When a 95 year old defeated America's Biggest Furniture Brand

5 Jan 2022  Read 2579 Views

Do you know who "Rosie the Riveter" is?
She is a character from the American Industrial Movement meant to inspire women to join the workforce. The bandana-clad Rosie was an inspiration. She led the femme-Americana to join the very male-led industries as aviation, arms & ammunition, and the forces.

But Rosie came into existence in 1942 when our protagonist Rose Blumkin was already a decade into her furniture business called Nebraska Furniture Mart (NFM from here on). The very NFM, that is now America’s biggest furniture retailer. The same NFM that is one of the big earners in Warren Buffett’s Berkshire Hathaway conglomerates.

Speaking of Warren Buffett, the Oracle of Omaha is all praises for the furniture matriarch Rose Blumkin. He calls her a “marvellous, marvellous woman” and believes that if she were given an even start with even the top graduates from top business schools or chief executives of  Fortune 500 companies, she would “run rings around them”. Warren Buffett is truly inspired by Rose, and he’d even joke about being somewhat intimidated by her as a businessperson.

Let’s learn about Rose, her life and times, and her success with Nebraska Furniture mart.

A Budding Rose

She was born Rose Gorelick in 1893 in Belarus, Russia. Her father was a priest and her mother ran a convenience store. Times were tough in the Gorelick family as making ends meet was a difficult endeavour.

Rose, a hard worker from the very beginning, chose to help her mother out in the convenience store. While other kids her age would go to school and make merry, Rose chose to work.

Although she didn’t go to school, Rose learnt a different lesson working at the store. A lesson on how to run a business. To her credit, by the time she was 16 years old, Rose already had 6 men reporting to her in the same convenience store.

Little did she know she had given her illustrious business a very valuable head start.

Two Lovers in a War

During her time in Russia working in a convenience store, Rose fell in love with and married a local shoe salesman named Isadore Blumkin. But this union was ill-timed, for Rose and Isadore fell in love in the age of war.

The year was 1914, and the First World War had just begun. Russia had planned to invade Germany as a part of its war effort. To support this effort, the Russian army was recruiting all able-bodied men to participate in the invasion. This spelt trouble for Isadore. He knew he was no soldier and fled Russia to seek refuge on American soil, leaving his young wife behind. She was left behind because if Isadore took her along, he would have likely been caught fleeing.

Being caught would have defeated the entire purpose of doing so as he would have been recruited in the army anyway or might even have been tried for treason. Being caught meant losing all possibility of ever being with Rose.

Poor Rose had to spend the first three years of her marriage alone. But she didn’t give up, she bided her time and, soon enough, managed to convince a Russian soldier to help her reach America.

An Immigrant’s American Dream

Rose, like many immigrants at the time, came to America in a boat. She landed in Seattle and the Red Cross helped her reunite with her husband in Iowa. Since Rose had never spent a day in school in her 24 years of life owing to helping her mother since childhood, learning a new language (English) was a bit of a chore for our protagonist.

Away from home, Isadore decided to move from Iowa to Omaha; this time, with Rose alongside him. This was because Omaha had a settlement of Russian immigrants that would give the young couple some semblance of familiarity.

Here in Omaha, Isadore decided to open a store to sell used clothes to help sustain his family. Rose was living the American dream, a family of her own, some money and a little prosperity.

But this dream wasn’t Rose’s. She realised that helping in the convenience store during her childhood had kindled a flame that had not left her even when she was 40. Rose was a businesswoman and wanted a business to call her own. Thus began Rose’s American dream.

Enter Mrs B

The journey of a thousand miles begins with a single step. Rose had a dream that would need more than just willpower to fulfil. The dream needed money and patience. So with $2000 of her own and an additional $500 from her brother, Rose opened Nebraska Furniture Mart in the basement of the same building that housed her husband’s clothing store. Nebraska Furniture Mart had one motto; "Sell cheap, tell the truth, don't cheat nobody."

 

While this idea was great for the customers and did attract them, NFM’s competitors didn’t take too well to Rose’s strategy. Thus began a stream of hardships for NFM and Rose- courtesy of rival furniture stores.

The first attack at NFM was in the form of lawsuits against Rose under the Fair Trade Law, which decided the minimum resale price a seller, manufacturer or distributor could set for their goods. The competitors alleged that Rose was offending the said law because of her low prices. Rose, of course, was in the clear, and the low prices were a welcome by-product of effective cost management.

The second attack was more unscrupulous. The competitors targeted the suppliers of the furniture retailers—basically, the businesses that sold furniture to NFM and its competitors. The competitors threatened to stop selling the suppliers’ goods if they continued to support Rose’s business. Now, NFM might have been thriving, but it wasn’t yet close to being as prevalent as these competitors. The suppliers had no choice but to play to the whims of the competitors as the suppliers ran the risk of losing valuable clientele if they continued to supply to Rose.

Big strong furniture businesses cornering a lady and her newborn business. Is that how fragile the furniture businessmen of America were? That they chose to not compete with a new business but destroy it?

Or was it the egos of the competitors that was fragile and broken by a woman taking over their business?

So what did Rose do?

Well, she took every strike to her business in stride and turned the competitors’ games on them.

First, she dealt with the lawsuits. “How?” You ask?

Since Rose wasn’t actually convicted, only accused, she cited the lawsuits in newspapers to prove how low her prices really were.

As for the cutting-off of her supply chain, Rose wasn’t too worried. She was confident that the loss of suppliers inside the state could not dent her iron-clad business. She looked at this situation as only a minor inconvenience and started sourcing her furniture from other states- where her petty competitors had no power.

With competitors taken care of, it was pretty easy breezy for Rose. With NFM growing as a business as well as gathering fame, it even caught the attention of Warren Buffett.

As said before, the way Rose operated her business still inspires Buffett. A way he appraises businesses is how he’d like to compete with them if he had sufficient capital resources. When it comes to Rose, NFM and Rose’s family, he’d “rather wrestle grizzly bears than compete with Mrs B and her progeny.” 

Which is why, instead of competing with NFM, Warren decided to acquire a majority stake in NFM in the year 1983 for $55 million. It was a simple handshake deal with a single paper contract. All the auditing he needed for this purchase was asking Rose, now famous as “Mrs B”, one question, ‘Mrs B, do you owe any money?’ To which her simple answer was ‘No.’

Don’t Mess with Granny B

Even after the sale of stakes to Berkshire Hathaway, Rose stayed as the chairman of the board of NFM. Age was never a problem for her; she started young, she was ready to keep going! Tiny Mrs B could often be observed zipping around the shop floor in her little scooter even at the ripe age of 90, managing the business from the ground up.

According to her, the secret to her long life was her dedication to her work. She would consistently put in 6 ½ days in a workweek, each being over 10 hours long. Now that’s commitment!

But 5 years into the acquisition, Rose ran into a new and strange problem, her own grandchildren.

According to Rose’s recollections, her grandchildren had begun freezing her out of the business because she was too old. This attitude wasn’t going to fly with Rose, so reluctantly, she stepped away from NFM in every capacity.

Imagine being in Rose’s shoes, building a company of her dreams from scratch, turning it into a blooming and flourishing empire for her children. All of this for what? To be betrayed and left in the dust by her own flesh and blood? Any other grandmother would have been broken by such deceit by her own grandchildren. But this isn’t just some other grandmother we’re talking about. Rose wasn’t one to go down without a fight. This step back, away from NFM wasn’t Rose backing away or giving up; she was only backing up like a lion ready to pounce!

And pounce she did. Right across the street from NFM, now under her grandsons’ management; she opened Mrs B’s Clearance and Factory Outlet. And with Mrs B at the helm, her new store met the same success that she brought to NFM. Only this time, she was competing against her own business and biological progeny!

And boy, did this new competition stoop low! NFM under new management brought the same threat to Rose as did the competitors mentioned before. Only this time, NFM had the power to influence the furniture suppliers of the entire country.

Again, only minor inconveniences for our heroine. While there were suppliers ready to stick with Mrs B, she had a point to prove again. If she did it once, she could do it again. This time, she went international and still made Mrs B’s a flourishing business.

This family tussle was brought to an end when Mr Buffett intervened and acquired Mrs B’s Clearance and Factory Outlet and merged it with NFM. This reunited Rose back with her creation on better terms. Buffett joked about it by saying he should have made Rose sign a “non-compete” agreement before she left as the chairman of the board. 😉

Rose worked tirelessly for NFM until the ripe age of 103, when she finally retired of her own volition. A year later, she passed, leaving behind a behemoth of a business in her wake.

The Bottom Line

Today NFM operates through a total of 5 outlets spread across America. Nebraska has the original store and Mrs B’s, while three new have been opened in Missouri, Iowa and Texas.

Somewhere around 1975 when Nebraska was hit by a violent tornado, the NFM store was destroyed. While most businesses would be devastated by a loss of this scale, Mrs B saw an opportunity to renovate. She just built a bigger store in the same location without breaking her stride.

One lesson that ladies, gentlemen and children of all ages should take away from today’s story is that no problem is too big if the person faced by it has even a shred of the urge to overcome it.

About the Author: Deb P Samaddar | 248 Post(s)

Deb is a keen learner and eager to learn about the finance world. He is that person who would never stop talking, but my oh my, the words he uses, are not something a normal human would in a regular conversation. While the conversations are well, interesting, the write-ups are faultless. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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