Art Van Furniture, Inc. History

Address:

6500 Fourteen Mile Road
Warren, Michigan 48092
U.S.A.

Telephone: (810) 939-0800
Fax: (810) 939-3055

Private Company
Incorporated: 1959
Employees: 3,000
Sales: $440 million (1997 est.)
NAIC: 44211 Furniture Stores

Company Perspectives:

Art Van Elslander opened his first furniture store in 1959. The 4,000-square-foot facility, located on Gratiot in East Detroit, featured Danish contemporary furniture and employed only its owner. The first Art Van store opened with a philosophy that is still the foundation of store operations today&mdash′ovide area residents with quality furniture, at great prices, while implementing high standards of service.

Company History:

Art Van Furniture, Inc. is the largest furniture store chain in the state of Michigan and the eighth largest nationwide, in terms of sales volume. Targeting the middle-class consumer, the company has achieved success by its emphasis on quick delivery, attentive customer service, and persistent advertising campaigns. In the late 1990s, the family-owned company employed five of founder Archie "Art" Van Elslander's ten children in key positions. Over the years, the chain has expanded to nearly 30 stores, most located in the metropolitan Detroit area.

Beginnings

Archie Van Elslander was born in 1930 on the east side of Detroit into a Belgian immigrant family. Van Elslander showed an interest in sales early on, hawking newspapers up and down Detroit's Gratiot Avenue as a youngster. During these years he also adopted his preferred name of "Art." After graduation from high school and a year in the U.S. Army, Van Elslander married and then began working for the Crown Furniture company, moving up to store manager within two years.

Desiring a business of his own, Van Elslander in 1959 mortgaged his house and borrowed from his insurance policies to finance the first Art Van Furniture store, a 4,000-square-foot outlet on Gratiot Avenue in East Detroit. As a salesman he had found it easier to omit the end of his last name when talking to customers, and it was this shortened form that he chose to use as the store's name. The early years were difficult, with Van Elslander, the store's sole employee, responsible for everything from opening in the morning to making deliveries after closing in the evening. As he would continue to do in the future, he involved his growing family in the business, bringing his wife and children in on Sundays to dust and sweep.

Key to the company's success was a policy of quick delivery. While most furniture stores required a customer to wait weeks or even months for an order to arrive from the manufacturer, Art Van maintained a warehouse that stocked a large backlog of goods, enabling prompt delivery of most items.

Strong automobile sales in the early 1960s boosted Detroit's economy, and sales of furniture were good. By 1964 there were a total of seven Art Van stores, Van Elslander having taken on several partners to help finance the expansion. However, an economic downturn that year caused sales to drop off, and the highly leveraged company faced the prospect of bankruptcy. Determined to pay off his creditors and remain in business, Van Elslander held a liquidation sale at the Michigan State Fairgrounds in a giant tent. Following the successful sale, he split the business with his three partners, giving each a store of his own and keeping four to himself. In the early 1970s he was able to buy the others out completely and again become sole owner. By this time Art Van had grown into a chain of 15 stores, all in the metropolitan Detroit area.

The early 1970s saw an increasingly competitive atmosphere as other furniture retailers such as Joshua Doore began to aggressively target Art Van's customers. Rather than bow to the competition, Van Elslander responded in kind, moving the company's headquarters and warehouse to a larger location and offering such new services as free immediate delivery. "I knew we had to expand or lose our business. Expand and keep up the advertising," said the company's founder.

Advertising had become a vital part of his strategy, and it would eventually make Art Van Furniture as well-known as McDonald's or Chevrolet to Detroit area residents. The company was one of the first in the area to use television spots to advertise furniture. Art Van commercials, which were changed weekly, stressed sale prices and the company's special services such as free delivery.

1970s and 1980s: Expansion During Recession

By the mid-1970s an economic recession began to cause a shakeout in the furniture business, and within the next few years over 80 furniture stores or companies in Michigan folded, including Joshua Doore, which at one time had operated over 300 showrooms. At the same time, however, Art Van was expanding its warehouse yet again and also opening its first stores outside of metropolitan Detroit, adding locations in Flint and Lansing in 1977. The year 1980 saw the company introduce an Art Van charge card and open an additional store, bringing the total count to 19 for the chain.

In 1983 the company named Gary Van Elslander, Art's son, to the position of president, while Art remained company chairman. In 1987 the Van Elslanders purchased an upscale furniture store, Scott Shuptrine, and soon bought three other independent stores and built a fourth, giving each the Shuptrine name. Scott Shuptrine's typical customer was 35 to 54 years old, with a household income of $50,000 and up, as compared to Art Van's 25- to 54 year-old, $25,000- to $30,000-a-year demographic. In 1989 Gary Van Elslander left Art Van to oversee the Shuptrine operation, which was run as a separate entity from Art Van Furniture. Profits remained elusive for Scott Shuptrine, however, due to strong competition from other high-end furniture retailers and the vastly different nature of its business. Unlike the more mainstream Art Van, which could sell couches or bedroom sets by the truckload, the high-end market was geared toward sales of expensive, custom-built pieces and relied upon the recommendations of interior design consultants. Showrooms were much more lavish and customers expected to be pampered. Thus, overhead was much higher than at an Art Van outlet. Over the next few years the number of Shuptrine locations declined to two.

In 1988 Art Van Furniture added a new service, Mattress Express, which guaranteed next-day delivery or the purchase was free, with free removal of mattresses that were being replaced. The company offered the mattresses it picked up to Detroit-area social service agencies, eventually purchasing a converted tire-shredding machine to dispose of the mattresses that were not reused. This massive, $200,000 device, the only one of its kind in the country, paid for itself quickly as shredded mattresses required only one-seventh the landfill space of intact ones.

Charitable Activities in the 1990s

In addition to running his furniture business, Art Van Elslander was also active in local community service organizations and was a frequent contributor to charities. One of his most public efforts involved rescuing a holiday tradition. The city of Detroit had enjoyed an annual, nationally televised, Thanksgiving Day parade for many years. However, in 1980 Hudson's department store ended its sponsorship, and in 1988 CBS dropped its national telecast, causing many other corporate sponsors to exit. The parade's budget immediately went into the red, and in 1990 the event was in danger of being canceled altogether. Reading in the newspaper of this possibility, Van Elslander quickly decided to make a contribution to keep the parade afloat. His $200,000 check enabled the parade to go on, and the next year he offered to match the contributions of other businesses up to $100,000. Charitable efforts were an ongoing activity for Van Elslander, who often donated money privately to local agencies. Over the years, other beneficiaries of his and the company's generosity included the St. Vincent de Paul organization, the National Cherry Festival, America's Walk for Diabetes, the Holland (Michigan) Tulip Festival, and many others.

By 1992 Art Van's annual sales had topped $220 million, and the company was still seeking new ways to reach customers. One successful idea was the introduction of clearance centers attached to many of the chain's stores. These centers sold damaged or overstocked merchandise at rates from 40 to 70 percent off retail, allowing the company to expand its penetration of the market to yet another price level. Art Van stores were also successful with sales of such accessories as lamps, area rugs, and wall art pieces. To increase sales of such items, products at the company's stores were arranged carefully into harmonious groupings that appealed to the eye. With research showing that customers who made a major furniture purchase often bought accessories to accompany it within 72 hours, the company put a great deal of effort into this category, which was a consistently profitable one.

Art Van Elslander's business acumen and community spirit led him to another new project in 1994, when he and a group of investors purchased the landmark Ponchartrain Hotel in downtown Detroit from the Resolution Trust Corporation. The purchase price was $4 million, and $7 million in renovations were planned. Van Elslander intended to turn the hotel's fortunes around, and immediately aligned the Ponchartrain with Holiday Inn's Crowne Plaza chain, enabling the hotel to benefit from that company's reservations network. The years following the city's deadly 1967 riots had seen Detroit's population drop precipitously, and some areas of downtown Detroit had come to resemble a no-man's land. With this and other major investments taking place in the area, it appeared that the city's badly damaged reputation might finally be on the mend.

A bitter strike at Detroit's two daily newspapers caused controversy for the company in 1995, as picketing union members targeted Art Van stores, which had continued to advertise in the two papers. Art Van filed charges with the National Labor Relations Board in October 1995, alleging that picketers had harassed customers at 11 of its Detroit area locations. The picketers withdrew after a Detroit NLRB official threatened to seek a federal injunction against the six unions involved.

An Upscale Redesign for the Late 1990s

By 1997, following a spurt of growth in the early to mid-1990s, the company had increased in size to a total of 26 stores with over 2,600 employees. An expansion of the flagship store in Warren, Michigan, was being planned at this time, based on company research into shopping patterns and lifestyles. The redesign, unveiled in August 1998, featured a two-story glass atrium entrance, a cappuccino bar, soft lighting, and a more upscale merchandise mix. The company was trying to attract more affluent patrons, while not alienating its core customers. Other stores in the chain were scheduled for similar upgrades, and the most recently built ones had incorporated the design changes from the outset. In November the company opened its 27th store, in northern Michigan's Traverse City. This 62,000-square-foot facility, which followed the new design, also featured a Kid's Castle, first introduced in the Warren makeover. The 1,400-square-foot play space featured climbing structures, a TV room, and a ball-play area. Art Van staff supervised the children while their parents browsed the store. The merchandise offered at Art Van now ranged from bedroom sets and mattresses to dinettes, entertainment centers, home office furniture, sofas, chairs, end tables, grandfather clocks, and children's furniture. Italian leather furniture and Amish-made oak furniture were displayed in specially designed sections of the stores to enhance their appeal.

Striving to distinguish itself for its customer service, Art Van stores not only offered free delivery and set-up of furniture, but also focused on the shopping experience itself, walking customers to their cars with umbrellas on rainy days, loading large purchases into their cars, washing their windshields, and presenting them with a flower. The company also offered a financing plan that required no money down, no interest, and no payments for two years. While competitors tried to match these terms, Art Van's policies proved the most generous.

The company's policies of attentive service, carefully designed stores, attractive financing plans, and heavily advertised sale prices proved an irresistible combination for several generations of Michigan furniture buyers. With its first 40 years in business largely a huge success, and the next Van Elslander generation actively involved in the company, Art Van Furniture seemed assured of continuing dominance of the Michigan furniture market.

Art Van Furniture, Inc. History

Company Perspectives:

Company History:

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