HomePlace: a stylish rookie with big league plans - Home Market Trends - Cover Story

Discount Store News, Feb 19, 1996 by Dawn Wilensky

On the retailing playing field, Home Place founders Bob Hurwitz and Jim Monro could be considered gainers: driven individuals who play hard to reach milestones in their careers.

For this pair of seasoned veterans, another important milestone was surpassed when the duo exceeded their corporate mandate of "26 in '95" with 28 stores in operation as of early December--with five stores opening on the same day in Atlanta--and two more in early '96, bringing store count to 30.

These lofty goals only act to awaken the competitive spirit of these two men who have spent the past 19 months establishing a strong infrastructure for an upscale home furnishings chain that competes head-to-head with mature and entrenched competitors like Bed Bath & Beyond and Linens 'n Things.

These guys know how to play the game and are not intimidated by curve balls thrown by the competition, since they have the ability to draw on more than 20 years of retail experience to help ease their doubts.

"We knew we had a winner from the start when a customer approached me and said that we had given the store the wrong name," said chairman Hurwitz. "She said we should have called it HomeRun."

Both men have played on championship teams before: Hurwitz at OfficeMax, a 64-unit office supply superstore that he sold to Kmart in 1991 for more than $200 million; and Monro, president of HomePlace, for seven years with Fabri-Centers, first as its executive vp and then as president and ceo of the 650-store fabrics chain.

"Bob and Jim have experience with rapid rollouts and have developed teams of dedicated store openers that get the box, merchandise it and train all store-level personnel. This is why they could open 18 stores in November and December," said Marcia Aaron, retail analyst with Alex. Brown & Sons, the Baltimore-based investment firm.

While Hurwitz characterizes competition as "a macroeconomic trend that indicates that consolidation will continue," he hasn't looked back since opening the first store in September 1994 in Dallas. Since that time, the chain has entered 14 additional states: Arizona, Connecticut, Georgia, Iowa, Minnesota, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania and Tennessee.

While no specifics were given as to future store sites, the chain will likely add stores in major metropolitan markets like Chicago, Nevada and California, and cluskets like New York, New Jersey, Pennsylvania and Texas in order to increase visibility among consumers.

To critics who said, "The chain is growing too fast," Hurwitz countered, "Our fear is not growing too fast, but growing too slow." And for skeptical observers who pointed a finger and said, "There's no one in the stores," manufacturers happily have reported receiving reorders.

"I've heard the rumors regarding foot traffic, but we keep getting reorders. I don't think Bob is using all of these products to furnish his own home so there must be people in the stores buying stuff," said a bedding manufacturer.

There will also be a lot more stores to buy from as this year promises to be one of rapid-fire expansion, with plans for 30 stores on its way to "in excess of 200 stores doing in excess of $2 billion in the year 2000," he said.

This is a tall order since it would mean that each HomePlace store would generate an average of $10 million in sales, significantly more than mature competitor Bed Bath & Beyond, which Alex. Brown & Sons estimates will be doing about $8.7 million per store in 1997.

But if anyone can win the game, Hurwitz can. He is currently seeking investors to fund this aggressive growth through a private placement that allows the company to raise money, but not trade on the public exchange.

"This strategy is good because as a young company it is preferable to get private money rather than public money, mainly because when you're a public company, you're under a magnifying glass," explained Aaron of Alex. Brown & Sons, which is helping HomePlace raise capital. "But when you are private, people are a little more forgiving because investors understand you're in a growth phase and are less judgmental."

What might also quell investors is that HomePlace brings a unique perspective to the industry with a format rich in theater and drama that teams on-trend merchandising, a strong signage program, logical adjacencies, stylized endcaps and cross-merchandising in every nook and cranny of the store.

"HomePlace is Bed Bath & Beyond meets Williams Sonoma. They have a lot of the same ideas as Bed Bath & Beyond in that they carry the same merchandise assortment, but they romance the product more. They go a little more upscale with brands like Calphalon which is carried at Williams Sonoma and makes for a different shopping environment," Aaron added.

Above all, the chain has stayed focused on its core mix of 50/50 housewares and home furnishings. By comparison, Bed Bath & Beyond has 33% of its sales in domestics and has been criticized by industry observers for taking its eye off the ball in the category. Even Linens 'n Things, which does 86% of its business in soft goods, sometimes misses the mark.