Through IT investments, a strong culture, and acquisitions, this furniture company continues to grow. According to Edward Breunig III, the state of the economy has been both a blessing and a hardship for his organization. As more businesses begin to dissolve during the recession, Breunig and his team encounter more opportunities to purchase companies at a reasonable rate.
The team at La-Z-Boy Furniture Galleries of Arizona opened its first store in April 1983, and since that time, they’ve opened nine more locations through a mixture of acquisitions and start-ups. Although the company was incorporated more than two decades ago, much of the growth took place in the past 18 months. In November 2007, the company acquired three locations, and last December, it opened a start-up location, bringing the store count to 10.
Prior to the trio of acquisitions, La-Z-Boy’s sales volume was declining, and Breunig, president and CEO, knew he needed to bring it up. Although the locations the company purchased were in distress, Breunig and his team developed a plan to revive them.
“We knew the culture of our staff and the processes we could implement would revitalize the stores and make them profitable,” Breunig said. “We also have a best-of-class in-home design program, which helped increase sales at those locations.”
And because two of the acquired stores are located in Tucson, the team at La-Z-Boy can stock them through its Phoenix warehouse, increasing the organization’s overall efficiency. “Because two additional stores are using that warehouse, we’ve increased our inventory turn without investing in another distribution center,” Breunig said.
But the team at La-Z-Boy has also experienced negative effects of the recession. At the end of last year, the company opened a store in what it thought was an emerging retail area. When the team committed to build at the location, the construction of a mall was also on the books. Unfortunately for La-Z-Boy, the construction of the mall was pushed back two years, and today, Breunig’s store stands alone.
According to Breunig, the store is doing well, but the absence of the mall has affected its results. Consequently, the team at La-Z-Boy adjusted its forecast and its marketing plan. “We’re going to do more direct-mail marketing than we otherwise would to move traffic through the store,” Breunig said. “This will help compensate for the decrease in drive-by customers.”
Inside the store, however, Breunig made no changes. The team is focused on building a good reputation in the area and emphasizing its in-home design program, which helps set it apart from other furniture dealers.
Across all of its stores, La-Z-Boy has implemented an initiative to become environmentally friendly. In addition to inhouse actions, like recycling and installing fluorescent lights, the team at La-Z-Boy introduced an eco-friendly line of furniture last October.
The new line is called Eco-Comfort, and there are two factors that make it environmentally friendly. First, the new products use a soy-based seat cushion, as opposed to the standard petroleum-based cushion. Second, the products are available in an array of fabrics certified by Oeko-tex, an international testing and certification system for textiles.
According to the team at La-Z-Boy, some of the Eco-Comfort fabrics are made from recycled materials, like ground plastic, and all of the products are manufactured using an energy-efficient process.
“These products leave less of an environmental footprint, and with the growing green trend, our customers are interested in them,” Breunig said. “We’re just getting to a place where we have the line properly displayed and our employees know how to talk about it, so we’re excited.”
To help the sales team better market the company’s products, including the Eco-Comfort line, La-Z-Boy recently invested in an IT system called Market Point. The company partnered with ServerLogic, as well as Brad Parker, who owns and operates six La-Z-Boy stores in Oregon, to develop the system, and according to Breunig, the technology allows salespeople to retrieve customer data almost instantly.
“The software enables us to manage our repeat clients more efficiently, and it allows our marketing team to inexpensively and proactively contact customers on a regular basis,” he said. In fact, the software has been so successful at Breunig’s locations that a number of other dealers have purchased the program.
In addition to Market Point, La-Z-Boy recently implemented a forecasting and replenishment system that it developed in conjunction with Parker. The system allows Breunig and his team to manage their inventory more closely.
The team’s hard work has not gone unnoticed. In 2007, La-Z-Boy Corporation compiled a list of the top 10 La-Z-Boy locations in North America, and four of Breunig’s stores made the list. In fact, one of his stores topped the list. “There are more than 350 locations in the country, so it’s a great achievement,” Breunig said.
“I think the recognition is the result of a few things,” he continued. “We’re fortunate to have a vibrant market in Phoenix, and despite the effects of foreclosures and credit issues, our sales are strong. Our technological investments and strong employee culture also play a huge role in our success.”
Looking to the future, Breunig plans to keep one eye open for opportunities to grow, but he doesn’t expect any major expansion to happen soon. “We look to open stores near malls or other retail centers, and those things have come to a halt right now,” he said. “I do expect we’ll open another two locations, but I don’t see it happening in the next 18 to 24 months.”
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