The Other Store part of strategy

March 22, 2010
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When Israels Designs for Living chose to close The Other Store — its furniture clearance center that had been operating for 22 years — the decision was about more than retail. It was about real estate and bringing more jobs to the location.

The current liquidation sale at The Other Store is expected to continue at least into May. How long it will last, of course, will depend on how customers respond to the discounted inventory. But the store’s final day will be the first day the space at 769 Seward Ave. NW will be made available to Modern Day Floral and Event Planning — the first of multiple retail and service businesses that will set up shop there.

“We’re closing it as a consolidation and restructuring that we’re looking at for future growth,” said David Israels, company CEO.

“Part of that location is already committed to a contract that we’re working with Modern Day Floral and Event Planning. We have a few other contracts that are being worked out right now and we’re not in a position to share the specifics of those as of yet. But hopefully within the next six weeks, we will be able to follow up with those announcements,” he added.

What Israels was able to disclose is that it looks like the new tenants will be a mix of retail and services. One potential tenant is related to the IT field, others are tied to the interior design industry, and another possibility services the event business. Renovation work to the nearby Drueke Co. building that the Israels family owns is wrapping up, and that office structure will be an information technology center, and, of course, the family is in the design business.

“What we see currently is a higher concentration of people working out of that location than there are right now. So what this does is it creates more job opportunities and more needs for other services in this area,” said Israels of the store’s growing northwest location.

The Other Store is in the city’s Renaissance Zone; Israels said there are a few years left on the building’s nearly tax-free status. The Drueke is also in the zone and for a longer duration.

The retail reason for closing The Other Store has to do with the company’s major furniture outlet: Klingman’s on 28th Street SW in Wyoming. Israels said they inadvertently overlooked a key element when they bought and opened the store in the former Rogers Department Store building: Klingman’s customers also had looked for bargains offered in its clearance center.

“The clearance center selling operation has been a very important part of Klingman’s marketing for many years. It was kind of silly for us to not recognize that because we opened The Other Store in 1988 to compete with that store,” he said with a laugh.

“In the beginning of 2009, the customers were coming in and asking where the clearance center was. So in June, we opened up The Rock Bottom Shop at the Wyoming location, and right now we have about 6,000 to 7,000 square feet of clearance product in the Wyoming location. What we’ve seen since it has been open is customers are competing back and forth and shopping back and forth between the Klingman’s location and The Other Store,” he explained.

So the Israels — Robert, David and Jason — decided to close The Other Store and triple the clearance space at Klingman’s to consolidate that sector of the business.

“We can make it better for the customer and make our business more efficient,” he said. “When we started having inquiries about other types of businesses coming into (The Other Store), that really solidified the decision (to close it).”

As expected, Israels said furniture sales, in general, have fallen because of the economy. Even so, sales at Klingman’s were above expectations last year. Another facet of the industry, though, has had an effect on attempts to improve sales.

“We have maintained some real strong numbers and actually have exceeded what I’ll say is our conservative projection for 2009 for written orders. But everything is taking longer to get,” said Israels. “The whole industry has slowed, because just like retailers need to cut back on their inventories, manufacturers need to cut back on their inventories, and raw-material suppliers need to cut back on their inventories. So everything has become slower through the entire process.”

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