Improve your business by learning from the business practices of City Furniture.
Whether your sales are two million, twenty million or over a hundred million dollars there are ways you can improve your business by learning from the business practices of City Furniture. I recently visited with their management team and observed outstanding practices that have contributed to their 500% growth since 1994 to over $220 million dollars.
Headquartered at their “Sawgrass Center” in Tamarac Florida on a 72 acre palm studded campus, City Furniture operates 14 locations in Broward, Dade and Palm Beach counties, a marketplace with 5.2 million people plus an export market and plenty of competition. As Keith Koenig walks the aisles of City Furniture’s massive 660,000 square foot distribution center, his vision of the future is bolstered by a successful formula developed in the not-so-distant past.
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A. Arial view of City Furniture.
B. The Computer Room.
C. Customer Service Department.
D. Receiving, bar coding and loading on carts for transfer to storage. |
“We started out with a single waterbed store, with just 800 square feet of floor space in 1971,” Koenig said, looking out at a facility that could house 11 football fields. “The reason we’re here today is pretty simple. We’ve stayed focused on making furniture shopping a fun, hassle-free experience for customers. If we stay innovative on the customer service front, we’ll continue to grow.” From the humble beginning as Waterbed City, the business was re-invented as City Furniture in 1994 and did $46 million that year. They moved to a new 175,000 square foot distribution center. Sky rocketing sales exceeded the distribution center’s capacity and they supported the sales growth with satellite facilities and up to 500 trailers in a storage lot 20 miles away. It was a 2-year process to build the new distribution center that opened in 2001. This site has room to grow another 250,000 feet.
The evening before my scheduled visit I played mystery shopper at the Tamarac showroom for a first hand view. Recognized name brands, their own brand in middle and upper middle price points and Sony home theater are featured throughout a meticulously maintained showroom. Flexible credit programs are an important element in the overall strategy. City Furniture recently partnered with GE Retail Sales Finance to create a state-of-the-art credit system. “Working with GE to develop this technology has been great,” Koenig said. “With other companies, you fill out forms, have to fax them somewhere and wait for an approval. The system we developed with GE is completely electronic. Any of our associates can swipe a customer’s driver’s license, plug in one or two pieces of data, and get an approval within 60 seconds. “It’s a critical part of the package for us,” Koenig said. “Instantly giving customers more purchasing power helps us grow our business.” The system also accesses Wells Fargo to provide the best possible financing choices for the customer.
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F. Mobile computer units, printers, copiers, etc., for use throughout warehouse.
G. Furniture picker and cart taking merchandise to storage.
H. Wireless computer displays of work to do on Furniture Pickers.
I. Train to put away stock with racks in background.
J. Racks are 38 feet to top of storage.
K. Cycle counting the finished goods racks... complete warehouse counted every two weeks. |
Employment is approaching 1,000 people, 600 in operations. Excellent attitudes toward people were evident throughout the showroom and when I was in the warehouse with high-energy executives Bob Forde, Senior VP Operations, Jose Calero, VP of Operations and Javier Ocampo, Director of Operations. Employee recruiting, selection, training and motivation is a major focus, drawing on expertise from other customer-focused organizations like Disney Studios. During the interview process all candidates are given a warehouse tour and lunch in the café so they know what the working conditions are and the expected work pace. Flexibility in the distribution staff is key as employees may work in several functions plus delivery in the course of a day. Everyone carries the job title Service Technician. Prior experience with furniture isn’t a prerequisite as they have formal training for every position to “do each job the City Furniture way”. My long-standing belief that prior experience with furniture can be a detriment was confirmed because unfortunately, many bring bad practices to their new employer. Company goals, objectives and daily performance statistics are shared with employees. The importance of their involvement in reaching these is stressed. Pay for performance is used in many categories of work.
The warehouse is forty feet high, a quarter mile long, has 100 feet of staging on both sides of cantilever and conventional racks facing 220 dock doors. It is spotless. The proprietary supply chain management system covers every aspect from purchasing through sales, warehouse management, delivery and service after the sale. This system is almost paperless and productivity is tracked through the product bar codes. Typical daily volume includes receiving 25-30 trailers, delivering 500 to 700 orders and 100-300 customer pickups. The export shipping operation is significant. The entire warehouse is cycle counted every two weeks.
City Furniture is the first furniture retailer I have ever seen with industrial engineers as area supervisors. Every retailer recognizes the challenges faced in repair areas. At City Furniture, products entering the repair area are assessed by the supervisor and consigned immediately to scrap, sent to the outlet center or repair department. The amount of time to complete a repair is noted on the ticket. Workers have performance-based compensation. Over 90% of repairs are cleared within two business days with emphasis on cleaning up the remainder through expedited parts processes. The skill level in the shop and the workstation designs are excellent. Similar emphasis on workplace efficiency and productivity was evident in the chair and entertainment center assembly areas.
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L. Master Computer screen showing where stock needs to be pulled from and the respective priority... customer pickup first, etc.
M. Jose Calero, Vice President Operations
displaying objectives which are widely shared with the company’s associates.
N. Receiving/shipping dock.
O. Delivery trucks.
P. Dock is a quarter mile long.
Q. Chair assembly area.
R. Chair assembly work station.
S. Monitors showing Aisles where stock must be pulled from and priority.
T. Customer pickup entry.
U. Customer pickup docks adjust to the height of the customer’s vehicle. |
Customer pickups are user friendly. The average time between presentation of an order to the warehouse and the customer signing off on the delivery receipt is under twenty minutes at one of 17 customer pickup docks.
There are 75 delivery vehicles in two sizes. The majority have 27-foot bodies and smaller units with 18-foot bodies have been added to support their same day delivery program. City Furniture has rolled out a state-of-the-art, same-day delivery service that’s on call seven days a week.
“A few stores can offer same-day delivery if you get the order in before noon, and all the planets line up right,” Koenig said. “We want to have a system in place that if a customer orders furniture five minutes before closing at 9 p.m. on a Saturday night, that we can deliver it that night. People work during the day, and we want to fit into their schedule, not make them fit into ours.”
Over 50% of the customers request same day delivery and there isn’t a premium charge. With 98% in-stock position, virtually all orders are shipped complete. Orders are batched at scheduled intervals, routed with electronic technology and loaded on the appropriate size truck, typically ten stops on the 27-foot bodies and five stops on the 18-foot bodies. Customer not-at-homes are a rarity.
The bottom line is the fact that City Furniture has truly focused on their employees and satisfying the customer throughout the purchasing process; from greeting in the showroom, getting credit with minimum paperwork, making a customer pickup, delivery by uniformed company employees to calling for customer service after the sale. Consistent application of these principles can improve any size retailer’s bottom line profitability, increase customer referrals and provide overall competitive advantage.
Daniel Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. Questions can be directed to Mr. Bolger care of FURNITURE WORLD at dbolger@furninfo.com.