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KANSAS CITY, KAN. – Question: What can be tougher for an independent dealer than competing against Nebraska Furniture Mart in a market?
Answer: Competing against them in two markets.
And yet that’s exactly what Factory Direct Appliance (FDA) does, and does well. Based here, the seven-store majap chain has two locations within 15 minutes of Nebraska’s Kansas City mega-store, and one showroom that was audaciously opened on the retailer’s home turf of Omaha, Neb. (The balance are located in Iowa and throughout Kansas.)
Does management have a death wish?
“Actually, Nebraska has helped our business,” noted president/COO Rod Holsapple. The home-furnishings emporiums siphon off shoppers from the national big-box chains, he explained, and customers then cross-shop both local retailers.
Once inside FDA’s 10,000- to 17,000-squarefoot showrooms, customers are captured by an expansive assortment that ranges from Asko to Wolf and spans all price points and product categories. The stores also feature eight to 10 live kitchen and outdoor vignettes, and some locations provide cooking demonstrations on weekends.
“You can’t just sell appliances — you also have to offer more of an experience,” observed VP Steve Johnson.
The company has also “gained a lot of traction” from its transactional website, developed in concert with the BrandSource buying group, which also provides FDA with financing and extended-warranty programs and fulfillment through its Expert Warehouse distribution arm.
Consumers are also drawn by the 20-year-old company’s reputation for outstanding service, as reflected in its mission statement of providing “unequaled attention, service and appreciation,” and its pledge that the FDA experience “must be the most memorable, successful and enjoyable aspect of the home building or remodeling process for both contractors and their customers.”
FDA does its own in-house servicing, a breakeven proposition but one the company feels compelled to provide its customers, as factory service is “unreliable and not very good,” Johnson said.
Johnson is quick to credit the company’s success to a crackerjack staff, from the sales team to the delivery crew. “Our people are the No. 1 reason we survived the recession and are doing well,” he said.
“We have the best service and installation. They’ve been with us for a long time, they take ownership of the business, and they’re a really strong team. Our people look forward to coming to work.”
Ironically, it was finding themselves out of work that inspired founders Dennis and Suzanne Birkestrand to launch the company’s precursor in 1988. A change in two-step distribution policy had ended the couple’s Jenn-Air distributorship, but they saw an unmet need in the local builders’ market for a wholesale supplier, and working out of the back of pickup truck, FDA was born.
Joined later by fellow Maytag veterans Holsapple and Johnson, they grew the operation into the largest independent distribution source in the Kansas City area, and added a retail component that now comprises 30 percent of the business.
But their journey was not without its challenges: The last four years were the toughest in the company’s history, Johnson said, as the housing market hit its nadir. To compensate, FDA networked with cabinet and plumbing contractors and aggressively pursued every market segment, including remodeling, multifamily, tenant finishes and even commercial ice machine installation.
Today, the majap industry has stabilized, contract work is returning, remodeling has remained consistent, and the company is doing “a fair amount of retail too,” Johnson noted.
“We’re coming out the other side,” he said, “and we’re coming out stronger.”