Slumberland Furniture

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Proudly Telling the Slumberland “Secret”
Midwest-based furniture operation anxious to add to existing footprint

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It’s not as if Slumberland Furniture doesn’t already have some hefty street cred.

After all, the 47-year-old company was part of the Entrepreneur magazine’s “Franchise 500” list for four straight years between 2010 and 2013, and the enterprise has grown from a single store in Minnesota to 127 locations in 12 states across the interior of the U.S.

Company-wide sales in 2012 were $394 million, which placed it at No. 156 on the Franchise Times’ 2013 list of Top 200 Franchise Systems – and marked a 6.3-percent increase from the previous year’s figure.  2013 sales were $414 million.

But in the estimation of Michael Larson, a self-professed “second-generation furniture guy” who’s now the organization’s director of franchise development, it’s still something of an undiscovered gem.

“I feel like we’re one of the best-kept secrets in the franchising world, just because there’s not a lot of furniture-type franchises,” he said. “Most people think of restaurants or hotels or gas stations or whatnot. The few people that I’ve talked to outside of the furniture industry really like the dynamics of our financial model, so I would love to be able to talk to some of those multi-unit restaurant owners.

“I think they would love to see something like that that has the capacity to grow.”

Among the financial requirements for franchisees are a net worth of at least $300,000 and $100,000 in available liquid cash. Franchise fees run from $30,000 to $50,000 for a renewable 15-year agreement – and 40 percent of all franchisees own more than one unit, with an average of 10 employees per unit.

You look at some of these concepts that they’re in, and they’ve got to keep growing into all sorts of different territories just to keep growing,” Larson said.

“The Slumberland franchise has certainly a lot of opportunities in the Midwest still.”

The company was created as a mattress-only specialty operation by a father/son team in 1967, and was purchased soon after by Larson’s father, Ken, to begin a family ownership chain that still exists today.

Mattress-only shops were a rarity in those days, Larson said, and the market was instead dominated by either independent furniture operations or department stores.

La-Z-Boy recliners and sleep sofas were added to the Slumberland product mix in the early 1970s and the gradual evolution continued as the typical store footprint grew from 2,000 or 3,000 square feet, to today’s large-store prototype of 30,000 to 40,000 square feet.

Modern stores include products from every major furniture category, Larson said, comprising sofas, loveseats, occasional chairs, occasional tables, dining room and, of course, mattresses.

“There’s really everything you’d find in a typical furniture store,” he said.

“One thing that did stay consistent is our roots from the mattress business. That’s really what our key category is that we really stand on as the heart of the home furnishings market that we just dominate and own in a significant way.”

Slumberland is now one of the largest retailers of Sealy, Simmons and Tempur-pedic in the country.

Slumberland maintains 43 corporate-owned stores among its franchise majority, which Larson said is part of a strategy in which the company strives to capture the medium to medium-high price point furniture buyer with a mix of both style and value. Along with that target is an aim to be the most convenient retailer in the industry, which means its franchise locations will be placed to fill out every single market in every state that the company is in – beyond just the major metropolitan areas.

Slumberland has 19 corporate locations in the Minneapolis-St. Paul metro area, for example, but it’s also saturated the small-to-medium areas across the state with franchise operations.

“When you look at our coverage in the Midwest, typically speaking you’re going to find a Slumberland roughly within about a 30-to-40 minute drive time from city to city,” he said. “So we try and pick those key areas which would support a Slumberland, but we’re in cities as small as a couple thousand people, all the way up into Minneapolis-St. Paul where there are millions of people.”

The convenience is augmented by a significant store-to-store business, which allows orders to be transferred between locations to avoid exorbitant delivery charges. The same mechanism allows merchandise that’s ordered online to be funneled to the closest store for delivery and service.

Locations are held to a strict uniformity standard in terms of their interior design, though store sizes are based on community size and run according to three square-footage templates – from 16,000 to 20,000 for a small, from 25,000 to 30,000 for a medium and from 35,000 to 40,000 for a large.

About 75 percent of locations are freestanding buildings, Larson said, while the remaining 25 percent are part of shopping centers and typically serve as the junior anchor or full-scale anchor tenants.

“The Slumberland plan, for whatever reason, and I wish I could say it was some grand design, but it is very scalable from one size to the next,” Larson said. “Our store size is more scalable than some of the other competitors that we have in this space that have 100 or 200 or 300,000 square feet. I don’t know how you would ever scale that concept down to a town of 10,000 and make it financially viable.

“Our brand has been able to be scalable in those different-sized markets probably more efficiently and effectively than a typical furniture store.”

The company has intentionally grown contiguously from its Midwest base, which allows it to maintain advantages of shared direct marketing and maintain an efficient supply chain from its three distribution centers in the region. It will continue that plan going forward and will not “leapfrog over multiple states just because there’s an opportunity,” Larson said.

Franchise interest has been frequent from potential operators in the Northeast, Southeast and on the West Coast, in fact, but it’s been declined so the company can maintain the proximity efficiencies.

“We’ve spent an enormous amount of time, energy and money over the last few years really re-architecting our logistics strategy – partnering with a group called LeanCor – and they’ve really helped us rebuild all of that to make it as efficient and as quick as possible,” Larson said.

“As we’ve gotten better at logistics over the years, we’ve seen the franchisees warehouse inventory, and total inventory, continue to shrink over time. They’re now measuring that in days versus in weeks, and some of our franchisees have been able to lower their inventory well over $100,000 in the back room just because of this new effort we’ve put in the logistics side.”

With that in mind, the goals for the immediate future involve pushing into “the next ring of states” beyond the company’s existing footprint boundaries that stretch toward Wyoming and Montana in the west and Kansas and Missouri in the south. There’s been recent interest in locations in both Michigan and Indiana, Larson said, and a “healthy mix” of franchise and corporate entities is the expectation.

“We’re trying to grow at least four-plus units per year,” he said. “Obviously it depends on a whole lot of factors coming together, but we can comfortably add anywhere from four to six a year with our current staff. So, in five years, that’d be somewhere between 20 and 25 stores.”


WHO: Slumberland Furniture

WHAT: One-stop home furniture store specializing in bedroom, living room/dining furniture and mattresses

WHERE: Headquarters in Little Canada, Minn.; more than 80 franchised locations and 43 corporate owned locations in 12 states

WEBSITE: www.Slumberland.com

Short URL: http://www.businessworld-magazine.com/?p=3528

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