I wanted to get away from the stripe around the wall.
Chuck Green, owner of New Image RTO

“We definitely focus on furniture. It’s about 65% of our business, and it’s featured throughout most of our showroom. We’ve always accessorized our showrooms well and carried the latest looks. Even in the ‘90’s we were huge in wall units before the major rental chains caught on. We like to look for ways to fill in and complement the competition.”

“Our new showroom concept clearly makes a statement on who we are and how much RTO has evolved. I really wanted to get away from having a stripe painted around the store.”

Green has succeeded in his quest, with an interior that evokes a warm and inviting upscale home.

“We have exposed wood ceilings with custom matched track lighting, cloud-painted ceiling areas, the latest paint colors, different hard wood flooring and tile flooring areas, cultured stone fireplaces, and wall-mounted waterfalls, just to name a few of the upgrades. We feel it is an investment in our future and a way to help our customers visualize the quality of their experience when shopping with us.”

That’s a $225,000 investment, to be exact. And while some dealers might worry about how they would ever recoup that outlay, Green remains unfazed.

“It isn’t something you recapture overnight. But you do look at how much BOR you need to grow to pay for it over five years. In our case, we built our building, so it was a long-term decision. And so far, since the upgrade, this location has grown 15% in just about eight months.”

That growth comes despite the fact that in the midst of the remodel, Aaron’s opened up a location right in Green’s backyard.

“I could throw a ball and play catch with their manager, that’s how close they are to me. And they opened about two or three months before we were finished. But actually, it’s been good to have some real competition because before then we really had very little.”

Green is a very detail-oriented person and carefully worked through every issue that arose when remodeling his 6,800 square foot store. In fact, when it appeared that limited parking could pose a concern, Green purchased the vacant Arby’s building next door so that he could acquire an easement to increase the amount of parking spaces for his customers. He has since sold the building to a developer, who plans to convert it into a shopping center.

“For me it was literally going door to door and asking for referrals. It took months of knocking on doors to get a handful of believers. That was in late 1989 and I owe them a great deal of gratitude. They were all paid off a couple of years later and I greatly appreciate their believing in me.”

Those early days were “undercapitalized” in Green’s view, and he says he started the first store with about 25-30% of the capital he really needed.

“In those days you rented, you collected and you delivered it yourself. I’ve come the long distance, and it’s made me conservative. I never wanted to jeopardize what I had worked so hard to achieve. I’ve seen companies that overextend themselves financially and I have always preferred to grow in a very controlled and sustained manner. It’s held me back in some ways, but I made a commitment to myself and to my employees that I would never grow on borrowed money.”

Green’s employees seem to appreciate his dedication to the financial health of the organization, and Green is proud to have never lost a store manager.

“Every single store manager is still working at the store they were at when it opened.”

Pretty impressive, considering the first rental store Green opened in Colorado Springs was back in 1997. He then added Fountain, CO in 2000; a second Colorado Springs store in 2003; Pueblo, CO in 2005; and in September of 2006 he opened a 21,000 square foot clearance location.

“We like to funnel our pre-rented merchandise through there. It’s a great way to keep our showrooms looking fresh and new. We do 90 days same as cash and even layaway at that location. Since all of our stores are within about a 50 or 60 mile radius it works out well for us and for our customers.”

Green has taken a different approach with selecting store locations, as well.

“We took a big leap of faith and opened up a store in an area with average annual household income of $86,000. Thanks to the upscale store design, it is working very well. Most of the customers look at the transaction as more of a lease, and we do a great deal of business with people who may be new to the area or temporarily in the area.”

Does that mean a higher-income customer base poses less of a collection issue?

“We have absolutely the same collection issues as any other rental store. It’s all about disposable income. Customers may make twice as much, but it’s still about what they’ve got left over. We do see, however, that areas where you have a concentration of home renters versus apartment renters have by far better collection numbers. But believe me, it’s a daily battle we fight just like everyone else.”

Green says the presence of a large number of military families in the Colorado Springs area has been both an opportunity and a challenge for his stores.

“A few years back, when Fort Carson deployed their troops, we lost about 50% of our business. We had to react to that loss. So we decided to go after the Hispanic market, which until then we had not targeted. We hired bilingual drivers and employees and it’s been enough of a success that we have been just marginally affected by the loss of military business. Hispanic customers have been great for us and they tell everyone they know when a business treats them right.”

“When Fort Carson welcomed back some 3,800 troops last summer, they had huge tents set up on base where the soldiers could visit approved product and service providers that the military felt they would need. There were apartment complexes, realtors and much more but there was only one furniture company invited and that was New Image. We were able to park our truck on base and we are proud that we were the most recommended furniture store when the military surveyed the soldiers and their families.”

Green says military pay dates of the 1st and 15th of each month are a major factor in the breakdown of his store renewal dates.

“Over 50% are semi-monthly agreements and weekly agreements are definitely the smallest segment of our business.”

Agreement length is frequently determined by the cost of an item.

“If a product falls above $400, it usually goes on an 18-month agreement. You have to balance your need to make a profit with the payment that a customer can afford. Our agreements are typically 12, 15 or 18-months in length.”

That formula seems to be working, as the revenue generated by a typical New Image store is substantially greater than the industry average.

“We like to have all stores at a minimum of 800 BOR, and our goal is to open a $1 million store in every location.”

Green says he pays close attention to the competition, and he mainly refers to retail furniture locations and well-known national chains.

“Walk into a successful business and look at the environment. Visit an Eddie Bauer store, or even a Chile’s restaurant and you get an ‘instant feel’ about that place. Frankly, you don’t pay as much attention to the price because it’s more about the experience. All the big box chains – stores like Pottery Barn and Crate & Barrel - have done a great job with their store design process.”

Green says it’s important to follow the lower-end retail stores, as well.

“Our customers, even if they don’t buy retail, see the circulars. I’m not afraid of the low-margin retail guy. In fact, I like to take advantage of their advertising and offer some of the same looks for customers who are interested in that type of merchandise.”

When it comes to placing that merchandise on the showroom floor, Green follows a plan.

“You need to put effort into merchandising. There’s an old adage that every showroom has ‘hot spots’. There are certain spots where you can place product and it moves. If you’ve got merchandise that isn’t moving, get it to your hot spot.”

“First impressions are also really important. Within 15 feet of our front entrance, customers are greeted by a living room set flanked by a 9 foot by 5 foot waterfall. And we’re big on pathways, so that we can direct customers throughout the store. We have a tile pathway that wraps around both sides of a large stone fireplace with additional living room vignettes placed on either side. We put three windows on either side of the fireplace that were custom-milled in West Virginia and we also set off some of our displays with a custom micro fiber-padded wall.”

The upgrades don’t end there, as Green carefully researched and selected the paint colors chosen to offset the furniture inventory.

“We sought out professional advice and we studied environments like coffee shops where people like to relax and enjoy themselves. It was absolutely worth the investment to get the help of a designer. Retail companies know the importance of creating atmosphere, but I don’t think enough rental companies realize just how much it adds to a store.”

For the past five years, Green has worked to add his imprint on the Colorado Rental Dealers Association. As President of the CRDA, Green has seen first-hand the legislative and image challenges that face the rental industry.

“I am very proud to say what I do when people ask. Not everyone will be able to see the value in our unique transaction, but most can understand its importance to millions when explained. No one liked being cast in the wide net of the early critics of our industry, but some of their concerns were valid and our industry has reacted. I believe it is better as a result.”

Green is confident that the industry’s legislative efforts are having the desired effect.

“I believe we will some day get our federal legislation to secure the future of our industry. After our recent legislative conference in Washington DC, I hope more and more independent rent to own dealers get involved.

Complacency, apathy or thinking the rest of us will do it for you would be a mistake. No one understands our business like we do and I hope every RTO dealer gets personally involved in securing cosponsors for our federal bills, participating in their state associations and being informed.”

Clearly, Green has been able to interweave his passion for the rental industry with his love of merchandising and design. And he has advice for other dealers interested in upgrading the appearance of their showrooms, as well.

“Dealers need to go to the furniture markets and stay informed. Be aware of what other companies are carrying. I used to go to the Tupelo, High Point and Las Vegas markets but really you can see it all now in Las Vegas. Talk to the furniture reps and get educated. Learn what the best sellers are in your area and take advantage of the merchandising services offered by more and more furniture companies. They have really gotten better about showing which tables and lamps match which upholstered sets. It does require some effort, but it pays off.”

That’s pretty sage advice from a dealer who couldn’t afford a transaction counter in his first store, only to acquire a custom-built $14,000 transaction counter (debt-free!) for his latest store. Clearly, Chuck Green has reached the pinnacle of rental success.