Insights
Bel Furniture: Furnishing Homes During the Pandemic
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How this Texas furniture retailer leveraged their business model to solve supply chain issues in a pandemic
When brothers Sid and Jamal Mollai started Bel Furniture 20 years ago, their business model looked very different than it does today. What began as a liquidation business quickly pivoted to become one of the biggest furniture retailers in the state of Texas.
“We used to travel the country, just like a carnival,” Sid says about when they first started out as business owners. “We used to be liquidating furniture, office furniture, and some bank assets, computers, jewelry—all that in nature.”
Then about 21 years ago, they had the opportunity to liquidate Sears HomeLife, the now defunct furniture retailer. That’s when the Mollais decided to give retail a try.
“Ever since then, we started buying local,” says Sid. “We bought domestically in town, then we bought some furniture from out of state, and eventually we took the business overseas. We do about 90% import right now; we pretty much import every category in our showroom from overseas at this time.”
Ramping up online sales in the midst of COVID-19
Despite importing the majority of their furniture from Asia, Bel Furniture was not severely impacted by the supply chain issues that plagued many other businesses in the wake of COVID-19. In fact, the retailer achieved record sales in 2020.
Their secret to this seemingly unlikely success? Cutting out the middleman.
Instead of finding a third-party distributor, Bel Furniture decided to handle distribution themselves. “We probably are the only company in the country that is doing something like this,” notes Sid. “We are very, very unique in what we are doing—there is no agent, there is no middleman.”
They buy directly from the same factories that supply other big box furniture retailers like Ashley HomeStore and Rooms To Go. Not only does Bel Furniture save on costs, they are able to pass those savings on to the customer. “So from manufacturer, to import, then directly import to customers—our prices are about 60-70% lower than our competitors,” says Jamal.
Not only does their business model give them a competitive advantage, it’s what allowed them to thrive when the pandemic hit. Although several of their showrooms had to temporarily close and they experienced some difficulties in keeping workers on staff due to social distancing restrictions, their online sales increased by 190%. Furniture retailers were allowed to resume in-store business after the first few weeks, but Bel Furniture was one of the few actually able to deliver—literally.
Many of their competitors were unable to receive products because most manufacturing had been shut down, but because Bel Furniture had cut out the middleman, they had all their stock on hand.
“The takeaway from that period is that our competition could not get the furniture,” states Jamal. “There were enough customers, but there was no way to deliver that furniture, to get it from the supplier and then deliver it to the customer. But we had everything in stock.”
Mark Koshnick, senior vice president of commercial lending at East West Bank, adds that, from a consumer perspective, being able to buy and receive products in a timely manner during the pandemic was a key differentiator.
“It's very easy to buy it online, but the problem was it takes [a long time] to get delivered,” says Koshnick. “So, their value proposition of being their own distributor and having all your inventory in a warehouse—that was critical. That was the winning formula for Bel Furniture throughout COVID.”
Getting a PPP loan
Like many small business owners, the Mollais wanted to get a Paycheck Protection Program loan to help keep their business open and their workers employed. Bel Furniture became one of the first businesses at East West Bank to get PPP funding.
“Mark was on top of it—I mean, 10, 20 emails every day,” laughs Jamal. “He did an excellent job.”
Koshnick adds that it was especially important for him and his team to “over-communicate” the PPP process as they were learning new information and wanted to make sure they could effectively help their customers in this time of crisis.
“There were a lot of moving pieces to put that program together,” he explains. “As Jamal mentioned, there was a lot of communication along the way, and it served everybody well in the whole process.”
Forward focus on e-commerce
Although the Mollais say that in-store furniture shopping will remain their bread and butter in the foreseeable future, they are pushing their existing e-commerce business more—it’s just a matter of differentiating the customer types.
Consumers will buy lower-priced items online, such as office chairs and desks, but still prefer to come in-store for the more expensive goods, Sid says. “We try to combine both [e-commerce and retail] sales, because we don't want to compete with ourselves,” he explains. “But we definitely are pushing the e-commerce more than ever. Our showroom has been strong and our online presence being strong, so we try to treat them equally.”
Koshnick adds, “The shock and the reality of COVID really forced consumers to take that next step into more of an e-commerce mode. We've seen that across the board. Bel Furniture had the platform, but COVID created the paradigm shift from the traditional consumer outlook on how they bought furniture.”