Fast furniture

Rooms to Go has become the biggest U.S. furniture retailer by offering the next best thing to drive-through decorating: complete rooms, from sofa to silk flowers, at competitive prices.

By MARK ALBRIGHT, Times Staff Writer
© St. Petersburg Times
published March 3, 2003

Lewis Williams doesn't shop for a table here or a chair there. He and his wife, Stephanie, buy by the room.

"I prefer packages," said Williams, who works at the Renaissance Vinoy Resort in St. Petersburg. "It's fast and easier to compare prices. Plus everything matches."

Catering to such shoppers and their need for speed has paid off handsomely for Rooms to Go, a chain named for its matched furniture sets that include rugs, lamps and wall hangings. By copying fashionable styles that upscale rivals sell at higher prices, president Jeff Seaman's closely held chain grew over 11 years into the nation's largest furniture retailer.

Rooms to Go surged past Ethan Allen Home Interiors in 2001, and this year Seaman won accolades as the National Retail Federation Innovator of the Year.

Yet Seaman admits being haunted by his fragmented industry's "billion-dollar curse." Sears HomeLife, JCPenney Portfolio, Heilig-Meyers, Roberds and Levitz are all examples of furniture chains that imploded after getting about as big as Rooms to Go, which generated $1.3-billion in sales in 2002.

"I purposely slowed our growth to be sure we are organized in smaller business units that get us to the next level," said Seaman, who founded the 90-store chain that includes 18 Rooms to Go Kids stores.

He put off until this year plans for a new bedding store designed for smaller markets. He cut Rooms to Go new store openings in half. This year the chain will venture into only one new market, San Antonio, Texas.

There's extra reason for caution: Furniture sales nationally are mired in a two-year malaise. Sales in 2002 rose only 2 percent, and Rooms to Go did only slightly better.

So industry watchers were surprised when Seaman and Sun Capital Partners, a group of Boca Raton financiers, a few months ago acquired the 35-store Wickes Furniture chain for an undisclosed price.

With annual sales of $350-million, Wickes stretches Seaman's reach from six states in the Southeast to a national stage, with stores in Chicago, Minneapolis, Los Angeles, Pittsburgh and Portland, Ore. The Wickes name lives on, at least for now, but its ads and merchandise look more and more like those of Rooms to Go.

"There's a 90 percent chance we'll turn them into Rooms to Go," Seaman said in an interview.

This all seems a long way from rural Seffner in the late 1980s.

Seaman's father, Morty, a veteran of the furniture wars in New York, had sold his interest in Seaman Furniture Co. in 1987. His son Jeff, a University of Pennsylvania business school grad, used some of his share of the $365-million price tag to start Rooms to Go.

Seaman came to Florida because he liked its growing population and the furniture buying habits of the many transient residents.

After turning a small Orlando chain into Rooms to Go in 1991, the 30-year-old entrepreneur opened stores in the Tampa Bay area. He chose a prominent site along Interstate 4 at Seffner for his headquarters as much for its visibility to passing motorists as its central location.

The 70-year-old Morty Seaman was one of the original Rooms to Go investors. He's no longer vice chairman but remains a familiar sight at the company's headquarters.

The younger Seaman envisioned making furniture shopping less of a time-consuming chore. The idea of packaging accessories along with the sofas and end tables came to him when he was a college kid working with his father's furniture buyers. He bought 600 Persian-style rugs and feared he would be stuck with them. They sold quickly after he split up the collection in stores and slipped them under matching living room sets.

"Rooms to Go is a perfect form of instant gratification," said Gordon Siegel, chairman and chief executive of Crate and Barrel, the Chicago home furnishings chain. "You see the room you like, order it all, including the rug and artwork, and it arrives at your door within a week."

Seaman took the rough edges off the traditional furniture store. Rather than jam furniture into every nook, his stores are showrooms that display the furniture in its best light. In most cases, if the chair on display is upholstered in blue, you can't get it in red or green. That reduces choice for customers, but it also means they don't have to wait two to three months for an order from the factory.

There is no cash and carry. So customers must pay for delivery or drive to the Lakeland warehouse to pick up their purchases.

The formula is not as simple as it sounds. The logistics of making 20-million deliveries a year are staggeringly complex. Carrying that much inventory carries big risks if the chain's buyers don't guess right about what appeals to customers.

Rooms to Go's sprawling distribution center in Seffner is huge. Yet it's only spacious enough to house the company's buying and accounting operations and supply Rooms to Go Kids, the chain's offshoot that specializes in furnishing children's rooms.

The Seffner center is dwarfed by one that's twice as big, a 1.6-million-square-foot warehouse in nearby Lakeland, one of six that serve the chain in six states.

To avoid the problems in handling customer credit that helped sink some chains, Seaman farmed out the credit card business to banks. Rooms to Go's commercials boast that the chain pioneered the zero percent financing deals that are now dominating the auto industry.

He pays his commissioned sales force about a third more than the industry average: $50,000 to $80,000 a year, with a few salespeople earning six figures. Customers get a followup call to grade their experience.

A scan of complaint files at the Pinellas County Consumer Protection office show delivery problems and damaged goods are the biggest source of complaints. The company resolved 21 of the 24 complaints filed over the past five years. "That's a pretty good record given the amount of business they've done," said John Wood, the agency's chief investigator.

Standardizing everything in his stores, Seaman even developed a work uniform for the salespeople: preppy polo shirts, khaki pants and sweaters in their choice of three primary colors.

"When we shopped the competition back in the beginning, I came across a guy wearing a brown suit and an orange tie," Seaman said. "I realized we could not allow people to dress themselves."

Early on, Seaman was inspired by the Gap.

The apparel chain used flashy ads, hip-looking stores and its own value-priced private brands that became a cheap chic fashion statement of their own.

"I loved how simple it was," he said. "I wanted to simplify decisionmaking: 'I'll take that room.' "

More critical has been his company's knack for picking trends just as they build a head of steam. Rooms to Go carries some brand names, but the company knows how to knock off its own versions of new styles quickly. Years before most competitors, it turned to Asian manufacturers, who now make half the wooden furniture sold in the United States.

Upholstered furniture is still made mostly in the United States, so it helps that the Seaman family has an interest in two Mississippi upholstery factories that supply many other retailers.

Guided by a former Macy's furniture design boss, the chain's 15-member buying staff combs magazines, TV shows, films, new cars and rival furniture stores looking for styles suited for mass-market treatment.

"We can design our own furniture, then shop the world to have it made," said Seaman, adding that piggybacking on some other chain's order is far more profitable for a manufacturer because the high setup cost is spread over more volume. "You can get a pretty good price extending the end of someone else's production run when you buy 10,000 pieces."

The company earned an industry reputation as tough negotiators. "They're no-nonsense guys with an uncanny knack for spotting trends ahead of the pack," said Ray Allegrazza, editor in chief of Furniture Today.

"I know manufacturers who won't let them in their showrooms in fear they will copy them," said Britt Beemer, president of America's Research Group, a Charleston, S.C., market research firm that specializes in the home furnishings industry. "Some people even fear that if a piece they make for Rooms to Go sells too well, Rooms will just take the job to someone else who can do it cheaper."

Customers often are surprised.

"The perception is they are low end," Shane O'Neill, a St. Petersburg commercial real estate broker, said after his first visit. "This looks more like the contemporary stuff you'd see at Ethan Allen."

Not exactly. A popular five-piece British West Indies-style bedroom set, for instance, retails at Ethan Allen for $7,045. Rooms to Go put together its own version that's promoted at $1,229 as a set, $2,299 if sold separately.

The Ethan Allen version is made of solid domestic maple cut and assembled in its company-owned U.S. plants. Rooms to Go uses a far cheaper mahogany imported from Indonesia that's been stained to look like cherry. Rooms to Go shaved production costs by scaling down the size to fit smaller rooms. The chain also used cheaper hardware, less ornamentation and wood substitutes for the back.

While Ethan Allen spent two years getting its British Classics line to market, Rooms to Go had the first shipment of its Barbados line in stores six months after leaving the design desk.

Farooq Kathwari, chairman and chief executive of Ethan Allen Home Interiors Inc., said he is used to knockoffs. "It's sort of the nature of the furniture business," he said.

Seaman prefers to say his company's West Indies bedroom was "inspired" by others such as Ethan Allen.

"It's all about bringing value to the customer. Unlike most of our competition, we can value engineer our furniture right down to the tree," he said. "We can source the wood overseas, then have it finished in the states. Manufacturing in China is not all about lower labor costs. Because so much capital has been invested in Asia, they have the most modern equipment in the world."

Rooms to Go still is a work in progress.

A deal to sell its furniture in a Japanese department store chain was a bust. Stores opened early in the chain's history proved to be too small as the selection ballooned to more than 100 rooms of furniture.

So Seaman, who now lives and works in Atlanta most of the time, has been building new stores almost twice as big as the oldest ones in the Tampa Bay area. For each new store opened, two old stores are closed, or one is closed and the other is converted to a Rooms to Go Kids.

Exploiting trends is a constant guessing game. For instance, the current shift toward eclectic decorating, which encourages careful mixing and matching, has been vexing for Seaman's packagers.

"We learned you can mix tropical florals with Art Deco and wood finishes with metals," he said. "But people will not accept two different wood finishes."

Seaman is surprised that many people in their 20s want traditional styles their parents shunned.

The Rooms to Go formula resonates with today's shopper. Consumer willingness to pay for top-quality furniture has lagged far behind the rising prices retailers charge for quality. Americans are willing to pay $100 more for a sofa than they did five years ago, an average of $769. But the key prices that sell the most -- $599, $699 and $899 -- remain stuck in the 1970s. About a third of consumers now consider furniture a disposable product.

"People have lowered their expectations," said Beemer, president of America's Research Group. "They think a sofa is supposed to last only eight to 12 years. Many change every three to five years. People are spending $1,699 for a living room set at places like Rooms to Go that looks like Henredon pieces that went for $10,000 a decade ago."

And the market for the buy-a-room approach of Rooms to Go may only be growing. One survey shows stores that sell furniture in packages appeal to 60 percent of Generation X furniture buyers ages 25 to 40.

"That's higher than any survey we've done on any age group, and the results were the same regardless of income," said Al Wight, president of Strategic Decisions Inc., a Thomasville, Ga., research firm that specializes in the furniture industry. "They want less hassle and instant gratification."

The research fits with one of Seaman's goals: drawing in upscale customers who now drive past his stores to pricier competitors.

"We'd like to attract the customer who is prepared to spend $10,000 a room to spend $3,000 a room with us."

-- Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

Rooms to Go Inc.

Origin: When veteran New York retailer Morty Seaman sold Seaman Furniture Co. in 1990, son Jeff invested his share in his version of a furniture chain. From a base on Interstate 4 in Seffner, his Rooms to Go Inc. mushroomed into the nation's biggest furniture retailer 12 years later.

Innovations: Selling furniture by the room in discounted packages including wall hangings, rugs and lamps. One of the first chains to design its own furniture and have most of it made in Asia. Invested in logistics to deliver 20,000 pieces of furniture a day in six states.

Size: Sales of $1.3-billion in 2002, up slightly from $1.2-billion in 2001. Adding eight stores to its collection of 90 this year, mostly in Texas. Acquired 35-store Wickes Furniture on the West Coast and in the Midwest last year in a venture with Sun Capital Partners. Seaman family owns two Mississippi upholstery factories.

The unexpected: Pays commissioned sales force a third more than the industry average, $50,000 to $100,000 a year. Outfits them in casual, preppy uniforms of khaki pants, polo shirts and sweaters.

Challenges: Growing in an industry with a cemetery full of chains that tried to get bigger than Rooms to Go is now.

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