• Clint Engel

Rothman calls it quits

Top 100 and e-commerce competition play into decision to liquidate all 6 St. Louis-area stores

rothman furnitureO’FALLON, Mo. — Faced with growing competition from major furniture chains and e-commerce companies, Rothman Furniture is closing all six of its St. Louis-area showrooms after 90 years in business.

In a move that surprised both suppliers and customers, the third-generation family-owned business will begin store closing sales in early October, said Jay Steinback, who succeeded his father Dale Steinback in the CEO post in 2013. He called it a strategic decision, one that has been months in the planning.

“The market is changing, the customer is changing, and business models are changing,” Steinback told Furniture Today.

Rothman, started in 1927 by Steinback’s grandfather Milton Rothman, is healthy and profitable, he said, so the news shocked customers who have been lighting up Twitter and Rothman’s Facebook page all day, he said. The retailer has about 240 employees and does about $50 million in annual sales, he said. It had been one of the largest advertisers in its greater St. Louis market and very active in the community through donations to hundreds of charities and sponsorship of sporting and other local events.

“But in the past decade, I’m no long competing against similar-size companies,” Steinback said, local retailers with sales in the $20 million to $60 million range, which made for a relatively even playing field.

“It the past decade, we’ve had Ikea move into town; that’s a $3 billion company. Value City (Furniture) has reinvigorated its brand; that’s a billion dollars. Ashley (HomeStores) has stepped up its game; that a $3.5 billion company. Bob’s (Discount Furniture) recently moved into our market. Mattress Firm has about 18 locations.

“It’s just been a slow chipping away,” Steinback said. “I can compete all day long with the local regional players, but when you start talking about companies that have marketing budgets quadruple my gross revenues, it’s time to take a look at your strategic planning and understanding of what’s next.”

The rise of e-commerce and the changing shopping habits of young consumers also played into the decision, he said. Steinback pointed to demographic data that shows Rothman is “No. 1 by far” in its market among consumer ages 50 and up. With consumers ages 40 to50 it’s in the top three, and then it slips to the top five with consumer ages 30 to 40.

“Under 30, we’re lower in the Top 10,” he said. “So for the younger demographic, we’re their grandfather’s furniture store. It’s been harder and harder; they’re just a very challenging demographic to meet.”

And that’s coming from a 39-year-old leader of a business that Steinback said was the first local furniture business with an e-commerce website. Online, Rothman still stands up well against local competition, “but now we’re going up against people that spend $5 million-plus a year on their web presence,” he said.

“We can compete today. We can compete tomorrow, but when you start getting years down the road, there were some strategic decisions we had to make for the health and safety of our company.”

And there will be a future for the company, Steinback said, but he wasn’t ready to elaborate on it just yet, noting that the focus for now is on Rothman’s legacy and history and “having a great sunset of that.” Steinback owns all the real estate and said one location already is under lease contract, though not for furniture industry use.

Several industry sources have told Furniture Today, Rothman will convert to a five-store Art Van Furniture franchise, though Art Van and Steinback declined to comment.

Steinback did confirm that his future will be in furniture, noting how he’s been attending High Point markets since he was 18 (and will be there again next month); loves, lives and breathes furniture; and is “certainly not leaving the industry.”

“But the Rothman name and the legacy that it represents could only take us so far.”

 

Clint EngelClint Engel | Senior Retail Editor, Furniture Today
cengel@furnituretoday.com

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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