Designs on the market

Robert Levin was working in Washington, D.C., in the health policy field when his brother, Howard, died of a heart attack in 1992.

Just 40 years old and president of Levin Furniture for only three years, Howard Levin had been charging hard to build Levin Furniture Co. Inc. — then in its third generation of family ownership — into a major player in its home markets of Pittsburgh and Northeast Ohio. Then, just weeks after opening a store near Cleveland, he was dead.

Robert Levin, now president of Levin Furniture, says that some of the details of those first few months after his brother’s passing are fuzzy, clouded by the shock of Howard’s death and the steep learning curve Robert faced as he tried to acclimate himself to running a business that he had had previously had little involvement in.

“It was such a shock,” says Levin. “I remember feeling in that first year that I was just hanging onto the tail of the tiger and just trying to keep it together.”

But it couldn’t be clearer that Levin’s strategy since taking has been sound. At the start, Levin took over the marketing and advertising responsibilities, the portion of the business his brother had handled on his own.

Since then, he has continued to lead the company with an aggressive marketing and advertising program, leveraging technology to support it. He has pushed the company forward in stagnant markets by putting in place a bold store development plan, a wider product mix and two expansions of its distribution capabilities.

And he’s managed that growth in markets where population centers have shifted away from the cities’ core business districts, and overall growth remains flat or sluggish.

“The challenge is that you have aging populations, fewer people who are new homebuyers, and you’re doing more of a replacement business,” Levin says. “So it’s really getting a larger percentage of the pie that’s the goal.”

In the face of a pie that isn’t growing much, Levin Furniture has managed substantial growth. Even with some flat or negative years for the industry overall, Levin says the company has historically managed year-over-year sales increases. Sales at the 700-employee company were $57 million in 1997 and reached $140 million by 2004.

Levin expects to hit $150 million in sales this year.

Expanding potential
Levin is setting his sights on continuing the company’s growth with a plan to continue to remodel and expand or replace existing showrooms and bolster distribution capabilities. This year, Levin Furniture is investing $5 million in a 110,000-square-foot addition to its distribution facility in Smithton, boosting its space by about half and its head count by nearly 50. The expansion will support an estimated $75 million to $100 million in additional sales.

Levin acknowledges that there is some risk involved in building bigger stores with higher break-even levels and adding distribution and warehouse space, but says that standing still isn’t an option, either. The lessons of failed competitors have not been lost on him.

“There’s equal risk, certainly risk of some kind, in not improving your operation and trying to expand as well,” says Levin. “The companies that have stood pat in our markets — you can generalize about this and there are always exceptions — but there are specific examples in both the Northeast Ohio market and Pittsburgh market that did not reinvest in the company or at least in locations, and because of that, it hurt their business.”

The demise of independent furniture retailers and the successful emergence of a few strong chains has meant a consolidation of market share. That tends to keep potential newcomers out, says Levin, leaving the market to those strong enough to have survived.

“The one benefit is that they become less desirable markets for competing retailers. I suspect people think twice about coming into a market that already has well-established businesses,” says Levin. “That’s a positive.”

The task then becomes getting the biggest piece possible of the existing market. Key to his company’s growth, says Levin, is the ongoing change-out of older existing locations, replacing them with larger stores that feature wider selections, brand-name products and, unlike the neighborhood independent dealers, the power to draw from larger geographic areas.

In Monroeville, for instance, it replaced a 28,000-square-foot store with a two-story, 75,000-square-foot unit. Its newest store, in Akron, Ohio, occupies 70,000 square feet. And several other stores, almost all of those in the Pittsburgh market, have been upgraded or replaced in recent years. On the boards are improvements to four other stores, as well as plans for a new location in the bustling Route 19 corridor in the North Hills.

Replacing small stores with larger ones can produce significant results. Levin Furniture’s North Fayette store, which replaced a smaller location doing about $3.5 million annually in sales, now rings up about $15 million a year.

“We’re trying to put up very attractive stores in good locations that will have a bigger selection story, so it will be more things to more people,” says Levin.

To broaden its appeal and its customer base, Levin Furniture has added designer brands to its offerings to attract a more upscale buyer, while also including less expensive products for more price-conscious customers.

Aggressive marketing
Attractive stores and a wide product mix aren’t enough in themselves to drive sales. Levin, who serves as spokesman in some of the company’s television and radio ads, relies on extensive marketing and advertising, including broadcast and direct mail, to draw customers.

When it comes to marketing costs, size becomes a lever to lower the per-unit cost of advertising. Furniture manufacturers offer cooperative money for retailers’ advertising, and the bigger fish are going to attract the most dollars. That makes growth critical not only to profits but to driving down costs.

“Marketing is a very important part of the business,” says Levin. “You have to be aggressive marketers. We’re heavy users of television and direct mail. That certainly drives business. We get cooperative advertising dollars, so it has a snowball effect; the more you sell ,the more you get from manufacturers.

“It’s a clich, but the larger you are, the more valuable you are to the wholesaler, who has a limited number of outlets to sell to. The partnership becomes more valuable to them, therefore advertising support becomes more significant. That’s one way you can build your business, by increasing your advertising, but having the net cost of advertising actually drops. That’s been very important in growing the top line.”

One of the traditional hallmarks of Levin Furniture’s marketing program is the attractive financing arrangements it has offered its customers, offers that Levin says the company strive to make the best available in its markets. Levin Furniture has been able to offer customers who qualify long-term plans that defer interest or even payments for extended periods.

“It’s been a really popular offer and has driven a lot of sales volume over the years,” says Levin.

Getting customers into its stores with advertising and attractive financing incentives is a good first step but not good enough if the visit doesn’t convert into a sale. To make it easier for customers to make a purchase, Levin Furniture has virtually eliminated paper credit applications, replacing them with an automated process where customers can enter their credit information via touchscreens at an in-store kiosk and get a quick approval.

“The kiosk program has been effective in getting customers’ credit approved,” says Levin.

The system has reduced man-hours at each store, doubled credit applications and increased average ticket sales by about 10 percent. Nearly all customers use the kiosk to apply for credit, and with the credit application at the beginning of the sales process instead of near the end, it’s also converted a higher percentage of foot traffic to purchases.

While Levin is at the helm, he says he relies substantially on the advice of others, both internally and externally, to help him set strategy and decide how the company should move forward.

“We have a senior management team made up of folks who have been with us for a long time,” says Levin. “In addition to that, I have an advisory board of outside people who have had business experience.”

By nearly every measure, it can be argued, the strategy has worked well. In two markets where growth is tough to come by, and in an industry that doesn’t allow much margin for error, Levin has managed steady growth in sales and in the company’s share of the pie.

“We’ve been growing at a consistent rate of about 10 percent top line,” says Levin. “That’s nice growth, even when the economy’s been flat in both markets, so market share continues to increase.”

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