The wholesale story of Moe’s
Behind the stores is an operation that spans two continents
Moe’s Home Collection might look like a one-off Vancouver furniture store, but the bulk of its business takes place behind the scenes.
“A lot of people think we are just this one store, even though it’s a 50,000-square-foot, three-storey store, one of the largest in Vancouver,” said Sara Samieian, Moe’s general manager of retail, about its Glen Drive location, just off Terminal Avenue.
In fact, the company, founded by Sara’s father Moe Samieian, is a major North American wholesaler. It supplies more than 1,000 furniture stores across the U.S. It carries 1,500 items, of which up to 1,300 are kept in stock. Its wholesale division comprises 70 per cent of the business.
Moe’s, which employs 100 people, also owns two U.S. warehouses (a 110,000-sq. ft. building in Washington state and a 30,000-sq. ft. facility in Kentucky) and a Chinese office with eight staff. It’s also beginning to open more retail stores, with one in North Vancouver, one near Seattle and a new franchise in Victoria.
The wholesale-focused business model came about as a result of the global economic crisis of 2008, which hit the Samieian family’s company hard.
“Our wholesale business almost got to the point of shutting down completely,” said vice-president Moe Samieian, Jr. “We went down to 7,000 sq. ft. of warehouse space and that’s a very small amount, especially for furniture.”
At the time, Moe’s owned its own factory and consolidation centre in China, shipped only container loads directly to retailers and was heavily focused on its Chinese investments.
When the global economy tanked, many of its retail clients went out of business and the company’s remaining customers lost interest in buying entire containers, said Moe, an accountant by training.
“It just crippled us. Running a factory in China is not easy either,” he said. “At that point, retail wasn’t that successful. Nothing was really working.”
The Samieians identified product development as their company’s core strength. Rather than enter e-commerce themselves, they decided to focus on wholesaling to e-com partners.
Wholesalers who turned away ecom partners seven or eight years ago for fear of angering retailers now know they must partner up or risk failing to thrive, Sara said.
Moe’s created unique products with its own designers and then protected its retailers with minimum advertised prices (MAPs).
“We set a MAP price that is fair, so our bricks-and-mortar stores can sell at that price and still make a healthy profit,” Sara said. “As soon as you go down that road of allowing that price to be discounted for short-term gain and short-term sales, it’s hard to fight and get it back.”
The company’s strategy has brought in some of the U.S.’s top furniture retailers, such as New York’s Raymour and Flanigan, Pennsylvania’s Levin Furniture, Berkshire Hathaway’s Nebraska Furniture Mart, and Wayfair, the Boston-based online furniture giant.
Just over half of Moe’s products are now produced in China, with most of the remainder made in Vietnam and India.
Furniture shipment is slow and speed to market is important, so the company is quick to commit to new products.
“When we confirm our sample, we put our first batch into production right away so the retailer can get product into their store right away and show it to their customers,” Moe said.
The Samieians saw a niche in providing a broad range of accessories along with their furniture. But wholesaling everything from bedroom furniture to upholstery, rugs and wall decor means dealing with more than 100 factories.
The risk is somewhat offset by the company’s ability to divert overstock to its retail stores, rather than directly to liquidators. Wall decor has grown to about 20 per cent of the wholesale business, said Sara, who took over the retail side of the business.
“Business has gone up maybe 400 per cent over the past five or six years. I think it always makes a difference when an owner is on the floor working alongside staff,” added Sara, who has a background in economics and business.
Moe’s four retail stores are strictly bricks-and-mortar operations. The company’s retail website is not set up for online shopping, though customers can make purchases by phone or email.
“We’ d prefer them to buy through Wayfair or a retailer near them,” Moe said.
The Samieians are now building low-risk visibility with Moe’s Studio, a store-within-a-store program they started about nine months ago. About a dozen wholesale customers now have Moe’s Studios.
At the same time, they’re moving carefully and slowly into franchising, which provides brand recognition without requiring Moe’s to “take on the burden of operating stores ourselves,” Sara said.