Nobody said selling furniture was easy. Some would say it’s, risky business…
When she first heard Raymour & Flanigan was building not one, but five stores in central Pennsylvania, Ronne Kurlancheek of Kurlancheek Home Furnishings had every reason to:
- Keep doing the same old, same old and hope customers remained loyal.
- Slash prices and try to compete with the big chain.
- Throw in the towel and buy a condo in Florida.
Instead, Kurlancheek, a longtime Home Furnishings Association member, checked a different box:
Blow up a retail strategy that worked for more than a century and three generations of Kurlancheek retailers.
Kurlancheek Home Furnishings in Duryea, Pa., carved out a nice living selling promotional and lower-end furniture before Raymour & Flanigan showed up. With the Top 100 offering similar products on a larger scale, she knew that strategy was no longer a viable option, so she took a bold gambit: Rather than go head-to-head with the chain, Kurlancheek went around it.
First, she upgraded the quality of furniture she sold so that shoppers could see a difference in the two stores. Then Kurlancheek hired several designers. Unlike her competition, Kurlancheek’s staff started making free house calls to plan and design clients’ rooms. These days, Kurlancheek Home Furnishings’ walls are loaded with fabric swatches, and her business is the area’s go-to store for special orders. By Kurlancheek’s back-of-napkin math, more than 70 percent of the company’s sales are special orders.
“I’m doing better than ever,” she says. “We’re making money and I’m able to draw a salary on top of that.” But the best part of Kurlancheek’s gamble can’t be measured in numbers. “I don’t think (Raymour & Flanigan) worries about me and I sure don’t worry about them,” she said.
There’s something else Kurlancheek doesn’t worry about. That risky move of ripping up her business model and starting over? These days there’s not a week that goes by without Kurlancheek taking on some form of risk or another in her store. “I’m not afraid of trying anything anymore,” she says.
That’s not bragging, says the retailer, it’s simply a necessary ingredient to selling furniture in 2019.
“If you’re an independent furniture retailer these days, there’s only one way to survive and grow and that’s to take risks,” she says. “You can’t decide to go into business for yourself, which is the biggest risk of all, and then decide you’re not going to take any more risks. Well, maybe you can, but you won’t last long.”
Sometimes a risk works. Sometimes a risk fails. Sometimes it takes years before you can tell the two apart. But in today’s retail furniture world, HFA members say risk-taking is no longer optional – it’s as integral to your daily workload as marketing, advertising or any other part of your retail strategy.
Complacency costs you
John Egger sees the risks furniture retailers take every day. Egger is CEO of Profitability Consulting Group, which works with furniture retailers in all aspects of their business. It’s not just the size of the risks Egger says retailers are experiencing, it’s also the frequency. “The opportunity for risks is coming fast and furious, because the change we’re seeing in the furniture industry, the innovation we have is unprecedented,” says Egger. “If you become complacent, there’s going to be somebody else willing to take the risk you’re not willing to take, and they’re going to capitalize on it.”
Bobby Herzog understands most small furniture retailers are averse to taking risks. “I can’t really blame them,” says Herzog, who runs HFA member Vogel Furniture in Lockhart, Texas. “If you’re scraping by month after month, straying from what you’ve done all those years and trying something new can be absolutely terrifying.”
Herzog was on break from college when he took a job at Vogel. He never planned on staying with the company long. But soon he was helping with all aspects of the business, and after a few years he became Vogel’s manager.
Herzog remembers attending a retail conference a few years back and sitting in on a session only to be distracted by another seminar next door touting an in-store Ashley kiosk. Herzog had been looking for ways to drag Vogel Furniture into the future. Vogel is 30 miles south of Austin, Texas, but light years removed where technology is concerned.
When Herzog arrived in 2005, the company was still writing tickets by hand and using the old-fashioned credit-card-processing machines – the ones that made an imprint of the card while simultaneously scraping the knuckles of the merchants who operated them.
Herzog was convinced the kiosk was the right move for a family store trying to capture some of the Millennial traffic in Austin. “Millennials don’t eat at Applebee’s,” says Herzog. “They do things a little different than other generations and that includes shopping.”
It took some work, but Herzog persuaded store owner June Vogel to buy a kiosk. At $3,200, it was an expensive leap of faith, but one that paid off almost immediately, Herzog says. “It’s paid for itself one hundred times over,” he says. “It’s a different way for some people to shop, but it’s exactly the way Millennials want to shop. I think we’re seeing older clients using the kiosk now. It’s a whole different experience.”
June Vogel likes the risks Herzog takes. “He’s not going to just jump at something,” she says. “That’s not taking a risk. That’s rolling the dice. Some people might say Bobby’s always looking for risks. I think he’s looking for opportunities.”
Taking a risk might mean trying out a new advertising platform. It might entail opening a new store. Or it might involve getting back on one’s feet after a fire. But in the retail sector, Herzog says, one always needs to be taking risks. “It’s the only way you’re going to grow your business.”
Fellow HFA member Sam Zavary agrees. When Zavary opened his eighth Exclusive Furniture store last month in the Houston area, he knew exactly where he wanted to be: Gulf Freeway in Webster, Texas. Most retailers would shy away from the area. After all, Exclusive was building a store within a half-mile of eight other furniture stores. Store No. 9, American Furniture Warehouse, is coming across the freeway from Exclusive later this year.
Some retailers might say building so close to your competitors is risky. Zavary disagrees. “If you’re confident in your brand and what you sell, you should be brave enough to go anywhere,” Zavary says.“I don’t mean this the way it sounds, but I’ve never been afraid of trying anything. What’s the worst thing that can happen? You fail and you learn something from it.”
That’s what Egger tells retailers all the time. “A lot of retailers, they’re paralyzed by fear,” he says. “I can’t tell you the number of retailers I’ve worked with over the years who have moved, taken a risk – whether it’s buying another property in a down market for pennies on the dollar or investing in technology – when their competition stands still. Those are the retailers who have succeeded.”
Besides, says Egger, when you put everything in perspective, wasn’t the idea to go into business on your own a huge risk to begin with? “Leaving the world of working for others and doing your own thing is incredibly risky. You’re already taking a chance by leaving regular employment and taking the unbeaten, entrepreneurial path.”
Investments can pay dividends
Part of taking risks can be expensive. Bobby Watson, who along with his sister Vicki runs Hoot Judkins furniture store in Redwood City, Calif., started using online advertising platform Google Adwords (now Google Ads) in 2005.
“We like to think of ourselves as early adopters,” he says. “And I basically taught myself how to advertise on Google’s platforms.”
Watson invested a lot of time and money into learning the technology, but the reward was worth the risk. “It paid off huge dividends,” he says. “Even today it might be the most effective form of advertising we have, as far as what we’re spending and what we’re getting in return.”
Watson said most of his business decisions might look like risks, “but if you do your homework and know what you’re getting into, it doesn’t have to be so risky.”
His latest gamble is taking place online. Hoot Judkins is creating a new website so customers can see the company’s products in all colors and wood species, says Watson. “One of the goals of the site is to show the consumer how many options they have. With our existing website, you can see some thumbnails of the different colors, but it’s not very consumer-friendly.”
Down the road, Watson sees other risk-taking ventures in his store’s future: artificial intelligence and augmented reality are possibilities. But not every innovation has been a success.
“We got on board four or five years ago with a video chat company,” Watson says. “It was almost like Apple’s FaceTime, where you could do a face-to-face conversation with a customer through our website. And we spent a whole bunch of money adopting it, and it turned out to be kind of a flop.”
Watson learned the hard way that most consumers like chatting via text rather than face-to-face. But a willingness to experiment is important for growth, he says.
“The business environment changes constantly, technology changes constantly,” he says. “And any successful business needs to take some risk in order to remain competitive. The people who did not risk changing or adapt to a new reality, they went out of business.”
Egger says there’s a silver lining to taking a risk that ultimately fails. “You’re smarter than you were beforehand,” he says. “I really believe not taking a risk in this business is the biggest risk of all because that means you’re content with the status quo and that means you’re not growing.”
The fire
Sergio Diaz’s furniture store was growing. Just a few years after opening in Santa Maria, Calif., Diaz had built an established clientele and was adding new customers by the month. All that changed when he woke up early the morning of Jan. 3 to a notification from his alarm company.
Movement was detected at the back door of his store, Sergio’s Furniture, and Diaz was convinced someone had broken in. He called police, hopped in his car and hurried to the store.
Only it wasn’t an intruder. When he got there, he saw flames. Diaz thought his store was safe, that the fire was confined to an adjacent restaurant. “Next thing I knew, the whole place was on fire,” Diaz says. “And they couldn’t stop it. It took the whole roof. The whole place was gone.”
Diaz had a choice: sit back, let his insurance handle things and wait for the landlord to rebuild, or try something different. Within two months, he was back up and running, albeit at a different location.
The fire, the cause of which is still being investigated, was responsible for about $400,000 worth of damage, but Diaz took a chance that a new spot in a mall across town might be a good fit.
In some ways, starting over in retail furniture is old hat to Diaz. He got his start in the furniture business at 18, delivering for a store. He continued doing that part-time, while making his way through college. About 10 years later, he opened a store of his own.
“I used credit cards to start it up,” he says. “I maxed out every credit card I had in order to open that first store. The banks wouldn’t lend me what I needed to start a store. So, I just purchased everything with my credit cards.”
He ran that first store until the Great Recession of 2008. He wound up moving to Las Vegas, where he opened a new store specializing in children’s furniture.
“I worked at Macy’s selling furniture at first,” he says. “But I had a young son and had a hard time finding anything decent as far as kids’ products. I did know there was no competition. I had to use our savings to get ourselves going and move forward.”
Diaz returned to California about three years ago and opened Sergio’s Furniture after hearing from plenty of former customers who wanted to do business with him again.
Diaz had just gotten back from vacation and came into the store the afternoon before the fire. “I was looking around to see how we did in December,” he says. “And we did very well. There was a lot of merchandise ready to be delivered the following Saturday.”
The store, Garcia learned, was underinsured, so he had to take money out of his retirement fund to reopen. But manufacturers were willing to give 10 or 15 percent discounts.
One of the biggest challenges was finding the right location for his temporary quarters.
“I didn’t want a small place,” he says. “I have to make sure I carry enough product. But I negotiate pretty well when I sit down for leasing. And I was able to rent a separate building for storage. But, if I would have waited too long to reopen, I would have lost a lot of customers. And really, you have to take care of your customers.”
These days, Diaz’s business in his new store is doing so well that he’s thinking of keeping it open after his original store is rebuilt.
Egger says one of the biggest keys to risk-taking is not letting fear paralyze you in business. “There’s a difference between thinking things out when an opportunity arises and dragging your feet,” he says. “I know a lot of furniture people who have bought buildings, existing buildings, for relocation or expansion and picked them up for pennies on the dollar and have been wildly successful because they made a decision and took action.”
Diaz agrees. “Some of the best business decisions I’ve ever made were a little risky and made somewhat nervously. But when they succeed, you get the courage to take another risk. And then another, and another …”
