Thirty years ago, it was innovative. Fill a cavernous warehouse with inexpensive furniture and allow customers to take home their purchases the same day. That was the formula that helped Levitz Furniture Corp. build itself into the country’s largest furniture retailer with 129 stores.
But consumers in the ’90s aren’t willing to tramp around warehouses anymore, and they have a lot more furniture stores to choose from, retail consultants say.
That combination of forces propelled the struggling Boca Raton, Fla., furniture chain into seeking Chapter 11 bankruptcy protection. “The quality and style of their furniture and way it was sold was no longer appealing to consumers,” said Bob Lupo, retailing analyst with BancAmerica Securities in Chicago.
The Friday move affects six John M. Smyth’s Homemakers stores in the Chicago area.
But the Homemakers stores are not likely candidates to be closed because they are among the chain’s top performers, Levitz said.
Levitz chief executive Michael Bozic was actually using the John M. Smyth chain, acquired in 1994 for $50 million, as a model for moving the rest of Levitz slightly upscale, sources said.
But Bozic, a former Sears executive who joined Levitz in 1995, ran out of time, said Kurt Barnard, publisher of Barnard’s Retail Marketing Report in Scotch Plains, N.J. The chain was burdened by rapidly dwindling sales and debt racked up in a leveraged buyout during the 1980s.
“By the time he entered the scene, they were too far gone and too deep in debt,” Barnard said.
Perhaps Levitz’s worst enemy, though, were its competitors such as Sears, Roebuck and Co., Ethan Allen Interiors and even Crate & Barrel.
Sears has been rapidly expanding its furniture business in recent years, moving sofas and dining room tables out of Sears’ mall stores into free-standing HomeLife stores.
The Hoffman Estates-based retailer currently operates 98 free-standing HomeLife stores in 30 states and plans on having 200 by the year 2000. The large, airy stores have attractive lighting and floors, and a wide selection of items with fast delivery.
Other energized players in the furniture field include Ethan Allen, the traditional furniture chain that has updated its conservative offerings; Crate & Barrel, which has added furniture to its traditional housewares; and Carson Pirie Scott & Co., the Milwaukee department store chain that also is rolling out free-standing stores for furniture.
As their options expanded, shoppers increasingly were turned off by Levitz’s stores, many of which are located near railroad tracks in rundown parts of town, retail experts said. Its style of furniture, epitomized in customers’ minds by a brightly colored recliner, fell out of favor, they added.
“Levitz remained the same while the competition was mushrooming and moving ahead,” said Barnard.
Levitz also damaged itself by its own practices. In June 1996, the company agreed to pay $1.1 million to eight states to settle allegations that it misled consumers with phony discounts. A year earlier, Levitz paid Florida $430,000 for fraudulently selling Scotchgard fabric protection for furniture that already had been Scotchgarded.
Levitz was close to becoming part of Montgomery Ward & Co.’s retail empire two years ago. Wards announced a plan to buy 20 percent of Levitz for $65 million back in 1995, but called off the deal a month later saying synergies weren’t possible after all.
Wards, now in Chapter 11 bankruptcy protection itself, also is trying to become a bigger player in the furniture business.
