Why Jim Gabbert Fired Himself

Redesigning Gabberts

In-house research showed that customers found the sheer size of the Edina store, as well as its complicated layout, daunting and difficult to navigate. And while Gabberts’ customer base still maintained a positive view of the store, many thought that the showroom’s look was out of date. The last major remodel of the store was in 1991. “There was not too much new and exciting going on,” Knight says. The store’s massive size also raised problems from a sales management perspective. “It is hard to manage people you can’t see,” he explains.

What’s more, there were inventory-related problems. “Buyers were also having trouble filling the space. How many traditional brown leather armchairs do we need to show?” Knight asks. “We had too many vendors, which required an enormous amount of vendor management.” In short, “We just had too much store. The store should be a sales tool, but it was actually inhibiting sales.”

It was time to downsize. The old Gabberts spanned 150,000 square feet of Galleria space. Sales space, which once covered 90,000 square feet, has now been cut by about a third. Office space and work rooms, which used to take up 60,000 square feet, have been slashed to 15,000. This will cut Gabberts’ lease expenses as well as increase sales per square foot.

The space that remains has been undergoing a $4 million renovation, which should be complete in February. “The new store will be much more user friendly,” Knight says. Besides a smaller sales space, the seven “resource centers”—the various design centers for specific products (lighting, furniture, carpets, and so on)—have been merged into one. Just as important as the redesign, Gabberts is once again focusing on its base customer—the upper-income, educated, busy woman with a big home project on her hands—and returning the store to its top-of-the-line roots.

Some vendors will be discontinued as the company refocuses on that upper end. It will keep the upscale Stickley and Century labels. Brands such as Bernhardt, Stanley, and Hooker are likely to go.

“Bernhardt is a classic example of what doesn’t work for us,” Knight says. “Many other stores in town carry it. It doesn’t fit because it’s in too many places. Bernhardt wants to be more aggressive on price promotion as it increasingly targets the fat middle of the market. We are not going to be a big box.”

Knight says that most of the two dozen models of mattresses the store has carried will also go. Mattress sales, being more promotion driven, are a different animal from the type of furniture sales Gabberts has historically focused on. “Selling mattresses just doesn’t fit with who we want to be,” Knight says. “It’s like trying to play a symphony when someone in the hallway is blaring a trumpet.” Gabberts will continue to offer about four or five top-end mattress brands as a service to customers who want them.

According to Dave Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas in Minneapolis, the direction Gabberts is taking is a much better choice than its recent attempt to compete with the more mainstream furniture retailers like Schneiderman’s or HOM, and the big-box stores like Slumberland and IKEA.

“The fact that 20 percent of Gabberts’ customers account for nearly 80 percent of its business is confirmation of the 80/20 rule,” Brennan says. “You can do a much better job of meeting the needs of those customers, and inventory can also be reduced.” And although sales involvement needs to increase through an added dose of service when catering to fewer customers, Brennan says that more customer “intimacy” is the better model for Gabberts.