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Retail Success: HOM Furniture

Furniture World Magazine


“There are just as many definitions of success as there are ways to achieve it. Focus, imagination, hard work, inspiration, motivation and uncommon common sense can get you there. And maybe a touch of magic. Talk with Rod Johansen, President and CEO, HOM Furniture, Coon Rapids, Minnesota. Or turn yourself into that “little bird” of fantasy, listening in while perched on the Board Room windowsill. You’ll hear strong hints of all the above. Plus just a scintilla of humor that peers over high hurdles and around hairpin corners and perceives no possible impediment. But, by all criteria, HOM has achieved extraordinary status as a leader in the field, now venturing into previously unmapped regions.

The Team: Wayne Johansen , Chairman of the Board, in charge of strategy and investments. Rodney Johansen, President and CEO, oversees areas related to marketing, merchandising, purchasing and financial. Carl Nyberg, COO, oversees sales, operations, IT and HR.

And family members working in the company. Alex, son of Wayne, IT tech and programmer. Kyle, son of Rodney, merchandise manager for HOM and Gabberts brands. Brian, son of Carl, is IT programmer. Matt, son of Carl, who works part time and attends college.

A countdown of HOM showroom locations as of February, 2016: seven Minneapolis-St. Paul (MSP) area, Sioux Falls, Sioux City, Onalaska (LaCrosse), Hermantown (Duluth), Eau Claire, Fargo, St. Cloud, Rochester. Gabberts, Edina, Little Canada, Sioux Falls, Sioux City, Fargo. DOCK86, Little Canada, Rogers.
It’s fascinating to trace the history of HOM and to form a picture of the flow of the family and the corporation from strength to strength. Said Rod, “Our grandfather came from Denmark in the 1900s. On the other side of the family, the same time frame, we have German descent.”

Along the way there have been mentors. “Our industry is still very local, which allows regional retailers to be comfortable exchanging great ideas with each other and even partnering. We’ve had a fair amount of peers who have been mentors to us, and been involved with dealer groups that helped us grow for over 20 years now. The learning and the friendships have been very valuable to our organization. We have been exceptionally fortunate to also have organized our company so that my brother, Wayne, has been able to stay out of the day-to-day operations of the company for many years, allowing him to work on other opportunities to grow the company in unique ways. His focus is to make the company operate at an extremely high level but at the lowest cost when it comes to our physical plant. As an executive team, we work collaboratively.”

Back in 1974, Wayne Johansen “started a wholesale and retail import gift business out of Mexico, selling leather handicrafts, jewelry and pottery”. In 1977, Rodney Johansen joined his brother, Wayne, in the business. 1979, Wayne and Rod opened their first waterbed specialty store which became the Midwest’s largest specialty waterbed retailer, Waterbed Room. In 1981, Carl Nyberg joined the company and later became partner. In 1990, they opened three HOM Oak and Leather Furniture stores in the Minneapolis St. Paul market. 1993, with the national decline of the waterbed business, Waterbed Room converted to Total Bedroom branded stores, and added a complement of innerspring mattresses to its waterbed and bedroom furniture lines. In 1997, HOM Oak and Leather and Total Bedroom merged into one full line furniture brand, HOM Furniture.

Said Rod, “The name HOM has no family or origin background. The name was simply made up and developed as part of a marketing strategy that fortunately was fairly right on and has served us well.”
In 2008, HOM acquired Gabberts Furniture. Then, the following year, HOM also acquired Seasonal Concepts, closed Seasonal Concepts’ remaining three MSP metro showrooms, and rolled Seasonal Concept galleries into all HOM stores. A busy year! 2010, HOM opened off-price furniture brand DOCK86, and acquired Hoigaards Patio division which they rolled into Gabberts’ Patio department. The following year, Gabberts galleries were added to the out state locations of Sioux City and Sioux Falls within HOM locations, and later in Fargo. In 2012, HOM acquired the Abbey Carpet and Floor franchise in Ham Lake, and opened HOM Floors locations in all MSP HOM locations. 2015, HOM opened its first superstore in Little Canada, featuring all brands, Gabberts, HOM, Seasonal Concepts and DOCK86, under one roof, making it the largest retail furniture complex in Minnesota.

It was in the summer of 2014 that HOM announced its plans for their new complex at Interstates 694 and 35E, Little Canada, featuring 80,000 square feet for HOM Furniture, 42,000 square feet for a Gabberts Design Studio and Fine Furniture Showroom, and 60,000 square feet to accommodate DOCK86. Also planned, a 10,000 square foot customer service and pickup area.

In 2015, The Team polished their already sparkling vision. Said Rod, “Our multi-brand initiative has been evolving over the past five years. We first started after we purchased Gabberts and added Gabberts branded locations adjoined to an existing HOM location. Then, in 2003, we put our DOCK86 brand with HOM in adjoining locations. With the success of each of these tests, we felt that by adding all three brands together in one location, we would bring our customers the best of all in furniture retail and design.

“Customers now can virtually see every price point available in the marketplace under one roof. A customer can find a sofa for under $300 or a $10,000 sofa on display and everything between, with hundreds of choices on display to choose from. It was instantly a success. Customers feel they can see it all in one convenient location from three brands they have grown to know and trust for their furniture needs.”

As they had before, the Team called upon their friend and co-conspirator for the past 20 years, retail strategist, Miss Connie Post, Chief Executive of Affordable Design Solutions. They’d collaborated twice before joining HOM and DOCK86 in side-by-side stores. This time they shared “merging the three distinct brands and price points, a furniture shopping destination unlike any other in the metropolitan area”. Miss Connie was keen to take on the challenge, although “It was no easy feat, especially when Rod said he wanted common departments, mattress, flooring, carpets and area rugs, bathrooms, café and clearance for all three stores. And for Gabberts and HOM to share their customer service, special order departments and delivery services in most situations!

“We wanted to change the landscape for high-end shoppers in the Minneapolis market, to give them a unique experience,” she explained.

Rod added, “Our overall mission is to deliver quality and value at every price point and show a large enough assortment so that the customer feels comfortable making a decision based on a selection that satisfies them to feel confident they can make a buying decision.”

The new store is a second location for Gabberts. “Since we bought Gabberts in 2007, we’ve been trying to revitalize and expand the brand,” Rod explained. “We needed a second location because customers don’t drive across the city to shop for furniture.”

“We designed the Gabberts’ store to be a wow!” Miss Connie succeeds from the moment shoppers cross the threshold through a separate entrance to the 42,000 square foot store. “I had a blank canvas from HOM and Gabberts, but DOCK86 was already in place and I had to revise part of it to make it all work. The issue was transitioning into each store, so the customer would know they were leaving one store and entering another, plus creating allure and allowing guests to step up or step down with products and not feel bad about it. We had to make sure there was a separate entrance for each store, and then clear, distinct entrances to enter another store.“

Gabberts shoppers are typically in an income bracket of $250,000 with two or even three homes. They flow into a glamorous setting resplendent with white marble flooring, 25 foot ceilings, dramatic drapes framing 20 foot windows and a magnificent 700 piece chandelier. The first vignette is a clean, upscale contemporary/modern interior anchored by a towering fireplace. “I simply wanted to take the customers’ breath away when they entered... and that is exactly what we did!

“Store environments are spacious, so the furniture has room to breathe,” said Miss Connie. “Most retail stores are tighter with more merchandise in the space. At Gabberts you’re able to focus on each vignette as you walk through. We tried to create an environment as similar as possible to that of the customers’ large homes.”

A Gabberts’ tour: “Subtle cues guide shoppers through the retail experience. A fluid floor plan winds through the store, enabling guests to move seamlessly between environments. Post incorporated architectural elements, including expansive windows and glass walls to define areas. The transparent openings offer glimpses of the next vignette without blocking sight lines or diminishing the open floor plan, enticing guests to transition to the next experience. Flooring materials signal when shoppers leave one environment and enter another and window moldings and grids, as well as chandeliers and both faces of a two-sided fireplace, are in different styles to mirror the environments they accentuate. The ingenious floor plan also makes the shared departments like bedding, rugs and flooring easily accessible. Post’s sophisticated use of vignettes to tell lifestyle stories is one of many design choices that elevate the store’s visual impact. She created an astounding u-shaped penthouse, surrounded on three sides by a panorama of the Minneapolis skyline at night, exactly as it would appear if a residential high rise were transplanted to the Gabberts’ store location.

“Another inspired vignette replicates actor Patrick Dempsey’s Malibu living room, complete with bookshelves and a floor-to-ceiling fireplace. She also introduced a chic environment patterned after Giorgio Armani’s vacation home in Switzerland near St. Moritz as it appeared in Architectural Digest.”

Wow, indeed! Almost as good as being there! And a short course in retail interior design of the highest order.

Post explained that the environments also serve as backdrops for photo shoots. “One of the biggest disconnects in marketing is that a beautiful catalogue will go out but, when customers come into the store, the furniture doesn’t look remotely like it did in the promotional materials. My vision was to create a retail format that would work on every level, so customers wouldn’t experience disappointment.”

The original 60,000 square foot Gabberts store in Edina, Minnesota, remains the brand flagship and the new Little Canada location will serve affluent customers from a different geographic area. “This second location is on the opposite side of the city, 25 miles from the other store,” said Rod.

One of the interesting aspects of selling multiple brands has been observing brand crossover. “We see it going both ways which was the intention. We see some HOM customers trading up but also HOM and Gabberts customers shopping at DOCK86.” Rod believes that Miss Connie excels in differentiating brands. “She really nailed the presentation of the brands for different economic constituencies. If you are in Gabberts you are 100 per cent certain you are in the high end part of the store. If you are in the DOCK86 bargain shop, you know you’re in the value furniture section.”

Staffing for an enterprise tagged by some industry experts as “the prototype for a new generation of furniture showrooms”, could also be challenging. “Recruiting is done through most normal channels you would expect. College internships for design staff at Gabberts, for example. We do work with college design classes with curriculum and a variety of different ways to engage students looking to enter design fields. And we also look at a variety of different competitors that are in retail space. For furniture repair and refinishing, we are very active in teaching at vocational-tech schools that have wood finishing.

“Obviously, it depends on the job we are looking to fill, but for virtually all jobs we want quality people with good people skills who are customer focused. In jobs related to sales and customer service, we are comfortable training these folks so we have them doing things the way we believe will best serve the customer and the company long term.”

HOM offers entry training. “How long initial training continues depends on the job. All employees go through new hire orientation classes to understand company philosophy and how the company works. In sales, there are a couple of weeks of classroom and showroom training. And then there are onboarding programs that continue for some time after. Sales has continuous training related to selling skills and product education as does customer service and delivery related to product education in all departments, especially warehouse and delivery areas. Product handling and safety is being trained consistently as a key initiative of our company.

“For sales, we have both hourly and commission pay programs. We have an annual company bonus based on the success of the company. Health plans are competitive to maintain and acquire staff. We offer up to a five per cent 401K match for retirement, and also professional retirement education for employee and spouse. We have been very aggressive in our company 401 Plan to educate staff on benefits resulting in 97 per cent of staff being involved in our Plan.

“Our team is fairly long term when you think of retail environments especially. Roughly one third of staff has five years or more employment out of the approximately 1,100 staff. Our nine member executive team averages 25 years with the company and seven of them came up through the ranks. Our ownership team has been together over 40 years now. This year, we retired three store managers who had been with us for numerous years, so we are seeing new opportunity for our up-and-comers. 2016 represents the 43rd year that the company has existed.”

Rod addressed the possibility of staffers switching between HOM, Gabberts and DOCK86. “There is movement between the different brands. In sales, we see movement from each brand to another, but probably don’t see as much from Gabberts towards HOM and DOCK as the Gabberts sales staff generally have interior design degrees and have the best audience there to utilize their education. For all other job functions, we see movement from each brand. For example, our GMM at Gabberts was a former Gabberts employee who came to work at HOM, and when we acquired Gabberts we immediately placed him into that position at Gabberts. He also manages the fine furniture category at HOM as always.”

From all reports, cross-fertilization between departments is thriving. “It works well because of our customer focused approach. We have always had pretty high standards, so while we try to take great care of all customers, we have an accelerated focus of service when we are working with our Platinum/VIP customer types. When we initially purchased Gabberts we were extremely concerned that we would serve the high end consumers as well as they had been in the past. We found out relatively soon after the purchase that our standards were as good or better and have not looked back. Two years ago, we moved the Gabberts branded merchandise into the HOM central warehouse system and that has been just fine.

“Both Gabberts and HOM have a strong interior design presence. We don’t offer it at DOCK86 but, because DOCK is located next to HOM in both cases, they can support the DOCK customer who is interested in a different experience.

“Our designers do make house calls. Some of our senior ID team only work in the home. They don’t take store customer opportunities and only use the sales floor as a tool. We do some external events for HOM and Gabberts. Gabberts will do more of this type of targeting as we are looking to reach a higher end design consumer. The benefits of having all three brands and price points though, does allow our designers to serve all customers looking for design assistance. We do mount regular in-store events in both HOM and Gabberts with a variety of topics, many of them seasonal. Many have a charitable element.

“Gabberts’ designers attend the High Point Market, generally two or three at each Market. Staff also visits many vendor factories for training and expanded knowledge.”

Rob Johansen is HOM’s strong right arm in marketing. “We, like most, have utilized and tried almost everything possible when it comes to marketing! We’ve used different mediums and, truthfully, executed properly they can all be effective. We’ve utilized TV and newspaper inserts, our primary vehicles for mass media over the years, and still continue to use these two vehicles. Some of the areas where we have been early adopters, have been the use of cable TV and how to buy these products efficiently. We were amongst the first to go to 15 second TV commercials as a way to get our multiple messages out and yet get frequency and reach necessary targets.

“We use a fair amount of digital signage both inside and out in our showrooms, and also exterior store signage is a critical piece of our marketing. When we developed the brand HOM, store signage was a part of the strategy along with locations. Two things we felt all along was to invest in strong locations and have signage that was large and powerful. That says to our market that we are a worthwhile place for people to consider. With an ever-changing landscape, these two constants have served us well.
“And we have our company web team as we do with all marketing. We built our own custom site after trying to use off-the-shelf platforms from some of the largest providers, with poor results from support to functionality. After going through this twice, not being able to satisfy what we felt was necessary, our team felt they could produce a better product long term for us. We do a fair amount of our own photography along with all of our own video and TV production in house also.”

Sales on Internet? “We do e-commerce, and while it is still a small percentage of our business we are growing at a pretty good pace. We look for this to continue for some time.”

Importance is placed on internal and external “keeping in touch” vehicles. “We do a monthly e-mail newsletter for both HOM and Gabberts, as well as an internal newsletter every quarter directed to our staff for employee and company news.”

Charitable outreach, a high mark on HOM’s list of essential elements, is handled “in a variety of ways. We run design events and functions at all brands in various ways. Gabberts tends to do a lot in-showroom with a design event, fashioned around an event to support a cause. We also host different groups that meet and use our meeting facilities. Most of our major events tend to be organizational in nature even if it has a HOM handle on it. Our HOM Open Golf Tournament is a good example where business partners of all brands join in to support some worthy causes.

“HOM Teal Strides for Ovarian Cancer is also a complete company event. It actually was something we started to support because our events coordinator from Gabberts was a survivor of ovarian cancer. Shortly after we started our relationship with MOCA (Minnesota Ovarian Cancer Alliance), Wayne’s and my mother was diagnosed with ovarian cancer, and passed away from the disease a few years later. Our relationship has grown to where we are now the major sponsor of MOCA’s largest fundraising event with over 3,500 participants this past September, and over $350,000 raised.

“We support a mixture of local events, too. For example, our Eau Claire HOM store has sponsored for over 10 years a Wine and Cheese event that raised $50,000 this year with over 400 guests for the local Boys and Girls Club. Our Sioux Falls location has been involved in their local Junior Achievement branch for over 20 years and, company-wide, we support hundreds of individual requests for all of our different community events.

“We like to keep most of our fundraising local to support our local communities, even though we support industry programs such as the ADL (Anti-Defamation League) Furniture Chapter and City of Hope. Last year we started partnering with our local TV stations with a new program called Trees of Hope. This program also supports national groups. Another company event we sponsor is called ‘A Night of Giving’, and it supports Ronald McDonald Houses in the Minneapolis-St. Paul area.”

Miss Connie Post talked of issues that arose “at the latest NRF Conference at the Jacob Javitz Center in New York. We heard that we’re in an era of rising operating costs and that many retailers are looking to downsize their super-sized stores. It would appear that our country is heading for a shortage of workers in the near future, therefore the old 80/20 rule may just have to do to survive.

“Then along comes Rod Johansen and his team of warriors who chose to rewrite the book on home furnishings retail with their 150,000 square foot format that has proven to beat the odds and that same old 80/20 rule!

“The development of three separate entities that will attract three separate price points, demographics and value perspectives all under one roof from my point of view is a pure genius direction to move forward and for future growth. Never mind the challenge to do each and every one of the subsequent stores bigger and better than the last! Rod has presented me with a personal challenge to always set the bar higher each time I design a new store. I am presently working on new designs to elevate the exterior brand image that, according to Britt Beemer of America’s Research Group, accounts for 57 per cent of a retailer’s marketing brand identity.

“I love my job! I get up every day looking forward to working at the next great challenge, thanks to clients like the Rod Johansens!”

Vision, mission and corporate philosophy is very much alive at HOM Furniture. Rod considered the future, both long and short term. “As I said, Wayne isn’t involved in the day-to-day operations, so he works on projects that sometimes are very time consuming. Sometimes he is able to work on new concepts and not taxed on a daily basis. I think it is what he enjoys doing and it gives him generally a lot of flexibility. For myself and our partner, Carl, we are still committed to running the company for the time being. We both have a few more miles of tread, and we also do have it so we can get away. The digital world makes such luxuries possible that would not have been possible even 10 years ago!

“Long term, we have a great team of seasoned executives, great young managers and family members. That will allow us to decide the best way to operate the business as we move forward and beyond our current day-to-day involvement in the company. We look to grow the business at a pace that will continue to both allow growth for our employees, and keep the business healthy and prospering.

“Our industry is an industry that will always be relevant. People need to sit and to sleep, and the home is a core part of a family. The great thing we have going for us is that we are also a fashion business. That gives us a mechanism to help our customers change as their lives, wants and needs change. I think some of the biggest issues I see us facing are people! Finding people who want to work in our industry in manufacturing will continue to become harder and harder. And that will continue to change where we will get our products and the cost of them also.”

Janet Holt-Johnstone is retail editor at Furniture World Magazine.