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Paradise lost and found

SAN DIEGO RETAILERSan Diego is a place Many casual furniture retailers can only dream about. The average highs never climb to the 80s and the average lows never dip into the 40s. Both the median home value and median income hover above the state averages. It's hard to believe the recession could touch such a paradise.
     Doug Wheat, president of Hauser's Patio, promises that it most certainly did. From 2008 to 2010, his store, located just north of downtown San Diego near I-5, suffered a 57% decrease in its retail business and a 29% drop in commercial sales. He also went from 19 employees to just four.
     "Having gone through other recessions in the past, I think we knew something was coming," said Wheat in retrospect. "We just didn't realize the extreme circumstances that this one was dropping on us."
     The timing couldn't have been worse for Wheat. He took over full ownership of the store in 2007. The timing for the business, however, couldn't have been better. The store wouldn't have made it through the recession without him.

THE EARLY YEARS
     John Hauser launched Hauser's Patio far from the sandy beaches of Southern California in Ontario, Canada, in 1949. Hauser, an Austrian-trained fifth-generation blacksmith, moved his family to Canada so he could produce wrought iron furniture and sell it in his own stores. The family still produces furniture and runs eight casual furniture stores in Ontario and Quebec.
     His son, Herb Hauser, moved to San Diego in 1963 to replicate his father's business model. Wheat joined the company in 1978 to oversee furniture production, which never grew to match the family business back in Canada.
     "We were a small mom-and pop manufacturer," remembered Wheat. "We had a full wood shop, a full paint shop, a full metal shop and a full upholstery shop, but they were each manned by one to three people."
     Within a few yea

Hauser’s customerHauser’s customer base is mostly Baby Boomers, who are more brand conscious than younger generations of shoppers. They respond more to color, which is why every furniture display includes colorful accessories such as pillows and rugs.
rs, Hauser's began selling other furniture lines in its San Diego store. Wheat said he realized retail was carrying the business, so he left in 1987 to become a minority owner in Patio Guy's, a furniture refinishing company. Shortly thereafter, Hauser's got out of manufacturing altogether.
     Wheat did well at Patio Guy's, helping it grow every year. But when the Hauser family reached out to him in 1999, he saw even better growth potential. He bought in for a third of the business and bought out the Hausers entirely in 2007.
     By then, Wheat had already proven to be a good business manager. The economy would soon prove just how good.

TRIMMING A LEAN BUSINESS
     When the economy plummeted in 2008, Wheat said he knew Hauser's had a couple of things going for it. Wheat had already established a bottom line operation that eschewed unnecessary expenses in order to plow as much money back into the business as possible.
     "I think we were pretty frugal with our views on the way this business is run," said Wheat. "Herb Hauser said, ‘Take care of cow and cow will take care of you.' Many times we drew on that simple expression."
     Hauser's also had a relatively recession-resistant high-end clientele.
     "I think there's always the story that high-end retailers do well regardless of the economy," he said. "But this time eventually everyone's pocketbook tightened up."

The San DiegoThe San Diego economy is slowly coming back, but customers remain cautious. As a result, Hauser’s continues to push the “staycation” and “resort living” concepts via its in-store displays.

     San Diego's usually sterling weather didn't cooperate, either. A cooling trend started in 2009 and lasted all the way into 2010, when the city had its coldest July in nearly 100 years. No one was in the mood to buy patio furniture, and Wheat had to look everywhere to find cost savings.
     "I had to take things apart and put them back together, from the inventory to advertising," Wheat said. "Everything was reviewed and renegotiated."
     His employees weren't immune.
     "The first couple of layoffs were kind of easy, but when I got down to the final few it was very hard," said Wheat. "I didn't become cold-hearted to the fact that I was taking away their livelihoods."
     Wheat said he felt like the grim reaper. Employees avoided eye contact. They did everything they could to appear busy all the time. His wife, Julie, runs the back office operations at Hauser's. Everyone knew if she met them at the back door and said her husband needed to see them, their days were numbered.
     "When we got down to four employees, if you didn't wear multiple hats you weren't working here," he said.
     Wheat didn't let a depleted staff affect the store's merchandising, which has earned Hauser's several retail merchandising awards.
     "The people who are still here have the ability to lay out a nice store," he said. "They have multiple skills and learn from one another to help us constantly keep the high-end look we need to have."
     And if something on the back end needed doing, Wheat said he wasn't above doing it.
     "A lot of times, I was on the trucks doing the deliveries myself."
Despite theDespite the gorgeous year-round weather in greater San Diego, Hauser’s business is seasonal. By the time school starts back up in September, its busy season is over until March.

     Wheat has since hired a new person for the sales floor and another employee for the warehouse, but the staff remains lean and highly efficient. Mostly what kept everyone working then and now is commercial work. Last year, he said, was its best year ever in commercial, a product of Wheat's efforts to cultivate that business.
     "It's almost like selling life insurance," he said. "When you start out you starve to death, but then people get to know you and start recommending you to other businesses."

HARD LESSONS LEARNED
     With the commercial business increasing and retail sales slowly recovering, Wheat has steered Hauser's through the worst of the downturn. He said he's a better business manager because of that experience.
     "I learned that you're on your own," he said. "The government won't take care of you. The bank won't take care of you. There's a real loss of trust in the banking industry."
     So even though the Southern California economy and weather are sunnier than they've been in several years, Wheat isn't loosening his grip on the business.
     "The demographics and average ticket sales of this business have changed," he said. "I can have $16,000 day followed by a $200 dollar day followed by a zero day. This is the new normal."
     There's no looking back, he said. The new normal means a new brand of business management. A style that is always ready for dark clouds, even in a place that gets few of them.

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