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Nebraska Furniture Mart didn’t hit $1B goal in a year but learned a lot about Texas (4/29/16)

By Maria Halkias

It’s not a $1 billion store yet. The folks from Omaha have had to walk that forecast back a bit, but are not giving up on it.

A year after Nebraska Furniture Mart, the largest U.S. furniture store opened in North Texas, the store that is as big as nine football fields has discovered a few things about us:

• We aren’t applying for their store credit at the same rate that folks do in Nebraska, Kansas and Iowa. We come with our own ability to pay, be it cash or credit.

• We’re still discovering it. Even a year later, one in three visitors to Nebraska Furniture Mart is there for the first time.

• Oh, and we’re ignoring that big beautiful parking garage the
company went to the trouble to build so our trucks and SUVs don’t bake in the Texas sun. Customers prefer the exposed surface parking out front.

• What are we buying? So far, furniture is going gangbusters, but the store’s other departments — appliances, electronics and flooring — aren’t meeting expectations.

The pressure was on even before the store in The Colony on Highway 121 was preparing to open. The Texas-sized Nebraska Furniture Mart, owned by Buffett’s Berkshire Hathaway conglomerate which is holding its famous annual meeting in Omaha this weekend, would “do over $1 billion” in first year sales, Buffet said on national TV in March 2015.

Total sales in the first full-year ended up being about $750 million, which is still enormous and puts The Colony performance right up there with just a handful of single U.S. stores. (We’re talking Manhattan’s Macy’s Herald Square, Bergdorf Goodman and Saks Fifth Avenue.)

$1 billion is a huge number even when it’s applied to 560,000-square-feet of selling space that is backed up with the capability of having that sofa you just bought loaded on your truck in 10 minutes. That’s what the attached 1.3 million-square-foot warehouse is about: instant gratification. And $1 billion is a lot of sofas, beds, dishwashers, smartphones, headphones, TVs, rugs, ceramic tile, and hardwood floors in a market that already has a lot of stores.

In its first year, Nebraska Furniture Mart snatched the largest market share for furniture in Dallas-Fort Worth, said Edward Lipsett, director of the local store. And according to surveys conducted throughout the past 12 months by America’s Research Group, 97 percent of shoppers who made a purchase said they would return. That compares to a national average of 58 percent in the furniture category, according to the consumer behavior research firm based in Charleston, S.C.

“We’re still on track to hit $1 billion,” Lipsett said, but it will be a couple years from now. “Tons of people haven’t been here yet.”

Shoppers get the furniture part, it’s in huge letters outside the building, but the fact that it also sells appliances, electronics and flooring hasn’t been communicated well, he said.

“We knew the ramp up for those departments would be longer. We’d like to see them grow,” he said. “Our sales will grow when we educate the community about who we are and what we sell.”

The higher-end furniture is doing best, Lipsett said, and he expects that floor space that comes with designer services will be expanded. In electronics, the home theater selection will be expanded to, because area shoppers have more of an appetite for it than in its other markets. Selling patio furniture year round is also a difference the store is adjusting to, he said.

Britt Beemer, CEO of America’s Research Group, has been to the store several times in the past year as part of the research he is doing for Nebraska Furniture Mart. He said the store is profitable in its first year and should make that $1 billion target in the third or fourth year.

“It’s going to depend on how the high-end consumer responds to them,” Beemer said. “They have the high end appliances and everything else for that customer who can come in and spend $100,000. That’s what they have to work on.”

The Colony store is competing with a lot more existing furniture, electronics and appliance stores vs. the competitive environment that the three other Nebraska Furniture Stores face, Lipsett said.

Fewer customers here are seeking in-store financing for their purchases than at its other stores in Omaha, Des Moines and Kansas City, he said. The company is chalking that up to higher household incomes in North Texas. “Offers to get several months to pay for a mattress aren’t as big a deal as it is in other markets,” Lipsett said.

People prefer to shop in the evenings here, even on the weekends, he said. “And even though we have digital screens around the store for directions, people still want that printed map when they come in the door. “

About half of the store’s customers want delivery and half take it home themselves, which is about how it goes in the other stores.

Lipsett believes the consumer is benefiting from their presence even if they don’t come to shop at the store. “We believe we’ve lowered prices in the market.”

And a while back he added a sign to the parking garage, it says “free parking.” The garage entrance has a digital screen showing how many spaces are available on each level. And there’s direct access from the garage into the store, he said. “Unless it’s raining really hard, people aren’t using it.”

It cost $400 million to build Nebraska Furniture Mart, the warehouse and five-level parking garage. It’s run by a staff of 1,750. The bigger 400-acre Grandscape development it anchors will be a $1.5 billion project when it’s done in a few years. The destination is taking shape. Rock & Brews, the restaurant owned by KISS members Gene Simmons and Paul Stanley, opened in March. A Mi Cocina is about to open, followed in the fall by a Hampton Inn & Suites. There’s a Cheddars and Hard Eight barbeque restaurant open. Coming later this year is a Heritage Pizza Co. restaurant. A Truck Yard beer garden is planned for summer 2017.

http://bizbeatblog.dallasnews.com/2016/04/one-year-later-nebraska-furniture-mart-has-a-lot-to-say-about-texas-shoppers.html/