooklyn and then into a second, 50,000-square-foot warehouse in Elizabeth, N.J. The strategy remains the same, with Unlimited Furniture targeting furniture shoppers with low prices, kept low, in part, by a no-frills approach to operations.
Its stores are in industrial locations and usually are hard to find and have little signage, Kharitonov said, adding that “that's part of the charm.” Advertising costs are minimal —mainly using eBay and Craigslist Web site listings. Outside of Elizabeth, the stores are all small, about 3,000 to 5,000 square feet.
Furniture Unlimited buys deep and all stores carry the same few items. The company started with one bedroom and one line of mattresses, then added categories such as dining room, youth bedroom and home entertainment furniture as customers started coming back to buy for other rooms in their homes, he said.
While most retailers are looking to drive increased traffic to their stores, Unlimited Furniture prefers appointments, Kharitonov said. He adds that customers often thank the retailer for letting them shop at the stores because the whole concept — from the out-of-the way locations to the more-like-a-warehouse-than-a-showroom feel, to the limited selection and appointments — helps drive the perception that consumers are getting a great deal.
“I like to say we have an above average close ratio,” said Kharitonov, who grew up in the business, first with the former Hillside Bedding in New York and later Citywide Furniture. “Once they come in (they feel like) they have to make a decision today because what's here today might not be here tomorrow.”
As the business has grown, Unlimited has sharpened its own buying skills and now buys exclusive container-direct case goods from China, bedding from Turkish company Istikbal and other products from Klaussner, Ashley, Lexington Home Brands and Corsicana, among others.
It began wholesaling product for sale to other furniture retailers in 2006, a business that now accounts for about 70% of its volume and about half of its profits, Kharitonov said. Asked if its retail presence has led to any conflicts with its retailer customers, he said the company avoids interfering by steering clear of traditional retail advertising strategies, and keeping its marketing message low key.
He declined to disclose sales figures, but said business last year was off about 15% from 2008 because of the recession.
“But what's different about us is when everyone was afraid to invest, we saw it as an opportunity to expand and prepare for growth,” he said. “Yes, it's a difficult time, but when it rebounds, we will be in the market and it will be easier for us to grow.”
Unlimited Furniture expanded into Boston in 2008, then into Upper Marlboro, Md., and Chicago in 2009 and Atlanta this February.
It has branched out in other ways too. Unlimited Furniture is the exclusive distributor of AICO goods in certain parts of Russia, mainly Moscow (Kharitonov's birthplace) and St. Petersburg. It also operates an e-commerce Web site at strictlyelegance.com, which sells American Drew furniture, and it will soon launch other category-specific e-commerce sites, Kharitonov said.
With the new licensing plan, Unlimited Furniture is hoping to expand more rapidly than it would be able to otherwise, he said. Licensees could use the company's trademarked logo and proprietary operations software.
“We (will be) teaching them our method,” he said. “It's proven to work and be successful even in a tough economic climate, and has the potential to be very, very profitable.”
He estimated start-up costs for licensees would be $50,000 to $100,000, including a licensing fee. Dealers won't pay royalties on sales, but would be required to buy product exclusively from Unlimited at a discount to its usual wholesale prices.
Kharitonov said it's difficult to estimate annual sales for a licensed store because it would vary widely by market. But for each of the two large markets Unlimited is targeting — Los Angeles and Dallas-Fort Worth — he said he believes the “right partner” could do from $1 million to $3 million annually.
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