The Nebraska Furniture Mart's new store in Kansas City, Kan., was a disaster for nearly two years.
It was overwhelmed with customers. Deliveries lagged purchases by 30 days or more. Problems began multiplying almost as soon as the store opened in 2003 and didn't let up.
When Warren Buffett, whose Berkshire Hathaway Inc. had bought the company 20 years earlier, cut the ribbon on the new store, he asked Ron Blumkin, the Mart's president, “When are you going to do this again?”
Because of the difficulty in getting the new store running properly, Blumkin said Thursday, he was shocked at the suggestion, and his reply was simple: “Never.”
He and the other managers viewed the Kansas City store as a huge risk for the Mart. “We were betting the farm,” he said. But Buffett viewed the new store as a low-risk venture because he trusted the company's management to make it work, even if it took a long time, Blumkin said.
As time went by, the Omaha retailer resolved its Kansas City store's problems and the company's managers learned from their mistakes, Blumkin said. The idea of expanding into another market gradually became a possibility, and Buffett's backing did not waver.
Today, the Mart is halfway to opening its third and most ambitious mega-store, a $1.5 billion, 433-acre development in suburban Dallas that's due to open in 2015.
Blumkin told about 150 people at a meeting of the Association for Corporate Growth at Happy Hollow Country Club that the Dallas-area store, to be known as the Nebraska Furniture Mart of Texas, is an example of patience and a focus on long-term business goals.
Those principles are part of the Mart's culture inherited from his grandmother, store founder Rose Blumkin, and learned from Buffett during 30 years as part of Berkshire Hathaway, he said.
After the talk, Blumkin said two or three companies have inquired about becoming anchor tenants at the development. The goal is to have anchors that will be new to the Dallas market, he said, alongside the “bread and butter” tenants that most malls must have to attract customers.
So far the only building under construction is the Mart's store, which will occupy about 100 acres counting parking and warehouse space, he said.
Over the years, the Mart has adjusted some of the principles that had guided Rose Blumkin, who died in 1998 at age 104. After an unsettling experience with a bank loan in the 1940s, she was opposed to borrowing money.
Blumkin said the Mart still maintains a high level of assets in relation to debt but has taken advantage of financing in its expansion plans.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.