How a furniture chain beat the recession with Danish modern
Robert W. Darvin, president of Scandinavian Design Inc., saw his furniture company's sales grow from $31.5 million in 1981 to $44.5 million last year - despite the recession.
''It was the most profitable year in our history,'' notes the proprietor of this 23-store retail chain in New England, New York, and New Jersey. ''We are weathering the recession exceptionally well.''
This year he predicts his privately owned company will have sales of $60 million.
One growth factor will be the addition within the next few months of four new stores, including one at 63rd and Broadway on Manhattan's West Side. Mr. Darvin also will be launching a new related business, Scandinavian Office Design, to sell modern office furniture and furnishings to business.
''It probably has more potential than retail,'' he figures. Heading that operation and partly owning it will be Judy George, his dynamic executive vice-president. He confidently forecasts $5 million in sales the first year.
And last year, Scandinavian Design moved into a brand new headquarters office building here.
Scandinavian Design is doing so well, in fact, that it sells some 10 percent of Denmark's entire furniture exports. Last fall Prince Henrik of Denmark awarded Mr. Darvin a special medal of honor at a ceremony in New York.
How do you boom in a recession?
Mr. Darvin attributes his succcess to a mixture of a first-class product - high-quality contemporary furniture - and highly skilled marketing. Mr. Darvin was a marketing graduate of Rutgers University some 20 years ago when he and his fiancee, Gretchen, scraped together $200 to purchase a furniture business with a 12-item inventory in this town west of Boston.
A big help for sales recently has been the weakness of the dollar on foreign exchange markets, enabling him to buy and sell imported furniture at favorable prices.
Here are some of his marketing tips:
* Seek volume sales.
Scandinavian Design (SD) sells about $400 of merchandise a year per square foot. That is more than any other furniture chain in the nation. The national average for furniture stores is about $70 a square foot.
SD manages this by ''cherry picking'' items that sell well. ''Bad buys,'' items that sell poorly, are quickly put on sale and cleaned out. ''We can't afford losers,'' says Judy George. The average turnover for the company is eight times a year. The industry average is 2.3 times.
The chain's stores run about 5,000 to 6,000 square feet, about one-third of the industry average. This small size and high turnover have enabled SD to locate many of its stores in major malls, despite high rents.
''This is the time of specialization,'' Mr. Darvin said in an interview. ''Most older-line furniture operations are being everything to everybody.''
Scandinavian Design buys about 50 percent of the less than 600 items in its stores from abroad, particularly Denmark. (The new office furniture operation will sell a considerable amount of Italian furniture.) These imports are mostly ''case goods'' - desks, shelves, tables, wooden chairs, etc. The other 50 percent, primarily upholstered items such as sofas and soft chairs, are made in the United States. A ''normal'' furniture store might carry 3,000 to 4,000 items.
* Sell your product in an attractive environment.
''We put more dollars into consumer-pleasing architecture than normal,'' Mr. Darvin said. ''We feel we get it back when consumers see our furniture in a warm environment.''
The storefronts and interiors, designed by Moritz Bergmeyer & Associates Inc. , Boston, usually incorporate the same warm natural woods that dominate SD's furniture. Moritz Bergmeyer sometimes creates a facade that angles toward the display window and door, drawing potential shoppers into the store.
* Employ top quality in advertising.
Brochures mailed to homes are on slick, good-quality paper and in full color. ''We spend a lot of money on production,'' Darvin said. Mrs. George added: ''We want to bring the furniture to life for customers. We design our brochures to give the consumers an idea how it would look in their own homes. It is packaged and presented in a true, honest manner.''
Newspaper ads are also designed to be attractive.
* Study the needs of consumers.
Scandinavian Design twice a year takes a three-page survey of some 200 or so customers to test their needs and likes in furniture and furnishings. ''Our concept is to sell people what they want and need,'' Mrs. George said.
Also, the store staff is trained to report formally on the enthusiasms or criticisms of customers. Using that information, SD will frequently work with manufacturers to modify and improve their products.
* Provide a meaningful guarantee.
''We stand literally behind whatever we sell forever,'' said Mr. Darvin. ''No matter what happens, we take care of it.'' If a leg breaks off a chair, the company will usually repair it at no charge.
* Motivate and train your staff. Make the job as much fun as possible.
Two staff members conduct staff seminars full-time. Four other key people in the business join in some of these seminars. The sales force does not operate on a commission basis. Rather, it has a bonus system that rewards an entire store's personnel on the basis of monthly sales targets.
As for the future, Mr. Darvin is taking a ''hard look'' at the ''off-price business'' - the possibility of establishing more outlet stores. SD has three of these now. ''A big segment of the population likes to shop in them,'' he says.