DirectBuy Overhauling Business

A new management team looks to mend the mistakes of the past
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DirectBuy, the troubled members-only showroom chain, is touting a new management team and a more transparent, customer-friendly style.

Merrillville, Ind. – DirectBuy, the troubled members-only showroom chain, is touting a new management team and a more transparent, customer-friendly style.

The franchise business, which charges thousands of dollars in membership fees in exchange for access to wholesale-priced furniture and appliances, has been slammed in recent years by customers, Consumer Reports and state attorneys general for deceptive, high-pressure sales practices and its failure to deliver on its lowest-price promise.

“Even if you think you know what DirectBuy is all about, we want you to give us a chance to show you the results of implementing a more contemporary business model,” said recently installed CEO Mike Bornhorst, a veteran of ADT and Culligan Water.

The new model is built around service, selection and value, the company said, and a new set of standards and policies to make its prices and business practices more transparent.

Changes include a new approach to member enrollment and a “completely transformed” sales and Open House experience. The latter were 90-minute membership pitches conducted at local showrooms where invited consumers were subjected to coercive sales tactics.

The company also has a new website and marketing campaign to convey its amended values, and is reducing the footprint of its showrooms from 20,000 to 12,000 square feet.

 “We have an incredibly happy base of satisfied members, but there has always been a bit of mystery associated with DirectBuy due to the nature of our business and pricing model,” noted executive VP/chief marketing officer Curt Hilliard, part of Bornhorst’s new team. “Our goal is to be your trusted advisors by inspiring members to enhance their lifestyles with our service, selection and value.”

Hilliard has been instrumental in implementing DirectBuy’s “new values” across the company’s sales and marketing practices both nationally and within the franchise community, the company said.

Aiding him are two newly promoted VPs: member experience chief Dylan Astle, formerly with Walmart and Restoration Hardware, and lead merchant Jim O’Keefe, late of OfficeMax and True Value.

The company, based here, was founded 42 years ago by businessman Jim Gagan, who offered shoppers home goods direct from manufacturers and suppliers that were priced without retail markups.

According to a profile in Northwest Indiana Times, Gagan sold the business to a private equity firm for more than half a billion dollars in 2007. But the recession, a pricy national advertising campaign, and scores of federal lawsuits led to mounting debt and the closing of half its 160 showrooms.

The new management team began implementing its revised vision and values about 16 months ago, and today offers more than 1 million items from 1,200 popular brands in the U.S. and Canada.

“At our core, we are a franchise organization made up of passionate owners and operators who are dedicated to inspiring our members,” Bornhorst said.

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