Seattle Lighting makes a switch that works

Home Channel News, Nov 9, 1998 by Carol Tice

Private-label product training prove to be key factors in turning the company around

At Seattle Lighting's flagship store near the Kingdome in Seattle, shoppers browse aisles adorned with stylish pendant fixtures, table lamps and torehieres, priced as low as $29. The fixtures are grouped tastefully, with unusual furniture pieces and sculptures. In the 10,000-square-fool showroom's small, upscale "design center," a $10,000 alabaster marble-and-silver chandelier sets the tone.

"And it sells," said Mistie Anderson, the company's Washington district manager. With a clientele that's 75 percent builders, Seattle Lighting is able to provide complete lighting packages for every home, ranging from the modestly priced $150,000 abode to the $2 million mansions.

Builders praise the company's service. "We use them almost exclusively," said Tim Price, senior vp of John Buchan Construction in Bellevue, Wash., a firm that builds 400 units a year, across the entire price specturm. "If we need anything, I call [my salesperson], and he gets it."

The Seattle Lighting that Price lauds is a far cry from the company that existed in June 1996, when, in the words of Anderson, it was "three days from liquidation." The then-14-store company had been losing $2 million or more a year for several years, owing to bad buying decisions coupled with acquisitions that overextended the retailer.

Vendors were displeased with lack of progress during the company's reorganization under Chapter 11. By spring 1996, shelves were emptying, contractors were defecting to competitors. And employees were heading for the door.

Turnaround time

The 81-year-old Seattle Lighting's rescue came from the owners of two companies based in Portland, Ore.: A-Boy Supply, an eightstore plumbing specialty retailer; and Globe Lighting, a three-store operation selling lighting fixtures. The two companies are owned by brothers Pat and Dan Dolan, and their sisters, Jean Lester and Mary Gedeon. Other potential buyers had sized Seattle Lighting up as a flatlined corpse that was beyond resuscitating; the Dolans recognized a rare opportunity to expand their business through the Northwest.

The family purchased the company, which had once pulled in $38 million in annual sales, for a mere $1.2 million. One store wasn't part of the deal; the Dolans immediately closed four more units in Washington state, leaving five Seattle-area stores, three Portland-market units, and one store in Boise. The Portland and Boise stores operate under the name Builder's Lighting.

The Dolans set out to rebuild the business at the remaining nine stores. Among the assets the Dolans brought to the job were expertise in light fixture importing and a value-priced, private-label fixture line Pat Dolan created called Dolan Designs.

Launched in 1994, the Dolan product line has been expanding steadily ever since; a recent Dolan Designs catalog had 80 pages of product. The products are also distributed to some 500 lighting showrooms outside the trading area of the family's various retail outlets, building sales volume and consumer awareness of their brand. Initially focused entirely on pendant lamps, the line will include table and standing lamps next year.

The Dolan-branded product was a crucial addition at a time when Seattle Lighting's vendor relationships were in disarray. The company also lacked buying expertise.

The Dolans were importing fixtures direct from China, working with dozens of vendors; Seattle Lighting had been using a California-based middleman. The result was low margins and prices that were some 20 percent above warehouse competitors in the market, including Eagle Hardware & Garden, Home Depot and HomeBase.

In the old days, the stores were merchandised with the highest-priced merchandise up front and cheaper items in the hack, providing customers with the immediate impression that the store was focused on high-end product. Now, the Dolan Designs are prominently featured. Pendant lamps used to hang one-deep on tracks; these days, light clouds allow more product to he displayed in thematic groupings. The furniture and accessories were added earlier this year to lend a warmer atmosphere to the store, as well as create add-on sales opportunities.

Fighting the widespread customer perception that Seattle Lighting was a pricey specialty chain took time, Anderson said. However, the combined buying power of Globe and A-Boy, coupled with Seattle Lighting, brought prices down as the Dolans increased their import volume to some 200 containers a year. The company also introduced new, lower-price-point items, like $59 mica-shade torchieres. The company also began distributing 900,000 consumer ad circulars quarterly, increasing the customer base and showing the builder customers the prices were right and the product range was broad.

"At one point, you could go to the big warehouses and heat [Seattle Lighting] up on price pretty well," said Price of Buchan Construction. "But now their prices have come down considerably. They weren't competitive before, and now they are."