These are notes from a visit to NFM by students from Tuck school of management at Dartmouth. Some students described this visit to Nebraska where they also met Warren Buffett, the legendary investor, the highlight of their trip.
Tour of Nebraska Furniture Mart:
Upon entering the enormous furniture superstore, Bob Batt, along with employees Jeff and Kristen, greeted us with a sign welcoming the “#1 Business School in America” fresh from the Wall Street Journal article earlier in the week. During the tour we picked up several pointers from Mr. Batt:
On being open on weekends/holidays: “gotta be there when the customers are there”
Sam Walton: “If you don’t care about your customers someone else will”
Furniture retailing in Omaha is now a global business, events in China and India will affect the bottom line.
Continuous cleaning is very important, nobody buys from a dirty store.
Target customers are women, they make the purchasing decisions.
“How credible are you when you’re selling?”
Learned crowd control from Disneyland, keep people in line entertained.
There is no consignment, all inventory is owned: “cash is king” – furniture manufacturers will give discounts to customers paying cash
In 1975 NFM lost all stores in a tornado, they made a Red Cross contribution the next day.
NFM does not have employment contracts, has never fired an employee in 61 years.
When asked what market segment NFM targets, Mr. Batt replied “we want it all”.
Television sales are highly correlated to Nebraska’s football schedule.
‘Adjacencies’ are very important; having complementary items displayed near each other. For example, lamps and rugs near where chairs and couches sold.
After about an hour many students were planning kitchens and living rooms for their future houses. The story of NFM’s founding was referenced multiple times, and was a recurring theme during our meeting with Mr. Buffett as well. Rose Blumkin, aka ‘Ms. B’, started NFM in 1937 with $500 of friends and family money in her basement. She couldn’t read or write and had never attended school at any level but built the largest furniture retailer in the region. NFM was sold to Mr. Buffett in 1983. After a difference of opinion with the current management team, Mrs. B started another furniture store at age 97. She sold this new furniture store to Berkshire a few years later, at which time Mr. Buffett wisely required her to sign a 10-year non-compete agreement. Her greatest asset was her passion, a pre-requisite for business success according to Mr. Buffett.