How Restyle – as a concept was born.
eople often ask me how long I’ve been doing Restyle Redistributed furniture, and how in the world I came up with our Breakthrough Maximum Value Concept (click here to learn more about our Maximum Value Process).
In the late 1980’s, I was working for a troubled Steelcase Dealership in Washington, D.C. trying to affect a turnaround. For its time, the firm was a giant among major manufacturers, coast to coast doing $50+ million dollars in sales. Officially called Director of Operations, I had all revenue sources (other than new furniture sales) under my responsibility. The design department, carpet department, reconfigurations, deliveries, installations, wood touchup, cleaning, and other services combined were beginning to out-perform new furniture sales in terms of monthly gross profit.
“Almost New”, Superb Condition, Commercial Office Furniture
mong the problems facing the dealership were unproductive warehouses with literally hundreds of thousands of square feet, filled with decades of order mistakes and returns. I took on the job of liquidating that furniture, and created a second tier revenue stream of “almost new”, but superb condition, commercial grade furniture.
The idea took off. A couple key employees set up a mini-showroom in one of our warehouses, we advertised in the DC area, and word spread rapidly what remarkable deals could be realized. One of my first significant sales was 6 tractor trailer loads of miscellaneous systems furniture components to one buyer – a refurbisher in Michigan. The cash generated, and the saved warehouse space was amazing.
conomic times for new furniture sales were tough in those years. Services and our new secondary tier were doing quite well. The stockholders in this dealership were consumed with other major issues including Steelcase pulling the franchise, cutting overhead, and trying to rebuild their position in the marketplace with a new dedicated line. When their commitment to the program flagged, I left and started Restyle.
Discovering Greater Value in “Redistributed” (Used Office Furniture) than in Remanufactured
ut the story isn’t that simple. We had one more major adjustment to the concept to make. In our first year, it was thought that we could catch the growth curve in remanufactured and refurbished product – taking tired product were we could get it at pennies on the dollar (if not free), refabric, repaint, and return the product to the marketplace at a price point significantly less than new products. We were targeting 35 cents on the dollar list/ 65% discount from list.
olid growth and significant projects came our way largely from the Federal Government – Departments of Labor, Commerce, and Defense and from dealerships wishing to farm out their refurbishing work. To perform this work, we quickly grew to 30 people, two shifts/day stripping fabric, disassembling panels, repainting, refabricing, reassembling … and quite frankly, it was a zoo! Way too much “squeeze for the juice”; Way too much complexity; way too many personnel issues, and way too much competition from the new furniture people – pressing ever lower discounts in tough economic times. Eeking out a couple percentage points of profit, for all the risk, investment, energy was just plain discouraging.
An Aside: I’ll be writing soon about the fallacies and false economies of remanufactured product – for the moment let’s just say – there is far greater value in Redistributed product than Remanufactured product. If you’re in the remanufacturing business, you’re actually in the new furniture business! Check this blog in about another week for this surprising insight.
y the time we entered year two of Restyle, Inc., it became apparent that much of the furniture we were capturing for remanufacture was so attractive, and in such beautiful condition, that it didn’t deserve to be remanufactured. Why in the world were we repainting perfectly good components? Why were we stripping and replacing perfectly good fabric? Why were we investing labor, materials, sophisticated manufacturing equipment, inventories, transportation, to upgrade the product only slightly?
I asked myself, “why aren’t we just reselling our product “as is” and eliminate all this overhead, all this time, and reach an even more dramatic price point for our clients?
Our remanufactured product was being offered at 35 cents on the dollar list/ 65% discount from list – a serious savings over many new furniture offerings.
ow I saw the possibility of avoiding the remanufacturing process, accelerating the delivery cycle, and being able to reach a whole new pricepoint of less than 25 cents on the dollar list/ more than 75% discount from list. A tremendous additional competitive advantage over remanufactured product of at least 30%. A stunning competitive advantage over new of 50%!
Better pricing to the client – often ½ the cost of new; lower costs, and much lower overheads – extremely fast delivery and streamlined operations. The Epiphany!
But how could we build a real business around this new concept?
How were we to find enough product on a continuing basis?
How could we meet our clients’ varied tastes and requirements?
How were we to introduce this radical concept to the market place?
There were seriously limiting factors, “threats” to our survival – good reasons why no one else was doing this kind of business model.
How could we change course and make this work?