From Home Furnishing Business
TAKE 5: BOB MARICICH
Having just steered International Market Centers through its second private equity transaction in six years, one could forgive CEO Bob Maricich if he wanted to kick back and spend more time at his vacation home in Montana.
But that’s not likely to happen. The 67-year-old Maricich says he isn’t planning to retire anytime soon, and said IMC’s recent sale to a pair of funds controlled by the private equity firm Blackstone presents significant growth opportunities that he and his management team are excited to pursue.
IMC, which was formed in 2011 when the World Market Center in Las Vegas and several major High Point showroom properties were placed under common ownership, now controls about two-thirds of High Point’s showroom space, including the sparkling new Christopher Guy showroom on South Hamilton Street.
And the World Market Center has been adding gift and home décor exhibitors at a furious pace after designating a large chunk of Building C for those vendors.
Maricich recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about IMC’s sale to Blackstone, the growth opportunities the deal presents, and its possible effect on the High Point and Las Vegas markets.
Home Furnishings Business: What changes can buyers and exhibitors expect to see under the new ownership?
Bob Maricich: It’s an extraordinarily positive development for the company and the industry. There’s no question that Blackstone is in the business to grow, and that growth could be in the form of buying something. It could be in the form of building new buildings. It could be in the form of broadening the furnishings and home categories that are in our markets. The total focus is really on improving and making more effective and efficient the buyers experiences. `
At the end of the day, the buyers really determine where market is and how long it is. Even though they don’t pay us anything, we need to treat them as a customer. And that customer focus is how do we improve that experience? Particularly in High Point, we’re looking at some of the things we can do in terms of physical improvements, beautification, and efficiency, so that buyers can be more productive. We’d love to figure out a way to have them stay longer and shop more, but they’re clearly telling us that their time and their money is valuable, and the effort needs to be on the efficiency of shopping.
On our executive team, everyone is a personal owner of the new company. And the quality of management was a significant reason for Blackstone buying the company. So everyone is staying on, and everyone is excited and motivated about the growth opportunities going forward.
HFB: Blackstone has said acquisitions are a possibility. Could these opportunities take the company outside the home furnishings and gift industries, or is there still room to grow in these core businesses?
Maricich: I think there’s a lot of room to grow in those core categories. The definition of home furnishings is broadening. Channels of distribution are broadening. That’s a great opportunity. Then there are the verticals, particularly in Las Vegas, related to gift. We’ve got a great start, but there’s great growth opportunity there. I hope that (the World Market Center) will be fully occupied by the end of next year or early 2019, and that will afford us an opportunity to build another building there.
Our main task is to put buyers and sellers together in the most cost-efficient way. So without a doubt, there are real opportunities to expand the experience with technology. We invested a lot of money researching that, and we’re looking for ways to create value in that regard.
And finally, even though our name is International Market Centers, we’re not a property owner outside the United States. That certainly creates an opportunity as well.
HFB: Unlike the furniture industry, there are several competing U.S. trade shows for gifts and home décor. What special challenges does that present?
Maricich: We’ve done extensive research that clearly shows that buyers and manufacturers want a major show in the eastern United States and a major show in the west. It’s economical. Two shows that are drawing international audiences are better than six or seven regional shows. We’ve got the only truly growing whole home market in North America. The buyers want it because, at a regional show, there’s not enough suppliers to do their shopping. We think we’re the natural home in the west for the gift and home décor industry. Atlanta clearly has carved out that space (in the east), but buyers west of the Mississippi clearly want to come to a western location.
HFB: How did Las Vegas become the premiere market for the bedding industry?
Maricich: I’d love to take credit for growing that (laughs), but that started long before IMC. The bedding people generally are far greater promoters than the furniture people, and part of that promotion is entertainment. They just embraced Las Vegas and everything Vegas has to offer.
Four or five companies now have significant market share, and when they moved there (to Vegas), all of a sudden all of the smaller companies and the e-tailers went there. Once you get a core of leaders, it solidifies the category. They’re able to spend a lot of promotional money to draw a national audience.
But the same dynamic applies to that industry as it does to the furniture industry and the gift industry. We need to take care of the buyers. We need to keep the buyers energized and make sure they’re productive.
HFB: It’s clear that fewer furniture buyers are coming to all markets today. How to you address that?
Maricich: This notion of being a whole home market is really valuable to buyers. There’s a real need for that effective, efficient shopping experience. When we ask buyers what categories they’ve purchased, it’s heavily weighted to those who are buying for multiple categories.
I think you’re seeing a lot of challenges for traditional furniture manufacturers with not only the generational change, but with the change in channels of distribution. What we’re seeing is an industry that’s growing at two or three percent, but that’s highly deceptive because you’ve got a part of the industry that’s growing rapidly, at 10 or 15 percent, and you’ve got part of the industry that’s flailing and going backwards. Just watch and see who’s expanding their showroom. There’s somebody who’s playing to win -- somebody who is spending money to make their showroom compelling and a destination. The day that people that can come to a High Point market, and open their door and expect customers to walk in, that’s well behind us.
HFB: In the wake of mass shooting in Las Vegas, have you made any changes to your security plan?
Maricich: We’ve always been security conscious. But we’re going to do a better job of making them more visible, so people will see that there is a really significant security presence.
High Point is a very different challenge than Las Vegas because there are so many buildings and multiple points of entry. In Las Vegas, the last two markets, we have started registering people outside the courtyard and having a single point of entry. Now that we have that in place … we can beef up security to almost an airport level if we have to. We don’t think that’s necessary, but we have that flexibility.
HFB: In High Point, there’s a proposal to build a minor league baseball stadium, apartments, a hotel and other development just north of the downtown market district. Are you supportive of this effort?
Maricich: We are unequivocally supporting it. It’s a fantastic idea. I’m frankly troubled that there’s some hesitancy that seems to be coming from the county government. The wrong answer is to do nothing. Now, you have a ring of almost urban blight. It creates kind of a vacuum in downtown High Point, where there are no restaurants, no after-hours places, no dynamic of excitement, even during market. The stadium idea and the vision that (High Point University President) Nido Qubein has articulated is phenomenal. It will be a catalyst for more and more of the kind of growth that the downtown area needs…and that will be good for the market.