BoConcept rethinks its retail strategy

Company rebuilds US store footprint after scaling back to improve its image and presentation

HERNING, Denmark — Danish furniture retailer BoConcept is looking to expand its presence in the U.S. market, with plans to add three more stores this year.

This would bring the company’s total store count here to about 22, with new locations on tap for Boca Raton, Florida; Short Hills, New Jersey; and Natick, Massachusetts.

Yet even with the expansion, the store count is still below the 32 franchise stores that it had as of 2013. It had grown to this number from a single location that opened in 2002 in Livingston, New Jersey, expanding to markets around the U.S. including Miami, Chicago and Dallas.

While it still operates in Livingston and the Miami market, many other stores around the country have closed as the company has since separated from franchisee agreements or decided not to renew when they expired.

It chose to scale back for several reasons, namely that some stores were not living up to the company’s brand image. In other cases, the franchisees were not making money and decided to part ways with BoConcept. Or they did not want to undertake the expansion the parties had agreed to, Steen Knigge, the company’s U.S. director of marketing told Home News Now.

This dining room set is in a BoConcept store in Fort Lauderdale, Florida.

Knigge attributes some of this to the lax rules the company had relating to it franchises, including who it chose to run the stores along with inconsistencies in its own policies about the general product mix and appearance.

“Anyone with a pulse and a little bit of money could get a franchise with that, but that’s really dangerous,” he said, later adding, “We also were not very consistent or stringent with our branding. It (the store) could be very different depending on the area, not only in the U.S., but around the globe.”

In other cases the stores were not kept up to its standards.

The front of a BoConcept store in Fort Lauderdale, Florida

“We had one store that looked absolutely atrocious,” he said. “You were almost embarrassed to go in there. The person who had it was a good salesperson, but it was horrible in terms of how it looked and in terms of how they spent their marketing.”

So the company decided to clean up its model, first by agreeing to part ways with various franchisees and keeping others that were working out, including about 13 stores in a number of major markets such as the greater Miami area, which has about five BoConcept stores currently.

Still the transition was painful as the company ended up losing several stores in key markets including Texas and Chicago, not to mention the New York City market, which at one point had six stores that were its biggest in terms of sales. Today the company has two stores in New York, one on Madison Avenue and one in Westchester, both of which are its only company-owned locations.

But as with its other franchise locations — including several it added to the mix last year — it is looking for franchise partners for these key locations, with the idea that a partner can expand to multiple locations in the same market. It also is looking at other potential growth markets such as Texas, Chicago, Phoenix, Nashville, Tennessee, and Charlotte, North Carolina, where franchisees can operate multiple locations.

“Nobody has just one store,” Knigge said, noting that the Florida franchisee has five locations and plans a sixth this year, all in addition to the 10 BoConcept stores he operates in Mexico. Another franchisee has three locations in Southern California, and another has three stores in the Bay Area farther north. “We wanted to get away from that single-unit operator model to having multiple-unit operators.”

He also noted that the company has taken a more stringent approach to enforcing its own guidelines that dictate things like how the stores look to how they are marketed. But he said that this has been a plus because everyone has clear expectations of the rules they are expected to follow.

“Six to seven years ago we did a very major cleanup — we closed a lot of stores and separated from several other franchisees because they were not following the model,” he said. “So we went down to about 13 stores and weeded out the ones that we didn’t want to work with or that didn’t want to work with us because we had a much harder policing of how you did the model. Now we are incredibly strict, but it’s way better for the chain. And it’s way better for the partners because they don’t have to spend their time figuring out all these different things. So everything is more streamlined.”

“One of the reasons why you buy a franchise is that you want to be guided by the franchise,” he added. “If you are an entrepreneur, you don’t want to spend your time figuring out the marketing or on developing creative assets … that is something we have to provide for the franchisee and that is what we are doing.”

The process, he said, is important because it aims to improve the customer experience by providing a consistent brand image, aesthetic and quality story throughout the store network. In addition, Knigge said, the company has streamlined other aspects of its organization, from logistics to data management, all aimed at helping the individual store operator.

“If you come in as a new franchisee, you don’t have to reinvent the wheel,” he said of the assets available to franchisees, including an online training academy. “You need to have retail acumen and the financial muscle to operate it, but everything else, from training to personnel, there is a deep, deep process in terms of how to learn about our product and how to sell the product.”

Ultimately, he noted, the stringent guidelines and improvements are aimed at improving the overall customer experience. And in a world of online communication, one poorly presented store can result in a negative review that potentially hurts many other stores in the network.

“We can’t allow that because one bad partner will ruin it for everybody else,” he said. “I think we learned this the hard way, not just in the U.S., but globally. We very much did a cleanup of our operations and are now in such a good place from that perspective.”

Thomas Russell

Home News Now Editor-in-Chief Thomas Russell has covered the furniture industry for 25 years at various daily and weekly consumer and trade publications. He can be reached at tom@homenewsnow.com and at 336-508-4616.

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