Indian Furniture Maker Opens Warehouse in Bentonville

A retailer based in Bentonville has attracted the largest furniture manufacturer in India to town.

No, it isn’t Wal-Mart Stores Inc.

I.O. Metro has a new neighbor at its 30,000-SF warehouse off J Street. Jaipur LLC, which produces solid wood furniture in nearly 1 million SF at three factories in India, has taken 10,000 SF for a U.S. distribution center alongside I.O. Metro’s.

By no means is I.O. Metro the largest customer of Jaipur, CEO Jay Howard said. But Howard and Jaipur CEO Subodh Johari have become fast friends since meeting at a trade show in Florida when I.O. Metro was still just an idea.

Howard’s business model is to deal directly with manufacturers, sourcing product from 14 countries and cutting out third-party distributors who add layers of cost and price pressure that hurts quality. Howard found an ally in Johari.

Around 80 percent of Johari’s U.S. business is direct to retail, only using distributors in more remote areas like the northwest where he has carefully selected partners.

The decline of the U.S. dollar and the overall furniture industry is leading Johari to cut back some American business and focus on his best customers. Howard said his out-of-stock rate on Johari’s products is now 40 percent to 50 percent.

“Most of it when it comes in is already pre-sold,” said Howard, who worked directly with Johari to develop the product line sold in I.O. Metro that’s a combination of American and Indian influences.

With Jaipur next door, Howard said his out-of-stock rate should drop to 10 percent. Johari’s nephew, Nitin Soni, will run the Bentonville center.

Metro, Jaipur Models Made for Each Other

Johari said the goal for his company is to take after success stories like Southwest Airlines, Cheesecake Factory, P.F. Chang and Starbucks.

“They are high quality while maintaining the price point,” said Johari, who also sees that characteristic in I.O. Metro. He picked up steam as he expressed the frustration of dealing with distributor demands.

“I have a chair that I sell for $35 and I tell the distributor I have to raise the price to $37. The distributor says, ‘No. Why don’t you use cheaper material? Use cheaper labor.’ We won’t do that. Our consciences won’t allow that. We won’t compromise our ethics.”

Johari said a distributor would take his $35 chair, sell it to a retailer for $79 and then the retailer will charge the customer a price around $149.

“Jay will pay me the $37, then he can sell it in his store for $79 and the end-customer can afford solid wood furniture,” Johari said.

That kind of price edge is why Howard’s chain expanded to six locations from Tulsa to Northwest Arkansas to Memphis in its first two years, growing to $5 million in revenue during 2006. Howard has since repurchased the Little Rock and Memphis stores from their franchisors.

He’s just opened a store in Kansas City with plans in the next two months to open in Oklahoma City and Jackson, Miss.

“People keep asking him, ‘How can you open a store every month when others are closing?'” Johari said. “He’s using the global economy and entrepreneurship to outsmart them all.”