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Tell City Chair Company
Tell City Chair Company, founded in 1865, is a manufacture of fine solid-wood furniture. The company was mired in a strike and was forced into Chapter 11. The President of the company and a descendant of the founder was determined not to see his company die, however, cash was needed to satisfy his lender and creditors. Their sales force was gone and they had no way to dispose of the $8,000,000 of finished goods in their warehouse.
ARG planed and implemented a market-specific program that maximized the value of this inventory. Our plan was not to use Tell City's normal customer base of retail furniture stores where the goods would need to have been sold at distressed prices.
Instead, ARG put together a strategic sale where we could sell Tell City's inventory directly to the public at retail. ARG had to move quickly because of the season and cash needs of the company. We had less than three-weeks to get the sale started.
ARG did a complete analysis of the inventory and market: determining that the sale would be run at the Tell City
factory in Tell City, Indiana. We built a furniture showroom right in the plant.
The plan was put into motion:
A 25,000 square foot area was cleared and cleaned in the warehouse. Our showroom had a direct view of the manufacturing equipment. Lighting was improved and carpet purchased and laid. Furniture was displayed and priced.
While the showroom was being created, systems had to be put in place to manage the inventory, sales and expenses.
ARG's consultants put together a point of sales system. Cash registers were set up, an inventory taken and keyed into ARG's system.
ARG called on our experienced and highly motivated furniture salespeople to work the event. Our consultants hired and trained all hourly sales clerks and cashiers.
To further improve our ability to sale furniture, ARG set up an in-house
non-recourse credit program so that the
customers would be able to finance their purchases. We also arranged to accept major credit cards and checks.
ARG brought in our warehouse specialist to control the warehouse inventory. Inventory management systems were set, people were hired and trained.
Warehouse pick-ups and delivery systems were implemented. Because of Tell City's location, furniture had to be delivered and set up as far away as 150 miles.
Marketing and advertising was planned and implemented. Since Tell City was 60 miles to the nearest metropolitan area, our marketing included newspaper, radio, television and extensive signage.
ARG developed an advertising campaign that both told this unusual story as well as gave the customers a reason to drive two plus hours to shop.
To further maximize the return, an analysis of the inventory, work-in-process (WIP) and parts allowed us to recommend to the company that it reopen the factory on a limited basis to complete salable groups, i.e., chairs to sell dining room groups, night stands to sell bedroom groups, etc.
Working closely with the company ARG established the WIP requirements and a production schedule that would meet the sale goals. Using management, we reopened the factory, producing furniture that helped bring the merchandise mix back in line, thus maximizing the value of all the total inventory. As example we produced and sold over 6000 additional chairs, without which we could not have sold tables at the margins we did.
The hallmark of any ARG project is budgeting and expense control. Budgets were done prior to the sale and managed aggressively throughout. ARG's commitment not to exceed allowable expenses was met. The end result was a milestone. ARG produced after-all-expenses net, including our fee, of over 100% of the original manufacture's cost.
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