Bob Gaylord Retires
By Richard Wright
Gaylord’s stretch in working with outdoor furniture goes from 1970 to 2020. That’s 50 years, which is pretty much the entire span of the new patio furnishings industry.
We asked him to spend some time with us looking back through all those years.
Hearth & Home: Let’s start at the beginning.
Bob Gaylord: “My career in outdoor furnishings began from 1970 until 1976, when I was with a little company we started called Erecto-Pat. We made picnic tables and sold metal hardware in kit form so people could build their own wood decks. We did business primarily through home centers.
“Back then, there were about 50 home center chains in this country; now there are only Lowe’s, Home Depot, and Menard’s. They were pretty cool places in which women felt welcome and comfortable. I don’t know what was wrong with those businesses, but they just disappeared. It wasn’t that the big boys put them out of business. They were very good outdoor furniture customers.”
So that’s where you got your first sense of outdoor furniture.
Gaylord: “Yes, it was the picnic tables and the deck hardware.”
You were with Franklin Cast Products, but that was only for a very limited time, right?
Gaylord: “Yes, we started Franklin Cast Products and ran it from 1976 to 1981. That was so much fun.”
Was that a successful venture for you?
Gaylord: “Yes, it was. Well, two things happened. One, it was the only sales forecast I ever missed in my life, I swear. I missed it by 50%. It was in the fall of 1981. Stuff just didn’t sell. I don’t know if there was a recession in there or what. This whole thing started in your neck of the woods (New England) and there was a real need (for wood stoves); it made a lot of sense. But for us guys who were paying $300 a cord and/or buying log splitters, you could actually end up spending more money than you were saving.
“The biggest thing was that we knocked off Vermont Castings and lost a lawsuit. It was the stupidest thing in the whole world. But Larry Schwartz (the company owner) felt he knew better than our patent attorney. Larry always referred to the Coke trademark and the shape of a bottle. He said, The only way that we could lose this suit is if you stop 1,000 people in a shopping mall and they say, Oh, the shape of that stove, that’s a Vermont Castings. The attorney said, Larry, it’s not that clear cut. We lost the suit and closed the business the next day.”
Did you get hurt financially?
Gaylord: “No, no. We all went on unemployment, but there was no stimulus check (laughs). We started making plans virtually the next day to go into the outdoor furniture business.”
What did that industry look like in terms of product design when you got into it?
Gaylord: “Oh, it was tough. It was pretty sad. Brown Jordan and a few others had some very nice cast-aluminum sets, although they were a little bit undersized by today’s standards. But they were very nice. If you had money, you bought a $4,000, five-piece Brown Jordan set with a glass-top table or cast table. That was the high end of the business. If you wanted a nice set of furniture, you had no choice.
“On the mass level, which is where the majority of people bought, a patio set was four folding chairs around a steel-top table. It was really sad. In certain markets, there was PVC pipe furniture with the fittings. We got into that business out of Taiwan because that’s where we had been getting our wood stoves.
“The big thing that we did very quickly, within a year, we got rid of the pipe fittings and we came up with a different way of constructing PVC furniture. We were doing hot bending, cold bending, all the rest of that stuff; then we got a patent, a very strong patent, on our Genesis, which was the steel tube inside one of the chambers of the PVC. That virtually allowed us to design our PVC so it looked like aluminum-extruded furniture. That was pretty neat.
“We also did extruded aluminum, and the big advantage of doing that with the cheaper labor was we could put so much more labor into our furniture. So we tried to make it as elaborate as possible. We started selling to patio shops and everybody else. It was a neat business. But that was Larry Schwartz again, and Larry built businesses to sell businesses. We sold it, bought it back, sold it, bought it back, and sold it again over the course of eight years.”
When did you hook up with Oliver Wang? Was that in Taiwan?
Gaylord: “Yeah. Oliver was one of our suppliers of wood stoves. He was probably only in his mid-to-late-20s. We hooked up around 1975. His uncle had a cast factory in Taiwan, then his uncle went to China very early. In fact, my first time in China was 1977.
“Oliver, in addition to being one of our suppliers, was also our agent when we started the furniture company in 1981. Agent basically means he’s got all these people who speak English and Chinese, and he helped us negotiate and mediate with our suppliers, who became close friends over many years.
“There was really only two, the PVC guys and the aluminum guys. Then the company was bought and sold, and we did well. We did darn well. In fact, talking about product volume, I saw in Hearth & Home that Jøtul did $15 million or something like that. We did $15 million in our biggest year at Franklin Cast. That was a lot of business.”
Absolutely. What were stoves selling for at retail – $400?
Gaylord: “Yeah. I think our highest price-point would be a fireplace that looked like a Vigilant or a Defiant. They would run about $600 or $699, something along those lines.
“Anyway, back to outdoor furniture. That company was called Omni Products; it was doing great and making money. I had a piece of that on the last buyout. We sold it, and I had to stay for a year or two. Then I left and was actually representing Omni at the wholesale clubs. But the guys who took over the market put it out of business in two years.
“Meanwhile, Oliver had gone to China and opened a run-down little factory in Shunde in 1989. In 1990, he said, Bob, you ought to really come and market my product for me. I said, Oliver, I think that’s going to happen because these guys are going to put Omni under. I can see it now. So we hooked up for the duration in ’91. He had started his company in ’89. I started my rep company and we took over all the Sales and Marketing for what was known as Shian Industries, or something like that. Later, the ad agency O’Brien et al. created the name Agio back around 1988 or 1989.”
When you started peddling the furniture, were you going after specialty shops? Were you going after Big Box stores? What did you do?
Gaylord: “I was afraid to go after the specialty shops in the beginning because, at Omni over the years, if we got behind on production or something happened like that, it made me afraid because I didn’t want to take orders and not ship quality product on time. I took my first order from Fortunoff in about 1994, 1995. I want to tell you, we didn’t miss a shipment. We didn’t miss a shipment on the small guys, and that really helped our specialty business grow. That portion of our business has been as high as $80 million or so.”
Am I correct that Oliver at first only manufactured stoves?
Gaylord: “Yes. Oliver had never made any furniture until 1989, and it started with extruded aluminum. When I got involved, we started doing aluminum cast, but we started with a run-down 250,000 sq. ft. old mill-style factory where you had one row down the middle.
“Starting about ’96 or ’97, we really began to grow quickly. That’s when Oliver and I really meshed; I would tell Oliver, I think we can go from $50 million to $100 million in a year. He said, Well, I don’t know if I have enough factory. I said, Well, you’ve got to make the decision whether you build it or not. Eventually, we went from a 250,000 sq. ft. factory to eight factories, each with one million sq. ft.”
So Oliver has done very well.
Gaylord: “Yes, manufacturing and warehousing. It has been a really good run. I was certainly late to follow the dot-com business, but now it’s an important part of our business. But we brought a lot of things to market earlier than a lot of people. When I first started, it was all five-piece sets; we were the ones that really pushed six-piece, eight-piece-plus tables, four chairs, six chairs, eight chairs, 10 chairs.
“People who are outside when they’re entertaining need more than four chairs and all the rest. We sure as hell sold a lot more stone-top tables than anybody else. I do believe that Terri Rogers came out with a gas fire pit before we did, but when we brought them out we sold a lot. We still sell a lot of them, but it’s not just the gas fire pit, it’s the chat set. It’s fire. It’s absolutely fabulous.”
Let me back up for one second here. When you first started making furniture, who was your designer? Did you hire someone who knew what they were doing?
Gaylord: “Well, I designed a lot of it. I’m not even sure we had designers at Omni. I designed a lot of it for the first seven or eight years of Agio. But we started hiring designers from the get-go. We have several designers on staff right now, all on staff.”
When did you begin working with Sphere Trending? Are you still working with that company?
Gaylord: “Yes, absolutely. That was 1998, and we have spent a lot of money with them. It’s good to have somebody bringing me a lot of what-ifs. That’s what Sphere Trending has always done. She (Maxine) is terrific on many different levels, and she’s got great staff; they help us tremendously with colors and finishes and trends of all sorts. They also go to some 50 trade shows or more around the world, and that was especially important back in the ’90s and maybe into the early 2000s.
“That’s when Europe seemed to be leading the outdoor casual business; now it has been in the toilet for a long time, and any leadership that they showed is pretty much all gone. It’s really a shame. It’s really sad.”
So that was probably one of your very smart moves.
Gaylord: “Oh, absolutely. I can tell you that our Big Box guys are always begging us to bring Maxine in to give her presentations. We don’t do this just for their outdoor people. I’ve had 60, 70 people attend one of her seminars at XYZ retailer, from Costco to Target to Sam’s to Lowe’s – all of them. They love it.”
Let me run through a few firsts.
Offshore manufacturing, you certainly were an early bird there.
Gaylord: “Oh, gosh. Yes. Nobody brought anything from overseas in terms of welded furniture before us. Nobody.”
Gas fire pits, maybe Terri was ahead of you, but you were right up there.
Gaylord: “Yeah. We were right there. With all due respect to Terri, her footprint and our footprint are a little bit different. Again, I begged for competition. Most manufacturers in China don’t have all the disciplines that we have. A lot of guys make aluminum. Other guys make wicker. Other guys make stone-top tables. Some guys do fireplaces. But we do it all in-house. We don’t job anything out. That gave us a tremendous advantage.
“Today, we have 100 competitors or so, which is fine. Talk about a category with staying power!”
Deep seating groups, you were one of the early birds there, I believe.
Gaylord: “Oh yes. That was because of wicker. The big specialty guys, their sofas were so expensive, ridiculously so. If you remember, we had a partial ownership in Brown Jordan at some point. It’s when Casual Living Worldwide, which we owned half of, merged with Brown Jordan and we ended up with 10% or 12% of Brown Jordan. So we knew everything that was going on there, where they were making money, where they weren’t making money, the volume they did. Their deep-seating sales were pitiful, mainly because of the pricing. I’m going back 20 years, and a sofa would retail for six, seven, eight thousand dollars. I mean, how many are you going to sell?”
Indoor furniture stores, opening them up was a major coup for you.
Gaylord: “Yes. It sure was a big thing. It was the 50th anniversary of the Apollo Awards, and they had a brochure on the table showing all the Apollo Award winners for the past 50 years. Lots of winners going back to the early ’50s or late ’40s were indoor furniture stores that were winning the Apollo Awards for outdoor furniture. I wondered why they weren’t still in the business.
“They got out of the business when the mass merchandisers went into it, because the prices that were being sold by the Targets and the Home Depots were about $499, and it wasn’t a bad set of furniture. So the indoor furniture stores got out of the business.”
I find it hard to believe that these indoor furniture guys didn’t carefully monitor what was going on with outdoor furniture.
Gaylord: “Yes. The problem was this: They virtually were carrying all domestic products, and it no longer was relevant to the masses. So Joe and Melissa Smith come into their shop where they bought their indoor furniture, and they show them some outdoor furniture. It’s $4,000, and they said, We furnished our whole house for $4,000. It made them look bad.
“Also at that time, it was a very short season because they didn’t have deep seating and things like that. They were very frustrated. There were enough categories in indoor, such as mattresses and stuff, that they felt they had enough challenges already. They had blinders on. It was ridiculous.
“The average sale of a sofa back in 2009 or 2010 had dropped down to $399, domestically made, by the way. When we said that our average sofa sells for $1,500, they said, How in the world can you get that for a sofa? I said, Try putting your $399 sofa outside for a couple of years.
“I said, guys, there is a tremendous gap between the Kmarts and Walmarts and the Lowe’s and Home Depots of the world and the patio specialty shops. Just a tremendous opportunity. There’s a big space in the middle. They said, You want us to sell furniture for $1,499 or $1,299 or $1,999? I said, Absolutely. But, quite honestly, overall they didn’t really pay any attention. Between tariffs and everything else, prices slowly climbed up there. They were surprised and said, I didn’t believe I could sell a $2,000 set of furniture. Well, that’s was what I was saying.”
But that took some years, didn’t it? It wasn’t an easy sale.
Gaylord: “Yes, but 10 or 11 years later, I think they’re in it to stay, at various levels of success. New recessions don’t help. Recently one of our salespeople said that an indoor furniture company wanted to know if it’s a good idea to go to lower price points because of the coming recession. I said, absolutely not. First of all, we’re talking about staycation 202. We’re talking about the Outdoor Room 203. I said, Are you kidding me? Our industry has the biggest opportunity going forward in the next couple of years because of this pandemic than we’ve ever had.
“Are you kidding me? This is a resurgence for the outdoor furniture industry. Things were going very, very well – right? – ’till March 1 or March 15. But 30 days later it was like the world died. Then, all of a sudden, it exploded again. We had cancellations from people, and then they’re saying, Wait a minute. Not only do we want the stuff that we canceled, we want more. It’s absolutely amazing, and I have to believe it’s happening at all levels, to one extent or the other.”
One of the beauties of the U.S. consumer – particularly the ladies – is that they enjoy buying stuff. Put them in a house and say, You’re quarantined. They look out the window and say, Ah, I think I’ll spend my money on creating an Outdoor Room. That’s what happened in ’07, ’08 and beyond, and that’s what’s happening right now.
Gaylord: “Absolutely. Men and women are staying home more. Many of them are not going to offices. They’re not working or not working as much. People are doing puzzles, watching TV, and doing projects. Have you seen Lowe’s and Home Depot on an average day? There’s just hundreds of people, and they’ve got them lined up at doors, monitoring how they come in, because everybody’s doing something to their home. It’s absolutely amazing. So, no, you don’t drop your price points.”
It took you guys years to get the price really up there, right?
Now, you’re not going to tell me that you created the dot-com way of selling furniture?
Gaylord: “Oh, no. In fact, I was the guy 10 years ago who said nobody is going to buy something they can’t sit in first.”
Right. That was the mantra for quite a while, wasn’t it? I would hear that constantly. “We’re never going to be impacted by the dot-com guys because nobody can sit in something that’s digital.” How wrong we were.
Gaylord: “Yes, and we’re doing a lot of business in it. I think it’s around $100 million. We could do a lot more if we inventoried in the United States, and we’re not. We don’t want to end up in the warehousing business. Somebody in my company one time said, Stick to your knitting. He was right, and warehousing has never been our thing.”
Let me ask, what made the wicker trend really take off? When I first got into the industry in ’89, there were lines of buyers coming out of the Lloyd Flanders showroom. But at that point, those products had to be under cover on a porch. When did the synthetic product really take off?
Gaylord: “Well, when all-weather wicker came out, it was very expensive. People only knew wicker from Pier 1, Kmart, Walmart, and some furniture stores. All of a sudden, you’re looking at a set of all-weather wicker, and it’s $6,000, $7,000, $8,000, $10,000. The sticker shock was unbelievable. It took people a while to get it, to understand that there was wicker you could put outdoors, and this stuff was going to last forever.
“It was an evolution. It took time for people to get it. Certainly the imports had a big part of getting price points down where it made it more affordable, and that’s how you get something to sell big.
“Like I’ve always said, it’s all about growing the pie. My biggest fear has always been the pie shrinking. As long as the pie grows, everybody will be fine. So who cares who made all-weather wicker popular? People will pick their price points, and people will pick their sales pitch they want to believe. I also think that the wicker thing went hand in hand with the deep-seating thing, which makes more sense than anything.
“The short story is you eat outside for 20 minutes. But who wouldn’t want to go out there and lounge around for a couple of hours? Doing that in a dining chair isn’t half as good as doing it in a nice, big, deep-seating wicker chair. That’s the success story right there. It’s the combination of the wicker, which has tremendous perceived value versus a cast-aluminum or extruded-aluminum deep-seating set.”
Is that trend going to hang on for quite some time?
Gaylord: “Oh, I believe it’s got a long ways to go.”
What’s going to happen to the specialty patio shops? I’m hearing from different manufacturers that the single stores are going to go by the wayside, that they can’t make it. It’ll only be the mini-chains that do. Do you agree with that?
Gaylord: “Oh, no. Some of these guys do so many things right, and they’re in the right community, and they’re well known, and they do a great job. You invite a woman into a really great patio store, and you got her. Now, does it help to have multi-stores in a geographic area in terms of advertising and all the rest of that stuff? Sure. But these single-store operations can hold their own with the Internet.
“By the way, here’s the greatest reason why the independents should do well, and that is the indoor furniture guys are not following what I told them to do. I don’t mean to make it personal, but they’re not filling the bill. They’re not selling nice enough stuff. They don’t have big enough selections. They don’t go deep enough into a collection. More and more people want nice furniture; there’s only one place to go, and that’s the specialty store.
““For example, Costco does significant amount of outdoor business. It’s nothing when you figure that you can’t buy an accessory. You can’t add on. You couldn’t buy a dining set to match your deep-seating set. They can’t get enough velocity out of the little occasional tables to go with the chaise lounge, so they don’t carry it. That’s not being a legitimate patio furniture store.
“There are factors playing that will make it even better for the specialty retailers. The indoor guys, basically as a whole, said to me, Our competition is Lowe’s and Walmart. I said, No. That’s not the business you want. You don’t want that customer. But they’re convinced that’s the customer they have to have. It’s just stupid. It’s not where the opportunity is. The Walmarts, the Kmarts, Lowe’s, and those guys, 90% of what they sell is under $999.”
Aren’t the dot-coms increasingly going to hurt the specialty shops?
Gaylord: “Oh, sure, the dot-coms can hurt the specialty guys. The dot-coms will hurt every brick-and-mortar store. On the other hand, I say the bigger the pie the better. I play a lot of golf, and when I ride on a golf course, I always see the backyards. You don’t see the front yards.
“When I look at backyards, the trip for me is how many nickel-dime, $399 sets are being replaced by $2,000 sets, $3,000 sets, and so forth. If they come from a dot-com, okay. But to me, the higher price points we’re talking, the better chance that person is going to go to a really nice patio specialty shop.”
And there are people such as Doug Sanicola with one store doing over 10 million bucks. That’s terrific. (Doug Sanicola, Outdoor Elegance, La Verne, CA)
Gaylord: (laughs) “Absolutely. Your magazine is just one big seminar on how to do it right, and the people either do it, invest in it, or they don’t. When you don’t, you’re going to get left behind for sure. We’ve been out of the hearth industry for 40 years, but we were certainly there at the beginning of the hearth industry. There wasn’t a big hearth industry before the oil crisis, and that’s what got me into it. In the same respect, the outdoor furniture industry was miserably small until we started selling mass guys in the ’80s.
“The important thing is the size of this industry today, and to me, it couldn’t be healthier because deep seating and chat makes so much more sense than just pure dining. We don’t do it, but costco.com has these conglomerations of sets that they sell with all-weather wicker. How about a 22-piece patio set, or a 24-piece patio set? You get your deep-seating set. You get your dining set. You get your chaises. You get your fire pit and they do super. They’re $6,000, $8,000, $10,000 and they sell a trillion of them.”
Gaylord: “That is sure marketing. Absolutely. There’s your entire backyard, people. It’s cool. It really is.”
Did you ever sell into Canada or Mexico?
Gaylord: “Yes, and it goes up and down depending on the strength or weakness of the dollar. If the Canadian dollar gets really weak against the U.S. dollar, they suffer. Of course, we have Costco Canada, and we have Costco Mexico, and stuff like that. But we have other customers up in Canada. Again, the success or failure usually has something to do with the dollar.”
How many employees do you have here in the states?
Gaylord: “We have maybe 80 people, something like that.”
So that would be the designers, things like that?
Gaylord: “Yes, designers, salespeople, product development people, marketing people, customer service, and our warehouse. The only thing we use our warehouse for, it’s all warranty replacement, stuff like that, because we do give warranties for up to 10 years. We’re pretty lenient. So everything goes out of my warehouses free of charge and prepaid freight.”
Is there anything that you would like to get out while we’re having this chat?
Gaylord: “Well, I must say that I’m really happy to pass on the presidency of the company to Doug Peppler. He’s the right guy at the right time. Everybody thought I was going to make my son president, but he’s not ready. He’s not seasoned enough. It’s funny. He said, Dad, you started this company when you were 40. I said, yes, but starting a company and taking over a large company are two different things.
“I told him, Mike, Doug is 54 years old, or so. I wouldn’t be surprised if Doug puts another eight or 10 years in, and then maybe it will be your turn. But we have a lot of other qualified people, too. Anyway, they created a position for me. It’s Executive Committee Chairman.
“The only message that I will leave you with is that I look at this problem that we have right now as a serious opportunity to really build our business, to really promote the business, and try to energize people that this is not doom and gloom.
“On the contrary, we have another opportunity of cocooning and staycations like we have not seen in 10 or 12 years. To have it happen twice in our lifetime, or career-wise, is really significant. I really believe that.”
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