How Gloria Homeier-Schwien left the agriculture industry for RTO and found her cash cow.

Gloria Homeier-Schwien was featured in the RTO Excellence section of the January 2006 issue of RTO Magazine, the rental purchase industry's leading print trade publication.

Each issue of RTO Magazine (Print Edition) recognizes one rent to own owner or operator that has built a successful business through a day-to-day commitment to excellence. Our goal is to recognize achievement, find out what drives success, and to share hints we can learn from and emulate.

The January 2006 issue's success story is Gloria Homeier-Schwien, Full House Rentals.

It was supposed to be a two-week job. A young Gloria Homeier needed temporary part-time work and found it - working for the federal government measuring grain bins and counting cows of the local farmers.

“I was not the person the farmers wanted to see coming. I monitored compliance, so they were always nervous when my truck pulled onto their property,” says Gloria.

Fifteen years (and many cows) later, Gloria knew she needed a change.

“I have to admit, I had a good job. I eventually became the County Executive Director for the Farm Services Agency in the US Department of Agriculture. I implemented all of the farm programs in my part of Kansas. The government was good to me, but I was bored. After you master your tasks, there is no challenge. And I needed to be challenged. I really wanted to go out on my own.”

Luckily for Gloria, she had a close role model. In 1990, Gloria’s father, Richard Cross, had begun opening Hometown Brand Center stores in Kansas and Nebraska. A long-time Sears dealer, he needed a new concept when Sears started to consolidate and close his stand-alone rural locations.

Since Gloria’s US Department of Agriculture position only required a four day work week, she would often spend a day or two working under the tutelage of her dad. Eventually he maxed out at five locations.

“He’d have kept going, but my mom wouldn’t let him open any more!” says Gloria.

Bit by the entrepreneurial bug and intrigued with the possibility of opening her own stores, she started to look for locations near her home in Russell, Kansas.

“My very first thought was Beloit, Kansas (population: 4,000). I looked at the push-pull factors published by Kansas State University and felt there was enough stability despite the rural location and seemingly small population. Beloit had a rather high pull factor, meaning people were going in to conduct business there from other towns, making it all the more attractive.”

So in November 2001, Gloria Homeier-Schwien became Owner/President of G-5 Retail, Inc. and opened her first RTO store, A Full House.

“From day one, we did payday loans, rent-to-own, retail, 90 days same as cash, you name it. The way it breaks down is that 30% of the Beloit transactions are retail purchases and the rest are rent-to-own. And frankly, the payday loans complement the business wonderfully. Customers come in for a loan and end up looking at the merchandise on the floor.”

Interestingly enough, the one thing Beloit customers won’t see on the sales floor are male employees. Gloria’s entire staff, from delivery driver to service tech to store manager, are all women. When asked if this was intentional, Gloria has a practical explanation.
 

“I would like to think that I hire the best qualified candidate for every position. It just so happens that they were all female. I have the same expectations for every employee. If I expect a guy to lift it, I expect a woman to lift it. I also expect them to be able to take a washer apart and repair it and to perform routine maintenance on our vehicles. The entire Beloit staff is female, but we have two other stores now and there are a few male employees, as well.”

In fact, out of Gloria’s 13 employees, three are male and the rest are women. And out of her three store managers (other A Full House stores are located in McPherson, KS - opened February 2003; and Pratt, KS - opened October 2004) not one of them is a guy.

“Like I said, my expectations are the same for every employee and they come through every time. I have three great store managers and I hope I get to keep them forever!”

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Gloria has created a warm, friendly atmosphere in her company where she just might get to keep her employees that long. After experiencing high turnover among delivery drivers early on, she upped the pay scale and added benefits such as health, dental and life insurance, making it more of a management track. It worked, since every one of her three current managers started as a delivery driver.

“I’m in every store at least once a week, and sometimes twice. I believe in working right beside the store staff. In fact, the hard (collection) cases come right to me. When the store owner knocks on the customer’s door the reaction you get is a little different!”

That reaction must usually be good, since Gloria’s company went from day one until this past September without experiencing a single customer skip - that’s nearly a four-year stretch without losing any merchandise.

“The benefit of operating in a rural environment is that my managers have lived in the area and know our customers and know their families. Collections are not really an issue, although we all know sometimes things happen and accounts will become delinquent.”

One practice Gloria has instituted to help curb delinquencies is a merit-based pay system that factors delinquency percentages into managers’ compensation.

“The formula that is working for us is a certain percent of total revenue, less the percent of delinquencies. It might sound overly simple, but since we started this, I have seen tremendous changes. Overall revenue is up 15%. Delinquencies have been reduced by 30%. The best part of all, though, is that my managers’ pay is up 20%. And we all couldn’t be happier!”

That’s good, since Gloria’s stores are preparing for the upcoming rush, when income tax refunds have a strong impact on their stores.

“Normally, Beloit is about 30% retail purchases and Pratt and McPherson are about 15-20% retail. But February is our highest sales month overall, hands down. You really see the impact of those refunds both on the RTO and the retail side.”

Gloria’s stores aren’t huge (they all average about 400 BOR per store and 4,000 square feet of display space), but they are successful because she keeps her overhead low and her growth in check.

“If you grow too fast, it can take lots of cash to buy the merchandise you need. Our third store (Pratt, KS) grew so fast we sold out the entire store faster than I thought possible. It’s hard to know how to make sure you have enough merchandise. What was interesting is that the first day in Pratt we had NO business. Nothing. Whereas in the previous two stores, we were renting merchandise on day one. But by the fourth week in Pratt, we had gone through our entire warehouse. Now the Pratt store is consistently giving McPherson a run for its money for the highest company BOR.”

It also helps the profitability of her stores that a large number of rental agreements progress to ownership.

“In Beloit, nearly 85% of the rental agreements pay out in full. In McPherson, the number’s between 45% and 50%. In Pratt, it’s still too soon to tell, but the number should be at least close to 50%.”

Gloria’s company, G-5 Retail, Inc. owns the real estate occupied by all three stores, soon to be four. She also takes great pains to finalize her advertising in advance, to ensure a plan is in place and costs are kept in check.

“In December, we have our plan completed for the entire next year. I’ll never spend 10% of my revenue on marketing, but I might spend 5%. You know you’ll never beat word of mouth, so I try to capitalize on that by controlling employee turnover. I want our customers to see familiar faces in the stores. Beyond that, cable TV has been good to us. I mainly have folks say they saw our commercial on American Choppers or during wrestling. And the pricing is pretty advantageous, especially when the cable company will create the ad for you. I also like running ads in those free shopper publications.”

According to Gloria, that plan typically includes cable ads every week, a shopper ad every other month, and an on-going direct mail program.

“When we first enter a market, I hire someone from an area community college to enter every address in the area into a database. Then, we can reach just about every person out there.”

Gloria also credits Ideal Software’s marketing function for allowing her to run direct mail offers to her customers.

“One of the best offers I use is $5 the first week rents anything in the store. It always brings customers in. The key, though, is making sure you’re staying within the customers’ budgets.”

Another key, says Gloria, is offering the right mix of merchandise and being able to service what you rent. While A Full House stores rent Ashley furniture, and Pioneer, JVC and Sony electronics, they only offer one brand of appliances.

“We strictly rent Whirlpool appliances. Our techs know their merchandise, and they all have attended Whirlpool training at Whirlpool’s facility in Tulsa, Oklahoma. As a result, we service everything we rent or sell in our own stores. Refrigerators, stoves, washers and dryers, we know how to do it all.”

After 15 years in RTO (10 working for her father and 5 on her own), Gloria has seen some changes in the business.

“Customers now are much more educated. They shop around. They have choices. There is definitely more shopping and browsing than ever before. Of course, the merchandise has changed drastically since 1990. We love those plasma TV’s and LCD TV’s, and not just because they weigh so much less!”

Gloria plans to soon open her fourth store in five years, and eventually build A Full House into a force to be reckoned with.

“My goal is to be the biggest privately-owned RTO company started by a woman.”

So while it might seem like a long way from climbing grain bins in rural Kansas to climbing toward RTO excellence, for Gloria Homeier-Schwien, it’s just another job well done.

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Vendors: Contact sales@rtoonline to recommend dealers for the RTO Excellence Profile.