American Furniture Company, Inc. History

Address:

P.O. Box 3685
Albuquerque, New Mexico 87190
U.S.A.

Telephone: (505) 883-2015

Private Company
Incorporated: 1935
Employees: 900
Sales: $90 million (1996 est.)
SICs: 5712 Furniture Stores; 5722 Electric Household Appliances; 5021 Office Furniture

Company Perspectives:

Our business is best described as "Your Total Home Store," featuring strong assortments of middle and upper middle priced furniture and home products, such as housewares, table top, bed and bath, floor covering, lamps and decorative accessories, and outdoor furniture. American prides itself on excellent service levels and total customer satisfaction. It is its mission to treat its associates, customers, vendors, and communities it serves with respect.

Company History:

Recognized as one of the largest retail home furnishing companies in the southwest United States, American Furniture Company, Inc. has also been labeled a "mystery" company by the New Mexico Business Journal since exact information on the tightly held, family-owned company is difficult to obtain. The company sells mid- to high-priced home furniture, household appliances, and office furniture through its American Home Furnishings retail stores, its American Warehouse Plus discounted stores, and its American Business Interiors division of office furnishings for commercial customers. Well-known in the Southwest for the grand scale of its operations, the company's American Home Furnishings store dominated a five-acre expanse on the northeast corner of a busy Albuquerque intersection at Menaul and Carlisle and the company's American Warehouse Plus operated out of a four-acre warehouse.

Immigrant Initiative Started Company, 1935

Fourteen-year-old E. Mannie Blaugrund immigrated to the United States from Czechoslovakia in 1921. Three years later, when he had mastered the English language, Blaugrund quit school to work in his brother J.B.'s El Paso furniture store. Blaugrund was hungry for experience and had soon worked in all of the operations of the store, mastering the Spanish language as he did (a useful skill in the border town). Blaugrund found the pulse of the furniture business easily; by age 24 he managed the advertising and buying for several departments of the store.

Mannie Blaugrund foresaw the potential of owning his own company after only two visits to Albuquerque, New Mexico. In November 1935 Blaugrund opened his own store, American Furniture, in a 25-foot leased storefront at 212 Central S.W., near the center of town. With a stock of five boxcars full of mid- to high-priced furniture groups, Blaugrund, his cousin, Sigmund, and eight employees began operations. Blaugrund recalled working 75 hours per week to get the company started, but said it was "challenging, fun, and exciting to be in a new community. Albuquerque had 33,000 people and Clyde Tingley was mayor. It was a lot more fun then than it is now," according to Business Outlook in 1985.

The company remained in the town center storefront throughout the Depression. But by 1950, American Furniture's operations warranted a 46,000-square-foot building on Fourth Street. The move set precedent for American Furniture's future economies of scale and the growth of Albuquerque, making it one of the first large merchants to set up shop north of the city's main street, Central. Within a few years American Furniture had expanded to cover most of the block between Fourth, Fifth, Tijeras, and Copper Streets. The strength of American Furniture was such that in 1955 when a loose conduit started a fire that caused $300,000 in damage to its warehouse, the company had rebuilt and added 44,000 square feet to the warehouse by 1959.

Entering New Markets in the 1950s

In 1954, American Furniture started a separate division, which offered office furniture to commercial customers. The division had grown enough by 1963 to merit a move into the old Arrow Furniture Co. building at 612 Central SW, a purchase of $140,000. Originally the division was named Interiors for Business, American Furniture Co. But by 1975 the company cleaned up the name, changing it to American Business Interiors (ABI). The division remained in the same location into the 1990s.

One of American Business Interiors' more notable projects included what ABI sales manager Gordon L. Balter called a "multi-million dollar project" to supply technical workstations to the Los Alamos National Laboratory, according to Business Outlook. The three-year project was done in conjunction with American Seating of Grand Rapids, Michigan, with their equipment, for which ABI had exclusive rights in the area. Balter considered ABI one of the top ten dealers of American Seating equipment in the United States. The units were designed to allow for scientific research, light manufacturing, and electronic assemble manufacturing. Constructed of high-strength, interchangeable steel panels, the units contained their own electrical outlets and could accommodate air, water, and gas lines for each work space. Balter noted that the design was "extremely flexible and economical." ABI continued to carve its niche in the commercial office furnishings market by tailoring its products to the specific needs of its clients.

Welcoming Competition in the 1960s

American Furniture has been an anomaly in the home furnishings business since about 1966 when it had become one of the few remaining family-owned home furnishings businesses in the United States of significant size. Blaugrund noted in Business Outlook that he believed his company was the "only family-owned enterprise in the country with the breadth, quality, and wide selection of so many key lines of home furnishings under one roof." The rarity of its circumstance did not scare Blaugrund from competition. When department stores started to fill the two large malls at the Coronado and Winrock centers in Albuquerque, Blaugrund welcomed the competition. "Competition makes us all better and stronger. If you have no competition, you get lazy. The more the merrier," he told Business Outlook. His philosophy has survived his retirement. In 1994, with the opening day sales records set by Ultimate Electronics in Albuquerque, American Furniture electronic sales manager Rick Taylor said, "competition helps," noting that the company experienced a surge in sales with the opening of new competition.

Though the company welcomed competition, it chose its targets wisely. When stores began to target aggressively the growing Hispanic market in New Mexico, American Furniture did not follow. Lee Blaugrund, Mannie's son who took over the retail operations after his father's retirement in 1984, noted that there were increases in Spanish-speaking customers after the company ran Spanish-language ads. But he added in Business Outlook that "we're not falling all over ourselves to discover the Hispanic market. We feel like we already have it." The company's offerings appealed to quality-oriented customers across cultural boundaries.

The company supported its efforts to appeal to quality-oriented customers from its earliest years by maintaining an enormous advertising budget. American Furniture's advertising budget was ranked second or third among U.S. furniture retailers before 1958. And between 1958 and 1968, Business Outlook noted that American Furniture used more "advertising lineage than any other furniture retailer in the nation." The trend continued into the 1990s when large, pull-out ads for the company's offerings could be found regularly in the local newspapers.

Economies of Scale in the Late 1960s

In September 1968, American Furniture opened a new store, which was described by the local newspaper as "the largest display of quality home furnishings--and in the largest setting--ever assembled in the Southwest." On the seven-acre site, called American Square, on the corner of Menaul and Carlisle NE, city commissioner Pete Domenici cut the ribbon to open the three-acre store that had been designed as a split-level, territorial style building by Flatow, Moore, Bryan, and Fairburn and accessorized by the Miami designer Peter T. Grivas, who outfitted the hundreds of room-like settings with backdrops and accessories. The building cost $985,000, increased the number of employees from 150 to 200, and was stocked with six months' worth of boxcar deliveries.

In the 1970s the landscape of the city of Albuquerque was changing. The downtown area was beginning to focus more on governmental buildings and the shopping district was migrating further away. After damage from rioting in 1971 closed American Furniture's Fourth Street store for eight months, the company made plans to consolidate its operations in its American Square location. Although American Furniture had spent 40 years in Albuquerque's downtown, the company felt the store was "becoming separated from the central business retail area" and moved to the American Square location with the addition of 40,000 square feet of warehouse space in 1974. That same year a computerized phone system made it possible for customers to call individual departments directly without having to go through a main switchboard first.

A decade later, American Furniture continued to expand. In 1985, the company broke ground on a four-acre warehouse, called American Warehouse Plus. Sherry Robinson of Business Outlook described the warehouse as the "industrial equivalent of the Grand Canyon." The warehouse was built as "the only furniture warehouse of its kind and the only major home-furnishings distribution center in New Mexico," according to Lee Blaugrund in Business Outlook. It was built to hold about 100 to 1,000 households worth of furniture, depending on how they are measured, according to Blaugrund and an employee. That amount equals about 350 to 400 boxcars full of furniture. Blaugrund explained in Business Outlook that in a business climate when more and more furniture dealers are closing their doors survival depends on "efficiency of size and passing those efficiencies on to the consumer.... If you don't, you get gobbled up."

Management of American Furniture was well versed in the design and function of warehouses, having updated many warehouses over the years. And both of Mannie's sons, Lee and Cliff, had spent time working in the warehouse operations of American Furniture, a place Mannie Blaugund referred to as "the kitchen, where it's made or lost" in Business Outlook. So when it came to the design of their very own warehouse, the top priority was an extremely flat floor. The "super flat" concrete floor allowed deflections of only a sixteenth of an inch in ten feet, were reenforced with cables instead of rebar, and had smooth seams hidden beneath epoxy. Blaugrund noted that a small bump in the floor would be significantly magnified 38 feet in the air at the top of an "order picker," or modified forklift, causing the machine to bump into racks. The attention paid to the floor allowed for the warehouse to be taller and thus better organized.

Another innovation in the warehouse was the flow design. The warehouse could accept supplies in one side and send the empty cars out the other. The warehouse could accommodate 80-foot boxcar lines on one side through five rail doors while warehouse employees used three different kinds of machinery to unload and shelve the goods. Further modern touches in the warehouse included a computer tracking system that could locate a product and report its condition and routing.

By 1997, American Warehouse Plus continued to be a part of American Furniture's business strategy with locations in Albuquerque and Tucson, Arizona. Lee Blaugrund anticipated that the formats of both the retail American Home Furnishings and Warehouse Plus stores would evolve as the company entered new markets. The company operated four American Home Furnishings stores in Albuquerque, Sante Fe, Farmington, and Tucson.

Keeping the Company in the Family, 1984

Shortly before American Warehouse Plus opened, Mannie Blaugrund turned the management of the company over to his son Lee in 1984. At the time, Cliff had some health problems and assumed control of ABI, which contributed less than five percent of volume into the 1990s. Lee Blaugrund described the transition of power as an event that was "done quickly and without any fanfare," according to an interview with Sara Pendergast. Under Lee Blaugrund the company has gained a new management team to continue the company's growth, continued state-of-the-art systems development, and realized sales growth of 350 percent. The company has also narrowed its product mix to complement its self-description as "Your Total Home Store," dropping toys, lawn mowers, luggage, and home electronics to focus on the more profitable home business area. The elimination of some products has allowed the company to use the extra space to create "higher levels of product momentum" in the smaller home products, such as housewares, table top, floor covering and linens, and domestics, according to Blaugrund. The company's narrower focus has also increased the advertising for its home products. The momentum has aided American's ability to compete with "category killer chains," such as Bed Bath & Beyond, Linens and Things, and William Sonoma.

To keep the presentation of products fresh, American Home Furnishings stores continued to be partially remodeled each year. Blaugrund noted that American is "known for its excellent selling environment" and that the products are presented by category in a "fully accessorized," "open and easy environment." To maintain profit margins and the company's "value image with Everyday Low Prices," American continued to seek out quality imports. Although the company's next phase of expansion was in the planning process in 1997, Blaugrund anticipated that the company would expand geographically and continue to narrow its product offerings to "raise operating effectiveness" and "reinforce our market positioning."

Principal Divisions:American Home Furnishings; American Business Interiors; American Warehouse Plus.

American Furniture Company, Inc. History

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