Clint Engel –
Eyes small, midsized markets in N.C., Va.

MULBERRY, Fla. — W.S. Badcock is seeking existing furniture dealers in North Carolina and Virginia who are interested in converting to Badcock Home Furniture & more stores.

That’s a broadening of the Top 100 company’s strategy as it looks to accelerate expansion and crank up store count to the capacity of its newest distribution center in Mebane, N.C.

The promotional to midpriced chain typically enters new markets with new dealers developing new locations, said Mike Whitten, director of dealer development for the 329-store, Mulberry-based Badcock.

He said the company has never really approached existing retailers.

“We’ve taken a number of Heilig-Meyers people, and even some of their locations,” he said. “But we have not actually gone in and converted an existing independent local furniture store to a Badcock store.”

The new strategy is tailored to small and midsized markets in North Carolina and Virginia, which would be served by the $10 million, 200,000-square-foot Mebane facility, opened early last year.

Today, 40 of Badcock’s stores are supplied through Mebane, which Whitten said could service about 100 stores. Next month, the Southeast chain will open its first store in Virginia, in Danville. It’s looking to add 35 to 40 more in that state and another 20 to 25 stores in North Carolina, where it has about 28 stores.

Markets it’s targeting include Winston-Salem, Durham, Statesville, Taylorsville, greater Raleigh and Fayetteville in North Carolina; and Martinsville, Petersburg, Norfolk, Virginia Beach, Newport News and the Richmond area in Virginia.

Whitten said many independent store owners are facing supply chain issues; higher costs of operation, advertising and merchandising; and increased competition from such big players as Room To Go and Ashley Furniture HomeStores.

Badcock, he said, eases expenses by supplying inventory to dealers on consignment, with some 4,000 SKUs to choose from. It delivers to stores twice a week and shares advertisings costs, Whitten said.

He believes Badcock stacks up well with the competition, and offers dealer strong non-furniture categories such as electronics, appliances and floor coverings.

The new effort, about a month old, includes advertising in local newspapers and business journals, and sending out recruiting teams. Whitten said dealer response is encouraging, but he wouldn’t identify prospective dealers yet.

The investment needed to open a Badcock store varies widely by market and other circumstances. Badcock generally looks for people with $150,000 to $250,000 in net worth and about $100,000 to $150,000 in liquidity. With existing dealers, the company believes the investment would be at the low end of that general range.

“We’re willing to help candidates with conversion materials and help with some of the conversion costs,” Whitten said. “We’re going to make it pretty easy for them.”

He said Badcock is “looking for well-run, financially secure businesses that see an opportunity to increase business substantially by converting to a regional brand.”

Badcock’s goal with the new strategy is 12 to 15 stores or so over the next two to three years, supplementing its normal expansion.

As the company rolled out the Badcock Home Furniture & more format in recent years, its store count decreased slightly as it also closed unprofitable units, Whitten said. Today, 210 of the stores have the new format, and the rest will be converted over the next three or four years. Most poorer-performing stores already have been closed, he said.

Badcock had estimated 2012 furniture, bedding and accessory sales of $492.7 million.