American Furniture Warehouse plans for growth in outdoor category

Jake Jabs

For American Furniture Warehouse, Owner Jake Jabs says that his call to add outdoor furniture came down to which outdoors you were talking about.

For his 10 stores in Colorado, sitting on the patio runs about half the year, while for the two in Arizona and two in Texas, outdoor furniture is year-round.

It was an easy call to make: The customers wanted it and Jabs has done fairly well delivering what customers want.

Well enough to say that he is making five percent of his revenue from outdoor. Expressed in dollars, that amounts to more than $50 million. And he says that he is expected it to grow more, to as much as eight percent of revenue, once he opens three more stores each in Arizona and Texas.

“I really got into outdoor in 2000, because I have a 670,000-square-foot facility here and we have a lot of room,” Jabs says. “We sell it in vignettes and we sell it outdoors as well.”

Ever the salesman, Jabs is intentional when he builds his stores.

“Our stores are big, good locations and we have room on our façade to set them out,” Jabs says. “That is the main thing we do, we set a lot of them outside so that people outside walking in will see them. It’s an additional ticket item. They want a sofa and they spot outdoor when they walk into the door.”

American Furniture Warehouse trends towards brands like Treasure Garden, Ashley, Agio and Four Seasons. To sell the goods, it takes a page from Costco by carrying a big selection in a wide range of price points. They rarely hold sales but will sometimes do smaller promotions on social media. Jabs said he doesn’t see expanding the category as a whole just yet.

“What we are seeing a lot of now is the bigger, nicer goods, the sofas are doing well and we may expand on that, but we are not going to see any expansion on the promotional in the outdoor category,” Jabs says.

He also said that he competes with casual specialty retailers by beating them on price, volume and variety.

“We are way cheaper than they are,” Jabs says. “We look at it as a category that we don’t have to work on a big markup. We sell millions of other products and we don’t see it as a product profit center. We market it for way less. We don’t have to get rich on the patio because we have a lot of other stuff to sell. It’s nice, it meets customer demand, but it is not the center of our business.

The business, both outdoor and indoor, changed with the pandemic. People converted their homes into workplaces, gyms and restaurants as they sheltered in place. Jabs predicted that as the pandemic eases, people will regard their homes as more than they did before.

“It really peaked when Covid was bad and they couldn’t get out of their house,” he says. “In Colorado, we are now mask-free and people are out driving and freeways and the rest are full and the airport is full. But I think the ‘at-home’ will remain. We plan on continuing on in the future as we were. It won’t be as big as it was in the pandemic but there’s still a lot of that sort of thing going on. We will be carrying furniture along those lines to help folks out with that.

American Furniture Warehouse had its own challenges as well. Jabs said he buys from 200 factories in 13 countries to keep furniture in stock to meet customer demand.

“We may be the best store in America with furniture in stock,” Jabs says. “We have good relationships with vendors and we don’t send back and chargeback as they ship to us. But of all our categories, patio was one of the toughest to keep in stock. Most of that had to do with ports. But we do no special orders, we are an in-stock store. We are working with folks to get as much in as possible.”

What’s his best advice for full-line retailers who want to sell patio?

Do what he does.

“I would really encourage people to take advantage of their front entranceway,” Jabs says.  “It’s free, take advantage of that to show patio furniture on nice sunny days and holidays. A lot of the new homes have a garden room—kind of an outdoor and indoor combination. I see that expanding—it’s a good concept. People want nice seating, a patio, fireplaces and you don’t want cheap promotional outdoor stuff. Don’t be afraid to get into nicer fabrics and higher-end goods.”

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