Furniture’s Lost Generation

April 30, 2007  by in UnCategorized   

By Home Furnishings Business in on May 2007 Standing in a near-empty store on the second-to-last day of a sale that marks the end of Miller Furniture’s 114-year-
history, Quinn Miller recounts what is becoming an all-too-common story for small furniture retailers today.

“There are no family members to follow (me). The closest is my 14-year-old grandson, and I don’t want to wait that long,” said Miller, who has worked in the downtown Greensboro furniture store for nearly 50 years. “I’m 62 years old, and I can still do just about anything I want to do (physically), and I love to ride motorcycles. I can either sit here for another 10 years and get to where I can’t get on a motorcycle anymore, or I can go on out the door and take off.”

Like many other furniture retailers who have made the decision to shut down, two factors weigh heavily in the decision. The first is that the neighborhood around Miller’s Elm Street store has seen a dramatic resurgence in recent years. Property values have risen to the point that Miller believes that his building will produce more income by renting the ground floor out to a new restaurant and creating 13 apartments on upper floors.

The second factor is expressed well by 70-year-old Larry Appelsies, an owner of another store that’s closing, Albert A. Slater Furniture in Merrilville, Ind. “It’s not as fun anymore,” said Applsies, who, in mid-April, was presiding over a going-out-of-business sale at the 57-year-old company. “I’ve enjoyed all the (35) years I’ve been here, but the kids are all grown up and are doing their own thing, and they don’t want any part of the retail business.”

Like Appelsies, Miller said competitive pressures made the decision to close his Greensboro store a relatively easy one. “For the mom-and-pop stores, it’s just getting tighter and tighter with the bolts being tightened down on them.”

Retirement Sales Increasing

Across the industry, nearly every day brings new headlines about another multi-generational furniture retailer opting to close or sell the business for retirement. One much-talked-about example came in March when 75-year-old Herschel Alpert announced he was selling his Alperts Furniture Showcase store in Seekonk, Mass., to Raymour & Flanigan, a Liverpool, N.Y.-based chain with 70 stores.

C.A. Roberson, whose Dunn, N.C.-based firm ran Miller Furniture’s going-out-of-business sale, said the vast majority of closing events he’s overseen in the past couple of years have involved owners retiring. “I’d say eight out of 10 are because they just don’t have someone in the family to hand it down to,” he said, adding that C.A. Roberson Management handles about 10 sales each year, mostly in North Carolina and Virginia.

The furniture industry does not track figures on store closings, but nearly everyone who spoke with Home Furnishings Business said there appears to have been a surge of closings of independent furniture stores in recent years. Britt Beemer, chairman of America’s Research Group, Charleston, S.C., said 5,000 to 6,000 furniture stores have closed in the past two decades as more and more major markets have become dominated by large regional chains. “It’s a case of more baby boomers reaching retirement age,” said Sharron Bradley, executive director of the Western Home Furnishings Association. “They may be second- or third-generation retailers and have kids who don’t want to be in the furniture business because they’ve taken another avenue.”

Beemer said many small independents find themselves at a competitive disadvantage these days as they work in the shadow of better-financed large chains with enormous buying power and advertising reach.

“The rules have changed. Furniture stores can’t close at 5 o’clock anymore,” he said. “Most of them have to be open on Sunday, and you also have to buy better and advertise with four-color inserts. More of the people who have been hanging on by their fingertips are deciding to retire.”

Lucrative Going-Out-of-Business Sales

Retirement sales can also help retailers increase the size of their retirement nest eggs, if they’re well-run. Sales during Miller Furniture’s closing sale—which was concluded in eight weeks—equaled what the store typically sold in a year, Miller said.

Beemer said it was easier for independent stores to find buyers 20 years ago when the industry was going through a period of consolidation in which corporations like Heilig Meyers were buying up independent stores to create regional or national chains.

Among those actively planning an exit strategy for retirement is David Marks, owner of Finders Keepers, Tustin, Calif., who expects to close the store in four years. A second-generation furniture retailer, Marks said, “I have two (grown) sons who would have been likely candidates, but both had different passions ... and probably saw their old man come home a little bit on the frazzled side more than once.”

Marks, who has operated his own store since 1976, said, “They’re going to do better than I did by doing what they’re passionate about. I don’t blame them a bit. We pushed independence from an early age and that’s exactly what we got, which is great.”

After reciting a list of industry friends in similar circumstances, Marks said the challenges the furniture industry presents for smaller retailers today plays a role in the growing list of retirement sales. “I just don’t see the excitement in the industry that there should be. It’s changed so dramatically, and there are just not many stores like us anymore.”

Marks, who leases his store, said it’s unlikely he would sell his business, and he’s looking forward to an active retirement doing volunteer work after his store’s lease expires within a few years.

Fast-Forward: Helping the Next Generation Succeed

Concern about the lack of young people willing to go to work in multi-generational family businesses prompted the Western Home Furnishings Association to launch Fast Forward two years ago. The group is dedicated to assisting and supporting today’s sons and daughters who are interested in a furniture career. Lael Thompson, the 28-year-old chief operations officer of Broyhill Furniture Galleries in Denver, said, “It’s really easy to go to a (furniture) market and, with a quick glance, see that there’s not a lot of young blood stepping into the industry.”

Steve DeHaan, director of the National Home Furnishings Association, said there was rising interest in offering similar programs several years ago, but NHFA programs aimed at next-generation retailers were not well attended.

Thompson said Fast Forward started two years ago to encourage young people to pursue careers in the furniture industry. He said a networking event at the January Las Vegas Market attracted nearly 100 people. “We provide education tools and a platform to be able to network with one another to help them become successful more quickly,” he said.

Thompson believes that the relative lack of young retailers provides an advantage. “There’s so much opportunity, being that there isn’t as much competition with young people coming into the industry,” he said. “It’s an industry that welcomes young people and their energy and perspective. Because of that, there are more opportunities to achieve.”

The Most Common Mistake: Waiting Too Long

Roy Hester, vice president of Planned Furniture Promotions in Enfield, Conn., said more than half of the going-out-of-business sales he runs are “non-financial distress.” Still, he said, the most common mistake struggling furniture retailers make is waiting too long to shut down the business. “One trend I see are people in (the furniture) business simply because they own the real estate. If they were paying a full-market rent they would have been out of it years ago,” he said. “Most people wait too long and go through two or three years of losses. The result of a (going-out-of-business sale) might be the same if we did it today or three years ago, but the retailer can’t ever recoup those losses or have the inventory they sold off. It’s human nature to fight and to think it’s going to get better.”

He said he recently worked with an unnamed retailer who took a more proactive approach in launching a going-out-of-business sale with a profitable store. That retailer in New York had seen margins fall at the same time business declined about 15 percent to $2 million a year. “It’s very profitable, but he realizes that he’s got to change direction” by selling out.

Hester, who comes from a three-generation furniture store family, sold off his store 20 years ago, largely because of an influx of major chains. “It was a sea of independents in Central Florida at the time, but very few are left,” he said. “It was a relatively easy decision for me to say, ‘Let’s run a going-out-of-business sale and lease the property.’”

Miller, whose grandfather started Miller’s Furniture with a $52.66 investment in 1893, doesn’t have any misgivings about closing the last store in what had once been a loosely allied string of 13 stores, all owned by various family members. “I’m not going to pick up any furniture unless it’s in my house after this weekend,” he said. “I don’t want to be tied down (to a store) anymore. I’ve been tied down my whole life.”

Miller will continue to be involved in the furniture industry as a manufacturer. He and his brother, Richard Miller, are the long-time co-owners of a High Point-based high-end upholstery factory, Ashley Manor.