Art Van Furniture’s CEO asks employees: Has anyone tried to fire you? – Detroit Free Press
New President and CEO Kim Yost recalls the time he was fired three times while working at Woodwards, where he started his career in retail.
Kimberly P. Mitchell/ Detroit Free Press
In his first job, Kim Yost â nowÂ president and CEO of Art Van Furniture â was fired.
It was in the 1970s and the then-teenager was workingÂ in the furniture department ofÂ Woodward’s, a staid Canadian retailer. Yost lost his job, he said, because he took it upon himself to rearrangeÂ the store’s furnishings into showroom-style displays.
The story, though, had a good endingÂ â and a good lesson.
An executive,Â who later became Yost’s mentor,Â realized what the teen had done was actually good for business, and instead, Yost said, he was rehired, given a raise â andÂ promoted.Â Â
Now, at 63, Yost is planning to re-arrange a lot more than Art Van’s furniture.
Nearly a year after the privately held company, based in Warren,Â was sold toÂ Boston-based private equity firm Thomas H. Lee Partners, Yost aims to open moreÂ stores, create new concepts, and double annual revenues to $2 billion within four years.Â
He’s even challenging IKEA by building a new store in Canton.Â
When it was sold, Art Van had become one of theÂ largest independent furniture retailers in the country with 130 stores in five states, a franchising program, and about 3,700 employees.
But, Yost, who was hired in 2009 and stayed on as CEO, also faces some big challenges: The Internet and buying habits of millennial shoppers, customers now in their 20’s and 30’s who tend to shopÂ online and spend less on home furnishings than previous generations.
“Think about this: Without the Internet nobody could compete from California,” Yost said, explaining how e-commerce has created both opportunity and competition for theÂ retailer. “Now with the web, you could be based in Califonia and shipping furniture into Michigan.”
Retail commerce sales of furniture and home furnishings in the U.S.Â is expected to be $36.53 billion in 2017, up 16.1% from $31.47 billion last year,Â according to New York-based research firm eMarketer. By 2020, it is projected to hit $55.33 billion.
But, young furniture buyers are spending less on furniture than previous generations. For instance,Â to redecorate their living rooms, millennials planned to spend $1,500, while for generation X it was $2,500, and baby boomers,Â $3,000, according to a 2016 Furniture Today survey.
Among Yost’s most ambitious ideas for Art Van: A furniture trade-in program, a model he’s taking from Detroit’s auto industry, which has long boosted new car sales by giving car buyersÂ discounts on their new vehicleÂ when they turn in their old car.
The dealers then sell theÂ trade-ins to other customers seeking lower-priced cars.
Yost seeks to apply thatÂ same approach toÂ furniture.Â The profit margins on used and reconditioned furniture, he acknowledged, are likely to be thin. But, a trade-in program would encourageÂ more new salesÂ and provide the company with inventory to customers seeking the lower-pricedÂ furniture.
In the next few months, he added, the company is going to test a trade-in program in Lansing by taking customers’ old furniture and giving them gift-card credit forÂ a new purchase.Â
“There are so many households that have furniture and they don’t know what to do with it,” Yost said. “Our goal is to free up rooms in the home so people will be encouraged to buy new.”
To achieve his plans, Yost said he’s asking employees a key question:Â Has anyone tried to fire you?
âIf not,â Yost said, âitâs highly likely that weâre not changing enough. Weâre not challenging enough, Weâre not pushing enough newness and change. If you’re not pushing the envelope, there’s an argument you’re just playing it safe.”
The sales circle
Sitting in plush leather chairs at the Art Van headquarters, Yost outlined the company’s strategy.
“I want you to look over at the wall there,” he said, pointing to a map of the U.S. “See that big green circle. We have many meetings with many charts and documents. But, that circle is a symbol.”
The circle, Yost said, is a constant reminder of the target sales area for the company.
It’s a 600-mile radius â double what it had been â from Art Van’s distribution center in metro Detroit. Within that circle, he said, there are $35 billion in furniture and mattress sales annually, and Art Van aims to capture 10% of that, making it a regional furniture powerhouse.
It’s possible, Yost said.
Three years ago, Art Van opened a store in Chicago. The company now has 12 stores in theÂ Chicago market, withÂ four more on the way, and by Yost’s calculations, Art Van is leading the market in overall share of sales.Â
To become a significantly larger company within the circle he’s drawn, Yost aims to:
â¢ Boost sales in each furniture store by adding specialty brands, such as Magnolia Home CollectionsÂ furniture. It’s a line of furniture and home decor that’s promoted by celebrity designer Joanna Gaines, who is on HGTV’s “Fixer Upper” reality show.
â¢ Build as many as 200 new stores within four years. Among them is a two-story, 70,000-square-foot store on Ford Road just west of Haggerty in Canton that is set to open in January. It’s the company’s first new store in Michigan in almost 20 years. It will beÂ near Swedish furniture juggernaut IKEA, which already draws customers from all over the Midwest. Canton, Yost said, is one of the fastest-growing markets in southeast Michigan. Last week, Art Van held a job fair to hire 100 new workers. To signal its competition with IKEA, Yost said, the company is putting up a sign that says welcome â in Swedish.Â
â¢ Change the name of the clearance stores to outlet stores, which would let customers know that they also sell new, lower-priced merchandise. The outlet business, Yost said, is growing in furniture as budget-conscious customers seek lower-priced furnishings.Â
â¢ Increase the number and percentage of franchise stores, going from about 10% to more than 30%. Right now, there are 18 franchise stores, mostly in Michigan and Indiana. The company plans to open a new franchise store in St. Louis, Mo., next year.Â
â¢ Acquire furniture and mattress retailers â ranging from $50-million to several million-dollar chains â within the 600-mile radius that Art Van is seeking to grow.Â
â¢ Reinvent ArtVan.com and expand e-commerce sales to support markets where the company has stores. Art Van is spending millions of dollars on a new online retail platform and adding a new corporate office in Warren for an e-commerce group. The company aims to have $1 billion in online sales alone within six years, and by next year offer more home decor and accessories online, including bedding, towels, kitchenware, tableware, and glassware. The company hired an e-commerceÂ strategist â Michele Azar, who played a role in the turnaround of electronics retailerÂ Best Buy â to be the chief digital strategist.
To pay for this expansion, Art Van is turning to its new owner, which has deep pockets.
From the start
Art Van Elslander founded his namesake company in 1959 with a single store on Gratiot Avenue in what is now Eastpointe.Â
“People look at Art Van in an endearing way because we have been around for decades in Michigan,” Yost said. “Did you know we have 50% market share in mattresses?Â Last night, 50% of residents went to bed having bought a mattressÂ from Art Van.”
In addition toÂ furniture in Michigan, Art Van has long been associated with charitable giving and civic pride. It is a sponsor of the traditional America’s Thanksgiving Day Parade in Detroit.
The cost of the sale to Lee Partners wasÂ neverÂ disclosed, but some estimates have put it at about $550 million.
Through the years, Lee Partners has acquired several hundred companies, mostly in consumer goods, healthcare, andÂ financial services. Companies have included Snapple, Dunkin’ Donuts, and Safelite Glass.
After the sale, Yost stayed in place as CEO, along withÂ Van Elslander’s sons,Â Gary Van Elslander, who was president, and DavidÂ Van Elslander, who is president of Art VanÂ PureSleep.Â
Art Van Elslander, a big donor to St. John Providence Health System, started a foundation.Â
In June, Gary Van Elslander left Art Van and handed Yost the president title.
It’s unclear how long Lee plans to hold on to Art Van. Private equity firms tend to buy companies and sell them â or take them public â after just a few years for a huge profit. And, Yost said, that could happen, based on whenÂ equity firms generally exit, withinÂ four to five years.
That could present some challenges for the furniture company as it aims to get a lot bigger â quickly.Â
“The Art Van name is familiar,” said Ken Nisch, chairman of retail design firm JGA in Southfield. “But, if you ask people what it stands forÂ in terms of style, you probably would get fuzzy answers. They’d be more likely to talk about an Art Van story about a salesman or when they got their first piece of furniture.”
What makes Art Van special for Michiganders, he said, is the experiences they’ve had with the company and as it moves farther and farther away from the Detroit market, there’s a risk that the customers won’t have the same affinity and loyalty to it.
In many ways, Nisch said, Art Van is placing some big bets on an ambitious strategy.
“They’re putting themselves in competition with the national lifestyle players by extending their footprint and categories,” he said. “I think the question is can they be who they are and who they want to be at the same time?”
Nisch said he believes that Art Van, with the backing of Lee Partners’ deep pockets, can pull it off. But, he added, it will takeÂ a radical reinvention of the company, a lot of financial resources â and something that the new owner might not have: patience.Â
Formal and fun
YostÂ is a formal â and somewhat quirky â man.
Yost said he grew up in a relatively affluent family in Red Deer, Canada, he was in a rock band as a teen, and for years growing up, because he was the only son, it was his job at home to help his mother move and arrange furniture in the house.Â
âIâm incredibly passionate about buying, selling, delivery and all the support areas, but if it comes down to it, Iâm obsessed with the product,” said Yost, who is 6 foot 2.Â “Itâs the engine and driving force for any retailer.â
He starts his day at 4 a.m., runs for an hour,Â drives a selection of luxury and performance cars to work, including one of two Lamborghinis. HeÂ gets into work by 8 a.m., always wearing a suit, and then writes five down five things he needs to do for the day on cards.
He has nicknames for everyone. The guy who scouts real estate, he calls Hawk.
He’s also created what he callsÂ an eighth day, Sumonday, which is a combination ofÂ Sunday and Monday. It’s really just 5-10 p.m., Sunday, a time heÂ sets aside to read or write and do things he can’t fit into the rest of the week.
And for fun, he collects wine and writes self-improvement books andÂ adventure novels. He’s self-published a three-book personal development series, “Pumptitude.” It is shorthand for “pump up your attitude and gain altitude.” The other books are “InternalÂ Pumptitude” and “Maximum Pumplitude.” He also has published a four-book novel series, “Life Chest,” with other authors about adventures in far-away places, such as China and Africa.
Yost is an executive who likes to organize his thoughts into lists.Â
In the middle of hisÂ interview, he wrote down and enumerated what he considered the main points.
“As a CEO you have to get bossy,” he said, acknowledging in a lighthearted way his effort to take charge of the conversation. “Here’s what I’d like to be quoted: ‘If we go alone, we can only go so far, if we go together we can go endlessly.’ At Art Van, we’re all about the team.”
The good lesson
Still, Yost’s first few days working at 17 are the ones that most influenced hisÂ career.
“I get it in my mind,” he said, “that we shouldnât have sofas running in aisles â we called it soldiering â and that coffee tables shouldnât be on a completely different floor, and that lamps shouldnât be two floors above the furniture floor.”
So, he said, he went into the department store at 4 a.m., and with threeÂ friends, rearranged merchandise on the fifth floorÂ near the escalators, thinking, “because I did it at homeÂ because thatâs the way my mother liked it, our retail customers would like it.”Â
At 9 a.m., the bosses from the corporate office came in.
They rode up the escalator and noticed the new displays.Â
“Here I amÂ thinking that I’m going to get this great praise and it’s going to be outstanding,” Yost said. “I got two weeks working notice.”
The executives, he said, told him:
“We don’t put coffee tables in front of sofas. We don’t put lamps on top of end tables. We have all departments for those â and you didn’t get approval. This is Woodward’s. We’ve been around for decades, we don’t do things like that.”
On top of that, they took him to task for getting others to help him.
“All that’s going to do is multiply the idea you can do almost anything you want at Woodward’s.”
Fortunately, Yost said, an executive who had just returned from High Point, N.C., a center of furniture manufacturing and marketing,Â told his colleagues that other companies were starting to do that in High Point, adding: “Maybe this kid is on to something.”
The next day, Yost said, he got a $10 a week raise and was asked to merchandise the rest of the store.
“When looking for change, challenging the status quo, being innovative in organizations where that is not the culture, you have toÂ be brave and take risks,” Yost said. “I right went from the stockroom to the boardroom by doing just that.”
That’s also the way, he said, that he expects Art Van will becomeÂ a Midwest furniture-industry leader.
Contact Frank Witsil: 313-222-5022 or email@example.com.
Title: President, CEO
Education: DouglasÂ College inÂ New Westminster, British Columbia, bachelor’s degreeÂ in applied design, marketingÂ
Experience: Worked for 22 years at Woodward’s, a Canadian department store chain that was eventually sold; 13 years at Woolworth Canada; three years at Wosk’s, a Canadian retailer, andÂ a top executiveÂ at the Brick, a Canadian furniture store, for 13 years. HeÂ joined Art Van in 2009.
Family: Wife, Donna; daughter, Ashley
Art Van Furniture
Annual sales: Nearly $1 billion
Stores:Â 130, with 10 slated to open next year
States: Michigan, Illinois, Ohio, Indiana, Iowa
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