An Expanding Home Furnishings Chain: Q&A With Room & Board

While many retailers are either closing stores or pulling back their expansion plans, it's interesting to hear about chains that are doing the opposite. Room & Board, a Minneapolis-based home furnishings chain with 10 stores across the country, is actually looking for new locations during the recession. Right now it is seeking space in Boston; Dallas; New Jersey; Miami; San Jose, Calif.; and Seattle. Room & Board, which prides itself on its American-made furniture and customized options that offer customers a variety of sizes and styles, opened an Atlanta store in May. Mark Miller, the company's chief financial officer, recently spoke with BNET Retail about his outfit's expansion plans.

BNET: Is there a reason why you are looking to expand your store base right now?
Our approach in the past has been to add about one store a year. We've been a company that has grown pretty thoughtfully and methodically by finding the right market and the right property. Currently our infrastructure is in a good place. We're able to grow. We have a good set of vendors and employees in our central office that can support the growth. We've invested in the Web in the last couple years. So what is needed now is the next level of customers in these new markets, and we're not there yet.

The other part of it is that we're a private company and not really as affected as public companies that have run into problems. We're debt free, so we don't really have that issue. We're just using this economy to look for opportunities that are coming up, whether it's a purchase or a lease.

BNET: Have you seen opportunities as a result of some of the store closures taking place in the industry?
I don't know if it's directly because of someone closing. It's not like we've moved into their space. But if you're a landlord or an owner of a building and one of your key tenants is leaving and not going to renew their lease, that may get you to want to offer a better deal.

We normally don't go into where a Linens 'n Things or a Circuit City would depart from. Our buildings are generally stand alone, or we're a significant anchor space in a bigger project. We're not in strip malls.

BNET: What's your geographic-expansion strategy?
We opened in Atlanta in May, and we're opening in Culver City, Calif., in the fall of this year and Washington D.C. in the spring of next year. We have customers in every state, and we focus on the ones that are in the markets that we would like to explore. We look at where our competitors are, and we like to be close to them. We look at complimentary retailers. We have a company advisory board, and we look at some of the basic demographics, such as income, home ownership and occupation. We really like markets where there's a big interest in design and investment in your home. Even a percentage of Mac users is something we use as an indication of a market that is more inclined to buy from us.

BNET: What changes has your company made to deal with the recession?
We have been affected by the economy ourselves. Sales have been down by about 25 percent. They've picked up a little bit in the last two months, but that's still a significant decline. We had to make some expense adjustments to react to the new reality that we had seen for the proceeding three months.

But I think the key for us is that we really haven't changed much. Our philosophy has stayed very consistent in terms of that we don't have sales. We're not doing anything drastic to change how we operate. It's a short-term process. But a lot of our competitors have done very drastic things like have sales to attract consumers, and that becomes a vicious cycle. We've stayed true to who we are and made some adjustments internally to cover expenses. When this turns around we're going to be the same company that we were.