August 31,
2006 by in UnCategorized 
By Home Furnishings Business in Furniture Retailing on September 2006
Joe and Marcia Bograd, owners of one of the Northeast’s most famous and enduring furniture stores, Bograd’s Fine Furniture, did not imagine any of their three grown children carrying on the family business. Ten years ago, as the Bograds began to contemplate retirement, son Louis was an attorney, daughter Stephanie a banker and son Mark a museum curator.
“We had no feelings that any of our kids would take over,” said Joe Bograd, 71.
Today, Louis is still a lawyer and Stephanie still works on Wall Street. But Mark, 45, who studied government in college and holds an advanced degree in anthropology, has left the museum world and is now president of Bograd’s. The Northern New Jersey store, which offers one of the most expansive selections of high-end furniture in the nation, and rarely has sales, this summer advertised a “Pass the Torch Sale.”
Bograd’s, for a third generation, will remain under the ownership and management of a Bograd.
“We really think we have a reputation. We have a name in the business, and we can pass it on. We really enjoy that,” said Joe Bograd, who takes even greater pleasure in the fact Mark will own and run Bograd’s because he wants the job, and not because it was expected of him.
But handing the business over to Mark would not be as simple as handing him the keys to the front door and signing a few papers.
To put Mark in charge, there would have to be a legally sound plan—one that would be fair to all the Bograd children and assure that the store would continue as a venerated New Jersey institution. It took about three years, the family reports, for lawyers and accountants and family members to iron out a strategy.
Fortunately, Bograd’s has a history of smooth successions to draw upon. As leadership of the company changed hands, its goals remained the same: keep the family happy and the business healthy. The means to achieve these goals, however, became somewhat more complicated over time.
***
Bograd’s was founded in the midst of the Depression in downtown Paterson, N.J., on Aug. 1, 1930, by Samuel and David Bograd, Joe’s father and uncle respectively. The two immigrant brothers from Russia started out peddling door to door, selling sheets, towels, clothing, and, eventually, furniture. They made a success of themselves in great part because they were willing to sell on credit in a time when credit was hard to come by.
The business started by the two brothers thrived, and moved and expanded in 1935 and 1948, selling both moderately-priced and more expensive brands in downtown Paterson. Over the years, even as the city of Paterson declined, the merchandise became almost exclusively high-end, and customers continued to travel from nearby New York City, 14 miles away, and its affluent suburbs.
Like his son Mark, Joe Bograd as a young man did not picture his future in furniture, though he always liked the business. In his senior year at Cornell University, Bograd was about to fly off to an interview for an actuarial job when a snow storm closed the airport.
“I took that as a sign. I didn’t go to the interview, and I went to work at Bograd’s. I’ve been here for 50 years,” Joe Bograd said.
David Bograd, his uncle, died in 1973, and it was then that the family got its first experience transferring portions of the business among themselves. The Bograd brothers had been clear with each other on their thriving company’s future. “My father and my uncle had a buy-sell agreement,” said Joe Bograd. “If one died or wanted out, the other one would buy him out.”
Now the company belonged only to Samuel Bograd and his descendents, who saw the store through a major expansion in 1980. Samuel Bograd retired in 1986 and died in 1991, and the business fell to Joe. His younger sisters—a statistician and a mathematician—would profit over time from the earnings of the family’s land holdings in Paterson.
In 1996, Joe and Marcia Bograd decided on the store’s next major change—a move out of Paterson. Its departure from the city was considered so monumental that it was chronicled by the
New York Times under the headline: “Bograd’s, Paterson’s Stylish Survivor, Moves On.”
The new site for the store, in suburban Riverdale, nine miles northwest of Paterson, boasted exceptional highway access. The existing structure on the land was a former bus garage that offered more than 30,000 square feet. In addition to the furniture showroom, the building is now also home to a kitchen and bath showroom, a carpet store and customer-designed, contemporary steel furniture shop. Bograd’s also offers an expansive accessories department, headed by Marcia Bograd, whose own family goes back four generations in a furniture business founded in Upstate New York.
Another reason for the move to Riverdale: Joe and Marcia Bograd believed that because none of their children had shown any interest in running Bograd’s, they would have to move the business so they could eventually sell it. “We felt we had established a pretty substantial franchise for our name, but we would never be able to sell the business in Paterson.”
But just a few years after the move to Riverdale, Mark began accompanying his parents to High Point and it soon became clear that Bograd’s had an heir.
***
Mark Bograd graduated from Wesleyan University with a degree in government in 1983 and earned a master’s degree from the University of Massachusetts at Amherst in anthropology in 1989. He worked at the Smithsonian Institution in Washington, D.C., and became Curator of Collections and Exhibits at Lowell National Historical Park in Massachusetts, which chronicles the nation’s Industrial Revolution.
But the museum world was strapped for cash, and Mark knew that in a leadership position his duties would increasingly focus on fundraising, a job he didn’t want.
He was enjoying his trips to High Point, though, and impressed by his parent’s standing in the business. Bograd’s increasingly seemed like a good place to build a new career. But if he was to join the company, it would have to be soon. “I thought if I’m going to do this, I want to benefit from my parents’ knowledge. I want to benefit from their tutelage,” he said.
In 1999, Mark Bograd joined the company as vice president. Joe Bograd was chairman of the board. Marcia Bograd was secretary. It was then that the family began to think about succession seriously.
***
With relative ease Bograd’s had passed from David Bograd’s to Samuel’s family. And leadership of the business had transferred easily from Samuel to Joe. The same was expected for the transition from Joe to Mark.
But pitfalls are plentiful when it comes to handing down what is known as a “closely held” business, and the Bograds were eager to avoid them all. Their accountants and attorneys knew of many families mired in battles over assets and management. Too often, they told the Bograds, passing on a business can result in horrendous fighting that breaks families apart.
The smartest thing to do, the accountants and attorneys advised, was to split Bograd’s interests among the siblings. Mark would receive Bograd’s operating company and the company that holds the land on which the Riverdale store sits. His siblings would retain interests in the company that holds the income-producing land that was Bograd’s former home in Paterson. Now that parcel is rented to a 99-cent store and a children’s clothing retailer.
As for marketing, the family did not see any need for an extensive campaign to introduce Mark to their clients. The “Pass the Torch Sale,” Joe said, “was really just an excuse for a sale.”
An upcoming advertising campaign will stress the importance of family at Bograd’s, but it won’t feature any actual member of the family. Instead, ads will show a little girl and a piece of furniture that was presumably handed down through the generations of her family. Bograd’s should thrive on its reputation for customer service, not the appeal of the family’s personalities, said Marcia Bograd.
A partial exception to that rule is
Joe Magazine, an occasional glossy published twice since its inaugural issue in the spring of 2004, and distributed free to 16,000 Bograd customers. Its focus is design—furniture, fabrics and profiles of designers. And it is named, of course, for Joe Bograd, who writes its back page column and recommends restaurants in the vicinity of the store.
The theme of the magazine, and the store, is that quality and service are best delivered through smaller retailers who care deeply about their merchandise and customers. As Joe Bograd wrote in the latest issue:
“We live in a world that has been de-personalized. The human element has been removed. Our phones are answered by computers. ... We have voice mail and e-mail. We shop on the Internet. ... But not at Bograd’s.”
Mark is unsure whether Bograd’s customers will ever see such a thing as “Mark” magazine. But how about a fourth generation owning and operating Bograd’s? Mark and his wife have two boys, 9 and 6.
“I take the same attitude as my parents,” Mark Bograd said. “It’s their choice.” HFB
August 31,
2006 by in UnCategorized
By Home Furnishings Business in Case Goods on September 2006
Last month, Pat Norton retired as chairman of La-Z-Boy, but as chairman emeritus of one of the industry’s most recognized brands, the 84-year-old veteran plans on staying active in the business even in retirement.
Norton had been chairman of La-Z-Boy since 1997, where he oversaw one of the largest suppliers and retail networks in the business.
Before his tenure with La-Z-Boy, Norton worked at another of the industry’s most recognized brands, Ethan Allen, for 20 years, where he played a key role in the then-revolutionary concept of a manufacturer developing a dedicated retail channel.
At La-Z-Boy, Norton played a big part again in taking another recognized brand into retail with a gallery program and dedicated store network; as well as expanding the company’s product categories, a move that he has mixed emotions about these days.
Norton was named to the American Furniture Hall of Fame in 1995, and has a building at High Point University housing the school’s furniture program named after him, as well as a scholarship there. His tenure and dedication to the furniture industry qualify him as a legend in the business.
Norton took a few minutes to talk with
Home Furnishings Business about his most satisfying achievements, some things he might have done differently, and his thoughts on how the furniture industry can capture consumers’ interest moving ahead.
As you look back over your career, is there a particular period or event you can identify that gave you the greatest satisfaction?
There are really two things I’m most satisfied with, but they are essentially one and the same. Those are the development of the store system at Ethan Allen and the development of proprietary stores at La-Z-Boy.
Ethan Allen may have been a little easier to do because of the breadth of the product line we had there. Also at the time the idea of single brand store was a totally new concept for furniture.
At La-Z-Boy we had a very strong brand recognition but not as broad a line as we’d had at Ethan Allen at the time we were starting the stores, but we’re up to more than 300 now.
Those two developments have been very satisfying, and again, I look at the Ethan Allen and La-Z-Boy store development in pretty much the same way—it’s really one and the same when you think about it.
What has been the greatest challenge you’ve faced in your career as a senior executive, and how did you handle it?
One of the greatest challenges we all have in the furniture industry is getting great people, getting them motivated and keeping them on target. That’s always been the thing that makes for success.
It goes beyond the people you hire personally—in an organization like La-Z-Boy it goes to the level of the store owners, teaming up with the right people.
The toughest part of the business has always been the people equation. It’s always been the critical issue in any business, You look for people who want to learn, who want to be part of a bigger picture.
You must have integrity, and you must have loyalty. You need ambitious people, but not selfish people—people who want to be part of something larger than themselves.
What are some critical issues you see lying ahead for furniture retailers, and what advice would you have for dealing with them?
That’s a hard one, but it seems to me that as retailers, we have to stop worshiping price as an answer to all our problems. That’s ended up confusing the consumer, and just doesn’t get them excited.
Retailers need to differentiate themselves and stop trying to be everything to everybody. What is it that you do well? What sort of goods will you sell at which prices? You just can’t do it all, have every price and quality level.
It’s a question of who you’re going to be. You have to work to be the best you can be and to satisfy your customer, whether you’re carrying Henredon or La-Z-Boy.
That whole issue has been compounded by the way we source our merchandise today—if you’re competing on price now, that’s just a hard way to do business.
We all need to understand that people don’t come (to a La-Z-Boy store) looking for a Henredon bedroom, and they don’t go to a Henredon store looking for a La-Z-Boy recliner.
Let’s flip that question. What does La-Z-Boy have to do, in your opinion, to maintain and build its leading role as a furniture supplier?
I’m going to talk generally about the industry here. The answer is essentially the same as what I said about retail.
Don’t represent yourself as being something you’re not. We’ve lost, in my opinion, the confidence of the consuming public through our fascination with price. We sell what is essentially a blind product—if you go to the store to buy a stereo or a television, there are a lot of specifications you can research beforehand. You can determine the exact functions and performance features before you even go into the store.
We don’t really have that with most of the merchandise we bring to the market, so much of it seems about price, and price doesn’t make value.
You might pay a lower price for a piece of furniture, but is it really a value?
It’s a very big problem even on the supply side, because that’s the way we seem to be approaching the consumer today.
La-Z-Boy is in better shape than many, because most people understand where we’re coming from, and we have very strong brand recognition and reputation.
With the benefit of many years of hindsight, are there any things you would have done differently or any decisions you would have changed?
I’d say I regret any role I played in the La-Z-Boy acquisition of LADD. It was a mistake.
We shouldn’t have acquired any case goods companies at that time, because the case goods business was moving to China. The idea was to broaden our offerings but the timing was wrong.
A year-and-a-half, two years later, there’s no way we would have made that decision to acquire these case goods companies.
What are your plans for retirement? Any plans to keep to keep a toe in the furniture-industry water behind the scenes?
I certainly plan to have a role at La-Z-Boy as chairman emeritus of the board, and any way I can help this business I will. I still have an office here.
I also am involved with Culp and High Point University. I plan on keeping busy, and anything I can do, any advice I can provide, I’ll be here.
What will I do for fun? This is fun—I wouldn’t be here at 84 years old if it hadn’t been fun. HFB
August 31,
2006 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on September 2006
Kornmeyers - freshly rebranded and renamed Kornmeyers HomeSmart - celebrated the opening of 30,000-square-feet of incremental showroom space, including 150-foot atrium showroom, with champagne and roses earlier this month. On hand to open the doors and mingle with customers at the August event were Harold Bahlinger, Sr., chairman of the board of directors and outgoing president, and newly named president and general manager Rose Mary Williams.
The atrium, designed by GRID2, establishes a more prominent store entrance for the 126-year old, family-owned business, as well as a new customer reception area, floor layout and space for an upholstery gallery featuring Hickory Hill, Rowe, Hickory Chair, Hooker, Klaussner, Lane, Sealy, and Sherrill brands. Oversized graphics and photos complement the new brand identity.
Kornmeyers will maintain operations in its original 60,000-square-feet store. The decision to expand its current location was made in response to market research conducted by Al Wight of Strategic Decisions. The retailer expects to complete its total store and warehouse renovations in early 2007, when a grand opening event will be held.
August 30,
2006 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on August 2006
Pier 1 reported sales of $114 million for the month of August, a 7.8 percent decline from the $123 million posted during the same month last year. In addition, comparable store sales declined 9.1 percent.
Sales for the second quarter were $370.7 million, down 12.5 percent from last year’s $423.7 million, and same-store sales declined 14.8 percent. Year-to-date sales of $746.8 million were down 8.3 percent from $814 million last year, and comparable store sales declined 10.9 percent. The retailer will report second quarter results Sept. 14.
“Customer traffic and sales improved during the last two weeks of August, however traffic trends remained below last year,” said Marvin Girouard, chairman and chief executive officer. “We believe the improved traffic and sales resulted from more aggressive marketing initiatives including new TV commercials. We will continue to manage the business through promotional events designed to attract new and existing customers into our stores.”
In addition to the sales figures, Pier 1 announced it has agreed to sell its private-label credit card operation with outstandings of $140 million and a million active accounts to JPMorgan Chase. The retailer expects net proceeds of $155 million from the transaction.
Pier 1 and Chase will also entered a long-term marketing and servicing agreement under which Chase will provide credit and customer service benefits to Pier 1 cardholders, and offer special financing terms to the retailer’s customers. The retailer will also receive future ongoing payments based on credit card sales, new account generation and other credit-related activities.
The transaction is expected to close in the third quarter.
August 30,
2006 by in UnCategorized
By Home Furnishings Business in Furniture Retailing on August 2006
A sales slowdown at Ethan Allen that began in July has continued through August, said Farooq Kathwari, chairman and chief executive officer of the manufacturer and retailer.
“This quarter we are being impacted by both lower consumer confidence and our initiative, started last July, to reduce the lead time in filling customer orders,” he said. “As we previously indicated, the faster backlog turnover reduces the forward visibility of delivered sales, and we are subject to more volatility as demand levels fluctuate.”
Kathwari remained pleased with Ethan Allen’s record sales for the fiscal year ended June 30.
“More importantly, we have continued to take steps to differentiate Ethan Allen by focusing on providing decorating solutions,” he said. “In that regard we have strong product programs in place; we have strengthened our design professional staff and retail management; and, we continue to relocate our Interior Design Centers.”
In mid-September more than 800 Ethan Allen dealers are scheduled to attend the company’s annual Retail Convention in Danbury, Conn., where they’ll see new marketing initiatives and product in the newly renovated Ethan Allen Interior Design Center. Ethan Allen also will host an Investor Conference in Danbury Sept. 26.
Next Thursday, Kathwari will be speaking at the Goldman Sachs Global Retailing Conference.