Eric Sinclair was on the road early one weekday in August, crossing wide open spaces on his way from his home near Sioux Falls, S.D., to Aberdeen. It’s a three-hour drive but a journey of 132 years for his family.
Sinclair is president of Montgomery’s and the great-great-grandson of George Montgomery, who founded a furniture and funeral business in Alexandria in 1888. South Dakota was still a year away from achieving statehood. The company today owns furniture stores in Sioux Falls, Watertown and Sinclair’s hometown of Madison.
And now it’s staked a claim in Aberdeen, 200 miles northwest of Sioux Falls. Montgomery’s purchased another long-established furniture store, Malchows, and Sinclair was going to help organize a retirement sale in honor of former owner Tom Malchow.
Home Furnishings Association member Montgomery’s is growing, even during the year of the pandemic. But then, this isn’t the first pandemic the business has survived. It has gotten through world wars, a depression and other economic downturns.
Back in 1888, George Montgomery was bold just “to get off the train in the small, dusty town of Alexandria in the Dakota Territory” to sell furniture and caskets, Sinclair said with admiration for his pioneering ancestor.
In 1902, Montgomery and his brother-in-law built a two-story building to house the furniture store and a bank. It stood for 62 years, until it was leveled by a devastating fire. The owner then, Montgomery’s grandson George Loomer – Sinclair’s grandfather – lost everything. That included records of sales and payment schedules.
“For years, people would come by and give him money,” Sinclair remembered his grandfather telling him. “He didn’t know how much they owed.”
A fire led to Montgomery’s latest expansion
Ironically, it was a similar fire that led Montgomery’s to Aberdeen. Malchows’ store burned down last October. Sinclair reached out to the owners as a friend, offering whatever assistance they needed. Later, he and his father, Clark, talked about offering to buy the business. They discussed it with Tom Malchow and his son, Mark. The deal made sense for everyone.
It was an unusual sale in a way. Montgomery’s didn’t purchase a store or even inventory. It bought 75 years of furniture retail experience and goodwill in Aberdeen, as well as a potential customer base extending into North Dakota.
Then, the Sinclairs acquired a former Office Max located between a Walmart and Target in Aberdeen. They plan to expand the building from 23,500 square feet to 50,000. As that is happening, the facility is hosting the retirement sale, which features Montgomery’s merchandise.
Mark Malchow will run the new Montgomery’s store as managing partner, beginning next year. Malchows employees will have jobs there and more people will be hired. Customers will see familiar faces and a similar family business culture.
Montgomery’s move into Watertown in 2012 was similar, but fortunately without the fire. The owners of Zimmel’s Furniture were ready to retire. Montgomery’s would rather arrive as a friendly purchaser than barge into a new town as a bigger competitor, Sinclair said. The pattern was followed in 2013 with the acquisition of Traditions in Sioux Falls.
Montgomery’s left Alexandria years ago. Its current showrooms in Sioux Falls, Madison and Watertown all include a Mattress 1st, The Floor Store and Blinds + Design. The idea is to meet customers’ every need for furnishing their homes – with complementary design services. “Customers need help putting their homes together,” Sinclair said.
Full service beats online-only
Like many other retailers, Montgomery’s has found an effective formula for overcoming the e-commerce onslaught – full service. Shoppers can order what they want through Montgomery’s website, as the company began online sales in 2017. More importantly, shoppers can engage with Montgomery’s designers digitally to form relationships and exchange ideas. Customers can come into the store to carry on the conversation, but “we do a ton of home visits,” Sinclair said. It doesn’t work that way with, say, Wayfair.
Wayfair did enjoy one significant advantage that grated on South Dakota retailers. It didn’t charge sales tax on purchases made by South Dakota residents. That gave Wayfair customers a price break right off the top when they ordered from the online giant. The same held true for other remote vendors.
That was a familiar complaint of brick-and-mortar retailers across the country. The difference was that South Dakota, with strong participation from its businesses, put a stop to it. Sinclair was “extremely involved” in that effort – thanks, in part, to his babysitter when he was a child in Madison.
That was Deb Peters, who graduated from babysitting to an accounting career and serving in the South Dakota State Senate. By that time, Sinclair was active in the South Dakota Retailers Association.
Peters had worked to fix the online sales-tax inequity for years at the federal level. South Dakota was part of a multistate compact lobbying Congress for help. Sinclair was part of that effort.
Sinclair helped bring about South Dakota v. Wayfair
“If it weren’t for people like Eric who were willing to take time from their businesses to go to Washington to make our case, we wouldn’t have built the groundswell we did,” Peters told the HFA recently. Still, Congress failed to act.
“By 2015, I’d pretty much lost my patience with this issue,” Peters said. “I decided enough is enough.”
She and other supporters decided South Dakota should enact its own bill to require sales-tax collection by the Wayfairs of the world. She enlisted Sinclair in that campaign, too. The legislation sailed through the state Senate and House in five days, with barely any opposition. Sinclair helped make sure lawmakers understood why it was so important.
“If it wasn’t for Eric’s story about what this would mean for his stores, we wouldn’t have gotten it through the House and Senate as easily as we did,” Peters said.
But that wasn’t the end of it. Proactively, the state then sued Wayfair and other large vendors for failing to collect the South Dakota tax. That case, known as South Dakota v. Wayfair, moved all the way to the U.S. Supreme Court, where the state prevailed in a 2018 ruling.
Business people can influence public policy
The HFA was among many business organizations lauding the decision.
“We are making history not just for South Dakota, but for the United States and for the globe,” Peters said told Dakota News Now at the time.
Sinclair continues to be active in the South Dakota Retailers Association. He is currently secretary-treasurer of the association and in line to become president in a couple of years. He’s an example of a businessman whose political participation improves the business climate for everyone in his state.
E-commerce represents a growing portion of Montgomery’s sales, and that trend has accelerated during the pandemic, Sinclair said. It requires an ongoing investment in technology and people, but the 132-year-old company has never been afraid of investing for the long term.
During the Great Recession, when Clark Sinclair was still president, “We decided not to cut anything,” Eric said. “A lot of our competitors cut a lot, and we gained a lot of market share.” Some of Montgomery’s most significant growth occurred while many businesses were still struggling, including opening a Sioux Falls distribution center in 2011.
Montgomery’s continues to invest in its future
The tumultuous year of 2020 has presented its own opportunities.
“It’s interesting to see how the pandemic has picked winners and losers,” Sinclair said. While consumers have spent far less on airline travel, hotels and eating out, they have concentrated more on refurnishing their homes.
“I’ve never seen anything like it before,” Sinclair said. “It’s been a huge shot in the arm for us, a major windfall.”
While he believes in the pendulum theory of spending, meaning a likely swing back toward traditional spending patterns eventually, Sinclair expects the focus on home to continue for the foreseeable future. So, this has been a good time to invest in that future.
The steady growth also helps Montgomery’s retain employees, many of whom decide to make a career there. Employee recognition is important, as well. It also can serve more than one purpose. Recently, the company featured dozens of its employees on its social media, matching their photos with customer testimonials like these:
“I walked in and someone approached me immediately and literally helped me make my house into a home with my own ideas & then brought them to life. My designer was so willing to take her time and give me options with things from bar stools to succulents and beyond. I am beyond impressed with the talent of their staff and especially helping me stay within my budget! Thanks Wanda Faye!”
“We enjoy shopping at Montgomery’s in Watertown. It’s been a joy to work with everyone over the years, from Jaime & Brooke to the flooring department, to the delivery men. Everyone’s been kind and helpful, and everyone we’ve worked with in-store has a great eye for design. Montgomery’s is where you’ll find us when we shop for our home!”
Looking ahead to the sixth generation
“We believe in beautiful homes and happy people,” and they have many employees who share that passion, Sinclair said. That’s something else the online-only vendors can’t deliver.
After college, he worked as a rep for Rowe Furniture to gain some industry experience outside South Dakota – an important ingredient for someone in a family business, Sinclair said. He came home in 2006 and succeeded his father as president in 2013. He and his wife, Neala, are raising their three children a few miles outside Sioux Falls.
He’s observed a few things about family businesses. One is basic: “The more family members involved, the chances for success drop.”
“We feel fortunate,” he added. Since his parents retired, “Neala and I are the only owners. That’s very helpful to getting us through to the next generation.”
That would be the sixth generation. He will say to his kids what his parents said to him: “You’re encouraged to do whatever you want. Hopefully, one of them would be interested in running a great family business in South Dakota. If not, we’ll work it out.”
If all three want to continue the family tradition? That would work. “We have enough stores that we could spread them out,” Sinclair said.
All the way from Sioux Falls to Aberdeen, so far.
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