Promoting Value Pays Off

There is nothing quiet about Bob’s Discount Furniture, whose reputation for bargains is bolstered by its aggressive marketing program. Even in the face of recession, the Manchester, Conn.-based privately held company is still expanding—and still spending to keep its brand, which already enjoys strong regional awareness, flying high.

A cartoon image of co-founder Bob Kaufman’s face is everywhere these days—from billboards at Major League Baseball stadiums to TV spots. The voice of Bob can also be heard on radio ads that pop up frequently in the retailer’s markets. The company also promotes itself through sponsorships with the popular ABC reality show, “Extreme Makeover: Home Edition.”

Bob’s Discount Furniture pulls out the stops to get shoppers into its stores. It also works extra hard to keep them there, combining low prices and a high level of customer service with such in-store attractions as mini-golf, video arcades and free refreshments.

“We want our stores to be a destination spot where shoppers can relax and enjoy time with their families, so we give them an extra incentive to come and spend a few hours with us,” said Ted English, CEO, Bob’s Discount Furniture.

The strategy seems to be working. Bob’s Discount Furniture reported annual revenue of $457 million in 2008, up 9.5% from the year before. At a time when many furniture retailers are pulling back, it opened two stores this past May, one in Yonkers, N.Y., and one in Poughkeepsie, N.Y. Another two locations are scheduled to open by the end of the year.

The company remains active in community events. Through the Bob’s Discount Charitable Foundation, it supports numerous charitable and non-profit organizations.

Bob’s Discount Furniture was founded in 1991 by Gene Rosenberg and Bob Kaufman, current chairman and president. In November 2006, it appointed Edmond (Ted) English, former president and CEO of TJX Cos., as CEO. Chain Store Age Associate editor/Web editor Samantha Murphy spoke with English about the company’s unique marketing strategies and how the company plans to expand moving forward.

How has the economy affected business at Bob’s Discount Furniture? 

Everyone suffers when the economy suffers, and we are no different. However, we are in the right spot in the right place in the retail industry right now. Our value proposition and message about our high-quality, low-cost products have enabled us to weather the storm exceptionally well. Although everyone performs better in a more buoyant environment, we are staying stronger than anticipated despite the economic times.

Bob’s Discount Furniture prides itself on experience retailing. What does that mean to the company? 

We wanted to be a destination location where families can come in and enjoy the various amenities at our locations, and ultimately buy some furniture—and that’s exactly what we have become. We give out free coffee, candy and cookies, and this helps customers relax and enjoy the store. Although every location has a cafe and decorative water features such as ponds or fountains, many stores have additional attractions. The amenities depend on the space, which allows us to try out different things.

What is your average footprint? 

A typical store is about 35,000 sq. ft., but we also have a prototype that ranges from 50,000 sq. ft. to 65,000 sq. ft. The larger models include a space next to the showroom that we call “the pit,” which features marked-down furniture, usually with small damages. Unlike purchases made in the showroom, customers are required to come in and pick up the furniture themselves [delivery is not available].

Is delivery mandatory for showroom purchases? 

Yes. No one can walk out of the store with furniture from the showroom in hand. We deliver purchased items already assembled. I believe there’s no such thing as free delivery; even if it’s “free,” the service is included in the price tag. Instead, we just put out our products at a low cost and then charge a fair fee to get it to their homes. This model worked very well for us. The fee is a percentage of the sale. The more you buy, the better the deal will be.

During a time where many companies are cutting advertising costs, consumers still see Bob’s face everywhere. Tell me about your ad spending strategy. 

Unlike many other retailers right now, our ad spending strategy hasn’t really changed this year compared to the year before. Marketing is an integral part of our company, and this helps us to stand out against competitors.

We rotate dozens of spots each week on TV in the areas we operate in and produce over 300 spots a year. We keep the message consistent in our ads, but we say it in many different ways as the products change to keep things fresh for our shoppers. Our advertising initiatives create a lot of talk and curiosity about the company and the furniture we sell.

In what areas are you controlling costs right now? 

We are being very judicious with all of our expenses. We are growing, but we aren’t growing our staff at the same rate. We just have to keep an eye on all parts of the business right now, but we don’t do it at the expense of doing the right thing for the company and our customers.

Many retailers are cutting back on new product assortments and designs. How does this affect staying current with shoppers? 

The merchandise in our showrooms goes fast since it is delivered to our customers’ homes. If something isn’t selling, we replace it quickly. We also have to be mindful of our square footage; the product has to be worth it for us to have it there. That said, we haven’t cut back on assortments.

What is the company’s long-term plan? 

We think that this is an opportunistic time for us to expand our presence in the footprint we already operate in, and plan on doing so in 2010 and through 2011.

Are you planning to expand into new markets? 

Any good business with a solid business model and mindset to grow has to expand geographically at some point. However, we don’t have any immediate plans to break into new markets right now. We feel there is still a lot of growth available in the markets we are already in.

And finally, what are your aspirations online? 

We have a very active Web presence and transact a lot of business online. We continue to refresh and tweak the site often and have nearly 70% of our in-store products available online now. We are continually updating the site with new products. We think the Web can be a bigger part of our business going forward.