Furnishings 2000 to Add Appliances : Company Is Hoping to Increase Floor Traffic and Sales
Furnishings 2000, the retail furniture chain that recently has shuffled its product mix and changed its name in order to boost store traffic, is getting ready for still another change.
The chain, owned by San Diego-based Cousins Home Furnishings, later this summer will start selling appliances and home entertainment products that will turn Furnishings 2000 into “an overall home furnishings center,” according to Cousins President Gerald Hohman.
Just last fall, Cousins officials said the chain’s improved gross margins were in part generated by the decision to drop the so-called “brown and white goods.”
Canadian Connection
The decision to reintroduce appliances and home entertainment products was the most recent of several changes initiated during the three years since Cousins has been run by majority stockholder Brunton Corp., a U.S. company controlled by a Canadian family that also is majority owner of a successful Canadian furniture store chain known as The Brick.
The Canadian connection became apparent when the Comrie family imported the Brick name for its Cousins holdings. The name was changed last year to Furnishings 2000.
“Everything (the Comrie family of Canada) has done with Cousins is a copy of what they’ve done with The Brick (in Canada),” said Wallace Epperson Jr., a furniture industry analyst with Wheat, First Securities in Richmond, Va. In Canada, he said, “they were tremendously successful and (Cousins) is their foothold in the United States.”
The addition of appliances and home entertainment products could boost store traffic, suggested Epperson, noting that the successful Comrie-run Brick stores in Canada offer appliances.
Sales Boost
Appliances could boost furniture sales because “when a consumer sees bedroom sets (being sold) for $699, $899 and $1,499, he can’t comprehend the values,” Epperson said. “That’s because although furniture has a bad reputation for being overpriced, he (understands) electronics.
“People know that $199 is a good price for a 19-inch color TV and if they see a good price on a VCR or a TV, they tend to associate that (the nearby furniture) also has a good price.”
Helping customers recognize quality and pricing is “the name of the game,” acknowledged Daniel Selznick, who recently resigned as chairman of Cousins’ executive committee in order to purchase a five-store furniture chain in Texas.
However, because of Cousins’ ongoing name changes and product shuffling, Cousins, which is now looking for middle- and upper-middle-income shoppers, has had a “difficult time” letting those customers know what it has to offer, Epperson said.
Adding the “brown and white goods . . . will give them traffic and if they get traffic, people will see the furniture and buy it,” Epperson said.
Selznick suggested that the decision to reintroduce stereos and appliances is part of Brunton Corp.’s two-year effort to “Americanize the success story they developed in Canada.”
Tailoring the Canadian formula for success in California has been difficult, however. During 1983 and 1984, the chain lost potential sales when it closed most of its stores for remodeling and restocking before reopening them as “The Brick.”
However, the name change didn’t help Cousins reach profitability. The retail furniture chain--which became a public company in December, 1983--grew from five to 26 stores, and revenues rose by 237% to $89 million by the end of fiscal 1984. Despite the growth, dramatically increased operating costs spelled red ink, and the company ended the year with a $6.1-million net loss.
Revenues grew 39% to $124 million during fiscal 1985, but Cousins reported a $14.9-million loss for the year.
Cousins reported a $5.7-million net loss for the quarter ended March 3, on revenues that fell 42% to $18.7 million.
Last year, Cousins dropped The Brick named and switched to Furnishings 2000.
Ironically, the decision to return appliances and home entertainment products to Cousins’ lineup brings the chain “back to where we were three years ago,” said Hohman.
Hohman suggested that dedicating about one-sixth of Furnishing 2000’s floor space to appliances and home entertainment goods “will broaden our appeal to our middle- to upper-middle customers.”
Cousins is entering the highly competitive appliance market because “we want a bigger share of the (furniture) market and we feel this is a way of getting it,” said Hohman, who promised that Cousins would offer “name brands at the best prices in town.”
Cousins’ claim to the lowest prices in town might ring true because of a computerized and streamlined warehouse and delivery system that allows the chain to survive on lower profit margins than its competitors, Epperson said.
“And, carrying electronics is generally not expensive to do because they’re (purchased) through distributors (who will) carry the inventory for you,” Epperson said.
NET INCOME (LOSS) & REVENUES FOR COUSINS HOME FURNISHINGS
Year ended June 30: Net Income (Loss) Revenues 1983: $861,613 $26.5 million 1984: ($6 million) $89.3 million 1985: ($15 million) $124 million
