Furniture: the next mass superstore star

Discount Store News, June 5, 1995 by Teresa Andreoli

NATIONWIDE DSN REPORT -- The age of the furniture superstore may be upon us. From the latest office furniture concepts coming out of OfficeMax and Office Depot to start-up, single-unit, ready-to-assemble specialty stores cropping up around the country, retailers are starting to invest in furniture as a stand-alone segment.

OfficeMax began testing FurnitureMax, a store-within-a-store concept, in two OfficeMax locations near its Cleveland headquarters in November. About 850 skus fill the 8,000- to 10,000-sq.-ft. concepts, whereas regular OfficeMax units carry about 250 furniture skus.

"The selection is mostly case-good quality goods. For instance, we have a desk that retails for about $5,000," said Juris Pagrabs, spokesman and director, investor relations, OfficeMax.

OFS, Lazy Boy, Krueger, Hahn and National Office Furniture are some of the vendor suppliers, but RTA leaders O'Sullivan and Bush are stocked as well.

Among services offered by FurnitureMax but not OfficeMax is Computer Aided Design (CAD), Pagrabs said. Staffers need only to acquire from consumers the office square footage and number of employees planned for the area, and the computer can design a maximum efficiency workspace.

Most of the merchandise is displayed "in a visual format," Pagrabs said, meaning most items are on the floor and set with chairs and props such as desktop computers and paper trays--a selling environment vendors have urged retailers to adopt.

"I think retailers are recognizing that they need to show product in a truer setting, be it an office, bedroom or living room vignette, to get the customer to move up on price points," said Kevin Sauder, vp sales and marketing for Sauder, the giant RTA manufacturer based in Archbold, Ohio. "This superstore setting format is ideal for larger items, such as home office or even bedroom furniture--merchandise that doesn't fit on a gondola," he said.

OfficeMax plans to roll out the concept to 20 stores in the second half of the fiscal year.

Office Depot just announced its launch into a freestanding, 17,000-sq.-ft. furniture-only format to be tested in Dallas in the third quarter. Although the company wouldn't comment in detail, president Mark Begelman said at the annual meeting that Office Depot is "finding customers want a greater level of sophisticated furniture in their home or offices, and they want it at a reasonable price."

More sophisticated furniture--or at least a greater selection of it--at great prices is how the single-unit specialty RTA stores are staying healthy.

Affordable To Go, Avon, Mass., attributes the success of its RTA outlet to the consumer demand for rightpriced quality product.

"Saving money but getting quality goods at the right price is what draws our customers," said general manager Larry Noller. Located one-half hour south of Boston (an area rife with warehouse clubs and manufacturer outlets), Affordable's mix includes bedroom, home storage, dinettes, home theater and "a good selection of futons and accessories [artwork and clocks] to strengthen margin," Noller said. It employs a full-time assembler (with a van) to make assembly house calls, another example of an Affordable margin-boosting tactic. Almost all of the merchandise is on carpet, on the floor and worked into vignette styles. Utility and microwave carts are the only items on gondolas.

Affordable's highest-priced item on the 7,000-sq.-ft. selling floor is a $600 solid oak futon, but selection is more its forte. "We have about 60 to 70 entertainment centers, and we had to cut back on that to better accommodate the booming home office demand," Noller said.

"Home office is growing strong--for example, we've sold through our Bush hide-a-chair sample stock in less than a week. I think we're at the tip of the iceberg with the home office category," Noller added.

Being affordable and fashionable has boosted the success of Home Concept, an Appleton, Wis., single-unit retailer that opened this past October. The merchandise trends working in Wisconsin tend to match Noller's Boston perceptions: washed pines and cherry are hot.

"Fashion is very important and selling well, especially with progressive moves made by Sauder and Bush," Noller said, using the bun-feet furniture offerings from Sauder as an example. "White washes are another must-have, anyone ignoring white wash is probably making a mistake."

RTA vendors agree that the experimental concept could pan out well. "I think IKEA--with its Scandinavian niche--stepped up the image of RTA and made the category more acceptable," said Kurt Gelke, vp marketing and strategic planning for Bush Industries, Jamestown, N.Y. "But part of their [RTA furniture specialty stores and superstores] strength is the opportunity they have to show consumers a good/better/best merchandising environment. What we're seeing here is retailers viewing the category as strong enough to stand by itself."