The Haynes way: Be masters of the big sale

VIRGINIA BEACH

E.J. Strelitz knows that people don’t like his advertising.

Friends make jokes at dinner parties. Customers criticize it in focus groups. Some shoppers have complained to authorities about it.

“Lowest prices ever!”

“We’ll give it all up!”

“Everything is on sale!”

Haynes Furniture Co. ads make an easy target. Their bold, brash messages are hard to miss. Even Haynes’ competitors concede: When local shoppers think of furniture, they think of Haynes.

“Are you kidding me?” laughed Simon Daniels when asked if he had ever seen Haynes’ ads. He and his wife visited the flagship store on Virginia Beach Boulevard early last week to pick out thick-cushioned chairs for watching movies in their Virginia Beach home. “I think they’re overbearing a lot,” he added.

Strelitz, the company’s chief executive, acknowledged he would prefer a quieter approach for Haynes’ marketing.

But the screaming works, he said.

“People love a sale.”

Behind the very public, promotional face of Haynes is a privately held business run by the same local family for about 70 years. The Strelitzes have overseen Haynes’ growth from a single store in downtown Norfolk to a small retail empire with five large showrooms from the Outer Banks to Richmond, eight The Dump stores selling closed-out and clearance merchandise in four states, and a distribution center in Williamsburg.

Haynes has stood for at least a decade as the Hampton Roads market leader in furniture, with about $250 million in annual sales in 2008. The company had the largest share of shoppers’ mattress and furniture purchases last year, at 19 percent, according to surveys by Scarborough Research, which provides market analysis for media. Big Lots and Value City Furniture followed in the No. 2 and 3 spots, respectively, Scarborough shows.

With Haynes’ size comes a huge amount of overhead. In addition to marketing costs, the retailer must fill a 358,000-square-foot showroom and warehouse. That dwarfs competitor Grand Furniture’s largest store at about 90,000 square feet. Haynes employs more than 250 people at the Virginia Beach store and about 1,000 more across the company.

Haynes aims for the middle; its customers’ annual household income averages about $45,000, Strelitz said. Merchandise in the maze like store sweeps across every style of furniture. Brands mean less today, Strelitz said. Price is everything.

Competition forces the company to keep costs down and live with tighter profit margins. “The key to being able to do that is high volume,” Strelitz said, and Haynes’ marketing aims to drive customers through the door.

“Maybe 1 to 2 percent of the market at any given time is interested in buying furniture,” Strelitz said. “The 1 to 2 percent, they listen to our message.”

Haynes’ marketing isn’t unique in retail, particularly the furniture business, said Jerry Epperson, an analyst in Richmond who has specialized in the furniture business for 38 years. In many markets, the dominant furniture player boasts price deals and “no interest, no money down” financing.

Customer credit has been part of the furniture business for decades. Before credit cards became ubiquitous, the interest on payments served as a significant source of revenue for retailers, particularly those with an in-house finance operation, as Haynes has.

Today, the zero-interest terms generate little cash but can help a customer seal the deal on a new sofa.

“It is not the profit center it used to be,” Epperson said of the financing. “So you’ve got to learn to make money on your furniture and use the credit as a convenience or an incentive.”

Marketing became Haynes’ mantra early on.

L.D. Haynes founded the furniture company in downtown Norfolk in 1895. He befriended the young soft-drink salesman who filled his vending machines. As Strelitz family lore has it, the founder had no heirs and sold the business to the Pepsi guy: Ellis Strelitz, E.J. Strelitz’s grandfather.

E.J. Strelitz’s father and uncle, Leonard and Joseph, joined Haynes after World War II. They were fierce promoters who pushed the company’s value message.

A newspaper ad from 1967 hangs in the foyer of the president’s office. The typeface is finer than that used today, but the language sounds familiar:

“Save over half!!” reads the pitch for a pair of ladder-back chairs marked down to $33 from $89.90.

E.J. Strelitz left his job as a corporate bond trader in New York and joined the family business in 1985. He typically eschews a tie and jacket in favor of an open-collared shirt and khakis. He said he’s more laid-back than his father, but he took the promotional arm and amped it up with more radio and TV spots. The advertising, he said, consumes about 50 percent of his time.

After the terrorist attacks of Sept. 11, many retailers retrenched, but not Haynes. “We went the other way,” Strelitz said. “We said, 'Let’s try being aggressive.’ It was the right decision.”

Soon after, on Jan. 26, 2002, the company had its first $1 million sales day, Strelitz recalled. “We promoted like crazy.”

The approach has its detractors.

The local Better Business Bureau took issue with Haynes’ marketing when Jim Bryan was executive vice president from the late 1970s to the mid-’80s. Bryan objected to what he called unsubstantiated claims of a particular value on a piece of furniture that Haynes had pitched for less. The company would advertise a $1,000 mattress, for example, with its price of $795.

“They never sold it for $1,000,” Bryan said. “They never provided me with any proof of it.”

Bryan said he met with the Strelitzes and asked them to temper their language to reflect the bureau’s advertising code, which says a retailer should compare its sale price to a higher value only if it carried the product at that top rate for “a reasonably substantial period of time.” The code also says a retailer should cite an original price only if it was the actual previous price for which the product was offered.

“Their advertising message hasn’t changed,” said Bryan, who is now retired. “To me, it was immoral. It certainly wasn’t what I would say is a good business practice.”

Consumers also have complained. The Virginia Beach Consumer Affairs Program received seven complaints about Haynes’ business practices, including its advertising, in the past three years for which it keeps records. Some of those consumers, and others before that time, voiced distaste for the style of marketing, said Cathy Parks, director of the program. Many have questioned its credibility. How many times could Haynes set “record low prices” or host the “biggest sale ever”?

Leonard Bennett, a consumer attorney in Newport News, said those claims violate consumer protection laws by describing each sale as the “biggest” or each price as the “lowest.” Consumers don’t shop for furniture often enough to know its regular costs and whether a stated discount is a true deal, Bennett said.

“Their advertising, at a minimum, is misleading. It represents each particular sale as a unique and nonrecurring event,” Bennett said. “It is not unusual. It is not extraordinary. It is ordinary. They repeat these sales every week.”

Strelitz said he knows the laws. He monitors the claims Haynes makes. His buyers shop the competition and make sure an advertised comparison is accurate, he said.

“We are scrupulous in establishing these comparative prices,” he said. “What is concrete is a claim we make about savings. That’s our business, and we take it very seriously.”

Haynes sends its buyers to China to meet directly with manufacturers. It orders in huge volumes and gets the furniture cheaper, so it can sell below competitors’ prices, Strelitz said. The store will put out a sofa at $1,400, when the competition might sell a similar one for $1,700, then drop it to $999 for the weekend crowds before raising the price again.

Or Haynes might get a close-out deal on an order of sofas that was cancel ed by another retailer. Haynes would mark them at a discount, and its ads might claim savings on a “regular price” that it never actually put on the sofas but that other retailers might sell them for, Strelitz said.

Its “lowest prices ever” might apply to one group of furniture one week and then a different group or style another week, Strelitz said. The most popular products, such as the Louis Philippe bedroom furniture, might never fall by as much as 70 percent, but with the volume of furniture at Haynes, it always has some slow movers.

“There’s 20 to 30 percent at any time that we need to get rid of, so we’ll kill the price until we get rid of it,” Strelitz said.

While shopping for their home-theater furniture, Simon Daniels’ wife, Schronda, said she trusts Haynes and relies on its ads to find bargains.

Her sister-in-law recently bought a bedroom suite and returned to the store to show it to Daniels’ parents, when she noticed it listed for more than she paid. “So the prices do go back up,” Schronda Daniels said.

Despite some criticism of the Haynes way, Strelitz has confidence that consumers vote with their feet and money.

“I’m much more interested in what people do than what they say,” he said. “I’m in the business of what people do. I’m not here to win any popularity contests.”

 Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com