Editor's Note: This is one in a continuing series of stories on local small businesses and how they become creative to grow and survive.
MANATEE — There’s lots of commotion outside Mark Richmond’s office window.
Shipments are pulling up to the loading docks.
Forklifts are stocking and organizing inventory.
And furniture is being assembled and packaged for customer delivery.
Among it all, Richmond keeps his eyes on his computer monitor.
The owner of The Furniture Warehouse is searching for more deals on inventory. Richmond goes through his e-mail, as he does every day, to scour through closeout sales manufacturers are sending him.
Richmond sees sofa and loveseat packages for $599, armoires at $299 and $199 accent tables — the prices are about a 50 percent to 70 percent discount. But Richmond will likely respond to the manufacturers targeting a lower price.
“This goes on all day long,” Richmond says. “This is how I do business now. I just sit behind my computer and all day long I search the deals.”
Richmond says this strategy — buying truckloads of closeout specials — is why The Furniture Warehouse’s revenue is up about 25 percent so far this year.
It’s also why the retailer, 0with stores in Bradenton, Sarasota, Venice and Port Charlotte, has maintained estimated annual revenues between $15 million and $20 million throughout the recession.
And it’s why The Furniture Warehouse will be opening a fifth store — a showroom in Ellenton — later this year.
“People ask me ‘Why are you opening a new store now?’ ” Richmond says. “Because the adversity of the marketplace has created a tremendous opportunity. We have a niche that’s very strong and going to be very strong for Ellenton.”
The home furnishing industry has taken a kick to the gut as a result of the housing downturn.
Sageworks Inc., which collects sales figures on private companies, reported that furniture stores had the worst year among retailers in 2009 with sales dropping 11 percent.
Factory shipments were down significantly in 2009, too.
Domestic shipments of wooden residential furniture decreased 22 percent in 2009, and imported shipments of wooden residential furniture drooped 22.3 percent.
Furniture business hit hard
“Residential furniture is a housing, interest rate, consumer confidence and credit reliant industry,” said Jerry Epperson Jr., a furniture industry analyst based in Richmond, Va. “And if you really look at the last 18 months, consumer confidence hit an all-time new low, consumer credit for a long time late in 2008 to 2009 just wasn’t there, the housing industry was crippled and then there’s unemployment. All those things hit our business hard.”
To cope with these factors, furniture retailers are having to try new approaches, said Epperson, who is a corporate adviser to furniture retailers and publishes “The Furnishings Digest.”
Epperson said he’s seen some furniture stores scale back to open just three days a week and over the weekend to cut overhead and hope for a sales rush. Others are refraining from selling group packages of furniture or even setting up the showroom with room groupings and just showing a mixture of furniture sold at a discount.
The Furniture Warehouse still offers group package sales, but Richmond said it’s the discount approach that makes his stores successful.
He searches for manufacturers who are going out of business or having wholesale closeout deals, determines whether the furniture pieces will fit the market and then buys truckloads of inventory.
American of Martinsville, a furniture plant in Roanoke, Va., sold off its stock at “pennies on the dollar,” before it closed in April, Richmond said.
Richmond bought six truckloads.
“When these manufacturers want to get rid of inventory, we’re there to buy it,” he said.
Richmond gears his stores toward consumers making their first furniture purchases, either because they’re first-time home buyers or because they’re ready to own new room sets.
How it all started
The Furniture Warehouse started in 1988 with the store at 4027 N. Washington Blvd. in Sarasota. It was a building that nobody wanted at the time; basically a metal structure, no air conditioning, no finished flooring. It had been used as a farmer’s market and was in foreclosure.
“I went to the bank to see if they would rent it to me because it had been empty for three years,” Richmond said.
The bank wasn’t willing to rent it, but Richmond didn’t have a downpayment to offer for the $600,000 asking price.
At the time, Richmond had been running his own wholesale furniture warehouse, Richmond Sales Inc., for about 10 years. He told the bank what he planned to do with the building, and the bank agreed to work with him and let him finance the building with no money down.
The credit he had built up at Richmond Sales Inc. allowed him to make his first inventory purchase, and The Furniture Warehouse was born.
Really, Richmond’s path to a career in home furnishing began when he was 14.
His father was a manager at a furniture store where Richmond would work in the summers in the warehouse. Richmond stuck with the summer work throughout high school and college to help pay his college education at the University of South Florida, where he majored in marketing.
“My father was in the business and it was always the place I could go to get a quick summer job,” Richmond said. “I worked my way through college and went into wholesale furniture. I got to learn the business at an early age.”
Targeting Generation Y
In the home furnishing industry, Epperson said many retailers are targeting Generation Y as ideal consumers. Generation Y, those born between 1977 to 2002, is made up of an estimated 70 million Americans, a large audience furniture retailers are aiming for since they’re0 still growing into consumers.
“That’s where the new growth is going to be for the next 20 or 30 years,” Epperson said.