Heilig-Meyers Furniture

Moderator: Groceteria

Post Reply
Dean
Senior Member
Posts: 738
Joined: 11 Jan 2007 23:27

Post by Dean » 03 May 2007 22:23

Heilig-Meyers Furniture. They are completely gone, correct?

They had built a HUGE distribution center in Hesperia CA, off the 15 freeway, not long before they went bankrupt and closed. Probably spent too much on this DC! It is now a distribution center for Newell-Rubbermaid.

Heilig-Meyers had a retail store in the front corner. It is now THE FURNITURE GUY.

User avatar
runchadrun
Senior Member
Posts: 618
Joined: 27 Dec 2005 14:29
Location: Granada Hills (Los Angeles), CA
Contact:

Post by runchadrun » 04 May 2007 00:23

Heilig-Meyers filed Chapter 11 in August 2000 and shut down in April 2001. Here in Socal they took over McMahon's Furniture in 1993, which also sold a limited number of appliances. I never saw the point in buying appliances at a small furniture store except perhaps for people who can't get credit anywhere else.

There's a rather exhaustive history of H-M at http://www.answers.com/topic/heilig-meyers-company-1
Last edited by runchadrun on 04 May 2007 16:23, edited 1 time in total.

User avatar
Dave
Senior Member
Posts: 315
Joined: 01 Dec 2005 14:08
Location: Richmond, VA
Contact:

Post by Dave » 04 May 2007 12:23

Heilig-Meyers - another large dead chain based in Richmond. My wife did work for them too.

As the linked article points out, they still survive as The RoomStore. I believe they only changed the corporate name from Heilig-Meyers recently.

The article seems to imply that Heilig-Meyers voluntarily gave up its in-house credit operation, which is not necessarily true; their bank creditors forced them to go third party because they objected to H-M using any cash for the in-house credit program.

That was the death knell for Heilig-Meyers. How they got into bankruptcy aside, thier bread-and-butter was the small town store and customers buying on house credit. When they went into bankruptcy, they closed their underperforming stores - which tended to be newer stores in growing suburban areas, and focused on the profitable stores, which were the small market stores with lots of customers using in-house credit. Heilig-Meyers had a sophisticated credit system on the back end, but on the front line the decisions were made to old-fashoined way, by store managers who knew their neighborhoods and customers. That worked pretty well.

Once their third-party credit provider took over, customers who used to qualify for Heilig-Meyers credit no longer did, since the local input was taken away. That killed the remaining small-town stores.

javelin
Senior Member
Posts: 143
Joined: 23 May 2006 16:28

Post by javelin » 04 May 2007 15:31

I worked for Heilig Meyers for a while back in college. Our customers were typically on public assistance or minumum wage jobs with horrible credit. Reposessions weren't uncommon, and sometimes dangerous. Most of the time they'd just get sued, and of course the judgments weren't worth the paper they were written on. But the prices were over-inflated to begin with, along with 24% APR on top of that, so they could afford a high number of defaults.

In the end, we were selling analog cellphones, obscure CD's and B movie tapes (I especially recall one called "Black Gestapo"), along with cheap and usually ugly furniture.

The DC in Hesperia was only used for about a year or two. The city paid millions in incentives and tax breaks, only to lose most of it when the company went under. There was a rumor that Ferrari was interested in leasing a climate-controlled portion of the building, which never materialized.

User avatar
runchadrun
Senior Member
Posts: 618
Joined: 27 Dec 2005 14:29
Location: Granada Hills (Los Angeles), CA
Contact:

Post by runchadrun » 04 May 2007 16:41

javelin wrote:I worked for Heilig Meyers for a while back in college. Our customers were typically on public assistance or minumum wage jobs with horrible credit. Reposessions weren't uncommon, and sometimes dangerous. Most of the time they'd just get sued, and of course the judgments weren't worth the paper they were written on. But the prices were over-inflated to begin with, along with 24% APR on top of that, so they could afford a high number of defaults.
According to the LA Times article when they shut down, 3/4 of their sales were made through installment payments. It also said that the Hesperia DC was hundreds of miles from some of their stores so West Coast transportation costs were much higher than on the East Coast.

rich
Senior Member
Posts: 575
Joined: 15 Nov 2005 20:51
Location: Washington, DC

Post by rich » 04 May 2007 23:20

Even middle class people have bought furniture on time for ages and that's been a big part of traditional furniture retailers' models. Still, that model has been undermined by easy access to credit cards and they may have gotten more marginal buyers than they had had in the past. They clearly over expanded and probably got into markets they didn't understand. They probably also got into states that weren't as friendly to people issuing credit. Anti-labor states like NC are usually very lenient about garnishing wages, etc. which is beneficial to a low end credit business.

User avatar
Dave
Senior Member
Posts: 315
Joined: 01 Dec 2005 14:08
Location: Richmond, VA
Contact:

Post by Dave » 05 May 2007 20:06

rich wrote:Even middle class people have bought furniture on time for ages and that's been a big part of traditional furniture retailers' models. Still, that model has been undermined by easy access to credit cards and they may have gotten more marginal buyers than they had had in the past. They clearly over expanded and probably got into markets they didn't understand. They probably also got into states that weren't as friendly to people issuing credit. Anti-labor states like NC are usually very lenient about garnishing wages, etc. which is beneficial to a low end credit business.
Actually, NC is fairly tough compare to Virginia. Surprisingly, South Carolina is an extermely tough place to collect a judgment (I used to be in the collections biz).

Heilig-Meyers traditional strength wasn't in urban areas but small towns and rural areas. I worked in a bank branch for a while in a rural area and the mindset regarding credit was completely different. Our customers couldn't qualify for credit cards. We had some who came in each fall to get a loan for their heating oil delivery and we financed quite a few folks so they could get indoor plumbing (this was in the early 1980's in a rural part of what is now a rapidly growing suburban county). These loans looked like crap on paper but the borrowers were solid gold payers.

Unfortunately, those days are gone for the most part. Economies of scale and the investment community have made it so most everyone has to fit somehow into a matrix of credit scoring and risk management based on data and not on character.

Sorry for the soapbox.

javelin
Senior Member
Posts: 143
Joined: 23 May 2006 16:28

Post by javelin » 06 May 2007 10:24

Dave wrote:
rich wrote: Unfortunately, those days are gone for the most part. Economies of scale and the investment community have made it so most everyone has to fit somehow into a matrix of credit scoring and risk management based on data and not on character.

Sorry for the soapbox.
Did the banking industry change or has society changed? Something I won't try to answer, but many of the lower end customers from my experience felt as though they were "entitled" to skip out on payments because of the high prices and inflated interest. Sad, but it's a vicious cycle, that defaults have to be passed onto all customers, good or bad.

Nowadays, the only way to rate a person's character through some accuracy is through credit. It's not hard to build a good record, though it takes time. I think that it should be easier to establish credit than it is now, by giving people with good references at least a chance by giving them small loans at first, such as lines of credit attached to checking accounts (if a customer trusts a bank with their money, why can't a bank trust a customer with theirs?).

If H-M were around today, I'm sure they'd be selling lots of those pre-paid Visa cards. I worked for a retail store that sold these, and you'd be surprised to see how many actually think it's a "credit" card.

User avatar
Dave
Senior Member
Posts: 315
Joined: 01 Dec 2005 14:08
Location: Richmond, VA
Contact:

Post by Dave » 06 May 2007 11:39

javelin wrote:Did the banking industry change or has society changed? Something I won't try to answer, but many of the lower end customers from my experience felt as though they were "entitled" to skip out on payments because of the high prices and inflated interest. Sad, but it's a vicious cycle, that defaults have to be passed onto all customers, good or bad...
The banking industry changed. People like you describe could always get credit from someone somewhere (like maybe Heilig-Meyers), but at a cost. What changed was the willingness to price credit based on statistical risk assumptions on a grand scale.

When I went through credit training, we did not use credit scoring. We had used scoring, but had dropped it; at the time there was a concern that credit scoring systems tended to have a built-in bias against minorities. It is pretty funny to see what counted against you in those days - a couple of the big negative factors I recall were no home telephone and "unstable" occupation (some of the examples given were carnival worker, migrant laborer, and radio-television announcer).

Modern credit scoring systems like Fair-Isaac (FICO) supposedly take away the bias, but they then create scenarios in which your interest rate can be increased substantially because of the amount of outstanding credit you have or the amount of credit available to you - even though you haven't ever done anything other than pay as agreed according to the terms of the credit contract. That's dumbed down the extension of credit and taken the human factor away.

We went into deep panic if the delinquency rate on our installment oan portfolio went above 2.00% and above 1.25% on mortgages. That was in a time when prime was over 18%. Look at what the banks and mortgage companies are reporting now.

Dean
Senior Member
Posts: 738
Joined: 11 Jan 2007 23:27

Re: Heilig-Meyers Furniture

Post by Dean » 12 Feb 2009 23:17

Cathedral City CA--noticed a vacant former location on Highway 111.

San Bernadino CA--former location is currently offices for San Manuel Indian Casino.

Colton CA--on Valley Boulevard @ La Cadena. Vacant.

Post Reply