Why Jim Gabbert Fired Himself

Entrepreneurial Genes

Entrepreneurial genes run in Jim Gabbert’s family. His father, Don, opened his first store in 1946, but it had nothing to do with furniture. In fact, it sold tires, which were in big demand as soldiers returned home from World War II and rubber became more available for civilian uses. Later, Gabbert expanded into appliances and televisions.

Jim picks up the story from there: “My mother, who had been in California, returned home and said, ‘Don, there are maple shops in California that sell early-American furniture. That’s what I’ve been looking for. That’s what all my friends are looking for, and you ought to open a furniture store and sell it.’”

Don Gabbert’s first home furnishings store was located at Eighth Street and Nicollet Avenue in Minneapolis. It moved to Edina and its current location in 1958, first as a standalone business and later as the anchor of the Galleria, an upscale retail mall that Gabbert began building in 1972 with partner Warren Beck.

As a kid, Jim Gabbert helped around his father’s store sweeping up, then moved into higher-skilled jobs as a teen. During his college years, he sold vacuum cleaners. After graduating from Colorado College in Colorado Springs in 1975, he worked as a salesperson for the now-defunct men’s clothing store Juster’s in Southdale Center.

“After a time, I figured I could get an inside track at Gabberts,” Jim recalls. He started working at the family store in 1976 at the age of 24. His brother, John, was president at the time. “I thought the best I can be here is number two,” Jim recalls. So with his father’s encouragement, Jim Gabbert opened his Games by James store in Minnetonka’s Bonaventure Mall in 1978. Meanwhile, John Gabbert conceived of and began running Room & Board, a Gabberts subsidiary selling not only furniture but stylish casual furnishings such as blankets, picture frames, and baskets. “It was clear his passion was Room & Board,” Jim recalls. “My dad then negotiated the spinoff of Room & Board and invited me back.”

In 1980, at the age of 28, Gabbert became president of his father’s company. “My dad mentored me for a solid year, then he rushed back to retirement,” says Jim, who soon became CEO. Things went smoothly until the economic bust of 2000, which marked the beginning of several years of losses for what was then a roughly $120 million company.

The economic downturn wasn’t the only challenge Jim Gabbert was facing. The home furnishings market was changing in some profound ways. “Six or seven years ago, 90 percent of furniture manufacturing [in the United States] was domestic,” he says. “Now 30 percent is domestic. That’s huge—absolutely huge.” In the process of making that shift, the furniture industry blurred the lines between higher- and lower-end products.

“At the same time that was occurring,” Gabbert adds, “best-in-class manufacturers of home furnishings were moving toward the ‘custom options’ model and creating huge opportunities for ‘mass customization’”—in essence, giving each customer the opportunity to more easily make changes (in color, size, and fabric) to a company’s standard furniture designs. This trend also put pressure on Gabberts’ bottom line by forcing it to pursue sales avenues beyond its traditional business model, broadening its customer base and offering lower-priced items.

Still other factors were squeezing Gabberts. One was the emergence of what Jim Gabbert calls “McLifestyle stores.” These include the likes of Pottery Barn, Restoration Hardware, and Crate & Barrel, whose business models offer stylish design at a wide range of price points. At the same time, Gabbert notes, the Twin Cities metro area was adding about 800,000 square feet of new home furnishings retail space, much of it devoted to the 336,000-square-foot IKEA store in Bloomington, and expansions by Becker Furniture World in Becker, north of the metro, and Schneiderman’s Furniture to the south in Lakeville. “While the Twin Cities has grown, it hasn’t grown that much,” he notes.