Warners' Stellian Inc. - Company Profile, Information, Business Description, History, Background Information on Warners' Stellian Inc.

60 West Sycamore
St. Paul, Minnesota 55117

Company Perspectives:

Warners' Stellian is a team of dedicated professionals striving to be the preferred choice for home appliances by creating experiences so compelling that customer satisfaction and loyalty is assured.

History of Warners' Stellian Inc.

Headquartered in St. Paul, Minnesota, Warners' Stellian Inc. is the state's largest independent major appliance retail business. The family-owned and operated company has a name that is synonymous with quality and service throughout the Minneapolis and St. Paul metropolitan area. In its more than 50 years, Warners' Stellian has grown from one 3,000-square-foot store using an open pickup truck for deliveries, to six showrooms strategically covering every corner of the Twin Cities market and a fleet of 25 branded delivery trucks that criss-cross the seven-county metro area daily.

The private company is owned in partnership by the nine children of longtime owner Jim Warner. They maintain a corporate philosophy that promises customers, "We will work harder than the competition to earn customers' business by offering the best product selection, in the most innovative showrooms presented by the best-trained sales staff, and delivering unsurpassed customer service. We strive to be the best value added choice for the consumer. By keeping the customer our #1 priority they have become our most effective form of advertising ... they become our advocates." That formula has helped the company achieve steady, controlled growth, averaging approximately 10 percent increases year over year.

Warners' Stellian's reputation for service and extensive product selection ensures a competitive edge over national appliance retailers who are the company's primary competitors. Their extensive selection includes well-known brands like Amana, Frigidaire, GE, Jenn-Air, Kitchenaid, Maytag, and Whirlpool, as well as specialty brands Asko, Avanti, Best, Bosch, Broan, Dacor, Fisher & Paykel, GE Monogram, Independent, LG, Marvel, Miele, Sub-Zero, Thermador, U-Line, Viking, and Wolf. Warners' Stellian offers it all--more than 400 products in air conditioning, cooking, dishwashers, freezers, laundry, microwaves, refrigerators, dehumidifiers, and other specialty products.

The Stellian Company: 1950s-60s

The company's roots were planted in 1951, when Steve and Lillian Farkas opened the Stellian Company, an appliance store at a busy intersection just a few blocks north of the St. Paul city limits. The husband/wife owners combined their names to establish Stellian as the company name. A few years later the business needed a larger space, which the owners found across the street of that same intersection in a brand new multi-store retail space. It was an ideal location at the edge of the emerging new growth first-ring suburbs of St. Paul.

In 1955, then 25-year-old Jim Warner joined the business as a bookkeeper. On Jim's first day he was thrust into the role of salesperson when he found himself alone in the store for several hours. He remembers being apologetic to a customer who taught him something about ovens that day. It was not long before Jim's sales skills drew him away from the books and onto the sales floor. Jim eventually earned titles such as office manager and sales manager, though he laughed about it later, recalling that he really only managed himself.

In the early years there were numerous small appliance stores scattered throughout the growing metropolitan area. There was even a Stellian competitor on the opposite corner of that busy intersection. But at that time, dealers generally carried just one brand. Stellian carried Frigidaire. General Electric products were sold across the street.

From the start, Stellian made customer service a top priority, offering free delivery and installation of new appliances, as well as recycling of old appliances. In those days, deliveries were made in an open pickup truck that doubled as a service vehicle. The business grew steadily, thanks in part to its ideal location at the edge of the rapidly growing suburbs of Roseville and Falcon Heights.

Profit margins for the Stellian Company waned in the late 1960s, causing the owners to expand product selection into carpeting, dinette sets, chainsaws, snow blowers, televisions, and more. Getting away from the store's original vision of specializing in appliances ultimately put a strain on the business. It became difficult for salespeople to become knowledgeable about such a wide variety of products, and even harder for the service department to manage repairs for all those products.

Warners Take Ownership: 1970s

After a few years of little or no growth in the company, Jim Warner and his nephew Rick purchased the business from Farkas in 1971. Jim and Rick renamed the business Warners' Stellian, and streamlined the product selection back to just appliances and televisions. They kept the Stellian name because it was well known in the business, due in part to the fact that the previous owner had done a substantial amount of advertising. They also phased out the service department, liquidated the parts business, and sold off the carpeting and furniture inventory, selling the last of the snow blowers on a hot, humid June day.

Jim became sole owner of the company in 1979 when he purchased his partner's portion of the business. During the 1980s, Warners' Stellian saw more competition from big, national chains including Sears, Kennedy-Cohen, and Kmart, but the small dealer showed steady sales growth. From the mid-1970s through the mid-1980s approximately 15 to 20 small appliance retailers in St. Paul went out of business. Warners' Stellian survived due to its ideal location, strong company identity, and loyal customer base won over by years of great service.

During the 1970s and 80s all of Jim and his wife Nonie's nine children worked at the store, doing everything from cleaning used appliances for resale to making deliveries. Several went away to college and returned later to join the family business. By the late 1980s, five sons and daughter Carla were invested members of the Warners' Stellian management team.

As in any small business, owners often cut corners where possible to save on expenses. Jim Warner was no different. Knowing he had the muscles of his nine children available, he leased inexpensive warehouse space at the Minnesota State Fairgrounds, just blocks from the store. Unfortunately, during the 10 days of the state fair each year, Warner had to move the stock out or have a state fair inventory sale. He was later able to secure enough inventory space in an offsite state fair building and avoid the late summer appliance shuffling.

Beginning to Expand: Late 1980s

By 1987 Warners' Stellian had about $2 million in annual sales. That year the company acquired Richfield Appliance, located in a suburb on the south side of neighboring Minneapolis. Though Jim Warner was not looking to expand, he bought the aging store at the urging of his children, who were at the time actively involved in running the company. The second generation cleaned and remodeled the store in keeping with the Warners' Stellian standard. As Jim Warner explains, "We've never been into running off with the profits. We've always been of the mind to put a lot of money back into the business." From clean restrooms to flawless carpeting to shiny windows, appearance of the stores and products had always been a priority at Warners' Stellian. Within a few years, the Richfield store was earning a profit and securing a new, loyal customer base for the company in Minneapolis and communities to the south and west. The store eventually brought in about a third of the sales revenue of the flagship St. Paul store.

In 1993 Warners' Stellian expanded its market presence further south to keep pace with rapidly widening suburban growth. The company opened a third store in the southern suburb of Apple Valley. With three stores to serve, Warners' Stellian soon outgrew its warehouse space at the fairgrounds. In 1996 the company built and moved to a new corporate headquarters and warehouse facility near downtown St. Paul. The new facility housed Warners' Stellian's customer service, advertising, purchasing, and logistics delivery divisions. With three active showrooms, the company by 1999 saw sales grow to approximately $15 million.

As the second generation of Warners joined in managing the company, Jim gradually turned over ownership to them. Eventually, he officially retired. All nine siblings became joint owners of the growing business, and six were equal partners involved in the company's daily operations.

Targeting New Markets and Builders: Late 1990s

By 2000, the company had to add about 30,000 additional square feet of warehouse space onto the four-year-old headquarters facility to accommodate dramatic corporate growth. That same year the Warners opened another 12,000-square-foot showroom, this one in the hot growth outer suburb of Maple Grove to the northwest. It was followed two years later by a comparable store in an equally burgeoning southeastern suburb, Woodbury. Sales volume for the five stores continued on a steady growth curve, resulting in the company doubling its sales volume from 1998-2003.

During that time the company stepped up efforts to pursue more business from the builder/remodeler sector by adding a division to service builders, designers, and architects. In just a few years the staff of that department grew from one employee to six. In addition, to increase networking opportunities with that market sector, the company joined a number of local organizations of designers, architects, and builders. The results began to show as the percentage of business generated from designers, builders, and remodelers showed steady improvement.

Because Warners' Stellian was Minnesota's largest independent retailer, its showrooms were often the place where new and innovative specialty products made their debut. Such was the case when Warners' Stellian showcased the LC internet/multimedia refrigerator. It was never a big seller, but grabbed a few headlines for the company at the time. In addition, Warners' Stellian's buying power was enhanced by membership in Nationwide, a national buying group in the appliance industry.

Industry Innovators: 2004 and Beyond

The company made headlines again in 2004 when it opened a state-of-the-art showcase showroom in Edina, in one of the metro area's most trendy and upscale shopping areas. Carla had wanted to create something unique in the industry, so she spent several months traveling around the country to survey the showrooms of businesses in other markets. The result was a new kind of store. To create the new showroom, she enlisted the services of a local design firm to help create 18 original kitchen vignettes using Warners' appliances, surrounded by all different combinations of flooring, counters, cabinets, lighting products, and even wall decor.

The initial results were dramatic. The store was extremely popular with customers throughout the metro area, not just in the Edina area. First-year sales figures for the new store were very strong. In addition to attracting interested local and national vendors and business peers, the Edina showroom garnered Warners' Stellian recognition within the industry. Cooking classes and culinary demonstrations were scheduled in the showroom regularly to increase the company's exposure to a younger market, which included designers and culinary school students.

The year 2004 was also one for showroom facelifts in Apple Valley and St. Paul. The flagship St. Paul store was enlarged to nearly 10,000 square feet. The company also converted the Minneapolis (Richfield) store into an Outlet Center for new merchandise as well as "scratch and dent" type inventory, all with full factory warranties. Long-term plans called for the flagship store to adopt the kitchen vignette theme of the Edina showroom.

Need for more warehouse space to keep pace with a steadily growing sales volume prompted Warners' Stellian to plan another move. In mid-2004 the company signed a purchase agreement with the St. Paul Port Authority to purchase an eight-acre plot in St. Paul's Great Northern Business Park, near downtown St. Paul. The new 120,000-square-foot facility would house the corporate headquarters and warehouse inventory for the company's six stores, more than doubling current capacity. Estimated cost for the new facility was $6 million. Groundbreaking was set to begin the spring of 2005, with completion by early 2006. Warner's purchased the land for $1, benefiting from the city's economic development incentives. The company planned to add 80 new jobs over the next ten years.

A Model for Family Businesses

Family businesses passed from one generation to the next often did not have high success rates. The passion of the founder, for example, does not necessarily transfer to the second generation. Such did not appear to be the case at Warners' Stellian, where a third generation was already on staff. Jim Warner was in awe of where his children had taken his small appliance business, and Carla Warner credited her father's firm foundation for modern-day success. "He taught us how to treat the customer," she explained. "Exceptional customer service is the key." The company slogan "We're working harder to earn your business" was evident to savvy consumers, who appreciated Warners' Stellian's "hassle free" buying experience, from the store visit to proper installation of their new appliance. Each purchase over $399 included free metro area delivery, free recycling of the old appliance, and arrangement for professional installation when necessary.

Looking ahead, the Warners hoped to open two more stores by 2009, possibly expanding their market further into southern and central Minnesota. They also planned to continue efforts to increase business done with builders, architects, and designers. The company web site was also being updated to enable online buying in the near future.

The company was unique in the industry in that it had an in-house staff for delivery and installation, its customers included both retail and builder segments, and the sales force was 50/50 men and women--highly unusual in the appliance industry. In addition, Warners' Stellian had low employee turnover. Many had been with the business more than ten years, and were like family.

Perhaps most unusual was the fact that the six siblings had been able to share management of the company so smoothly. Having a close-knit family with mutual respect among members had helped this company grow and prosper. In addition to earning a local reputation as a strong family company with a high degree of integrity, Warners' Stellian had a long history of being extremely generous and philanthropic within the St. Paul and Minneapolis communities.

Principal Subsidiaries: Warner Management; Warner Properties.

Principal Competitors: Sears, Roebuck and Co.; Guyers' Builders Supply Inc.; Best Buy Co., Inc.; The Home Depot, Inc.


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