Someone forgot to tell At Home that big-box stores are passé.
Since Lee Bird took the reins as chief executive at the beginning of 2013, the Plano, Texas-based home decor superstore retailer has been on a steep upward trajectory — and it shows no signs of losing momentum anytime soon.
At Home has delivered revenue growth at a 20% compounded annual rate over the past four years. In its most recent quarter, the chain reported a 22% increase in sales and a 5.8% increase in same-store sales — its 13th consecutive quarter of positive same-store sales growth.
Also, at a time when many retailers are downsizing their formats and/or closing stores, At Home is doing neither. The company has opened 80 new stores in just over four years. It plans to open 25 net new stores this year.
Chain Store Age, HBSDealer's sister publication, recently spoke with Bird, who added title of chairman in April. He was in New York City to commemorate the company's one-year anniversary of its initial public offering by ringing the closing bell at the New York Stock Exchange.
CSA: What are you most proud of in At Home's first year as a public company?
Bird: That we continue to grow at the rate we were hoping we would as a public company, and that our business continues to grow across new and existing markets. Recently, for our fourth quarter in the public arena, we reported our 12th consecutive quarter of over 20% net sales growth.
CSA: How do you explain At Home's success?
Bird: The home furnishings market is a $180 billion market in annual revenue, with a growth rate of about 3% a year. And it's highly fragmented, which all bodes well for us.
We are winning as a result of the breadth and depth of our offering — we carry all the styles that people want at the lowest prices and that’s resonating with consumers.
CSA: How do you do all this?
Bird: We have a very low-cost structure and an efficient business model that allows us to offer low prices. And our secret sauce is our people.
CSA: What do you mean?
Bird: We firmly believe if your employees are happy, customers will feel it, so taking care of our team members is an important focus for us. And to that end, all of our store associates have bonuses and paths for career growth.
I believe in the golden rule: Treat people the way you want to be treated. My job is no more important than the folks who unload our trucks.
We try to make sure that all our employees feel rewarded and recognized. For example, everyone who works in a store can make a bonus if the store makes its plan. So they are incentivized.
I really believe retail is a place for great career growth. And with At Home's growth, our employees have great career opportunities with us.
CSA: At Home does not have an e-commerce site. Is that something you are thinking about?
Bird: It all comes back to the customers. We keep asking her — I say her because 85% of our customers are female — what's important (in terms of shopping). Our research shows that the most important thing she looks for when shopping for home decor is the lowest price, largest assortment, and to be able to see, touch and feel the merchandise — and to buy immediately. And we can do all that in our stores.
Customers vote with their wallets. We've had 13 consecutive quarters of same-store sales growth, and our new stores make money the first year out. That tells us the market is fine with our being a store retailer.
CSA: How much revenue are your new stores generating?
Bird: Our new stores in the first year used to do about $4 million in sales. But now they do about $6 million as we have gotten better at opening new stores.
CSA: What is At Home's real estate strategy?
Bird: We really do well anywhere. We look for nice retail locations where customers are use to shopping. We can do standalone stores, and we also love being in power centers. We have also taken anchor positions, which we are now testing in six malls.
We have stores in small and big markets and they do equally well.
CSA: Are you entering new markets?
Bird: Yes. Rhode Island, Massachusetts and Las Vegas are among the new markets we've entered. And we are also opening stores in existing markets, such as Pittsburgh.
CSA: At Home currently has 136 stores. What's the potential for expansion?
Bird: We estimate the market can support at least 600 stores — and we know where they should be. We have mapped out every retail trade area we want to be in. We use an analytical model from Buxton — we are of the third version. When a location becomes available we are able to make a decision quickly on whether that location would work for us or not.
We really feel that real estate is one of our core competences. Our real estate team has opened over 80 stores in the past four years. They've done a great job.
CSA: What about international expansion?
Bird: We are focused on the U.S. for now.
CSA: Tell us about At Home Stores.
Bird: Our stores average from 80,000 to 150,000 sq. ft. All offer the same assortment of 50,000 items, although the depth of inventory might vary depending on the store size. We bring in at least 20,000 new items every year, or about 400 new items every single week.
CSA: Have you entered any new merchandise categories?
Bird: This past year, we expanded our patio furniture assortment and that's been a great growth category for us. Decorative garden is another growth category.
And our seasonal business is strong and continues to grow. We carry over 100 artificial Christmas trees in multiple colors and styles, and have 12 different themes of Christmas ornaments. We really do win on assortment.
CSA: What about New York — is At Home thinking of coming our way?
Bird: Yes, we are looking at how to make it work. The rents are higher out here. But we expect that in the next two years, we would be in the New York metro area.