Raymour & Flanigan, Tenant & Landlord

The Northeast’s largest furniture chain owns and operates two-thirds of the centers in which its showrooms reside.

By Al Urbanski

It was the 1970s when brothers Bernard and Arnold Goldberg, who had successfully run a furniture store in downtown Syracuse, N.Y., for 25 years, decided to expand. They bought two properties in the suburbs and built two new stores.

Today that retailer, Raymour & Flanigan, has 143 showrooms, outlets, and clearance centers scattered throughout the Northeast. Some 50 locations are leased from retail real estate developers like Kimco, Federal Realty, Acadia Realty Trust, and Urban Edge. Raymour is the landlord at the rest.

The Liverpool, N.Y.-based company’s retail real estate portfolio totals gross leasing area of more than 15 million sq. ft. and continues to grow under the leadership of CEO Neil Goldberg, Bernard’s son. In the first quarter of 2023, the company expects to close on a major acquisition in Staten Island as well as complete leases for two additional new store locations.

“We continue to look for locations with the best financial terms we can negotiate, whether that be leasing from a landlord or through an acquisition,” said Scott

Milnamow, Raymour’s senior VP of real estate development. “We have a first-rate real estate operation that manages our properties, coupled with an exceptional brand in Raymour & Flanigan Furniture.”

As both a tenant and a landlord, Raymour holds a rare position in the retail world. Rents collected from the likes of CVS, Starbucks, Barnes & Noble, Aldi, Michael’s, and Burlington give the company a financial hedge not enjoyed by many retailers. Its real estate revenue is tallied separately from the company’s estimated annual $2 billion in furniture sales.

Because most households make furniture purchases once every five years, Raymour’s average 50,000-sq.-ft. showrooms require just 30 or so parking spaces, giving the company room to add outparcels to the properties it purchases. For an outparcel it created at a center it owns in Hamburg, N.Y., it had three national tenants bidding for it. Raymour went with Chick-fil-A.

“We have an advantage over other center owners in that we have a 50,000-sq.-ft. furniture store anchor that’s not going anywhere,” Milnamow said.

At a center it owns in DeWitt, N.Y., Raymour secured a choice traffic-building tenant with a maneuver few other retail real estate developers would ever be able to employ.

“Trader Joe’s was looking for a good location in that market and we knew the advantage of the number of trips the tenant would bring to the shopping center,” Milnamow said. “So we downsized our Raymour & Flanigan showroom by 12,000 sq. ft. and put them in it. That meant fewer SKUs for us in our store, but since Trader Joe’s opened up that parking lot is constantly filled.”

Raymour’s real estate business has a construction unit to rejigger its centers in such ways, but most of the of the centers it owns are acquired, not developed, by the company. Its real estate business model is focused on driving its core furniture business — and driving ancillary revenue. But in a time when not much new construction of open-air centers is underway, buying centers proves an adroit strategy for a retailer to put new centers exactly where it wants them.

“You go to New Jersey, New York,

Connecticut and how many new projects have gone up in the last five years? So you have Ulta and us and Burlington and Planet Fitness competing for spaces,” Milnamow observed.

In Reading, Penn., Raymour’s real estate unit gave it the flexibility to move its showroom to a better location. It owned a freestanding store in a B-side of the market and an opportunity presented itself to purchase a bankrupt Toys R Us in a better market nearby.

“We didn’t want to close our other showroom, but opening in a center with an Old Navy, a DSW, and Joanne Fabrics was very attractive to us,” Milnamow said. “The new showroom does much more volume than the original store because it is co-tenanted in a better location with a great mix of tenants.”

Central Pennsylvania is an active new expansion zone for Raymour, which opened showrooms in Harrisburg, York, and Hanover in 2022. Two of those locations were Wolf Furniture stores that the company acquired from Love’s Furniture and Mattresses after its bankruptcy filing. A fourth store was opened in Hampden Township—a former NB Liebman furniture store Raymour acquired from its independent owner, who was retiring. It has also purchased sites in Harrisburg and Lancaster where it will develop new centers.

“We haven’t done ground-up development in forever,” Milnamow said. “Development takes a long time. You have to buy a piece of land and work with a town’s traffic engineers, site planners — and perhaps DEP or DEC and maybe a zoning board. We’ll do it, but we prefer to buy existing real estate and make the renovations needed. Our construction department is great. We send them in and eight weeks later we’re flipping the lights on and selling furniture.”

One of the more curious requests Milnamow ever got from municipal officials took place in Vineland, N.J., where Raymour acquired a 110,000-sq.-ft. former Kmart box.

“My director told me that the staff at the planning board really wanted an Olive Garden in the town, so we contacted Olive Garden and they loved the location,” Milnamow said. “We then went back to the town for approvals of a Gabe’s and Aldi’s. It was a great collaboration of working with a town and understanding their vision for the development. A win-win for everyone.”

Technologies To Watch

Looking at the likely direction retail technology will take, here are three innovative technologies which have been growing in prominence and are poised to break out during 2023.

Digital twins

“Digital twins” are interactive virtual models of physical environments, products, and/ or workflows. The technology is becoming increasingly an popular tool for retailers to digitally conduct testing, check compliance and detect problems before rolling out changes in the “real world.”

Lowe’s Cos. unveiled digital twins in two stores. The home improvement giant is leveraging technology from Nvidia to create photorealistic digital replicas of the stores to enable store employees to visualize and interact with nearly all of a store’s digital data.

Lowe’s digital twin solution fuses spatial data with other data from the retailer, including product location and historical order information, and unites it all into a visual package that associates can gain access to on a range of devices, including desktop computers and Magic Leap 2 augmented reality (AR) headsets.

As a result, Lowe’s employees can perform virtual tasks such as checking inventory accuracy, gather and view information on obscured, hard-to-reach items, and testing changes to product placements

In an interview with Chain Store Age, Liza Amlani, principal of Retail Strategy Group, said retailers can also apply digital twin technology to save time and expense in their product development process.

Supply chain sustainability solutions

A growing number of retailers are adopting a variety of solutions that enable them to operate more sustainable supply chains. While the data is mixed, many recent surveys have indicated that consumers prefer to do business with retailers that have sustainable operations.

In one such effort, Macy’s Inc. is deploying auto-boxer and auto-bagger technology enabling it to create unique packaging that fit odd or oversized items, and reducing box volume and waste up to 50%. The department store retailer also launched a program to use RFID technology to track participation and weights of store cardboard recycling as part of its goal to increase store recycling rates to 80% by 2025.

Meanwhile, eco-friendly shoes and accessories retailer Rothy’s is utilizing Centric product lifecycle management (PLM) technology to enable circular design, manufacturing and distribution of its products.

Machine learning

Machine learning (ML), a subset of artificial intelligence (AI) that analyzes patterns in data to “learn” and adapt in a manner similar to humans, is reaching an inflection point in retail. This once bleeding-edge solution may not yet be a routine retail solution, but it is popping up more frequently in the retailer enterprise.

For example, in the case of case of Just Walk Out frictionless shopping technology, Amazon deploys sensors, optics, and ML algorithms. Just Walk Out sensors and algorithms have also evolved to detect a broad range of products and differences in shopping behavior in full-sized grocery stores.

Also, Walgreens is leveraging the ML capabilities of Blue Yonder’s inventory management technology to improve the accuracy of inventory, shrink and shipping. The pharmacy giant uses ML to see what the probable fulfillment rate is and to support increased customer demand for omnichannel shopping features such as buy-online- pickup-in-store, curbside pickup and same- day delivery.

It is also worth mentioning the game-changing possibilities posed by the recently released and ChatGPT, an AI-based chatbot. It uses ML algorithms to produce conversations and written content with a sophistication far beyond that offered by other AI chatbot solutions to date.

While ChatGPT technology is too new to be currently featured in any retail solutions, look for it to emerge as a retail customer engagement tool sooner rather than later.

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Dan Berthiaume dberthiaume@chainstoreage.com