USC

Doug’s Furniture copes with the economic slowdown

 

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With the housing market in a slump, gas prices high and the overall economy struggling under the credit crunch, small businesses like Doug’s Furniture are feeling the pinch in South L.A.

Doug’s has been passed down through three generations and was battered in both Los Angeles riots. But for owners Sparky and Terry Ferguson, running the store is their life.

“We think about it on the way to work and try not to think about it on the way home,” Terry said.

Out of a modest 7,000 square foot store on Central Avenue, Doug’s sells furniture, appliances and some electronics. The open showroom is a simple space, packed with couches and beds. Refrigerators and freezes line the far wall. The weathered storefront is white brick with a classic sign painted along the top.

Their business model remains decidedly traditional – Terry often closes sales over the telephone, while Sparky makes regular calls to customers who are late with the month’s payments.

While much of the furniture industry has gone online, Doug’s maintains a simple Web site. Visitors can’t order online or compare prices, which lets Doug’s negotiate with customers individually, Terry said, declining to disclose the store’s interest rates.

It’s a breed of business that is getting harder to find. The store is one of only a few remaining furniture shops in the area. Its relatively low-volume operation excludes it from larger buying groups that dominate the industry, Terry explained.

“We’re just on our own,” he said.

The furniture industry at large has also been struggling. Analysts have warned that sales this year will be depressed because of the economy and lower consumer confidence.

However, publicly traded furniture and resellers saw a bump in their share value earlier this year. The exact factors were unclear, but investors may reason cheaper housing in the long run means families upgrade homes and require more furnishings.

Industry experts maintain that it is a more complicated relationship, and buying furniture remains a casual decision in many situations.

While some other furniture stores dot the Central Avenue corridor, none have the history of Doug’s. Most of the other stores in the area are smaller shops geared towards Hispanics, said John Andrade, business liaison at the Central Avenue Business Association.

“There are a lot of small mom-and-pops, so there is some duplication,” among the smaller outlets, he said.

Other low cost stores have come in over the years, but Doug’s never considered them a real threat to business.

“A lot of these stores sell on small margins. That’s why they don’t stick around,” Terry said.

But the small margins of the internet could be stealing away customers. Online prices for items such as electronics can run substantially lower than the Doug’s showroom price. An older model Sharp 15-inch flat-panel television was marked on sale for $449.95. A similar Sharp can be found online for a little more than $300.

Nevertheless, continuity remains key to Doug’s survival. The store has been in one location for 70 years and was passed down through Sparky’s side of the family.

Customers now return two and three generations late to buy furniture where their parents did. Even as the neighborhood evolved from white to black to now largely Hispanic, longtime clients now come in from the Los Angeles exurbs to buy from the family they know.

“We’ve been here since 1938 and it’s because we have good customers,” Terry said.

But attracting new customers has been a problem. The store is empty for parts of the day, while some people only come in to browse. Terry has even reached out to a younger audience, advertising a 10 percent student discount in the USC handbook.

The offer only brought in a handful of Trojans, including a foreign exchange student. “She was only here for three months!” Sparky quipped.

The sluggish economy remains the largest challenge for the store. Higher gas prices have not only reduced consumer buying power, but have also whittled away at Doug’s profits margins because manufacturing and shipping furniture from overseas is also now more expensive.

The hard times have trickled down, Terry said, forcing the couple to hold off on hiring additional help beyond the current three employees. Keeping overhead low means running a lean staff and being selective with what is purchased as inventory.

“We have a lot of customers who work, but people start losing jobs,” he said. People out of work likely aren’t in the market for a new couch. A lack of good jobs in the neighborhood hurts commerce and has so far made the area unattractive to investors.

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But Terry and Sparky are confident that the depressed neighborhood will turn around once again. They look to pick up momentum from an ongoing redevelopment project in the Central Avenue district. A grocery store is already under construction, while grants will be used to refurbish the streetscape and building facades.

The retouches of older buildings along with groundbreaking on new ones will “give the whole area a fresher look,” Andrade said.

For now, Doug’s is holding on. “I’ve been buying very little. I’m going to see what the stock market does,” Terry said. The direction the economy takes will have a large effect on the store.

But the couple is in this for the long haul and has no interest in closing up shop.

“I like what we’re doing,” Terry said. “I don’t have any other plans.”