Schneiderman's Furniture Inc. History

Address:

8198 Elmer Road
Meadowlands, Minnesota 55765
U.S.A.

Telephone: (218) 427-2131
Toll Free: 800-220-2225
Fax: (218) 427-2223

Private Company
Incorporated: 1948
Employees: 190
Sales: $30 million (1998 est.)
NAIC: 44211 Furniture Stores

Company History:

Schneiderman's Furniture Inc. is an independent furniture store chain founded in a remote rural area of northeastern Minnesota. The family owned and operated business has capitalized on its ability to adapt to the cyclical furniture market and provide superior service to customers. The company operates stores in the Twin Cities metropolitan area and in northern Minnesota.

Rural Roots: 1940s-70s

Max Schneiderman, a native New Yorker, labored for 21 years in the U.S. Steel mill in Duluth, Minnesota, before striking out on his own. Eager to escape the mill, he bought a general store in 1948 located in a sparsely populated area northwest of Duluth. But Schneiderman, his wife Edna, and their six children found a new set of difficulties.

The store's living quarters were without running water, and the store itself was thinly stocked and situated on a dirt road that was nearly impassable in the spring. To top it off, the establishment was associated with the deeds of its former owner--he had murdered three town board members over a beer license dispute and then killed himself. Customers avoided the place.

The whole family pitched in to make the operation work. Edna minded the township's post office, stationed in the store, and the children helped out where they could. Schneiderman capitalized on the movement toward modernization of rural homes and began stocking electrical and plumbing supplies. The business received a boost when he purchased some of the closeout inventory of a wholesale hardware store for 20 percent below wholesale price. "We could sell so many things way below what anyone could even touch," said Edna in a June 1988 Corporate Report Minnesota article by Jane Brissett, "that it really kind of made his reputation."

Schneiderman entered the furniture business by way of a barter agreement for a family sofa. In lieu of payment, Schneiderman began acting as a dealer for Duluth furniture wholesaler DeWitt-Seitz Company. He met customers at DeWitt-Seitz, showed the products, closed on the sale, and made deliveries. When the wholesaler shut its doors in the early 1960s, Schneiderman expanded his store to accommodate the inventory. By 1967 Schneiderman had made the shift from a general store carrying groceries and hardware to a furniture retailer.

Skeptics abounded. Some in the industry as well as some residents of the area doubted that Schneiderman could sustain a furniture store in such a remote region, but he persisted. He made sales and deliveries, measured floors for carpeting, and repaired television sets. Schneiderman, as he had with the general store, strove to carry good merchandise and sell at the lowest possible price. No sales, no advertising, and low overhead were his mantras. He would build seven additions to the store located in Elmer Township.

Economic Downturn on Home Turf Forces Change: 1980s

Although situated in the unincorporated township of Elmer, nearby Meadowlands--population of about 200--was the recognized location of Schneiderman's Furniture. Considered the middle of nowhere by some, the town was actually centrally located, at the hub of a number of small cities spread throughout northern Minnesota's Iron Range. The business also drew customers from the westernmost port cities of Lake Superior--Duluth, Minnesota, and Superior, Wisconsin.

The furniture store covered 30,000 square feet or about ten times its original size, by the early 1980s. A 40,000-square-foot warehouse sat across the road. Unfortunately, the local economy was in big trouble. The bottom had fallen out of the Iron Range's taconite industry, which produced a low-grade iron ore for steel production and provided high-paying jobs for Iron Rangers who frequented Schneiderman's Furniture store. Sales fell 15 percent in 1982; it was the first time in its history the company had failed to grow from one year to the next.

Larry and Russell Schneiderman--the youngest of the Schneiderman children, who bought the business from their parents in the mid-1970s--responded by establishing a second store across the highway from a major Duluth shopping mall. Schneiderman's Bed and Recliner, which opened in 1983, was a hit and siphoned additional business to the Meadowlands store. Encouraged by the success of the Duluth operation, the pair opened a third outlet the next year, this time in the Twin Cities metropolitan area. They chose another out-of-the-way location, a vacant furniture store in the Lakeville Mall.

Their new store was south of Minneapolis and St. Paul but close in proximity to some of the fastest-growing suburbs in the region. When the unit failed to bring in the traffic they had anticipated, the Schneiderman brothers realized they were not in northern Minnesota anymore. Advertising, not word-of-mouth referrals, ruled in the Twin Cities.

The Schneiderman brothers had done some advertising exploiting their father's name when they opened up in Duluth. The ads for the Lakeville store once again featured their dad and played off his "crusty-but-friendly" image. "Typical was the ad in which Max said, 'Don't plan on coming to my January mattress sale. I'm not having one.' The manufacturer was, however, and the store passed along the savings," wrote Brissett. Those early Schneiderman's campaigns were limited to newspapers and billboards.

Although advertising was a shift in strategy, the Schneidermans continued their tradition of holding the line on spending. Their 1986 advertising expenses were 3.9 percent of sales versus six percent on average for the nation's other furniture retailers.

The company also brought in a veteran of the Twin Cities furniture industry who helped facilitate the transition into the new market.

A fourth Schneiderman store, which opened in the affluent Minnetonka area in 1987, had something the three earlier stores did not: a good location. The store quickly proved to be the top store in terms of walk-in business. The store's genesis, though, was highlighted by tragedy as well as opportunity.

The opportunity arose when Thomasville, one of Schneiderman's largest furniture suppliers, began searching for a store to house a furniture gallery of their products in one of Minneapolis's western suburbs. The Schneidermans now had an understanding of the Twin Cities market and were ready to expand again. In addition, Russell Schneiderman, the younger of the two brothers, and his wife Monica were looking for a change: the couple were recovering from the loss of their young son to leukemia.

Russell's move to the Twin Cities to oversee the Minnetonka store was a significant change for the family business. The two brothers had worked side by side for years. Larry handled the financial end of the operation and Russell the floor, including design, selling, and floor setup. Both had worked in the store as children, but responded to their chores in different ways. Larry had always planned to work for the family business and came on board full-time when he graduated from the University of Minnesota-Duluth with a degree in accounting. Russell, on the other hand, did not relish the thought of working in the furniture operation and moved toward a career in criminology, but in 1972 he gave the family business another try and found it suited him.

"He now works 60 hours a week as a hands-on manager at the Minnetonka store," wrote Brissett in 1988. "Once he called on a woman whose sofa had been delivered with a spot on it. Russell was on his hands and knees cleaning the sofa when her husband walked in. The man couldn't believe that the store owner would be in his house cleaning his sofa, but Russell says it's all in a day's work: "If you're going to preach service, it's got to come from the top down." Under Russell's management, the Minnetonka store quickly matched the volume of the Lakeville operation.

In addition to the $500,000 investment in the new store, in 1987 the Schneidermans purchased the Lakeville Mall for $1 million. In 1988 they acquired warehouse space for the Twin Cities operations. In spite of all the activity down south, the Meadowlands store continued to be the largest revenue producer. Sales jumped 30 percent in 1987, aided by the addition of an 8,500-square-foot Thomasville Gallery.

Schneiderman's estimated sales were $7 million in 1987. By comparison, Minnesota's largest independent furniture dealer in the late 1980s was Gabberts, which had sales of $60 million. The smaller retailer carried less expensive lines than its larger counterparts, which among others included Dayton Hudson's Home Store.

The majority of Schneiderman's stores, unlike their more upscale competitors, were off the beaten track. In a positive vein, the outlying locations helped keep operating costs down. The company's bottom line also was aided by highly productive, loyal employees--the company instituted an employee profit-sharing plan in the late 1970s. Larry's wife Sheila, Larry's sister Karen Braun, and her husband Bob Braun also worked in the business. Last, Schneiderman's had a practice of keeping debt down and paying off borrowed funds quickly.

The profile of the retail furniture industry, once predominately family run operations such as Schneiderman's, was changing as mergers and acquisitions gobbled up small stores and independent dealers were pushed out of the market by larger competitors. Furthermore, the independents competed not only with other furniture retailers for the disposable income of consumers but with merchants offering desirable products and services such as new cars, vacations, and electronics.

Schneiderman's, however, bucked the tide and continued to grow. Jack Crahan, president of Flexsteel Industries, Dubuque, Iowa, and furniture supplier to Schneiderman's, said customer service was the key to the survival of the independent dealers still on hand. Services such as designer assistance and free delivery within 75 miles of the stores, plus a top-notch sales staff and competitive pricing--medium to good quality furnishings were discounted 25 to 35 percent from the suggested retail price--helped Schneiderman's keep pace with others in the industry.

Schneiderman's sales for 1989 were in the $12 to $15 million range, up from $9 million in 1988, according to a 1990 Star Tribune article by Ingrid Sundstrom. The company opened its fifth store, this time in the eastern metropolitan area of St. Paul, in 1990. The Roseville store was 26,000 square feet.

New Traditions Replace the Old: 1990s

The early 1990s were marked by the introduction of more and more sales, a considerable deviation from the founder's no sale policy. A 10,000-foot addition at the Meadowlands store was designated for special purchases in an effort to boost sales. Schneiderman's advertising budget had grown to six percent of sales.

Company President Larry Schneiderman said in a June 1994 Corporate Report Minnesota article that his "dad wouldn't have been offended" by the changes. Co-owner and Vice-President Russell Schneiderman demurred somewhat, "He'd say what my mom says: 'you guys are crazy. Why do you need the additional headaches of what you're doing?'"

Max Schneiderman's company reached $16 million in 1993. The company was growing at a good clip, with more stores and larger sales volume. The growth spurt included the addition of a furniture manufacturing business, purchased in 1990, as well as the construction of a corporate headquarters in Meadowlands. All the activity spread the brothers a little thin, though, and customer service slipped. The Schneidermans responded to the increasing number of complaints by adding a customer service department, upgrading the computer system, and hiring more workers to inspect, repair, refinish, and upholster their products. The company employed a total of 130 people.

The Meadowlands store remained the largest of the group in terms of size and sales revenue into 1994. Some customers traveled for 100 miles or more to shop there. The flagship store had a loyal following to be sure, but the Lakeville and Roseville operations were rapidly closing in on the sales leader.

Schneiderman's Furniture, over the years and beginning with the ads featuring Max, cultivated a reputation for quirky advertisements. An ad campaign in 1994 stirred up some political controversy as well as interest in their products. Rudy Perpich, Minnesota's unconventional former governor and Iron Range native, made a cameo appearance in a couple of Schneiderman's television commercials featuring "a couple of grumpy old guys talking about politics," Jack B. Coffman reported for the St. Paul Pioneer Press. The problem with these ads, according to political watchdogs, was that corporations cannot, in Minnesota, make direct contributions to political campaigns, and Perpich was expected to take another run for the governorship. A July 1994 Star Tribune editorial pointed out that corporations could hire whomever they wanted for their ads as long as the main purpose was to sell furniture. The brief appearance brought a lot of media attention to the business. The former governor and his wife had purchased their first dining room set at Schneiderman's some 40 years earlier.

The Schneiderman family business celebrated its 50th anniversary in 1998. Eighty percent of its revenue was now generated by the company's six Twin Cities units, but the business continued to be of major significance to its rural home. As the main industry in the area, Schneiderman's employed about 50 people in various aspects of the operation. The immediate region itself--Elmer Township and the city of Meadowlands combined--had a population of about 222.

By the late 1990s the only family member still at the Meadowlands location was brother-in-law Bob Braun. Karen Schneiderman Braun worked as a design consultant for the store. Larry Schneiderman joined his brother Russell in the Twin Cities in 1997 to better manage the rapid growth there. The founders also were gone. "Max measured for carpets until 1985, three years before his death. Edna sold furniture at the Meadowlands store until she retired in 1993," wrote Jane Brissett for the Duluth News-Tribune in 1998.

Furniture Futures

Schneiderman's Furniture, firmly entrenched in the Twin Cities market as it began its second 50 years, was positioning itself to capitalize on the shifting purchasing patterns of the baby boom generation. The company expanded its Roseville store, renovated two other Twin Cities stores, and was considering a ninth store for the near future.

Middle-aged boomers, who were a driving force in the U.S. economy, were buying more items for the hearth and home. The U.S. furniture and bedding market was $54.8 billion in 1997 and expected to continue to grow at a rate of five or six percent through the end of the millennium, according to a 1998 Star Tribune article by Janet Moore. General economic conditions--such as interest rates--also would continue to have an impact on the furniture industry. For example, furniture purchases traditionally rose and fell with the level of housing sales.

In the grand scheme of things, Schneiderman's Furniture was one of the smaller players in the industry. Its annual revenues were estimated to be $30 million. In the Twin Cities, Schneiderman's competed with stores such as Slumberland Furniture, the nation's 19th largest furniture seller, which had sales of $190 million. Locally based HOM Furniture had sales of $70 million.

National retailer J.C. Penney sold furniture in Schneiderman's market area, but the nation's largest furniture retailer, Heilig-Meyers of Richmond, Virginia, which had $1.7 billion in sales, did not. National chain stores had established a strong presence in many industries by the late 1990s, but regional operators still had the upper hand in the furniture business thanks to strong customer service and knowledge of local preferences. Schneiderman's Furniture had a tradition of knowing what their customers wanted and needed and supplying it, skills that would continue to serve them well into the next century.

Schneiderman's Furniture Inc. History

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