Retail Snapshot: Ready For the Rebound

September 30, 2008  by in UnCategorized   

By Home Furnishings Business in on October 2008 Take a look at Michael Huber’s life in furniture, and you get an idea of why he decided to base Belfort Furniture’s business on a single, if multi-faceted, location in the Washington, D.C., suburb of Dulles, Va.

After years of working on two continents in his family’s business, followed by running around among multiple stores in his own enterprise, Belfort ‘s chief executive officer decided the only way to build a successful furniture retail operation and still have a life of his own was to settle his business in one place.

Huber was born into the furniture industry. With an American mother and Swiss father, he grew up on both sides of the Atlantic, and worked with his brothers in his father’s business, then called Belfort Furniture, which grew to 13 stores in Germany and one in England.

“I grew up in the furniture business—I never got an allowance, I got commission,” Huber recalled. “At 12, 13 years old, people were asking me whether a carpet went with their fabrics. At that point, I’d just have to tell them it was always a matter of personal taste.”

In the late ‘70s, Huber moved to Virginia, where he got an associates degree in business and met his wife, Kristi. After moving back to Germany to work in the family business, he and Kristi decided to return to America to raise their family; son Matt was born 26 years ago.

Going It Alone Huber was still working for his family, opening an outlet in Fairfax, Va., selling European-made leather furniture and wall units with the idea of establishing a chain of locations.

“The concept was a little ahead of its time, and we ended up closing that store,” he said.

Meanwhile, Belfort Furniture changed its name to United Furniture when Huber’s father bought a furniture assembly plant in Belgium to wholesale goods assembled from components imported from China. His brothers still work in that business, one running the wholesale business, the other in charge of five stores in Germany.

“I was going back and forth” between Europe and America, Huber said. “I wanted to stay here, so I kept the Belfort name and started this business in 1987. I was pretty much on my own, because nobody leaves the family business.”

Belfort Furniture opened a store and warehouse in Herndon, Va., with three employees: Mike and Kristi Huber, and Mike Perry, who’d worked with Huber in the earlier business. Perry’s still with Belfort, where he now is in charge of all service calls.

“He’s the only guy who can claim he’s worked for Belfort since before it existed,” Huber said.

Over the next five years, Belfort opened two more locations in Chantilly and Potomac Mills, Va.

“We were doing a decent business, not gangbusters, but we were getting along pretty well,” he said.

Getting Grounded Problem was, between years of jumping the pond with the family business and managing three locations with Belfort Furniture, Huber felt as if he was spending too much time running in circles. That wasted energy inspired him to think in terms of a destination “campus” for home furnishings.

“The lesson I learned is that if you have one store that’s big enough and you do it right—build that mousetrap with good furniture, good prices and good execution, it’s the most cost-effective way to do business,” he said. “I didn’t want to spin my wheels chasing around those different locations.”

The opportunity to bring that idea to fruition came in 1993 when, after a year of negotiations with the bank, Huber bought a half-built 75,000-square-foot shopping center in Dulles, Va., out of foreclosure that’s now the home of Belfort Furniture.

“I closed the other stores to concentrate on the campus concept and doing it right,” he said.

Huber looked to operations such as Gallery Furniture in Houston, Nebraska Furniture Mart in Omaha, and Darvin’s in Chicago, as models.

“Those guys all seem to be able to have a life and do a lot of business out of one location,” he noted. “I wanted to have my cake and eat it, too, and to a large extent that’s what’s happened.”

Indeed. Since opening at its current location, with 30,000 square feet now housing the “Belfort Galleries” store, the retailer went from around $3.5 million in sales to $20 million in 2000 to $40 million last year.

Belfort Furniture owns a 13.5 acre tract that includes five storefronts:

• Belfort Galleries, a 35,000-square-foot full-line store.

• Belfort Interiors, which features a leather gallery, casual dining, home entertainment, home office, home theater seating, and motion and recliners.

• The 20,000-square-foot Belfort Basics carries lifestyle furniture and coordinated room packages with an emphasis on more immediate delivery.

• Belfort Kidz and Mattress carries a big assortment of youth furniture; and bedding from Sealy Posturepedic, Stearns and Foster and Tempur-Pedic.

• A clearance center located in part of the 86,000-square-foot warehouse Belfort built in 2001 across the street from the shopping center.

Extra space opened for that clearance center in 2007, when Belfort completed a new 90,000-square-foot state-of-the-art high-cube warehouse a couple of miles from the main campus.

“In the past couple of years, we’ve expanded our ability to double the business—I did that right in time for the slowdown,” Huber said. “But we’re ready. Operationally we’re more than capable of doing well over $80 million a year with what we have now. We had been hampered by space constraints.”

Another addition is a spray booth for touching up finishing on wood product. “With all the furniture coming from the Far East, we found we needed that capability to prep some of the goods for sale,” Huber noted. “I still feel there are areas of opportunity and growth with what we’re doing right now, so I don’t have an immediate desire to open another location,” Huber said.

Focus on Execution Belfort has felt the effects of a tough retail environment, especially for furniture. Sales in 2006 were around $43 million, and that fell to about $40 million last year as the industry slowed.

“We’re trending down about 5 percent this year, but business has actually perked up, so we’re hoping to pick that back up by the end of the year,” Huber said. An in-home design program, for example, has helped build tickets in a down year.

“We have almost 20 people doing house calls this year,” he said. “We’ve standardized that format, and it’s been very successful. We’re writing some big orders this year through that program.”

The real key to maintaining the business in a tough environment, though, has been a strict attention to operational details.

“We’re all about continuous improvement,” Huber said. “We identified 400 processes to make a furniture company run efficiently that don’t really change much, but the procedures you use to perform those processes do change.”

For example, unloading a truck is a process.

“You always need to unload trucks—the procedure is how you check in the driver,” Huber said. “Do you do it manually, or do you use a bar code? Take sales—you always have to approach a customer, but how you do it changes.”

At Belfort, each of those 400 identified processes is tied to individual job descriptions. “By doing that, we’re able to make sure those processes are always assured of completion,” Huber said. “When something’s not working at a store, it’s often because someone’s in a new position with new process assignments.”

To remedy the potential for processes to fall through the cracks, from 2003 to 2004 Belfort developed its own internal database of job descriptions with access available to each employee.

“As long as that process is assigned, someone’s doing it,” Huber said. “How are we doing it? That’s the underlying procedure, and if that procedure changes, it’s updated on our business management system. Everyone can actually look at their job description, click on a process, and it tells them the procedure to use. Once you’ve solved a problem, there’s a place for that solution to go; you don’t have to keep reinventing the wheel.”

Individual teams develop new Belfort procedures for processes such as receiving, parcel shipping, etc. for approval by senior management. Once approved, those changes go into the database.

That attention to detail and insurance against dropping the ball on any operational process or procedure has served Belfort well during a sales decline last year and flat sales projected for 2008.

“We’re perfecting the actual systems for what we have in place here, and it seems the better you execute, the more sales you get,” Huber said.

Huber also is willing to look outside the furniture industry for ideas to increase efficiency and hone his business. He participates in a group of area CEOs from various sectors who meet regularly to discuss ways to improve their operations.

Belfort’s approach to quality control is a good example of that input. Huber’s wife, Kristi, serves as vice president of quality, a position inspired by discussions at the CEO group.

“We define quality as ‘the Belfort Way,’” Huber said. “When we have new policies or procedures, that runs through her, and she makes sure the changes define our mission. She doesn’t work day-to-day in the business, but in reality she’s the heart and soul of what we do.”

Maintaining Morale How does a retailer keep the staff fired up during a tough time to sell furniture?

“We try to celebrate all the small successes, things like a good customer satisfaction survey,” Huber said. And instead of backing off on advertising, Belfort has maintained its effort to spread its message in the D.C. market, which has a morale-boosting side effect.

“We’ve really kept up our advertising, and while the sales are down, we still have good traffic,” Huber said. “If you can keep traffic in front of the salespeople, it helps morale. We all hear about stores that are closing, and we are still pretty strong. You have to ask, ‘How am I doing relative to my competition?’ In that regard, our staff is pretty happy.”

It also helps to inject some fun into the business. Take the company newsletter, “The Buzz.” It’s a lively monthly with a big focus on employee achievement, recognition and outside activities.

“We’ve had various newsletters for years,” Huber said, “but ‘The Buzz’ has been around for about six months. We wanted something a little more fun for the employees.”

A recurring feature, for example, follows the travels of “Bucky the Belfort Beaver,” a stuffed mascot employees take for photographs on their vacations. Bucky soon will be featured in a coloring book Belfort is developing for customers’ children.

“It’s about Bucky and his bee friend,” Huber said. “Bucky gnaws on wood to make furniture. ‘The Buzz’ grew out of all that, and everyone gets into it.”

So does Bucky’s coloring-book gnawing produce more rustic-leaning furniture? “Oh no,” Huber laughed. “He’s really quite skilled!” HFB