Survival of the Smartest
Nourse threw his life savings -- $125,000 -- into the business and borrowed an equal sum from a bank. Then he hired a store designer to help him fulfill his vision. The Eaton Centre Bombay store was 2,000 square feet and modeled on England's Fountain Court at Hampton Court, Henry VIII's palace.
The store opened in April 1980, and was stocked with 35 styles of furniture. Sales were so strong that Nourse soon needed much more capital for inventory and expansion. From the start, he'd planned to build a chain. But with interest rates at 20%, he was stymied about how to proceed.
Meanwhile, Tandy Brands Inc., a holding company based in Fort Worth, had acquired Harper's mail-order outfit. In 1981 Tandy turned its sights on Canada. "I had mixed feelings about its buying me out," Nourse says. "If capital had been available at a reasonable cost, I never would have sold. But at the time it was the only way to grow the company."
Under the terms of the deal, Nourse retained complete control of the Canadian operation. And backed by Tandy's financing, he had built 13 stores by 1983. They were all profitable.
In the United States, however, Tandy had a disaster on its hands. It had opened 36 Bombay stores and was losing its shirt. In late 1983 its CEO, Carson Thompson, wanted to merge the Canadian and U.S. units, and make Nourse president of the whole Bombay division. Nourse couldn't refuse. "If I didn't do it, somebody else might have. That would have killed me," he says.
Once in Fort Worth, he lost no time in cleaning up Tandy's fiasco. By 1985, after a full fiscal year at the helm, he had turned a $3-million operating loss into a $500,000 profit. In 1986 profits hit $2 million.
Nourse credits much of the success of the Bombay Co. to his wife, Aagje (pronounced "Akia"), executive vice-president of marketing. Before she married Nourse, in 1980, she had marketed cosmetics for the largest cosmetics company in her native Holland. She had an advertising background as well, and her initial job at Bombay was writing newspaper ads for the first store, in Toronto.
"She's got a wonderful eye -- a commercial eye -- for developing products, for layouts, for color, for advertising, and for how to coordinate all those things," Nourse says. "You wouldn't want me as the driving force on that end of the business."
As a team, with Aagje as the merchandising guru and Bob as the operations whiz, they created a very profitable store model. "Then the trick was to roll it out at a rate you could manage financially, and to be able to grow the people and the organization to support it," Nourse says.
As Bombay grew from 75 stores in 1986 to 272 in 1990, the other divisions of Tandy, smaller and less profitable, were sold, spun off, or closed. The final parting came in December 1990, when the corporate name, Tandy Brands, was changed to the Bombay Co. Inc. On July 1, 1991 Nourse became president and CEO.
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Since then, Bombay has become one of the real success stories in retail. It has opened 119 new stores in the past three years. It will open 120 more by June 30, 1994, the end of its fiscal year. Sales reached $232 million this past June, up from $176 million a year earlier. That makes Bombay the 16th-largest home-furnishings retailer in North America, out of roughly 50,000 such retailers. Nourse is aiming for sales of $300 million by the end of this fiscal year, which would push Bombay into the top 10.
Bombay's average sales per square foot, at $340, clobber the $110 industry average. "You could almost say we cheat a little by staying away from the huge sofas and things that don't turn very quickly," Nourse says. "But that's part of tailoring our concept to the malls."
Equally impressive, last year -- a time when the industry was down overall -- Bombay's same-store sales rose by 13%. Then in 1993 they jumped by 15%. That might be enough success for some company builders, but instead of throttling back, Nourse is lighting the afterburners. "Our original ambition was to have 400 to 500 stores," he says. "We're now almost there. But we never dreamed that we'd just be scratching the surface of a whole new generation of growth."
Indeed, Bombay has embarked on a massive expansion. Last year the company started adding some larger pieces of furniture to its stock. "We know our customers are really keying in on functional items," says Aagje Nourse. "So we made a chest of drawers that's somewhat bigger to fit with everyday life. We also went into headboards. And with a lot of people working at home, it seemed reasonable to go into desks."
Everything still came flat-packed in boxes, but the stores were getting cramped displaying the larger new products. So in the spring of 1992, as an experiment, Bombay opened a superstore in lower Manhattan. Then it converted two more stores from the regular size of about 1,700 square feet to the large format -- 3,500 to 4,000 square feet.