Nebraska Furniture Mart To Decide This Year On Fate of Fourth Store

The timing for the new outlet hasn’t been set, but plans to open it have passed muster with NFM’s owner, Berkshire Hathaway, Buchanan said. NFM met with vendors in Kansas City late last week in connection with the grand re-opening of a 51,000-square-foot CE showroom in its seven-year-old branch. NFM hasn’t settled on a market for a new store, but it probably will be a standalone outlet like the one in Kansas City, Buchanan said. That one sits on 88 acres and is attached to a 650,000-square-foot warehouse, company officials said.

"We have a criteria for our financial stability, and our franchise is first and we look at a market second,” Buchanan said. “We have criteria that our executive team looks at and we have a report card that we to pass for Berkshire to say yes. And we passed those marks. It would very similar to our Kansas City location."

The new store will be positioned to serve a large metro area and be near regional highways, Buchanan said. The region around the store must have “pent-up demand for a store like ours,” he said. The community must have some “economic stability” and have consumers open to shopping in a store like NFM, Buchanan said. In addition to stores in Kansas City and Omaha, NFM has a 24,000-square-foot store in Des Moines, Iowa, and owns Homemakers Furniture, which has outlets in Urbandale and Altoona, Iowa. “We will be exploring our options from a prioritized list of preferred options,” Buchanan said. “If we cannot find the right location, we are patient. We are optimistic that we will find the right blend of economics and consumer benchmarks."

Any new store also would adopt the layout of the Kansas City CE section, Buchanan said. The revamped CE department, three years in the making, features 200 TV models plus store-within-a-store sections for Apple, Bose, Harman, Hewlett Packard, Panasonic and Sony. The manufacturer departments feature a selection of each suppliers’ products and range in size from 200 square feet to 1,700 square feet, company officials said. The new Kansas City format grew from plans for a Sony store three years ago into a complete remodel of the CE department, CE Merchandise Manager Mark Shaw. NFM shares installation costs with vendors and typically has one-year agreements with them, Shaw said. While Apple, Bose, Harman, Hewlett Packard, Sony have similar displays at NFM’s Omaha, Neb., store, the Panasonic Technology Zone was a new concept, featuring plasma and LCD TVs including containing with WirelessHD and Viera Cast. The Panasonic department also has an interactive display that provides specs for each TV line. The Kansas City facelift followed a two-year, multimillion dollar overhaul of the 100,000-square-foot CE store in Omaha. The Kansas City store has a 40,000-SKU assortment similar to Omaha’s, with added emphasis on GPS devices and wireless products, including more than 30 cellphones, company officials said. “The way we designed this, it was to be a transacting business. But with this type of display, it’s also about brand imaging,” said Jim Sanduski, senior vice president of sales at Panasonic.

NFM has no immediate plans to add more vendor departments, since they carry “a great deal of cost in time and collaboration,” Buchanan said. While NFM has discussed the concept with Vizio, there are no plans to implement it with them, Shaw said. NFM started carrying Vizio LCD TVs in October and sells 19, 22, 32, 42-inch models, company officials said.

In remaking the CE department, NFM also laid groundwork for selling 3D-capable products, company officials said. It developed a large home-theater area containing eight front projectors, including Sony LCD and JVC D-ILA-based models that are demonstrated using Stewart Filmscreen 2.35:1 CineCurve screens. While no 3D-capable projectors are available yet, the section can be upgraded to accommodate the technology, Shaw said. NFM carries 33 data and home theater projectors, sales of which account for one to two percent of the chain’s total CE sales, Shaw said. NFM also is preparing to carry and demonstrate a select assortment of 3D-capable TVs from Panasonic, Samsung and Sony, Shaw said. The Panasonic and Sony models will be highlighted in their departments, he said.

"I am going to carry Panasonic, Samsung and Sony, but I'm not going to flood my floor with a lot of 3D-capable brands because I don’t want to have it as just 3D on an end cap,” Shaw said. “I want to have it where it’s a 3D area and you have to go to Nebraska Furniture Mart because they have the best experience anywhere. I want to know what [vendors] are going to do to market it, help me with advertising funds and one-on-one seminars. What are they going to do other than sell me a SKU to put on the shelf?"

NFM also is slowly expanding its Internet business, which accounts for 5-10 percent of its annual revenue, Buchanan said. NFM posted sales of $840 million in 2009, CE accounting for 28 percent of revenue, Buchanan said. The retailer launched Internet sales three years ago and has slowly added features, said Shane Pohlman, CE merchandising manager for the Kansas City store. NFM enabled customer to buy goods from its website using their store credit cards. And NFM is in discussions with vendors about direct shipping products to customers who buy them from the retailer’s Web site, Pohlman said. NFM’s furniture vendors already direct-ship products, he said.

The new CE department comes as NFM tries to increase its share of the Kansas City market for audio, TVs and PCs, Shaw said. Among its nearby competitors is Best Buy. While NFM has a 66.9 percent share of the Omaha market for TVs, that drops to 41.4 percent in Kansas City. In PCs and audio, NFM has 51.5 and 59.7 percent shares in Omaha, but 22.6 and 32.5 percent in Kansas City, he said. NFM had 4.5 million customers come through its Kansas City store in 2009, had a 92.1 percent in-stock rate, Shaw said. For advertised products, the in-stock rate jumped to 96 percent, he said.