By MASON LERNER
For The Chronicle
WHEN Josh Samet finished college in 2002, the hotel management graduate faced a pretty bleak job market.
The economy was still reeling from the terrorist attacks of Sept. 11, and hotels across the country were tightening their belts.
Although the outlook was dreary after his spring graduation, Samet had landed a job by the fall of the same year that would become his career and transform him into an entrepreneur.
He started working with his current partner and former boss, Phil Winterton, at Southwest Surplus, a company that buys furniture from hotels going out of business and resells it from three warehouses and two showrooms in the Heights. After about two years, he bought into the business.
The company started off buying from high-end hotels and reselling to low-cost motel chains.
Although they still do business with motels that want name-brand products at a discount price, they’ve now opened to the public.
Some new furniture, too
They also carry new furniture, which they sell at a very low markup. Even though they don’t make much money off the new stuff, their logic is that it is the hook that attracts customers who wouldn’t normally give used furniture a snooty second glance.
“People can get funny about buying used furniture,” Winterton said. “When people think hotel furniture, they think of the standard straight-edge, clean-line hotel room, but that is not always the case. When we liquidate Four Seasons or Doubletrees, sometimes they have very high-quality furniture that any other furniture store would stock.”
As a result, Winterton said, his customers can decorate their homes with name-brand merchandise at cut-rate prices.
“We sell name brands for under 10 cents on the dollar,” he said. “For instance, we might sell an armoire that retails for $4,600 for $299.”
Low overhead
There is another reason Southwest Surplus is able to keep its prices low. In an age when visiting some furniture stores can be akin to spending a day at Disney World, Samet and Winterton keep their overhead as low as possible. They don’t offer finger foods to their customers. There is no big-screen TV showing the sporting event of the day on the showroom floor. They don’t even have air conditioning. All they have is furniture.
“We don’t have a lot of employees,” Winterton said. “We have our own trucks. We just don’t have a lot of overhead.”
In fact, there is one more thing conspicuously absent from their showroom floor: salespeople. So, although the heat from shopping in a warehouse with no air conditioning might get to you, at least there isn’t any pushy fast talk to make you sweat.
No hard selling
“We don’t push, and we don’t do the hard sale,” Winterton said. “We don’t have salespeople on the floor. You pretty much come and shop like you are at Wal-Mart. Customers see what they want, they bring it to our attention, and we ring them up.”
So far, that seems to be working pretty well for Southwest, but next month the partners are planning to expand into “furniture row” on Interstate 45 North.
They hope the new location will give them great exposure to a fresh clientele, but they will also be in direct competition with stores that are already established names in Houston.
James Evans, director of the University of Houston Small Business Development Center, said the new location could be a double-edged sword.
He said that while the increased traffic in the area could be helpful toward the bottom line, he thinks that part of their current success could be a result of serving a specific neighborhood.
“If you have good prices and quality merchandise, it could be to your advantage,” he said. “But generally I don’t think it’s best to be that close to your competition.”
Evans said that even though the current location might be isolated and even hard to find, that could be working to their advantage because they are the only option nearby and they have a specific residential area to serve.
On the other hand, he said, there is no arguing with the exposure that a location facing the freeway should provide.
“It will definitely help sales because it will be easier to find,” Evans said. “Location, location, location.”
Evans also said the most important thing is to come up with an advertising strategy that allows the business to compete with its new neighbors with larger marketing
budgets.
“What they probably need to do is a targeted marketing campaign versus more broad-type marketing,” he said. “They need to get directly to the person looking to redecorate their home or office.”
Spending wisely
Evans recommended using tools like mailing lists and very specific print ads instead of throwing advertising dollars at television.
“Their print ads should explain exactly what it means when they say that they liquidate hotels and what that means for their customers,” he said.
Samet said he believes Southwest has an ace in the hole that will allow it to go head-to-head with its new neighbors.
Because clients are able to furnish their homes affordably when they shop with Southwest, he said customers seldom regret their purchases or having spent too much in the store.
“A lot of times people go to furniture stores, spend more than they intended to and
never shop there again,” he said.
“We have a tremendous amount of repeat business.”
At the moment, the partners are depending a lot on word of mouth to keep sofas and recliners selling.
“It’s pretty simple,” Samet said. “We would like the word to get out to the general public that they don’t have to go pay retail prices for high-quality furniture.”
