Fresh thinking pays off for I.O. Metro
By Marc Barnes -- Furniture Today, August 6, 2007
Rogers, Ark. — If you are going to sell furniture, Jay Howard reasons, then sell furniture the way that a Ford dealer sells Fords.
No one finds a spiffy new red F-150 pickup truck in a showroom and then looks longingly at the empty space in his garage while he waits eight weeks for the truck to arrive. You buy your new vehicle, you finance it and you drive it off the lot.
Virtually every other industry you can name, from cars to computers to clothing, can be boiled down to two words: Instant gratification. You walk in, you pick out what you want, you pay for it and you take it home.
It hasn't typically been that way in furniture, but Howard figures that maybe it should. Add in an element of fun, with an eclectic selection of furniture, accessories and art imported from all over the world, low prices and a pulsing beat of music pouring out of the speakers, and you have I.O. Metro.
In the space of two-and-a-half years, I.O. Metro has grown from zero to six stores, with a seventh set to open and an eighth on the drawing board. All of these stores are within a day's drive of Bentonville, in northwest Arkansas.
I.O. Metro is in the process of doubling the size of its warehouse, from 22,000 to 44,000 square feet, which will be big enough to handle twice as many stores as it now has.
Last year, the retailer's total sales topped $5 million. Despite the rapid growth, the business operates debt-free. And Howard is just 26 years old — and he never worked in a furniture store until opening his own.
Today, potential franchisees, entrepreneurs who have encouraged him to go into e-commerce and even a few other merchants who want him to become a wholesaler for their stores are beating down his door.
"For the first year that we were in business, I never stepped foot into another furniture store," said Howard. "I had no preconceived notions of what the business should be. We built it from the ground floor, not trying to be a furniture store. And that was the best thing that we ever did."
A knack for sales
Howard graduated magna cum laude from Westminster College in Fulton, Mo., in just three years. At 21, he joined Jimco Lighting, where he grew the firm's Target Corp. account. He moved to northwest Arkansas to service another supplier's Wal-Mart account, but then moved on to realize a dream of owning his own business.
"I have a finance degree and I thought I could work for another guy, and then I thought that there is no way that I could contain myself," Howard said. "My thought process was that if there is any time to take a risk, it is at 22."
Howard was prepared. In his previous jobs, he had learned the ins and outs of importing directly from manufacturers — cutting out the middleman and allowing for stronger profit margins for the retailer. A long-standing friendship led to a business partnership with Bill and Helen Benton, who themselves have decades of experience in retail.
Howard also knew his audience in Bentonville and understood what they wanted.
"People are coming in for Wal-Mart from the East Coast and the West Coast," he said. "They're moving in here and all they could find was the same traditional furniture that in my opinion, the industry is moving away from. We opened and we sold 80% of our store the opening day. We were testing the concept and we thought that maybe this wasn't just Bentonville. Six months later in Little Rock, we experienced the same results."
Howard remembers well the unplanned cell-phone marketing campaign that happened that first day of the store's opening. The goods were set out, attractive in design and unlike anything anywhere else in Bentonville. The prices, too, were attractive, with sofas running from $499 to $1,999, upholstered chairs from $300 to $900, dining tables from $400 to $1,000, and dining chairs from $79 to $199.
Customers walked in, looked around, took out their cell phones and called their friends to tell them they had to see this furniture store — that they wouldn't believe it. The parking lot began to fill, then the store. There weren't enough employees to check people out fast enough. Howard and his partners knew that they had something.
Howard now spends less than 1% of revenues on advertising. Instead, he promotes new store openings in his existing stores. His customers then call their friends — and once those friends visit, they come back.
Fast and focused
From the beginning, I.O. Metro has been willing to change on a dime. A good example is the name. I.O. Metro started out being called "Interior Outlet." The logo, done by a company that does design work for Fortune 500 companies was excellent, making good use of the I and the O in the name; the name itself, however, was not.
"The word 'outlet' really had a negative connotation, given that it is all first-quality furniture," said Howard. "It worked in that market, but we feared that as we expanded, people would look at 'outlet' as second quality."
Howard kept the logo, added the word Metro and changed the original store to a new, more entry-level price point concept called "Home by I.O. Metro." That store carries home furnishings exclusively from China, while the inventory at the other locations comes from 14 countries. The retailer direct sources merchandise from India, Indonesia, China and Mexico, and also buys from Four Hands, Coaster, Jofran and Palecek.
I.O. Metro has stores in Little Rock, Fayetteville, Rogers and Bentonville, Ark.; Leawood, Kan.; and Tulsa, Okla. The company also is in the process of opening a Memphis store.
Howard and his partners own three units and the remainder are franchise locations.
What's ahead? More work, no doubt. Howard has been clipping along at a conservative 80 hours per week since the first store opened — and has worn out three BlackBerrys. He recently took his first vacation since his honeymoon and counts himself fortunate that he has an understanding spouse.
"She is very accepting, very understanding," said Howard. "She is a counselor, and at least she has one good client."
A lot of Howard's time is spent talking to others in the industry, from those with e-commerce ideas to those who want him to sell more franchises faster. But the company has decided, for now, to limit growth to franchisees within a day's drive time from Bentonville.
"We could have grown much faster — we have turned down franchisees because we knew that we couldn't physically get it done. We are growing at an almost unheard-of rate for a company a little more than two years old.
"We are trying to be smart about the opportunities that we pursue."
