Buffett’s tough Utah competitor joins Las Vegas furniture market

Kevin Ferguson

Thursday, Oct. 25, 2001 | 10:35 a.m.

The R.C. Willey furniture and electronics store in Henderson is one of the chain's top performers after just one month of operations, said billionaire executive Warren Buffett.

It's been such a success that the company is seeking additional land in the Las Vegas Valley for a second store, Buffett said at a Wednesday news conference.

"It's very clear that there is a big population here that would like another store," said Buffett, chairman of Berkshire Hathaway, an Omaha, Neb., investment firm that acquired the Salt Lake City-based furniture retailer six years ago.

Buffett said the company hopes to break ground on another local store within a year.

"It could be quickly. I'm 71 (years-old). I don't even buy green bananas anymore," Buffett joked.

R.C. Willey Chairman Bill Child said the company is looking for land around the Summerlin district of Las Vegas.

R.C. Willey opened its 128,000-square-foot showroom and 90,000-square-foot warehouse on a 15-acre site at Stephanie Street and Interstate 215 on Sept. 20, and many of its competitors took notice.

"It's a bigger type of store and it'll bring a lot of awareness to the furniture customer," said Larry Alterwitz, president of Walker Furniture.

R.C. Willey's aggressive marketing -- inundating consumers with print and broadcast advertising and always running specials -- is actually good news for competitors.

"The (large) size of R.C. Willey could create synergy for the smaller niche players," said Scot Marker, a retail expert for Colliers International.

Other furniture stores will likely want to open a store in the same area because furniture customers like to compare prices, Marker said.

"We're happy to have a big advertiser in town," said Joe Hules, owner of two Thomasville Home Furnishings. "People will go out shopping there and may want to come see us for a little higher-end furniture."

Henderson Economic Development Manager Bob Cooper said R.C. Willey could spur a Furniture Row in the Stephanie Street area, noting that Ethan Allen Home Interiors is constructing a store on Stephanie Street and American Pacific Road, which is just north of R.C. Willey.

Marker said Levitz Furniture Corp. plans to build a 37,000-square-foot store at Warm Springs Road and Marks Street, which is nearby. He is helping to broker the deal.

The Henderson store is R.C. Willey's first in Nevada and 11th in three states.

R.C. Willey, which has nine stores throughout Utah, is clearly the dominant mass market furniture retailer in Utah, said Jack Brittain, dean of the Business School at the University of Utah in Salt Lake City.

"Bill (Child) has the mass market locked up," Brittain said. "As big as his stores are, he still knows the cost structure of all his items."

Brittain told a story of a time when Child was walking him through his store and pointing out special wholesale prices on obscure items he found in foreign countries.

"We were walking through his store one day and he showed me these marble eggs that he sourced out of China for $2 each. He told me they would cost $5 anywhere else," Brittain recalled. "It's that detailed knowledge that makes his business such a success."

And it was that detail and cost-controlling management skill that attracted Buffett to R.C. Willey.

"When you see a guy like Bill Child take a company from $250,000 in sales to $250 million, you know he's doing something right," Buffett said. "It's clear that this is a winner."

Child said R.C. Willey now generates $450 million in annual revenues.

Child was introduced to Buffett in early 1995 by the Blumkin family, which ran the Nebraska Furniture Mart. It was a company of which Buffett acquired 90 percent in 1983 for $60 million.

Child said by June 1995 -- three months after meeting Buffett -- he sold his company to him. Neither Child nor Buffett would divulge the purchase price, but Child said it was an all-stock transaction.

R.C. Willey was founded by Rufus Call Willey in 1932 and has been run by his son-in-law Child for the past five decades.

The first store outside of Utah was built in 1999 in Meridian, Idaho, in the Boise market. The company now employs 2,300 people, including a staff of 270 in Henderson.

Executive Jeff Child said the company predicts the newly opened Nevada store will turn a profit by the end of December. He declined to say how much it cost to build the store or disclose the operating expense.

But he did say the company expects the new store to generate $50 million in revenues in the first year.

These revenue projections include the fact that R.C. Willey stores aren't open on Sundays -- big shopping days in Nevada but not in Utah, where the Mormon Church discourages commerce on Sunday.

Child said that keeping the Henderson store closed on Sundays is not because of religion, but instead is a benefit for his employees so they can spend time with their families.

Child said the Las Vegas Valley is much different than its other markets, but he's convinced being open six days a week will be enough to succeed here.

"It's a crazy town because it's a 24-hour town," he said. "My own thinking is that Sunday is probably a busy day for the people who work in the hotels and so they have all week to shop."

R.C. Willey's massive marketing tactics will help drive customers to the store throughout the week, Jeff Child said.

The company declined to say how much it is spending locally on advertising, but Bill Child said the advertising budget collectively for the 11 stores is about 4 percent of the company annual revenues.

Alterwitz of Walker Furniture said his company will be just as aggressive in marketing.

"Even though they plaster their ads everywhere, they don't do it anymore than Walker Furniture does," Alterwitz said.

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