Jabs' store a hybrid of new, old
Eyes greater efficiency, lower prices for customers
Clint Engel -- Furniture Today, December 27, 2006
FIRESTONE, Colo. — American Furniture Warehouse suppliers got a first look earlier this month at the retailer's new store here, which combines Ikea-like self-service and traditional furniture store displays.
The 530,000-square-foot American Furniture Warehouse facility in Firestone has been averaging $1 million a week in sales since its late November opening.
The aim of its renowned leader, President and CEO Jake Jabs, is to lift the Top 100 company to even greater heights of efficiency. The $30 million, 530,000-square-foot facility north of Denver is the 11th for AFW. It features a 350,000-square-foot warehouse and two 88,000-square-foot showroom levels, with consumers entering the lower, racked warehouse-style floor, where they can browse and buy, then move by escalators to the upper-level traditional furniture showroom. A Cantina of rustic pine furniture sits in the back of the lower level, accessorized with boldly colored pottery, piñatas, margarita glasses and other gift items developed by AFW buyer Judy LaMontagne and produced by vendors in Mexico. The first floor also is home to youth furniture, ready-to-assemble furniture, home office and rack upon rack of accessories, from wall art and vases to top-of-bed and small sculptures — all priced sharply.
The racks of rustic pine furniture on the back wall of the Firestone store are among the busiest areas of the store on weekends.
Even so, accessories command a higher gross margin (43%) than the overall average for AFW, a thin 35%. A 23-inch oval vase, for instance, retails for $24.78. Pottery on one shelf ranges from $12 to $56. "This says, 'Buy me'," said Jake Jabs, pointing to the racks. AFW is adding them where it can, he said.Accessories are a growing business, accounting for 4% of total sales this year, up from 3% a few years ago and on their way to 5%, Jabs said. And that doesn't include area rugs, which AFW added about a year ago. The Colorado chain will do $6 million in rug sales this year, selling from bins beside various living room collections.
This Klik-Klak sofa on a self-service wall can be pulled by consumers - the boxes are below - and bought for $188.
Jabs' theory on keeping prices down on typically high-markup accessories: Women are more likely to know a great price on a vase or picture than on furniture. If the store wows her with an accent price, she'll assume she's getting a good deal on furniture. AFW clearly is all about price. Jabs, touring his showroom on the night of the vendor party, is almost giddy about showing off the deals — such as a microfiber sofa from American Furniture Mfg. for $331, a microfiber recliner for $251 and a four-piece maple laminate bedroom for $715 from its largest supplier, Ashley. The store displays about 120 recliners starting at $129. It doesn't go above $1,000 on leather sofas, although it doesn't shy away from more upscale goods if the value is there, Jabs said.
A laminate bedroom from Ashley, AFW's biggest supplier, is a hot seller in the Firestone store's upper-level showroom, with four pieces at $715.
For instance, in the new store's bedding department — glass enclosed and softly lit — AWF offers Therapedic's new AirTouch air mattress line to compete with Select Comfort, at a starting price in queen of $1,478. It also sells Spring Air's Four Seasons premium bedding, topping out at $1,599 in queen, AFW's highest price for innerspring bedding. On the self-service level, consumers help themselves to shopping carts, while salaried employees help them load up. Today's consumers, Jabs said, are conditioned to use carts, from grocery stores to Wal-Marts, Costcos and Targets. "They think (stores with carts) are cheaper," he said. "We can take some of that business."
Dave Alkire, left, Majestic Mirror; Judy LaMontagne, AFW; and Charlie Pride, Majestic Mirror.
Jabs credits his low prices with largely driving Kmart out of the furniture business in Colorado, and with Wal-Mart's smaller-than-usual offering here. The self-service format speaks to AFW's drive to keep costs and prices down. The salaried employees save AFW the 4% commission it pays other salespeople. And customers picking out their own goods and taking them home "figure the warranty ends at the curb," Jabs said, which should keep returns down. AFW already has a low 3% return rate. "People are busy," he said. "They have less time to shop, and a salesman just slows the process down."
Jim Ihrig, left, Sealy; Cameron Capel, Capel Rugs; Scott Penters and Kevin Sisson, both of Sealy.
Jabs said he's considering changing to all salaried employees, noting that when he did that at a small store in Glenwood Springs, the staffing problem went away and sales increased. Opened since late November, the Firestone store is off to a strong start in a soft economy, ringing up sales of about $1 million a week, Jabs said, about what he anticipated. He's aiming eventually to reach $70 million annually. AFW's highest-volume store, in Thornton, is on track to do $78 million this year.
Jake Jabs, center, and Andrew Zuppa, right, both of AFW, present a $1 million check to W. Douglas Jackson of Project Cure. The donation will be used for a warehouse to stock medical supplies and equipment for delivery to developing countries.
The chain's same-store sales are up about 3% this year, not bad in a metro market leading the nation in home foreclosures, Jabs said, adding, "I think the only reason we're up is we have a lot of momentum going (with the Firestone opening)." Vendors seemed impressed by the new store. Vic Etheridge, owner of longtime upholstery supplier Corinthian, called it "fabulous." Ashley President Todd Wanek said it was "gorgeous," adding, "(Jabs) does such a good job with display and point-of- purchase — the best in the industry. He's truly operationally excellent in everything he does."
