• Clint Engel

Dearden's is gone, but software lives on

The retailer's in-house operating software will be repackaged for furniture and other retailers

LOS ANGELES — Dearden’s wrapped up a two-month liquidation sale this past weekend after a 108-year run in Southern, California, but a piece of company is likely to live on in the furniture industry and other retail sectors.

The liquidation sales run by Planned Furniture Promotions helped the promotional to midpriced credit-oriented eight-store chain clear out nearly everything — with the exception of a few oddball pieces — and generate a little more than $6 million during the sale period, said Ronny Bensimon, Dearden’s president and CEO.

He estimated Dearden’s earned an overall 15% margin during the sale — starting with higher margins at the beginning, but then trailing off near the end as everything remaining was sold below cost. The retailer sold a very broad mix of goods, including electronics, appliances, jewelry, largely to the Latino market in greater Los Angeles, especially new immigrants.

Furniture accounted for about 45% of total sales.

Bensimon wasn’t ready to say exactly what he plans to do going forward, noting he really hasn’t had much time to think about it and that it will probably take another six months or so to wind down the business completely. But he did say there is a piece of Dearden’s that will likely live on.

“We have really robust software that we have been developing since the mid ‘70s,” he told Furniture Today this week.

“A lot of people I’ve talked to in the industry were pretty envious of the things our software can do, so we’re getting it in shape so it can be used in other retail locations, and we’ll probably try to market that.”

Internally, Dearden’s calls the system “Spectrum,” although Bensimon said he’s not sure that’s the name it will take to market. The company started developing the program back when it was in the market for software but was unable to find anything that covered all the things Dearden’s needed.

Rather than buying something off the shelf, the retailer hired its own developers, and Spectrum has been in constant development ever since, he said, with the same team of employees behind it.

“It answers a lot of issue that some of the other software companies don’t in that everything is integrated, including the credit side of the business and distribution,” Bensimon said. “It (works) for furniture, electronics, appliances, jewelry, services, distribution center management, credit and collection, credit granting; it really covers the whole gamut.”

Dearden’s held a job fair for employees (nearly 420 people worked for the retailer at the end) and brought in 26 companies for them to talk to and interview with, including other furniture businesses. One day during the event, Bensimon took some of these company representatives on a tour of its Rancho Cucamonga, Calif., distribution center and showed off how Spectrum works across all areas of the business. Some of the attendees were wowed, he said, envisioning the potential cost savings.

“For now I’m talking to a couple of (retailers) that have shown interest, he said, adding that he hopes to have a version up and running in a few stores soon and “branch out from there.”

Earlier this year, when Bensimon talked to Furniture Today about the decision to close Dearden’s, he said there were a “host of negative trends,” that led to the decision, including a drastic change in the electronics segment, where innovative new, must-have products are more scarce (“every innovation now is an app on your cellphone,” he said).

More recently, he noted another contributing factor: a fall-off in business and traffic from an important Latino immigrant population, sparked in part by the Trump administration’s “build-a-wall” talk, crackdown on illegal immigration and the harsh rhetoric that’s come along with it.

Bensimon said Dearden’s strength has always been with that now-targeted population, the lower-incomed newcomers to this country, who knew and trusted the retailer and knew Dearden’s would give them much-needed credit to start their lives here. Dearden’s saw this segment of the Southern California’s population as a regular new source of business, he said.

“Over the years, and it’s not just this administration, the inflow of immigrants has been far less — diminishing every year,” he said. Dearden’s noticed it with the recession a decade ago, when people stopped immigrating because there were fewer jobs available, he said.

But then -- as immigration got tighter, more regulations came in and they’ve been watching the border more closely -- "it’s been diminishing and diminishing and diminishing,” Bensimon added.

Bensimon said Dearden’s business was off some 10% to 12% this year before the going-out-of-business sales launched. Its best year was 2006, when the chain did about $100 million in sales. Last year it did about $60 million.

He couldn’t say how much of the recent decline was due to a pullback from Latinos responding to the Trump rhetoric and anti-immigration stance and said he wouldn’t want to suggest that was the only problem.

“This community is very resilient,” he said. “They come back from things and we expect them to come back—the ones that are already here.

“We just didn’t see that new inflow of consumers coming. And as we looked out to the future, looking for anything that was going to make retail stand out here and give use some nice increases; we just didn’t see it.

What Dearden’s did see, however, was the cost of doing business, especially in California, continuing to rise.

“We pondered in all,” Bensimon said. “It was a difficult decision, but we thought this was probably a good time to call it quits and walk out with our heads held high.”

Clint EngelClint Engel | Senior Retail Editor, Furniture Today

Please feel free to email or call me with all of your retail news and tips, including expansion news, successful merchandising and marketing strategies and anything else you would like to see covered by Furniture/Today.  Contact me directly at cengel@furnituretoday.com or 336-605-1129.

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