Retail Observer

RETAILOBSERVER.COM MAY 2014 56 RO Mike Allen Furniture Trends E. Michael Allen, BrandSource VP of home furnishings, has been with the organization for 15 years and overseen the growth of the category to one of the largest in the country. DIVERSIFYAND GROW A t BrandSource, we have many independent appliance and AV dealers who live in small rural areas where the nearest big-box store might not be for hundreds of miles. At this year's BrandSource Summit & Expo in Orlando in March, I got a chance to catch up with a couple of these members with whom I had worked over the past year to help them diversify from appliances or audio/video only to adding high-margin furniture sales to the mix. And the results are inspiring… ELEVATING SALES IN ELKO Brad Bolotin, owner of Elko, Nevada's Encore AV and now a SleepSource store next door, was looking for a way to pick up business and discovered that he could conveniently add mattress/ furniture sales to his business at last year's Summit & Expo as he strolled through the furniture booths. He opened a SleepSource gallery next to his AV business and is now reaping the benefits. "Elko is 300 miles from Reno and is the epicenter of the gold- mining industry," says Brad. "These people have to drive five to eight hours to get the things they need. Twin Falls, Idaho, is 2.5 hours each way, and the price of gas is high." He modeled his AV business to capitalize on these market conditions. "We don't want people to go to Boise or Salt Lake, so we give them the best price, but also local customer service that you just can't get from a remote box store." Brad applied this same philosophy of local service and selection to the SleepSource store, but the market also had idiosyncrasies that naturally jibe with mattress sales. "Miners have bad backs. Our mattress sales average about $1300 a sale, about one-third higher than the national average," says Brad. In fact, between his stores in Reno and Elko, the Elko stores comprise about 75% of Encore's overall business, and he's now adding massage chairs to the furniture mix. He also strategically cross-promotes the AV and furniture sides of Encore. For one, anyone buying a mattress on the SleepSource side must cross over into the AV area in order to check out. With BrandSource's Citi program, Encore customers can get financing on both Encore's AV wares and services, as well as furniture. To further stimulate the business, Brad offers discounts to members of the mining community, aggressively buys radio, and puts an emphasis on customer service. "No matter how much advertising you buy, it is word of mouth that drives business," he says. "This mattress store is the best thing I have ever done." COMING UP ROSES IN CENTERVILLE Kevin and Leiba Wiskus of Your Square Deal Furniture & Appliances in Centerville, Iowa, have a similar success story. The store, like Encore, is about 100 miles from any town with more than 125,000 people. Centerville itself has a population of around 6,000. Formerly a Maytag appliance store, the store became a member of BrandSource when Maytag was purchased by Whirlpool in 2006. Kevin purchased it from the previous owner in 2011. "When we bought the business, we knew we needed to do something else to make the store thrive," he says. "We wanted to add something, and it wasn't until we started to attend the BrandSource conventions that we realized all they had to offer." While Kevin and Leiba wanted to add furniture to the business, they were landlocked on both sides of their store and there was simply a lack of available retail space. Fortuitously, the space next door opened up and the local furniture store closed. "When remodeling, we learned from the community that our existing appliance store and the space next door had at one time been a larger department store," says Kevin. "All we had to do was knock down the drywall between the two spaces and we effectively doubled our retail space from 3,000 to 6,000 square feet." The remodeled store has been open since December of 2013 and has been an unbelievable success: Overall sales are up 89% for the first quarter over last year and foot traffic has almost tripled. "While appliances are an 'I need' item, furniture is an 'I want' item, which brings people in the store to browse," says Kevin. Out of everything Kevin sells, however, mattresses are the top seller. "We are selling the same number of dollars from an 800-square- foot mattress area as we are in the 3,000-square foot furniture area," says Kevin. "That's because a customer can lay down on a twin and know what a full or queen will feel like, without us having to display all those models on the show floor." Kevin and Brad both continue to innovate and think of new ways to thrive in their unique communities. "When we bought the store, we were going to challenge the status quo and continually ask, 'What do we need to do different in order to survive?'" says Kevin. "We continue to figure out new ways to grow."

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