Going Against The Grain
They are always glad to shake his hand -- but never without glancing over their shoulders to see who is watching. Manufacturers at the furniture market in High Point, N.C., consider J. Edgar Broyhill II a good man to know, so long as not too many retailers know about it.
Broyhill is the grandson of the man who founded the General Motors of the furniture industry -- $300 million Broyhill Industries Inc. But he is also president and chief executive officer of Edgar B Furniture Plantation, a $15-million mail-order company that sells top-of-the-line up-holstered and case goods (wooden pieces) at discount prices. In furniture, where off-pricers are generally regarded as the industry's illegitimate offspring, that makes even a man with a name as good as Broyhill's a controversial figure.
"Retailers go hog-wild, saying I'm the reason they're going out of business," says Broyhill, citing figures that show a 30% decline in the number of furniture stores nationwide in recent years. "The stores push and pull manufacturers, telling them not to sell to me, and some of them refuse to advertise in the trade magazines that write about me. It's ridiculous. I sell a lot of furniture. Anybody who wants to make money isn't going to turn down my business."
Broyhill's business, consisting of 65 people in an old schoolhouse in Clemmons, N.C., is tailored to the upper crust of the furniture-buying public -- "the people who fly Learjets instead of driving station wagons," as he puts it. His average sale is an impressive $1,500. Broyhill finds these customers through advertisements run not in fashion or decorating magazines, but in such business publications as The Wall Street Journal. He maintains the "purity" of his mailing lists by charging $12 to obtain one of his bulky catalogs.
Edgar B is no mere switchboard operation. Salespeople cater to customers by maintaining files on their style preferences and by sending them swatches to aid in purchasing decisions. But, more than anything else, Edgar B wins the loyalty of its customers by giving them a means of comparison shopping. "They visit the stores, and if the retailer hasn't managed to hide the name of the [furniture] line from them, they call us for our price -- which they find is usually about 30% to 50% lower." How does he do it? "No inventory, and for all practical purposes, no showroom."
Showrooms, Broyhill explains, are margin eaters. "They're part of the reason that retail stores are becoming skeletons on the highway to success in this business. Why spend money on setting up vignettes when each of my 30 salespeople -- with a deck, a phone, and an Edgar B catalog -- are doubling and tripling their monthly quotas? That's as well as any retail store can do." He would have no showroom at all, he says, if he didn't need it for window dressing -- for promoting an image of quality and permanence with manufacturers and customers who are skittish about doing business with a discounter.
Broyhill is equally critical of the industry's retail-controlled market system, which coerces manufacturers to come up with new designs six to nine times a year, just to have something attention-getting to show when they go to market, as industry parlance refers to the buying events. "Twenty percent of the furniture is discontinued in the first year," he complains. "It just raises costs for everybody."
Broyhill's ultimate goal is to bypass most of the marketing and distribution problems the industry suffers by someday selling his own house brand of furniture, much as Ethan Allen already does. The difference, of course, would be that Edgar B would remain a mail-order operation. But, before that can happen, Broyhill will have to concentrate on controlling the company's growth and solidifying its hold on its niche.
"We've got a gross business now -- g-r-o-s-s," he says, wide-eyed."Now we have to refine it, segment it, and do everything we can to maintain our value to the consumer. We've got to think smarter, instead of 'more." In this, "an industry run by tyrants who make all the decisions," Broyhill intends to keep Edgar B responsive. "Our whole reason for being," he explains, "is the customer."