From Home Furnishing Business
Take 5: Kevin O'Connor & Don Essenberg, Legacy Classic
In 1999, as the home furnishings industry was starting to feel the growing pains of globalization, Kevin O'Connor, along with Richard Mihalik and Jerry Sagerdahl, launched Legacy Classic, which would become the fastest-growing casegoods startup in furniture industry history. As part of this venture, the founders instituted revolutionary logistical changes in bringing furniture to the retail marketplace, ultimately creating the model for the 21st century global furniture company.
Most notably, Legacy Classic set up vast, first-of-their-kind consolidating warehouses in the Far East for finished collections. They paired these automated warehouses with a U.S. distribution center for quick-ship items and replacement parts, which dramatically improved speed-to-market, whittling it down from an average of three-plus months to under 60 days. In addition, Legacy Classic removed minimum requirements, offered standard 30-day payment terms and enabled retailers to mix collections and product types. These changes helped retailers reduce both inventory costs and risks.
The ways in which O'Connor and his partners reimagined and transformed traditional manufacturing processes made business easier and more profitable for retailers, and created industry standards that are still in place today.
“It was a game-changer,” said O’Connor, who was inducted into the American Furniture Hall of Fame in 2012 for his transformative leadership in the furniture industry. “We were like a company on fire, and every month we broke another sales record.”
Before adapting their own Legacy-like processes, other manufacturers scrambled to catch up. Don Essenberg, president and chief executive officer of Legacy Classic, said that when he worked for a competitor, it was a challenge following O'Conner in sales meetings. "What they had to offer was hard to beat," he said.
As the company celebrates its 20th year of business, it enters another era of change, shifting from a China-based manufacturing and warehousing model to a multi-sourced, Vietnamese manufacturing model. This major move will allow Legacy to offer a broader product and price point selection.
O’Connor retired from Legacy in 2015 but remains a consultant to Samson Holdings, Legacy’s parent. He and Essenberg recently sat down with Home Furnishings Business to discuss their company's remarkable history—and plans for the future.
Q: What do you think is the greatest contribution Legacy Classic has made to the industry and the consumer over the last 20 years?
O'Connor: It can be hard to think of just one contribution. I think for retailers, I believe our greatest contribution was that our model kept a lot of them in business that might not have stayed in business otherwise. And for consumers, I think we proved the Far East could make a quality product. Our best selling and certainly most profitable product [Louis Philippe] was also a better-end product. So our greatest contribution there is that we allowed the middle market to have an upper-end look.
Essenberg: And, ultimately, Legacy pushed the rest of the industry into contributing in those ways. Back in those days, following Kevin on a call used to kill me as a competitor to his model. In order for other manufacturers to keep up and be competitive, many followed suit.
Q: What are you most proud of about Legacy Classic?
Essenberg: For me, I would definitely say that it's our ethics—how people are treated here, and how they treat everyone else.
O'Connor: Yes—I'm so proud of the people we started with, and the people we work together with now. When we created this company, we wanted everyone to be treated equally. All the people in the warehouse, all the people in the office... we wanted them to feel they were treated with respect and dignity, and like they were part of something. And that showed in how they interacted with our customers. Retailers would call me on the phone and say, "You know, I do business with a lot of companies, but when I called your customer service department and spoke to Mary, I got the feeling she really cared about my problem."
Essenberg: That's true for today, too. Our customer service department understands they're problem solvers, not a police force. We love them. And we love our salesforce—they aren't a necessary evil. You need good people, and Kevin understood that when he founded the company. We're all one team, and that's just as true today as it was then.
O'Connor: I think that's what I'm most proud of—the integrity we've had as a company. We always try to live up to what we say, whether it's to employees or customers.
Q: With top-selling lines like the Louis Philippe Collection-Vintage, which popularized high-end design for middle-market consumers, Legacy Classic has been known over the years for its focus on thoughtful product design. Would you say this is still a focus for Legacy? Do you see an emphasis on high-quality product design in the industry as a whole?
O'Connor: Somewhere in the mid-90s, life started to become more causal—even formal became more casual, which I know is an odd thing to say. We created Louise Philippe as a bridge between the formerly popular 18th century style and the newer, more casual look. It was softer. It wasn't fussy; it was more livable. And it was just what people were looking for. Another company tried to produce something similar, and it was a dismal failure. But we built a better mousetrap. We softened the lines and experimented with the veneer. We combined styles, putting a Queen Anne leg on a Louis Philippe dining set, which no one had ever done before. But the world liked it; it really took off. That's still our mentality—to know where consumers are and to create good designs that meet them there.
Essenberg: There are a lot of manufacturers competing just on price these days, but what we want to be able to do is compete on fashion, too, and to create value for what it is people want. You don't have to be the least expensive, but you should be the best value for what you're offering.
Q: Whether it's manufacturing, logistics or product design, Legacy Classic has been disrupting the industry for two decades by reimagining and refiguring the status quo. Who do you see as other disrupters in the industry right now?
O'Connor: I don't think there are a lot of disruptors on the manufacturing side right now. I think there are disruptors on the retail side, and it's really coming from the consumer. The business is different today. You're not selling, at any price point, as many packaged suits as you once were. The Internet has changed things. Consumers are exposed to more, and the young consumer today wants to be unique. That's not new, but there's now more accessible to them. Retailers have to be able to deliver and compete in that environment.
Essenberg: Today's consumer is a collector. She doesn't want to just go in and buy a four-piece bedroom; she wants to collect a bedroom with different pieces to make it hers, as opposed to what everybody else has up and down the street.
O'Connor: That's why some of the major disrupters you see at retail are specialty alternative stores that present an aspirational lifestyle. Furniture is only part of what they sell, but they tie together a lot of different elements that create excitement and inspire. I think that's a missed opportunity for a lot of retailers today.
Essenberg: As part of our reimagining, our job is to assist retailers in this area. It's not just a bed or dresser or mirror we're selling; it's a collectable hall piece or a unique cocktail table. In product development, we're creating pieces that are unique in their own right, as well as fitting with a collection. It's as much an art as it is a science—and it's being close to the consumer and how she lives.
Q. What is the next big change on the horizon for Legacy Classic?
Essenberg: It's important to note the things that haven't changed and won't change. It comes back to what Kevin started. Legacy is a very ethical, enthusiastic and entrepreneurial company, and that will continue with all the changes in the business models and retail environment. It hasn't changed in the past 20 years, and it shouldn't have changed 20 years from now.
But to survive in this business, we also have to be constantly reimagining. Our new business model is an example of that. As far as we know, no one is attempting what we're doing, which is literally transplanting our company completely. We're not doing it through a transition where we're moving some of our product; we're literally plucking the business out of China and putting it in Vietnam. That's an ambitious undertaking. It takes a lot of imagination to pull it off, but it's working and it's going to be really important to the history of our company. Twenty years from now, this will be one of the things we'll be talking about.