Know Thyself

September 1, 2013  by in Business Strategy, Industry   

A merchandise scheme that appeals across price points and big selection are keys to the self-image Gorman’s Furniture Projects. 

By Powell Slaughter

A commitment to offering a huge range of styles at upper-middle to high-end price points coupled with a “flat” management approach that inspires all employees to make offering solutions to customers their top focus have Gorman’s Furniture thriving in a highly competitive region for furniture retailing.

Based in Novi, Mich., Gorman’s serves the suburban Detroit area and, since March 2011, Grand Rapids. It’s an area chock-full of familiar, powerful retail brands. Those include Art Van (which has revived the high-end Scott Shuptrine name), Gardner White, Hillside Furniture and the 800-pound gorilla, Ikea. Not only that, research from Home Furnishings Business’ parent company Furniturecore/Impact Consulting shows the markets Gorman’s serves—Warren-Troy-Farmington Hills, and Grand Rapids—vary in terms of age and income, which might create problems for some furniture retailing models.

FROM “GOOD” TO “EXCEPTIONAL”

“The way we’ve competed is to have a clear understanding of who we are and project that to the marketplace,” said Tom Lias, president and CEO. And what Gorman’s projects is a huge selection at a range of prices. “As you enter one of our stores, you’ll see about half the store is set up into lifestyles, and the other half is divided into (category specific) shops,” he said. “Around half our customers coming in are product-specific. They’re looking to solve a problem, generally with a particular product category. Those customers are easy to talk to.” For the other half that says, ‘We’re just looking, we want to browse,’ Gorman’s sales staff, which consists mostly of interior designers, can steer those customers to defined lifestyles that are shown in vignettes. Gorman’s vignettes blend vendors, and they blend price points.

“Our merchandising platform is good, better, best and exceptional,” Lias said. “We treat merchandising in a horizontal fashion, like a flat management style. In flat management, everyone is equal, and everyone is important, they just have different job descriptions. That’s the way we run the business. The partners are out on the floors.

“The total (presentation) is what services the customer. Our ‘good’ presentation is branded under the ‘Intro’ brand—we’ve had that copyrighted for 17 years. You’ll have a $799, $899, $999 sofa. All the product categories are represented in Intro. It helps our competitive position, and makes us approachable. We know people have different needs for different times in their life, and for different parts of their house.” The contemporary furniture store in Southfield, Mich., is an exception to the look of Gorman’s merchandising scheme at the other stores, but the good, better, best and exceptional platform remains the same.

“We can have a $799 sofa and a $7,999 sofa from Baker in the same store,” Lias noted. “They’re there for a different customer, or for the same customer for a different part of the house. They might want that Baker piece for the living room, but something less expensive for where the kids hang out.”

A DESTINATION

If Gorman’s internal merchandising is good, better, best and exceptional, its external merchandising is led by ‘100 Brands.’

“About six or seven years ago, because we want to be a destination for the best selection, we created the platform of ‘100 Brands,’” said Lias, who joined Gorman’s as a partner in 1984 after long experience in dedicated, single-brand stores that included Ethan Allen, La-Z-Boy and Drexel Heritage. “We believe we have the broadest range in Michigan, maybe the Midwest in prices and styles, because most traditional stores don’t do contemporary. We have the 100 best brands in furniture all in one place, all in one time.”

Television is Gorman’s number one vehicle for getting that message out to the marketplace, along with some radio and print in supporting roles.

“In addressing those 100 brands, we say ‘We are Michigan’s style leader,’” Lias said. “When you define yourself that way, you can have the moderate prices and the high end in the same store, because it’s all about style. That is our market position.” The style and selection range fit well with Gorman’s emphasis on design-oriented sales. Of its 60 sales staff, Gorman’s has around 50 with design degrees, background and experience. Their services are complimentary.

“Working with a designer is a by-product of coming to Gorman’s,” Lias said. “All of those 50-plus people will make house calls, create plans for customers. That could involve just answering a couple of questions about color to designing a complete floor plan for the home.”

FROM FREIGHT TO FINE FURNITURE

Gorman’s dates back to 1940, when Founder Ben Gorman began selling damaged railroad freight from an outlet in Southfield. Soon, Gorman’s started receiving damaged furniture, which it would repair for sale. As word spread, furniture retailing was a natural next step. In 1965 Ben Gorman sold the store in Southfield to Bernie Moray who continues the operations with partners Tom Lias, Jeff Roberts and John Moray. That led to opening new locations, and a new direction.

“After Bernie acquired the company, he wanted to take it more upscale,” Lias noted. Gorman’s opened a store a couple of hours from its Detroitarea base in Grand Rapids in March 2011.

“We actually returned to the same store we were in 15 years previously,” Lias said. “We had Drexel Heritage store there for 15 years. It was bought out from under us while we were negotiating the lease.

“Ultimately they did us a favor, because we moved back to Detroit, where we opened new locations and moved existing stores. We really built up our business in Detroit, so it ended up a blessing in disguise.”

“FLAT” MANAGEMENT

Lias mentioned earlier that Gorman’s runs on a “flat” management model. The owners are on the floors, and they solicit input from all employees, which has generated powerful esprit de corps. And Gorman’s worked hard during the recession to keep those people in their jobs.

“The adjustments we made in 2008 were almost instantaneous,” Lias said. “By the end of October we had restructured the company. We took everyone to a four-day work week, and we were able to retain almost all our staff for the duration of the downturn. By moving early we didn’t have to be as drastic in our cuts, no closing of stores, laying off staff.”

It’s no surprise, therefore, that Gorman’s has been rated one of Michigan’s “Best Places to Work” for three years in a row by the Detroit Free Press.

“We have almost no turnover, and that includes administration and warehousing,” Lias said. “We keep everybody involved in the business —we communicate the goals, the standards, across the board.

“Gorman’s has one policy, and that’s ‘Must Be Right’ (see accompanying box). Everything else is a standard or procedure. And ‘Must Be Right’ isn’t a phrase for us, it’s a way of life that creates a very positive environment to work in.” It’s all part of flat management’s egalitarian approach, and it’s helped Gorman’s attract top-notch talent.

“Everyone’s treated with respect and involvement. It goes back to that flat management,” Lias said. We have no trainees; everyone here is a career furniture person. “When furniture stores were closing right and left, we went after their top one, two or three people. Almost everyone at Gorman’s was the best at their job someplace else.

 

Key Management

Four co-owners include Tom Lias, president and COO; Bernie Moray, senior partner; Jeff Roberts, executive vice president; and John Moray, vice president of operations and information technology.

Key Vendors

 

One Policy

Gorman’s Furniture has just one policy, and it’s “Must Be Right.” It reads: “Before you arrive, we assure you that Gorman’s is prepared to make presentations that meet your expectations. Whether your interests lie in classical motifs and traditional ambience, or in the latest contemporary trends, our objective is to help you visualize all the choices you have to achieve your unique design goals.

While you work with us, we assure you that the professional staff members who assist you are experienced, informed and – above all – sensitive to your needs: that you and your specific requirements come first and foremost. “After your purchase, we assure you that everything meets our standards for quality, specifications, and service. If there is a problem, Gorman’s will correct it.” “In short, we assure you that everything must be right, or we will make it right.” “That is more than our promise. It is our policy.”

"We can have a $799 sofa and a $7,999 sofa from Baker in the same store. They’re there for a different customer, or for the same customer for a different part of the house".

-- Tom Lias

Market Profile

Warren-Troy-Farmington Hills, Mich., MSA (includes Novi, Mich., Gorman’s Hometown)

2013 1st Quarter Retail Sales: $200.8 million

Change in Sales: -3.42% from 1st Quarter 2012

2012 Retail Sales: $837.1 million

Gorman’s Furniture at a Glance

Founded: 1940 as a retailer of damaged freight

Homebase: Novi, Mich.

Store Count: 5

Other Real Estate: 2 warehouses totaling 66,000 square feet

Employees: 150

Annual Revenue: $30-$35 million

Web site: Gormans.com