THE WOODLANDS, TEXAS – As the Great Recession continues to take its toll on CE and appliance retailers large and small, one chain stands out for having emerged from the economic malaise stronger and more focused than before.
Ironically, Conn’s, the multiregional furniture, mattress, appliance and CE retailer, was born from the ashes of the Great Depression, after layering its name and direction onto a failed plumbing business 80 years ago.
Today, after returning from its own brush with insolvency by overhauling operations and revamping its store design and merchandise mix, the Texas-based business encompasses a broad, 10-state swath of the Southern U.S., with much of the expansion occurring in the last two years.
And, fluctuations in its in-house consumer finance segment aside, the 89-store chain said it is positioned to operate over 500 stores across the country over the long term.
Underpinning that growth is in fact its finance operation, which provides ready credit to aspirational lower-income customers and funds some 77 percent of retail sales.
The company also runs its own repair and delivery services, and sells a high-margin mix of better appliances, electronics, mattresses and furniture.
Indeed, Conn’s was an early advocate of furniture and mattresses within the traditional CE and appliance retail channel, regarding those higher-margin categories as highly fragmented among dealers and vendors, and resistant to showrooming and comparison shopping due to a ready supply of derivative and direct-sourced SKUs.
The products also align with the company’s distribution and delivery model, which was already geared toward delivering and installing large, bulky products like appliances and big-screen TVs.
To better showcase those categories, Conn’s developed a new, larger store format, dubbed HomePlus, which features nearly 40,000 square feet of selling space and has been generating greater gross margins and roughly 10 percent to 15 percent higher sales than its predecessor stores.
All new and relocated stores feature the HomePlus concept, and the company is aggressively converting existing stores to the format. Over 75 percent of the store base was HomePlus as of July 31, and all but five stores will be in the new format by the end of January, the retailer projected.
Armed with an idealized showroom, a well-trained and incentivized sales staff, an in-house customer finance program, a step-up assortment, and a considerable war chest, the company is now embarking on a multistate build-out that has already taken it from Colorado to the Carolinas in two years and could quintuple its store count over the long haul.
So how is the expansion proceeding? Chief marketing officer Jamie Piper told TWICE that the push “is going well. We’re continuing with our plan to add a total of 17 to 20 new stores in fiscal year 2015,” she said, and “we just opened our first Lubbock, Texas, and Greenville, S.C., locations in August.”
Conn’s is also planning additional openings in the Eastern U.S. and Colorado later this year, she said.
Piper said the product assortment remains largely consistent chain-wide, regardless of trading area, although “we do flex our furniture assortment depending on the size of the store and the market.”
When entering new communities, the marketing strategy centers on educating customers about the availability and value of the company’s “Yes Money” in-house financing program, she noted, using a variety of mediums including TV, direct mail and the Internet.
“Our Yes Money financing allows low-income, working- class customers the ability to purchase products that they want and need for their families, even when they’ve been turned down for credit other places,” she explained.
While Conn’s in-house credit offering provides a higher barrier to entry, Piper acknowledged, that “other retailers are starting to follow suit” when it comes to adding furniture and mattresses to the mix.
The difference, she said, is that “we know that our value is about more than low prices or product. Our well-trained sales associates, next-day delivery in every category including furniture, and flexible, convenient financing gives customers something that they can’t find at other retailers. Our shopping experience and purchasing options will help us remain competitive among traditional and non-traditional stores.”
Looking ahead to the holidays, Piper pointed to Ultra HD TVs as “the hot product. Conn’s has been one of the leading retailers in this area, with 4K TVs representing more than 20 percent of our TV sales in August,” she said, “and we’re excited about prices coming down below $2,000, which will make them more accessible to a greater number of consumers.”