No one knows what month or even what year Schewel Furniture Company was founded, even though it will celebrate a 115th Anniversary in May 2012.Forty years ago, when I hardly knew the difference between a sofa and a loveseat and a dresser and a chest, this annual commemoration was a genuine door-buster -- not because anyone really cared about "the good old days" (Don't Grand Openings draw bigger crowds?) but because the company invested in it an aura of inevitability and import.
Back then the company's primary advertising consisted largely of primitive black-on-white newspaper displays and ponderous radio commercials. Once a year it would produce what is commonly known as a circular, a four-page broadsheet blanketed with specially-purchased, bargain-priced decorative delights lavishly rendered in monochromatic line drawings with red accents (as compared to today's digital perfections) which my father Bert would flourish like a winning lottery ticket as soon as the first samples arrived hot off some distant press.
Perhaps he or his father Ben or his uncle Abe plucked the May flower from the garden calendar because it signaled a seasonal warming trend that might awaken eager shoppers from months of hibernation or because it synchronized with the premiere of tasty new appetizers from the April Furniture Market (although July, October, and January offered their own flashy menus). Regardless of the rationale, the signature Anniversary Sale couldn't stand the test of time, and gradually surrendered its preeminence to a barrage of round-the-clock, deep-discount, high-impact promotions.
As for the purported year of origin, 1897, it marks the opening of a small furniture store on Twelfth Street between Main and Church in Downtown Lynchburg by my great-grandfather, Elias Schewel -- and conveniently coincides with the founding of the city's Jewish congregation, still existent today, where Elias was employed as part-time rabbi, a serendipitous convergence of dates which makes me somewhat suspicious as to their reliability, at least of the former.
Elias was a native of Latvia, and came to America in 1889, riding the massive wave of immigration that deposited two million of his coreligionists upon its shores between 1880 and 1920.
Always considered outcasts because of their quirky beliefs and stubborn independence, they were fleeing the iron fist of the Russian Czar, who confined them to barren farmlands, restricted their choice of occupations, coerced them into abandoning their faith and converting to Christianity, and turned a blind eye to the riots or pogroms which threatened their lives and property. Perhaps his most odious policy was to draft Jewish men into his army for terms that might last thirty years.
Elias's given surname was Heend. According to legend, upon disembarking at his port of entry, Baltimore, Maryland, he regurgitated the only word he knew, Schievel, which was the name of his American sponsor or patron; a frazzled bureaucrat wrote down "Schewel." Most likely, though, Elias was already a "Schievel," having been adopted by a select widow from his hometown by arrangement with his parents, since the only sons of such widows were exempt from the military.
Apparently Elias publicized his reputation as a promising rabbinical student. At a synagogue in Baltimore he met a visitor from Lynchburg who persuaded him to move there as a teacher and minister for the embryonic Jewish community. The salary was a pittance, and to enhance it he began peddling door-to-door, first with a pack on his back, and later, when he could afford to buy them, from a horse and buggy, which enabled him to broaden his product line from pots and pans to split-bottomed chairs.
Within a year Elias had saved enough money to book passage for his wife and four children; the fertile soil of Central Virginia yielded five more in rapid succession, all of whom would survive to adulthood except the youngest, a daughter who died in the flu epidemic of 1918.
Elias Schewel's situation was typical of Jewish immigrants. Lacking capital, education, and professional training, many opened retail stores to support themselves. At one time there were at least forty Jewish-owned businesses on Lynchburg's Main Street; today there are two.
Elias was a shrewd merchant. Since much of the furniture at the turn of the century was manufactured in the Midwest, he hoisted the sign "Chicago Furniture Bargain House" over his shop, implying a frugal elimination of the middle man and foreshadowing the decades-later practice of many dealers who simply substituted High Point, North Carolina, as their source. Rumor has it he seized an inspired advantage over his competitors by allowing his customers to pay for their purchases over a period of time, in weekly or monthly installments, although how he managed to forestall his own creditors remains an enigma. As they grew taller and stronger, he enlisted his progeny to help in the store, thus laying the groundwork for succession -- and retirement.
In this case the best-laid plans came to fruition. Sometime around 1917, the year the enterprise was incorporated, Elias sold it to his second oldest son Abe, who subsequently recruited his two younger brothers, Ben, a traveling salesman, and Ike, recently returned from the European war theater, as partners. Elias retired to Chicago with his second wife (his first had died in 1915) to re-immerse himself in the Torah and Talmud and debate their finer points with a host of Biblical scholars.
Abe Schewel, grinning through his tightly-clenched pipe stem, was a natural-born politician, serving several terms on Lynchburg's City Council. He liked to travel, had many friends and acquaintances throughout the state, and pioneered the company's modest expansion, which he placed in the capable hands of a redheaded, freckle-faced youth, W. E. Wilburn, whom he lured off the assembly line of the Lane Company. The first satellite was launched in Altavista in 1930, followed by Harrisonburg in 1931, Lexington in 1933, Danville in 1934, Luray in 1941, and Winchester in 1950.
By this time the sons of Abe, Ben, and Ike -- Elliot, Bert, and Henry, all college graduates, all war veterans -- had joined the firm. Business was good, fueled by a pent-up demand as former GI's landed in a burgeoning job market, married their sweethearts, bought houses and automobiles, and ignited the baby boom. After selecting an attractive three-room group, a young couple asked if they could add a refrigerator, probably on credit; within days appliances and electronics were on display, since Mr. Ben hated to lose a sale.
By 1953 or 1954, the Twelfth Street location was bursting at the seams. The owners purchased a spacious four-story former J. C. Penney building with an attached parking lot one block west at Eleventh and Main and relocated their flagship store and headquarters.
Imagine the dynamics of three overbearing brothers and their equally aggressive sons patrolling a territory not broad enough for responsibilities to be delineated nor all egos to be massaged. Tempers flared, and during one altercation one family member attacked another with the closest weapon at hand, a vacuum cleaner rod. Incensed, insulted, and irreconcilable, Ike and Henry sold their interests to the other four -- who mirrored the geopolitics of the Cold War by settling into a peaceful coexistence.
The company enjoyed steady internal growth into the late sixties, when it suddenly turned more ambitious -- opening stores in South Hill, Front Royal, Culpeper, Bedford, Amherst, and Reidsville, North Carolina, between 1966 and 1973. Abe and Ben Schewel died in 1968 and 1969. Elliot Schewel followed his father into the political arena, winning election first to City Council and in 1980 to the Virginia State Senate, where he became a fixture for sixteen years -- and left his cousin at the helm, where he had long aspired to be. Bert surveyed the retail landscape, observed how the chain store formula was evolving, hired advertising and credit experts, delegated regional oversight to two key managers, and ramped up the volume.
Although my father, emulating wise old Elias, had put me to work in the Lynchburg store during the Christmas and summer breaks (once I outgrew sleepover camp), I always regarded my temperament as too cerebral and introverted for the rigorous effusiveness required of retailing. An English major graduate of Washington and Lee University, I received a fellowship to pursue a masters degree at Columbia and was preparing to matriculate in the fall of 1969 when I received the dreaded notice to report for a draft physical.
It was the height of the bitterly divisive Vietnam War; like many of my peers I questioned whether my interests -- and the nation's -- were best served by further feeding the quagmire. Abandoning my fellowship, I snagged a deferment teaching English at Appomattox High School where the principal's desperation overcame my lack of certification.
Facing thirty unruly adolescents five hours a day was a daunting experience; soon I was harboring doubts as to whether I could persevere long enough to evade battlefields which I was beginning to think might be less violent than these classrooms. I threw up the white flag, and enlisted in the Naval Reserve -- sentencing myself to one year of local meetings followed by two years of active duty.
At that point, good fortune intervened -- three times. The Selective Service instituted a lottery, and I drew a birthday number that effectively eliminated me from the draft -- barring a World War. My Commanding Officer informed me that the Navy's ships were full to the brim and that, as a college graduate, I was an overqualified enlisted man; he offered me a voluntary discharge -- which I graciously accepted. Then, seeking productive non-teaching employment, I went to work for Schewels -- temporarily.
From a more mature perspective I discovered a vocation that was challenging, multifaceted, novel, transforming, addictive, and fun. As my father -- astute, indulgent, visionary -- granted me greater authority and responsibility, I looked for and found,ways to further the company's growth and progress.
The next fifteen years -- 1971 to 1986 -- witnessed not only the addition of six stores -- bringing the total count to nineteen -- but also the implementation of centralized merchandising, purchasing, and advertising, and the installation of a data processing system designed first to automate inventory and later accounts receivable -- all of which, now taken for granted, was lengthy, costly, painful, frustrating, and disruptive.
Nineteen-eighty-six was a watershed year for the company. It opened three stores -- Roanoke, Radford (which was later moved to Christiansburg), and Waynesboro. It built a 75,000 (later expanded to 100,000) square foot six-level racked distribution center, enabling it to consolidate inventory from three regional warehouses. Posting record sales and profits, it solicited a lucrative recapitalization proposal from a New York City investment firm -- in other words, a leveraged buyout.
By this time, my brother Jack, ten years my junior, had joined my father and me in active management -- my sister Donna Clark would make it a holy triumvirate before long -- while Elliot Schewel had no next generation members involved. He and his brother and sister -- all in their sixties -- were understandably desirous of converting their fifty per cent ownership to more liquid assets -- for the right price. In other words, they wanted their money.
After several months of contentious negotiations, my father, my siblings and I decided to reject selling out to a third party -- forfeiting our share of the proceeds -- and instead to redeem our partners' stock for an amount in excess of twice its book value; for the first time in its history, the company (and its new sole owners) woke up one morning in the same uncomfortable condition as most of corporate America, the federal government, and millions of imperturbable homeowners: buried under a mountain of debt. My father's unwavering faith in a rosy future was hardly reassuring, since he had recently been diagnosed with the terminal cancer that would kill him in twenty-four months.
His optimism was justified. Buoyed by a vibrant economy and the housing boom (or bubble), for two decades the company prospered, tripling its revenues and adding twenty-eight stores, including six acquired when the billion dollar chain Heilig-Myers shuttered its doors, a victim of too rapid expansion, too much borrowing, and too many slow-paying customers.
Some of the growth can be attributed to significant upgrades in several established markets. Recognizing that some debt can be useful, the owners financed the construction of handsome new 30,000 square foot buildings in Lynchburg, Winchester, Culpeper, Harrisonburg, Emporia, Roanoke Rapids, Roanoke, Henderson, and Martinsburg, and the purchase and renovation of a former Wal-Mart in Danville.
Disaster was narrowly averted in September 2005 when a disgruntled employee set two sofas ablaze in the Distribution Center. A prompt response by the local fire department and the expedient deployment of the sprinkler system contained the fire, although the entire contents was deemed unsaleable due to smoke damage. The insurance carrier made full restitution, and a yeoman effort by buyers, suppliers, clean-up crews, truckers, and inside workers had merchandise restocked and flowing to stores and customers in three weeks.
The Great Recession struck the company with a vengeance. From their peak in 2006, sales declined a cumulative 18% over the next three years, and profits 50%, a steady, confounding, demoralizing erosion that gnawed at one's self-confidence and tested his resolve. Retrenchment and cost control replaced expansion and investment, especially since the persistent bleeding of the one new store opened during this period, in 2009, has yet to be stanched.
Finally, after each feeble protest that it couldn't get any worse proved to be mere wishful thinking, the interminable downhill skid hit bottom. Sales rebounded 3.6% in 2010 and a slim 1% in 2011, and while 2012 seems to be showing signs of real life, the steadfast pessimist constantly reminds himself that furniture is the most easily postponed of the fickle consumer's wants and needs.
A silver lining in this lingering cloud of doom is that, after twenty-five years of paying interest and nibbling away at the principal, the company was able to retire 100% of its debt. Counterintuitively, in an environment of declining revenues, its accounts receivable generated a healthy cash flow as customers were paying down their balances faster than others were adding on with new purchases.
Is there any moral to be gleaned from this historical fable, other than to declare that after 115 years of inspiration, expansion, transition, reinvention, and contraction, the company is still here, still independent, still family-owned, and still profitable? Are there any special characteristics of this business or personality traits of these owners that might be helpful in explicating this remarkable longevity?
Consider first the nature of the product. While mass merchandisers like Wal-Mart, Target, and Best Buy have managed to monopolize almost every consumer category -- from food and clothing to housewares and electronics -- and steamroll any retailers standing in their way, home furnishings has remained stubbornly resistant to their encroachment. For example, Sears, Costco, and J. C. Penney briefly flirted with free-standing furniture stores, but ended the experiment when they proved to be ill-suited to their modus operandi.
Furniture manufacturing -- actually the proper term these days is supply, since most is made overseas, in China,Vietnam, and Malaysia -- is, and has always been, a fragmented cottage industry. With national advertising non-existent and brand recognition, except at the very high-end, a misnomer, consumers have little basis upon which to judge quality or to make buying decisions. Critical to the process are a trained salesperson and the establishment of a personal relationship, in contrast to the discount/department store's simplistic self-service format.
Handling, storing, and moving heavy, bulky furniture demand specialized logistics, which must be designed to accommodate extensive warehousing and to facilitate assembly, inspection, preparation, and home delivery. Such systems are costly, inefficient, and incompatible with those employed by mass merchandisers.
Finally, home furnishings represents a major purchase for which many consumers do not have the cash on hand nor the credit card capability. Financing -- whether by the actual seller or an outside source -- must be arranged, which often requires an interview with a trained credit counselor, although much of the processing is now conducted online.
For years self-financing by furniture retailers was quite commonplace, especially in the south where minorities lacked access to credit. As credit became more available, even to marginal borrowers, most abandoned the practice due to increased collection costs and to free up their capital.
For Schewels, financing its customer accounts is both a profit center and a marketing tool -- since it calculates that at least half of them would not qualify with a third-party provider. Many still hand deliver their payments to the store where they may be enticed to make another purchase, perhaps a television, home appliance, or riding lawn mower; non-furniture items still compose twenty per cent of the company's volume despite widespread price competition. Included among 400,000 active accounts, they will receive at least one mail piece a month inviting them to take advantage of an upcoming promotion.
By managing its receivables to maximize cash flow and minimize losses, by refusing to compromise its underwriting standards, by retaining professionals in every store to evaluate, advise, and collect from its customers, the company has been able to thrive as a subprime lender even during the economic downturn.
While the adage that a business must grow in order to survive is hardly disputable, the rate of that growth is a function of the owners' ambition, acumen, and appetite for risk. Twenty years ago a friend of mine inherited a small furniture chain from his father and uncle, bought another larger than his, jettisoned the credit operation, and embarked on a meteoric journey; today his revenues are ten times Schewels'.
In the latter's case, each generation has adhered to the cautionary philosophy of its forebears. Preferring to finance the company's growth internally rather than with borrowed capital, the owners were content to add stores at a leisurely pace and always in small towns where start-up costs were minimal. They had only to rent a building, hire a couple of salesmen, buy a pick-up truck, transfer some excess inventory, and run a few newspaper ads.
They were conservative in another respect. Despite carrying millions of dollars of customer receivables and retained earnings on their books, an innate aversion to debt -- the only way any of it could be converted to cash -- deterred them from ever extracting any significant amount -- until it became incumbent upon one to buy out another. They compensated themselves sufficiently to maintain a comfortable standard of living, and plowed the remaining profits back into the business. A strong balance sheet enabled them to withstand the brutal oscillations of the economic cycle.
The success of any business depends on the dedication, ingenuity, and industriousness of its employees -- and on nurturing within each and every one a sense of pride and accomplishment. From their first tentative forays into dispersed markets, the company's owners grasped this concept, and, whether by accident or design, intuitively fostered a universal culture of entrepreneurship.
Even today, with technological security and sophisticated checks-and-balances to monitor free-flowing inventory and cash, people still manage to steal, sometimes tens of thousands of dollars, although most eventually get too greedy -- and get caught. Imagine the trust it took seventy-five years ago -- and even into the 1980's -- when such controls were inconceivable, for Abe or Ben Schewel to hand over the keys to a store a hundred miles away, which he might come to inspect once every six months. Managers were owners in a true sense of the word -- responsible for their buying, advertising, display, collections, hiring, firing, sales, and profits.
A proliferation of storefronts and the attendant complexities of operation inevitably necessitated the centralization of many of those functions. But the level of trust persists, defining the culture and motivating absentee owners and key personnel to innovate, perform, and produce results. Managers now have more time to focus on sales, service, and building the team that will make them successful. In every corporate department -- buying, distribution, credit, advertising, human resources -- leaders are encouraged to think creatively and act independently.
Like ebullient winemakers, particularly gratifying to the owners is the fermentation process -- watching eager foot soldiers from modest backgrounds with limited education when given an opportunity exceed all expectations, realize their hidden potential, and explode from spark to superstar. Every day the message is reiterated: common sense, a willingness to apply oneself, and communication skills trump degrees and IQ.
The mysteries of human nature dictated that the personalities and leadership styles of each generation would be as variable as the upholstery fabrics they were purveying. I am more introspective and analytical than my impulsive and extroverted father, who acted at times as a calming influence on his own. Ben and Abe Schewel were salesmen to the core, and never stopped selling, even when they could afford to hire surrogates; as managers, their successors had the luxury of delegating these duties, and could concentrate in areas more to their liking: merchandising, advertising, real estate. But, regardless of their differences, all owners shared one important trait: an abiding passion for their work.
Undoubtedly, it's easier to be passionate about one's business when he reaps the benefits, both psychological and monetary, from its success. Conversely, one could argue that the persistence of that business through four generations derives to some extent from an acute emotional attachment that may either erupt spontaneously or pass from one to another almost by osmosis. Too obsessive, too irrational, too tinged with romanticism to be attributed solely to material considerations -- as evidenced by the owners' continual rejection of the tempting choice to sell out -- it is what compels them to haunt the premises sixty hours a week, to brood over sales hourly, to exult or despair over every minor victory or setback.
The owners were also deeply passionate about their community. Liberated from the prejudices and oppression of their country of origin, they were free to exercise their talents, apply their intelligence, enjoy the fruits of their labor, and appreciate the bountiful amenities of the interesting spot where fate had landed them -- a pleasant climate, excellent schools, seamless assimilation, abundant recreational and cultural facilities, and generous, caring citizens. And once having attained the requisite stature and acquired the wherewithal, they embraced an obligation to share their prosperity with those who had enabled it and to improve the condition of their fellow man through volunteerism, philanthropy, and public service.
Nothing lasts forever; soon the sun may set on family ownership of Schewel Furniture Company. My three children have their own passions, and none includes furniture. A nephew has expressed an interest, but he's still in college, and who knows if this is a suitor that will touch his heart, when so many glamorous alternatives beckon.
I hope he does -- for sentimentality, for tradition, for all the company's loyal employees and customers, and for his own personal satisfaction, which, of course, is the only reason that matters. Should the next generation indeed decide to enter this business, he will encounter unprecedented challenges -- and unlimited opportunities.
He will have to evaluate the company's marketing strategies and determine if they are still relevant: operating in small towns and cities, which might require leapfrogging to non-contiguous areas; carrying a diverse product line in the face of relentless competition; maintaining a costly and capital-intensive credit department. He must find creative ways to make his store heard amidst all the noise emanating from mass merchandisers, power retailers, restaurants, and the tourist industry. He must control escalating insurance, occupancy, and transportation costs. He must work to deliver his product more efficiently to his customer. He must master technology and the internet, and adapt to the ever-accelerating pace of change. He must resist the certitude and complacency inherent in proprietorship, and keep his mind open to new ideas.
If he can do that, the company's next fifty years will be as exhilarating, as rewarding, as fruitful, and as memorable as its first one hundred.
REFERENCES
Schewel, Elliot. "Elias Schewel." Lynch's Ferry, Spring/Summer 2009: 36-39.
