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Hearth & Home May 2015

The Texas-size new Nebraska Furniture Mart.

Texas-Style Shopping!

By Tom Lassiter

Nebraska Furniture Mart is open for business; it expects eight million customers a year and could well generate $1 billion in annual sales.

Photos: 2015 © Sebron Snyder Photography.

Nebraska Furniture Mart, now open in Texas, takes destination shopping to a whole new level. Under construction next to the 560,000 sq. ft. store are three restaurants and two hotels, all part of the master plan backed by the retailer’s majority owner.

Shop ’til you drop.

Eat. Sleep. Repeat.

This is how the retailer will accommodate customers flocking to a store too big to explore in a single day. It’s also how it plans to become a lure “for millions of visitors a year, from near and far.”

Nebraska Furniture Mart (NFM) opened its new store without fanfare in March, giving curious shoppers an opportunity to get to know the place before the onslaught of Grand Opening customers. Even without advertising, the volume of people flowing into the store was impressive.

Warren Buffett addresses the crowd at the opening of the Texas Nebraska Furniture Mart.

“I’ve been there for a few weekends, and I’ve seen the traffic,” Paul Lyman, a Tropitone sales representative, said in early April. “It’s unbelievable.”

NFM’s own projections are more specific. The company expects the Texas store to draw eight million customers annually.

That number – greater than the population of the state of Washington – is rather hard to grasp, so let’s simplify. To achieve eight million visitors annually, NFM must welcome an average of 21,918 customers every day. That’s more people than Madison Square Garden can accommodate. Every day.

The plan for this Texas-size venture was formulated 650 miles to the north, in Omaha, home of NFM and its majority owner. You may have heard of it: Berkshire Hathaway, led by one Warren Buffett.

NFM developed Grandscape, the 433-acre project that surrounds its new store. Grandscape is situated in a fast-growing municipality of about 40,000 people just 30 miles north of Dallas. Median household income in 2012 in The Colony (named for a 19th century event in Texas history) was estimated to be more than $74,000.

Plans call for Grandscape to have an outdoor amphitheater, plus a convention center hotel and spa. Estimated cost for the entire project is $1.5 billion, according to published reports. The NFM store itself cost more than $400 million.

NFM is famously known as a powerhouse retailer of interior furnishings. It’s less well known nationwide as a retailer of outdoor furniture, though patio products have been in the product mix for decades. NFM’s stores in Omaha, Kansas City, Kansas, and Des Moines, Iowa, typically stocked casual furniture just during the season. The company’s move into a climate more conducive to year-round outdoor living offered an opportunity to expand its lineup of casual furnishings.

In addition to sofas, dining room suites, mattresses, appliances, televisions and fitness equipment, NFM shoppers in Texas will find more than 17,000 sq. ft. of casual furniture and grills. A separate area focuses on high-end outdoor kitchen equipment.

Janet Lura, patio furniture and grill buyer.

Janet Lura, in charge of buying casual furniture and grills for all four NFM stores, said that in moving into the Dallas market, the company has altered its approach to outdoor living products. The selection of outdoor goods will be broader than in NFM’s other locations.

The longer outdoor season and booming Texas economy led NFM to create a separate area for outdoor kitchen products, with an emphasis on higher-end brands including Kalamazoo, Viking, Wolf and Coyote.

This is totally new territory, said Jeff Thomas, an appliance buyer in charge of outdoor kitchen products.

“We haven’t really traveled down the outdoor kitchen path,” he said. “We’re just getting our feet wet down there.”

After being open for just a few weeks, the retailer learned that Texas shoppers – at least those who came early – differ from the shopper profile NFM knows in Nebraska, Kansas and Iowa. Texans, Lura said, gravitate more toward higher-end casual furniture.

“So far, we’ve found that the higher range is doing very well,” she said, and to a surprising degree.

“Our goal is to cater to everybody’s taste and price level,” Lura said. “We don’t hit one price range; we try to hit them all. I don’t think people were expecting us to have the starting price point.”

NFM’s move into the Dallas/Fort Worth market has longtime casual furniture merchants on their toes.

“Everybody is aware of the Goliath coming into town,” said David Schweig, president of Sunnyland Patio Furniture. “You address it, and you focus on your strengths, focus on what makes you different.”

Tim Snyder, a sales representative for Woodard Furniture, has called on NFM for more than 30 years. He knows that the competition NFM brings to Texas will be formidable.

“As long as I can remember, they have been aggressive merchants,” he said. NFM excels at merchandising, no matter what the category. Employees are well-trained and kept abreast of product updates, he said. The retailer makes it easy for shoppers to make purchases by offering in-store financing.

“They hammer away at ways to produce business,” Snyder said. “They are very smart merchants.”

The store knows that shoppers need sustenance when browsing acre upon acre of products. That’s why there’s a Subway restaurant inside the store. Need something to satisfy a sweet tooth? See’s Candies are available in the store. The brand also is owned by Berkshire Hathaway.

The rotunda in the Texas store.

Mrs. B’s Legacy

Nebraska Furniture Mart got its start in 1937 when Russian immigrant Rose Blumkin started selling furniture in the basement of her husband’s Omaha clothing store. According to company lore, she had a knack for finding bargains, adding a small markup, and passing the savings on to customers.

“Sell cheap and tell the truth” became Mrs. B’s motto, steering the company to decades of success. The company’s reputation for doing the right thing was so strong that, in 1983, Buffett bought 90 percent of the business on a handshake. There was no audit of the books, no inventory of product. He cut a check for $60 million. Done deal.

Today, NFM is steered by Mrs. B’s two grandsons, Irv and Ron. Snyder said they carry on her legacy, remaining true to the motto she created and believing just as firmly in the work ethic she modeled. Mrs. B worked in the Omaha store until she was 103. She died a year later.

“People become successful and get fat, dumb and happy. They get lazy,” Snyder said, but not the Blumkin brothers. “These guys actually work very hard at showcasing everything in the best possible manner.”

Lura said one of the Blumkins is always with the NFM team at the Casual Market each fall. The boss is not just along for the ride, she said. He’s on top of trends and helps determine what NFM casual shoppers will find on the showroom floor.

“It’s such a hands-on company,” Lura said. “The family is there and knows what’s happening every step of the way. There’s not a day that goes by that we are not working directly with a Blumkin.”

Sharing the Dream

The Texas store spotlights the art of the possible in 13 areas throughout the two-story showroom. NFM calls these areas Inspiration Showcases, or Dream Rooms.

Dream Rooms differ from typical vignettes, Lura said, in that “we kind of go above and beyond. We use our imagination and create inspiration points for the customers.”

The casual furniture Dream Room in the Texas store features a pergola that was custom-built on-site. There’s an eye-catching copper fire pit set before a curved, deep-seating sofa.

A separate team accessorizes the vignettes and Dream Rooms, adding accents and details that create visual pop and make the scene more residential.

Jeff Thomas, appliance buyer.

Similarly, the outdoor kitchen area boasts touches that remind shoppers that they are Texans, shopping in Texas. For starters, it’s big.

Thomas said the DCS product area may be “the largest in the country.” He described it as similar in size to the DCS display at the HPBExpo.

There’s a 21-foot-long wall of outdoor kitchen accessories, including gauges and thermometers, turners, tongs and spatulas, plus specialized gadgets. Every Texas grill needs a jalapeno roaster, right? Each item carries the MAN LAW brand.

Rockwork constructed by local stonemasons gives the outdoor kitchen area a true Texas ambiance. NFM sought out local designers and contractors to make sure that the color palettes and the rock itself would meet the expectations of Dallas-area homeowners.

The wide variety of products offered by NFM allows the store to reach out to various departments to support what, in other stores, might be niche products.

For instance, NFM’s lighting department supports lighting products in the outdoor kitchen area. Televisions, designed specifically for outdoor use, are merchandised in the outdoor kitchen area but fall under the domain of the electronics department.

This approach means that the salesperson charged with being an expert on high-end grills doesn’t have to be an authority on outdoor televisions. Someone whose entire focus is electronics is available when customers want to know about an outdoor TV.

NFM is serious about putting knowledgeable salespeople on the floor. “We have vendor training every weekend throughout the season,” Lura said. “And we have great reps who come in and help whenever they can. We find that a huge, huge help.”

Thomas agrees. “All our sales staff is factory trained,” he said. “They know it inside and out.”

Even though the store is massive, the merchandise is presented in an approachable manner. Donnell Jones, an Agio rep who has handled the NFM account for 14 years, says, “The shop-ability of it is spot-on.” The products are presented “from a perspective that a customer can relate to,” she says. “They’ve got it laid out to where it’s shop-able.”

Evolution of the Texas Strategy

The 2003 opening of NFM’s Kansas City store did not go well, according to an article in the Omaha World-Herald. “The store opened – to a mob scene of shoppers without the staff, facilities or warehouse space to meet the demand,” the newspaper reported in a February 2015 story.

NFM president Ron Blumkin told a reporter that the company misjudged the size of the market and didn’t train new employees thoroughly on “how things are done around here.” The 800 employees at the 450,000 sq. ft. store couldn’t handle the traffic, so more were hired quickly. But the mayhem continued, resulting in high (and expensive) employee turnover.

Candies are available in the store. The brand also is owned by Berkshire Hathaway.

Lessons Were Learned

As a result, the Texas store opened quietly and without advertising. But NFM still managed to create a buzz without a major media buy. Starting in January, the company posted a new “sneak peek” video on YouTube once a week. The videos show a store still getting finishing touches while dropping enticing tidbits about what to expect. Does another Dallas/Fort Worth store offer 12,000 sofas or 7,000 area rugs?

    Some other details based on NFM’s Kansas City experience:
  • There are spaces for 4,200 vehicles (1,000 more than at the Kansas store). Drivers who choose the five-story parking garage will be guided to available spots by green overhead lights.
  • The Texas warehouse has five times as much space as Kansas City’s; in fact, it’s the size of 22 football fields.
  • With 2,000 associates, the Texas store has three times the number of employees as in Kansas City.
  • Long lines formed outside the women’s restrooms in Kansas City. Additional facilities in the Texas store should prevent similar embarrassments.
In the patio furniture section.

In Kansas City, NFM executives watched in amazement as other commercial developments sprung up around their store. It was a side effect they hadn’t anticipated. The traffic generated by the giant retailer convinced other ventures of potential success.

Jumping on the bandwagon in Kansas City were an array of restaurants, a brewpub, a cineplex, an outlet mall and hotels. Among the retailers setting up nearby was Cabela’s, a destination retailer for hunters, fishermen and other outdoor enthusiasts.

When the decision was made to expand into Texas, the NFM team decided that the company would exercise greater control over its surroundings. That strategy, which would also enable NFM to maximize profits, seems consistent with being a Berkshire Hathaway company.

Blumkin told the Omaha newspaper that controlling the entire development will allow NFM to prevent competitors from building stores in close proximity. But that didn’t stop Rooms To Go from buying 47 acres nearby, where it erected a store of about 50,000 sq. ft.

TopGolf, a Dallas-based developer of golf entertainment complexes, opened a 61,000 sq. ft. facility about a mile away.

Other developers and enterprises clearly believe that NFM will be a people magnet. As a result, land values in the area have doubled or tripled since NFM announced its plans, according to the Dallas Business Journal.

Blumkin told the Omaha paper that he expects the Texas store to generate about $600 million in revenues. He said that would boost NFM’s corporate sales by some 70 percent.

Buffett thinks that the $600 million estimate is too conservative. He told the World-Herald that he believes “the store will do over $1 billion.”

Buffett’s prediction is not mere speculation. The Omaha store, in a much smaller market, generates annual revenues of $450 million to $475 million.

The store displays a wide range of appliances.

Making Customers for Life

Unlike specialty merchants who concentrate on higher-end goods and leave mid-range and promotionally priced items to mass merchants and Big Box stores, NFM offers something for everyone. It’s the store’s philosophy.

A key strategy, said Thomas, the appliance buyer, is to never consider a sale as a single transaction. One sale should lead to others for “the entire life of the customer,” he said. “We want to be able to satisfy the customer from the time they are young and eating ramen noodles until they are older and eating out every night.”

For example, NFM happily offers to shoppers on a budget a Four Seasons Sling Double Glider priced at $70. For shoppers with more disposable income, there’s a teak sofa by Selamat Designs for $6,500 (list price, according to the NFM website, is $10,500).

NFM, said Agio’s Jones, offers “a complete package. They shop the category unlike any other (Agio) customer. They will seek out and find the best from every manufacturer, which provides them with a selection that is second to none.”

Jones said NFM is quick to spot coming trends. The company was first among her customers to understand that fire pits would be a huge category. When NFM identifies something new and viable, she said, “They will be the first to have it. They are not afraid of anything. These guys plan ahead, and they make everything work.”

Many things about NFM are staggeringly impressive: The third-generation family leadership, the backing of Berkshire Hathaway’s deep pockets, the gumption to steamroll into Texas and impress Texans with a huge development such as Grandscape.

But the most impressive thing about Nebraska Furniture Mart may be this: “We didn’t take a hit in patio in the recession,” said Lura, the outdoor buyer.

On the contrary, while most of the outdoor industry suffered for at least a season or two, NFM’s patio business grew. “During the recession, these guys were having increases,” Jones said, “some in double digits.”

Mrs. B must have been right. Focus on customer service. Sell it cheap, and tell the truth.

“And,” Jones said, “customers believe that.”

A few of the brands carried

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