April 13/20, 2015; Volume 29/Number 1
By Steven Feldman
The Colony, Texas—They say everything is bigger in Texas, so why would Nebraska Furniture Mart (NFM) want to be different? As one of the largest flooring retailers in the U.S., NFM on March 2 opened the doors to employees on its fourth—and largest—store in this suburb of Dallas after two years of construction.
The latest and greatest NFM is about as certain as death and taxes to eclipse the volume achieved at its other locations simply because of critical mass. There are 6.8 million people who reside in the Dallas metro area as compared to 1.8 million in Kansas City and 1 million in Omaha. In addition, NFM hopes to draw from a 150-mile radius through its massive marketing efforts, which include radio, TV, direct mail and more.
Store officials predicted from the outset that it would be the highest-volume furniture store in the U.S., and $1 billion in annual sales is not out of the question, a level only one store has reached—the 2.2-million-square-foot Macy’s in Manhattan.
NFM is the first tenant to open on a 433-acre space off the Sam Rayburn Tollway (TX 121) that it purchased in 2011. The land is in the first phase of a development project called Grandscape, which, when completed in a few years, will include retail, entertainment and hotels.
The flooring department of the new NFM comprises approximately 40,000 of the 560,000-square-foot behemoth—which equates to nine football fields on two levels—supplemented by 1.3 million square feet (22 football fields) of warehouse space.
While the space dedicated to flooring in Dallas is slightly larger than both the Omaha flagship and Kansas City location, and much larger than Des Moines, Dave Snedeker, division merchandise manager, told FCNews that the differentiator is how the space is allocated to the respective flooring categories. “The blend here is approximately 50/50 carpet and hard surface. The hard surface department in Dallas is much larger than Omaha or Kansas City simply because we knew hard surface was a bigger player in this market.”
But carpet still commands the largest amount of floor space of any individual product with what Snedeker estimated to be around 10,000 SKUs. Shaw and Mohawk own the largest share, but many other mills have a presence, most notably Tuftex, Royalty, Beaulieu, Nourison and Dream Weaver. About 25% of the products are Stainmaster branded. “We think we have everything covered,” he said. “In fact, consumers may be seeing product they have never seen in this market.” More than 250 carpet styles are stocked for immediate shipping.
The merchandising is also appealing to consumers. All racks are low level and provide a clean, uniform look. In addition, there are custom displays from Tuftex that highlight patterns goods as well as an Anso color wall with a design exclusive to NFM.
Soft surface selection extends to area rugs, which occupies about 10,000 square feet of space. The mindset here is to offer an extensive array of rugs given the propensity of consumers in this market to purchase hard surface. About 3,000 rugs are displayed on the floor, hanging in racks or in furniture vignettes. Price points range from $5 to $20,000 in styles that run the gamut from machine-made to handknotted and handtufted.
The differentiator here, Snedeker said, is the hanging rugs are color coordinated. “They go from black to brown and so on. This has been a big hit with customers. It makes it so much easier for them to find the colors they are seeking. We have been getting the most comments about that.”
As for hard surface, the hardwood area is the biggest of the bunch. Product is displayed against the wall as well as on low-level racks, continuing on the uniform theme. “Wood is the biggest category down here,” primarily engineered, Snedeker said. “For us it’s about selection, having the right amount of scrape, texture, color, etc.” Price points range from about $2 to $10 a square foot.
Dallas is also a big market for ceramic tile, and, as such, NFM has a vast array of product from many suppliers. “Ceramic tile is something we don’t do as well with in [our other stores], but we are learning on the fly,” he said. “We have great vendors and a beautiful department.”
And, of course, LVT, the industry’s fastest growing category, is highlighted. “LVT is now about 15% of our total sales if we eliminate rugs,” Snedeker noted. Around 20 suppliers have product in NFM’s Dallas location, including Shaw, Mohawk, Karndean, Earthwerks, USFloors, Mannington, Armstrong and some distributor private-label brands. “LVT is installed on the drive aisle for a reason. It’s a growing category.”
Unique pricing strategy
NFM has one of the most progressive pricing methods in this—or any—industry. Everything in the store (except area rugs) has digital tags, so pricing can be readjusted instantaneously if need be. And that extends across all four stores. “When we make the change in Omaha, we make the change everywhere,” Snedeker said. “Depending on where the competition is priced or what we are seeing in the marketplace, we can digitally input pricing per SKU to beat the competition or readjust by the day if there is a sale.”
Most digital tagging for flooring has happened in last month. “This is new to us,” he said. “We have been doing this in appliances and electronics for quite some time.”
NFM also uses technology to make sure its pricing is lower than the competition. Every night, the retailer uses what it calls a “spider” to search multiple websites. “Right now the program is only for specific SKUs in electronics and appliances. The spider electronically shops over 30,000 SKUs on 20 websites of leading competitors overnight, and brings the information back to us so we can adjust pricing and be the lowest in the market. The idea is that in the not-too-distant future this initiative will extend to flooring.”
Flooring execs out in full force
A gala charity event—the Live Big Benefit—was held April 8 at NFM to benefit Cancer Support Community North Texas, an event that also featured a Q&A session with Warren Buffett, chairman and CEO of Berkshire Hathaway, which owns 90% of NFM. The occasion brought out floor covering executives in droves to get a first-hand look at the industry’s latest and greatest retail space.
To say Piet Dossche, president and CEO of USFloors, was impressed would be an understatement. “This store is overwhelming. It’s amazing how much product is available. Anything that is available is here. I also like the open floor plan; it’s inviting. You can see across the entire store from one end to the other. This is the next generation from Omaha with the fresher, cleaner look. They clearly learn from what they have done in the past.”
Dossche particularly noted the merchandising of hardwood. “I like the large samples and large displays. It enhances the product. They also do a good job of combining those displays with vignettes on floor.
Matt Kahny, president of Unilin US, Mohawk’s hard surface division, was equally impressed. “I think they do a wonderful job of presenting product to consumer. They have an incredible assortment and they do it in a way that’s not overwhelming. They make it easy for the consumer to figure out what product she wants, then she can select colors and textures. We are proud to have all our brands represented.”
Larry Browder, president of Karndean, cited not only with the breadth of product, but also the presentation. “I think what separates NFM from the homeowner’s perspective is you can get everything from the floor to the ceiling and everything in between. The flooring section looks great. We feel very happy about our position on the end caps. It’s a prime position in the store.”