Sam Levin Inc.

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Sam Levin Inc.

301 Fitz Henry Road
Smithton, Pennsylvania 15479-8715
U.S.A.
Telephone: (724) 872-2055
Fax: (724) 872-2060
Web site: http://www.levinfurniture.com

Private Company
Incorporated: 1920
Employees: 400
Sales: $160 million (2006 est.)
NAIC: 442110 Furniture Stores

Sam Levin Inc. is the Smithton, Pennsylvania-based corporate parent of Levin Furniture, operator of a dozen furniture superstores. Half of them are located in the Pittsburgh area, while the others are in the Cleveland and Akron, Ohio markets. Despite operating in flat markets and the far-from-robust furniture retail environment, Levin has been able to grow its business by opening large family-friendly showrooms and offering attractive deferred payment and in-store credit options, which customers can arrange before starting the buying process through easy-to-use self-service kiosks. The company is owned and operated by the third generation of the Levin family.

EARLY 20TH CENTURY ORIGINS

According to Levin family lore, Levin furniture was founded in Mount Pleasant, Pennsylvania, by peddler Sam Levin in 1920 because his wife Jessie was concerned about marrying off their six daughters, being afraid that the families of would-be suitors might look askance at associating themselves with a child of such dubious parentage. So Levin opened a store in town, one that offered hardware as well as furniture, a common combination of the day. He even offered coal-burning stoves and replacement parts produced by the local foundry. Over time furniture crowded out the hardware inventory and became the focus of Levin and his wife. They managed to survive the difficult 1930s, building a lasting relationship with their customers, who relied on installment buying plans to furnish their homes during the Great Depression that did not abate until the national economy roared back to life in the 1940s and the United States entered World War II. Levin, the former peddler, was more than willing to barter to keep a customer during these lean times, known to accept chickens and eggs and other items in lieu of cash. Thus, working with customers with a tight budget became a hallmark of Levin Furniture from an early date.

In addition to their six daughters, the Levins also gave birth to a son named Leonard, who in 1943 joined his father in running the furniture store. It was Leonard and his wife Sally who took Levin Furniture to the next level. She played key roles in buying, as well as in merchandising and advertising. Sally was also responsible for incorporating professional decorating services into the operation. The second generation of the family bought a townhouse attached to the store and transformed it into "Colonial House," an in-store boutique decorated with Early American furniture and accessories for sale. The attention to period detail was so exact that Colonial House became a minor tourist destination, attracting busloads of visitors who viewed the different rooms and learned the history of period pieces.

A third generation of the Levin family, Howard Levin, Leonard and Sally Levin's eldest son, joined the family business in 1978. He spearheaded Levin Furniture's expansion beyond the lone Mount Pleasant store, and entered the much larger market of nearby Pittsburgh, Pennsylvania. In a matter of seven years, Levin Furniture opened five new, full-service furniture stores in the area. At a time when other furniture stores were beginning to struggle, the newcomer emerged as Western Pennsylvania's largest furniture retailer.

After his father died in 1989, Howard Levin began to plan his next major move: entering the Cleveland, Ohio, market. The residents of Cleveland and Pittsburgh, although hated rivals when it came to professional football, were more alike than different, populated by very much the same blue collar demographic. The more Howard Levin researched the market and visited Cleveland, the more convinced he became that it was ideal territory for the Levin Furniture concept.

OHIO MARKET PENETRATED: 1990–2000

The first Ohio Levin Furniture Store opened west of Cleveland in Bedford, Ohio, in 1992. A second area store opened just months later in Mentor, Ohio, followed later in the year by a store in Middleburg Heights. It was a promising start to the fulfillment of Howard Levin's vision, but only two weeks after the third Cleveland-area opening the 40 year old suddenly died of a heart attack. His younger brother, Robert Levin, who was hardly prepared for a career in retailing, took over. After graduating from the Pennsylvania State University with a Bachelor of arts degree in philosophy, he then earned a master's degree in gerontology at the University of Southern California and moved to the Washington, D.C., to work in the health policy field. He now quit his job, returned home, and took over a chain of nine furniture stores. According to a Smart Business Pittsburgh profile, "those first few months after his brother's passing are fuzzy, clouded by the shock of Howard's death and the steep learning curve Robert faced as he tried to acclimate himself to running a business that he previously had little involvement in." Describing the shock he felt at the time, Levin said, "I remember feeling in that first year that I was just hanging onto the tail of the tiger and just trying to keep it together."

Fortunately for Robert Levin, his brother had developed an excellent strategy for the company. He also followed Howard's lead by assuming the marketing and advertising responsibilities. Smart Business Pittsburgh explained that as he found his stride, Robert Levin "continued to lead the company with an aggressive marketing and advertising program, leveraging technology to support it." Under his leadership, Levin Furniture twice expanded its distribution operation. He also broadened the chain's product mix.

Levin Furniture enjoyed strong and steady growth in the 1990s and into the new century, despite operating in markets with an aging population and a decreasing number of new homebuyers looking to furnish their empty houses. Levin Furniture was able to find a way to prosper in the replacement business, enticing people to replace that old couch or dining room table. A key to the chain's success was its aggressive marketing, which included a good deal of television and direct mail advertising. In addition, Levin Furniture, because of it growth, gained an increasing amount of cooperative advertising dollars from manufacturers. "It's a cliché," Howard Levin explained to Smart Business Pittsburgh, adding, "but the larger you are, the more valuable you are to the wholesaler, who has a limited number of outlets to sell to. The partnership becomes more valuable to them, therefore advertising support becomes more significant. That's one way you can build your business by increasing your advertising, but having the net cost of advertising actually drops. That's been very important in growing the top line." That top line improved at a steady clip under Robert Levin's leadership. Sales reached $57 million in 1997, an amount that would total $140 million by 2004, and increase to around $160 million in 2006.

COMPANY PERSPECTIVES

Whether your style is clean and simple; traditional; opulent and elegant; or a combination of many styles, you'll find more ways to express yourself at Levin Furniture.

Another important part of Levin Furniture's program was its attractive deferred payment options, which generated strong sales volumes. Given that for most people furniture was the third largest investment they were likely to make, trailing only a house or car, offering accommodating terms was a key factor in making a sale. Levin offer a "12-month, same as cash" option, in which the customer made monthly payments but inter-est charges were eliminated or at the very least delayed for one year. A second option, "deferred same as cash," delayed both payments and interest for a full year. At that point, the customer could pay off the balance without interest charges or begin accruing interest as the purchase was paid off in installments. Because Levin Furniture did not have cash on hand to finance loans, devoting its cash flow to inventory, the accounts were sold at a discount to a bank, which also received between 5 and 10 percent of the sale price. The bank then accepted customer payments and handled all the other financial details. There was little money to be made, but banks took on the accounts to gain access to customer information, such as credit rating, as a way to uncover potential new customers. Moreover, the loans represented only a modest risk because the purchased furniture served as collateral.

NEW CENTURY BRINGS TECHNOLOGICAL INNOVATION

Levin Furniture merged technology with its financing plans in the early 2000s, introducing in-store, self-service, credit application kiosks, which essentially eliminated paper credit applications and provided a number of other benefits. Initially, the company created an in-house kiosk system to automate the credit process, but after a brief trial it proved too unreliable. Levin Furniture now turned to a commercial kiosk provider, Apunix Computer Services, which helped the company develop a truly viable self-service credit processing kiosk system tied in with any promotions the stores might be offering. Self Service Magazine offered a glimpse into how the system actually worked: "The customer walks in the store and the retail associate is trained to tell people about the incentive and then the sales associate introduces them to the kiosk as a private, secure, and fast way to get the application process done." Each store contained at least two touch-screen kiosks, at which the customer followed prompts to enter the information necessary to perform a credit check. "The customer then gets a slip out of the kiosk that tells them they are approved, account number, and the credit limit with the store. Then the customer can immediately begin shopping." Should a customer be rejected, the kiosk "doesn't tell a customer they are rejected, Rather, it tells a customer to see the front office. A manager will then look at the application and search for an alternative financing method for the customer. In almost every case they are able to find a way to provide the customer a financing option."

The kiosk system provided a number of benefits to Levin Furniture. Because customers preferred the privacy of the system, it significantly reduced man-hours at each store, freeing up sales associates to spend more time with customers instead of processing paperwork. With the credit application now taking place at the beginning of their shopping trip, customers were also more likely to make a purchase and spend closer to their credit maximum, on average about 85 percent to 90 percent of their available credit. Foot traffic was also converted to sales at a much higher rate, and sales associates, knowing the customer's price range could do a more focused and effective job in selling them furniture. Even if customers applied for credit and did not make a purchase, Levin Furniture benefited from the process. As Nick Rossi, the company's Information Technology director, explained to Self Service Magazine these non-activated accounts could be marketed it, "so we can find out why they didn't buy…. Knowing why your customer didn't buy is much more important than knowing why they do." Another advantage of the system was that it generated a unique customer number, which was then used to weed out duplicates in the mailing lists, thereby reducing mailing costs.

KEY DATES

1920:: Company founded by Sam Levin.
1943:: Second generation, Leonard Levin, joins the company.
1989:: Howard Levin is named president upon his father's death.
1992:: First stores opened in Ohio.
1999:: First large format superstore opens.
2006:: Akron store opens.

At the end of the 1990s Levin Furniture maintained its strong growth by turning to a new large showroom format that would replace older stores. The first opened in North Fayette, Pennsylvania, in the summer of 1999. At 70,000 square feet it was the largest furniture showroom in the state and in effect served as a furniture theme park, a destination as much as a store. It featured 100 living room settings on display, one of the largest in-store sleep shops in the United States, and a 10,000-square-foot clearance center. In addition, the store included a children's area where offspring could play on a wooden boat outfitted with slides and climbing apparatuses or watch videos on a big-screen television in kid-size recliners while their parents shopped. A hospitality center, named Sally's Café after Sally Levin, not only offered drinks and snacks, it was tied into the company's support for a local charity, the Free Care Fund of Children's Hospital. Items were ostensibly free but customers were encouraged to make a donation to the fund.

Levin Furniture opened another new showroom in the Pittsburgh area in 2001, this one 74,000 square feet in size. It offered the same features as the North Fayette store and a number of new collections as well: Jessica McClintock for American Drew and Alexander Julian's case goods. A year later, Levin Furniture opened an even larger showroom, 88,000 square feet in size, located in West Mifflin, Pennsylvania, in a renovated former location for big box retailer Builders Square. With the extra space, the store was able to take advantage of its close proximity to the Levin Furniture warehouse to devote 26,000 square feet to a clearance center.

Levin Furniture continued in the 2000s to replace older stores with the new larger prototype. In 2006 the company opened its 12th store, located in Akron, Ohio, and in the works were plans to improve four other stores and add another location in North Hills, Pennsylvania. To keep pace with growing sales, Levin Furniture also invested $5 million to add 110,000-square-feet of space to its Smithton distribution facility.