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From Home Furnishing Business

TAKE 5 KIM YOST

By Larry Thomas

There’s a map on the wall of every office at Art Van Furniture’s Warren, Mich., headquarters with a large circle highlighting every city and town within a 600-mile radius of the retailer’s massive distribution center.

 

Many of those cities and towns don’t have an Art Van store currently, but if CEO Kim Yost’s growth plan is carried out after he retires later this year, that will soon change. And in larger cities, it won’t be just one store. He wants enough stores to become the largest furniture and mattress retailer in that market.

“Our goal is to become number one in all the markets within that 600-mile radius,” he said.

The growth plan has gotten off to a flying start, as the retailer has grown from being present in 28 markets three years ago to 51 markets today. Much of the growth has come from opening new stores, but the acquisitions of Levin Furniture and Wolf Furniture last fall added the key markets of Pittsburgh, Cleveland, Baltimore and Washington, D.C. overnight.

Yost recently spoke with Larry Thomas, senior business editor of Home Furnishings Business, about the challenges of such a rapid expansion, the decision to keep the Levin and Wolf names, and Art Van’s expansion into several new product categories.

Home Furnishings Business: What are the major challenges faced by such a rapid expansion?

Kim Yost:  One big challenge is finding the right locations. We’re looking for anywhere from 45,000 to 75,000 square feet. Rents have to be at certain targets to achieve our financial thresholds. We look at each city with the view of having enough stores to get to number one in market share. We will buy existing buildings, lease existing buildings or build from the ground up. But going forward, leases (will be the priority.) We’re looking at these Toys R Us stores, as an example, to see what’s available.

Another big challenge is building the team for growth. Art Van has several leadership and sales courses for our team to help that development. As you build the stores, you have to staff them with great talent. We’ve had the opportunity to send in some of the talent from our Michigan headquarters, but that can only take you so far. You’ve got to have great education, sales and leadership courses to transfer your skills and your culture to these markets. And that’s not easy.

The difficulty is transferring your culture from your base to new markets. Culture eats strategy for lunch. You’ve got to realize that each market will have a degree of uniqueness.

HFB: Why did you decide to keep the Levin and Wolf names instead of converting them to Art Van stores.

Yost: Both our new brands have 100 years in business in their respective markets. We conducted an extensive survey in all four markets (Pittsburgh, Cleveland, Baltimore and Washington, D.C.) and came to realize that, unaided, these two brands had equal awareness to what we had in Michigan with Art Van. This is huge. When you’ve been in business for 100 years, like Levin’s, and over 100 years like Wolf’s, you’ve got two- and three-generation purchasers. You don’t want to take that great brand equity and just disregard it.

We’re going to maintain as much of the brand’s strengths as we can, whether it’s people, unique products, services and culture. Our goal is not to assume that one size fits all. In this particular case, we call it the power of three. We believe that by taking the best from Levin’s and the best from Wolf’s – combined with the best from Art Van – and bringing their synergistic secret sauce, we can create this power of three, and maximize the performance of all three brands.

HFB: Going forward, what will be the mix of product exclusively designed for Art Van vs. manufacturer’s brands?

Yost: The majority of our product mix is targeted to be exclusively designed and produced by our current domestic and import providers. We like to work with our current providers and then work from their lines so that the majority of our assortments are exclusive. We can’t differentiate ourselves unless we have a high propensity of exclusively designed and produced merchandise for Art Van.

Here are three examples of private label programs that have been incredibly successful. The new Detroit Sofa line that we’ve developed as a private label is made domestically. We also have a private-label leather line called Roma. And we have an upholstery line that’s one of our strongest, called The Style Collection. That’s also made domestically by one of our current suppliers.

We also have found great success by partnering with national brands like La-Z-Boy and Natuzzi to represent the quality perception from our consumers. There are not a lot of furniture brands that have that great perception like La-Z-Boy and Natuzzi.

You have to have lots of secret sauce in your merchandise. You have to have a strong position of uniqueness. It gives you a really good position in the marketplace. If you’re in the middle of the road with your merchandise, you’ll get run over.  

HFB: Is your e-commerce effort focused nationally or in local markets?

Yost: Although we can deliver white-glove to all 48 contiguous states, the vast majority of our online sales are where we have existing stores. We believe that’s driven by brand awareness, by having physical stores in high profile trade zones, by the concentration of our advertising, and by our ability to offer in-store pickup.

What we’re finding is that more and more online transactions are being consummated after the store visit. It’s a new phenomenon.

Let me give you an example. They come in. They look at a sofa. They narrow it down to two colors. And when they go home, they make a definite decision on one of those two colors, and they complete the sale online – as opposed to coming back to the store a second or third time.

HFB: Will Art Van’s product offerings expand to include non-durable categories?

Yost: In April, we are going to move down the path of changing our name from Art Van Furniture to Art Van Home. We are going to concentrate a big portion of our product growth and merchandising and marketing growth in a new division called Home.

We will be expanding our flooring galleries in all Art Van stores. We are in the early stages of doing window treatments. And we’re going to expand greatly the traditional home categories – lighting, wall art, tabletop, top of bed and gift. In addition, in our new Home division, we will be launching dinnerware, stemware and glassware relating to six style categories. Online, we will be looking to expand in all rooms and product categories that relate to the home, including storage for the garage, exercise and fitness equipment.

If you need it for your home, Art Van is going to carry it. It’s going to drive traffic – both online and in our stores -- and it’s going to raise the average ticket.

HFB: What was the thought process behind your decision to retire later this year?

Yost: The timing is right. The company is well positioned for growth with our partners at T.H. Lee and the power of three with our brands. The heavy lifting for this next stage of growth is behind us, and it could never be a better time to bring on a new leader with a new vision and new excitement for the next phase of growth. Change is good.

We feel incredibly confident that we’ve got terrific partners, we’ve got an amazing financial foothold, and we certainly have a strong plan for the future with our 600-mile radius and our goal to be number one in all the markets within that 600 miles.







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