Art Van has a new brand: Retailer seeks growth with mattress chain

With 2008 revenue down 31 percent from its peak in 2000, furniture retailer Art Van Furniture has no plans to stop growing the chain of stores.

The company has continued its advertising programs, opened a new store in west Michigan and is launching a new line of 12 standalone mattress stores across Michigan over the next year.

“Are we impacted? Sure, we're impacted,” said Art Van Elslander during an interview with Crain's. “But our impact is far less because of our market share. We're able to increase our advertising and open new stores.”

As the company celebrates its 50th anniversary with a large-scale gala this week, Van Elslander said he sees growth through continued pressure on profitable niches of the industry.

Bedding, in particular, has potential for growth, he said.

Last month, he quietly opened a 5,000-square-foot store in Canton Township under the brand name Pure Sleep.

The specialty store will sell mattresses as the prototype for another 11 standalone stores to open in the next year. In addition, Art Van will brand the mattress sections in its 31 stores as Pure Sleep.

“Our bodies are as different as thumbprints,” he said. “And there's a need to have the right mattress, from a wellness point of view. We want to address health issues rather than just sell someone a mattress.”

The impact of Art Van's expansion on the local market for mattresses remains to be seen, said Earl Eiben Jr., CEO of Taylor-based Mattress and Futon Shoppe, which has 14 stores in the area.

“Art Van has a majority of the market share in the area (for mattress sales),” Eiben said. “So he really might be competing for his own customers.”

Eiben, who is launching a new venture called Mattress Mountain with large, 20,000-square-foot stores, said he expects some local mattress stores to disappear due to the decline in local spending, but the stronger players will survive.

The bedding sector of the home retail industry is both the most competitive and most profitable, said David Perry, executive editor of Greensboro, N.C.-based Furniture Today and writer of a weekly bedding column.

“Art Van stands out as a furniture store that's putting more emphasis on bedding, and pushing harder than most,” he said.

Furniture Today rated Art Van as 19th on its national list of bedding sales, posting sales of $91 million in 2008, down 2.2 percent from the previous year. It also said that Art Van sells more mattresses in Michigan than any other retailer.

The trade publication ranked Art Van as No. 17 of its top 100 stores rated by revenue.

Art Van had 2008 revenue of $440 million, according to the Crain's Private 200 list released in May. The company's reported revenue had been well above $500 million until 2007, when it was $475 million, according to Crain's research.

Tasked with increasing the revenue is a new CEO.

Kim Yost was named to the post three weeks ago and begins the job this week, Van Elslander said, leaving his position as CEO of The Brick, a large Canadian furniture retailer. (See accompanying box.)

During a downturn in the economy, weaker retailers will fade away, giving a chance for the more established companies such as Art Van to gain market share, said Bernie Moray, CEO of Troy-based Gorman Furniture Inc.

“It's a time when people or merchants who are less fortunate can't advertise or promote themselves well because they can't afford to,” he said. “It gives the rest of us an opportunity to expand market share. For example, we're advertising more now than we have in the past.”

Moray said Van Elslander has become an icon in the industry, not to mention good for Michigan as a philanthropist.

“We admire him for that,” he said.

Van Elslander, at 78 years old, remains an active part of the company's management and retains the title of chairman and founder.

In terms of succession at the company, Van Elslander has two sons in the business. Gary, 58, is president and COO and David, 45, is director of product merchandising.

For now, Van Elslander's still driving the company he formed 50 years ago.

“You know, at the time, I was looking to make a living for my family,” he said. “I went to work every day, and I guess it just kept going.”

Daniel Duggan: (313) 446-0414, dduggan@crain.com