Great American Woodies gets down to business

company report

By Chris Gigley -- Casual Living, 2/1/2010 12:00:00 AM

Great American Woodies' Cottage Classics line, made of kiln-dried cypress dipped in a high-quality acrylic stain.

When Richey Smith acquired Great American Woodies in 1988, he was purely an entrepreneur, not an insider from the casual furnishings business. But what was once a handicap for the company is now one of its greatest assets. Richey is drawing on his broad business background to help the company and its customers stay financially healthy in a sluggish economy.

Prior to buying Great American Woodies, Smith did just about everything else in the manufacturing business. He made parts for Ford and Chrysler automobiles. He developed, manufactured and marketed the Hoppity Hop, the large inflatable ball with a ring handle on top that was all the rage 30 years ago.

“My children were on the boxes,” Smith said. “Now they're in their 40s.”

After he sold the Hoppity Hop business, Smith went to work for the global management consulting firm A.T. Kearney for about nine years, traveling the world to advise all sorts of manufacturing companies. He then decided to be his own boss again. In 1987, he acquired the assets of Kiefer McNeil, a company producing swimming pool chemicals, starting blocks, racing lanes and other competitive swimming products.

Smith

“I didn't know anything about what I bought, I just wanted to have a business of my own,” Smith recalled. “I'd been in the manufacturing and distribution business for 19 years, consulting for nine, and I understood that basic principles are the same for most businesses.”

When he acquired Great American Woodies a year later, Smith thought he could leverage synergies between the two businesses. The synergies, however, weren't there. At the time, Great American Woodies produced kits for porch swings in which consumers got all the wood and nuts and bolts to build the swing from scratch.

“That wasn't going to fly in the pool and casual industries,” Smith said. “What I learned was people want ready-to-assemble furniture, with a full back and a full seat already put together. So we scrambled for two years and finally came up with a product line that was acceptable but still fairly crude, similar to the kind of thing you see sold along the roadside in Amish country.”

Savannah arbor and swing, from the Southern Cypress Collection, invites hours of relaxation.

Shown in white, the Classic Bench swing is also available in sand, creamy yellow, Newport blue, barn red, black, sage and dark green.

The company has come a long way since then. Although porch swings are still the core of the Great American Woodies business, the product line has grown and evolved considerably since then. The company currently offers 19 different swings, 13 gliders and 11 Adirondack chairs. It also offers dining sets, occasional tables and a new line of benches, with and without backs. The company has four collections made from recycled plastic material, cedar or cypress. Altogether, Great American Woodies now offers about 300 SKUs.

As impressive as Smith has been at whipping the company into shape on the product side, he has been just as adept at managing the business on the expense side, something all businesses in casual furniture can learn from. The company has carefully controlled labor input and reduced inventory by 30% by removing slow-moving items from the line. It also reduced marketing expenditures by pulling out of trade shows where the sales team saw more existing customers than prospects.

“That money we spent on trade shows dropped right to the bottom line,” he said. “The last couple of months have been tough, but we have no long-term debt and we're profitable.”

Smith is also looking at the Internet as a means to attract and communicate with new and existing wholesale customers.

“I want to be emphatic that we don't sell from our Web site,” Smith said. “We don't compete with our customers. It's there for them to use as a tool. If they need product shots for their own Web sites or marketing materials, we have high-resolution images there they can download.”

Smith said the company intends to do even more online in 2010, but the bottom line is his effort to help specialty stores get the most out of Great American Woodies by offering a degree of security in an uncertain economic climate.

“We have all traditional designs,” he said. “We don't have any gimmick types. We have a lifetime warranty we started this year. Everything is made in America, so we can ship within 10 days or less, 15 days in the heart of the high season.”

Richey said he realizes imports will always be a challenge.

“But the advantage we have is: $1,000 is our opening order, and it doesn't take too many chairs or swings to meet that,” he said. “We have the inventory, and people can live on reorders. They don't have the inventory issues they can have with containers. We become their inventory. We'll take responsibility for keeping them in stock.”

Great American Woodies also offers a special order program that allows retailers to stock one color while offering every hue. The company provides photography and other material to show the breadth of its product line, and it will drop-ship whatever color the consumer wants to his or her home – taking that burden off the retailer's shoulders.

But perhaps the biggest reason retailers can feel secure when they deal with Richey is Richey himself. After all, he has made money in everything from pool accessories to toys to auto parts. He knows what he's talking about.

“Retailers should focus on margin dollars,” he said. “If they sell an Adirondack chair that retails for $49, retailers may make $20. Ours may retail for $179 and retailers make $80. They have to sell four at $49 to make as many margin dollars as they make selling one of ours. People who look at the mathematics of margins sometimes miss the boat. If they can create more margin dollars, that's more money in the bank. That's how to grow. They can't think of margin only and do that.”

Smith said he plans to spend all of 2010 spreading that gospel. One thing he won't do — a lesson learned from his days in the toy industry — is spend time toasting his success at turning Great American Woodies into a profitable company.

“Quality and service are like the horizon,” he said. “You never get there. We can always get better. Anytime you think you're the greatest, look out.”