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VALLEY BUSINESS | SPECIALTY FURNITURE: STORES FIND
THEIR NICHES

Do-It-Yourselfers Plug In to Lamps Plus Outlet

Lighting: The stores offer customers the company's leftovers and samples, along with some regular merchandise.

August 22, 2000|LEE CONDON | TIMES STAFF WRITER

CHATSWORTH — Each year, Lamps Plus manufactures and sells about 3 million units of lighting products.

But not all of the revenue comes in through the company's 40 retail stores. Lamps Plus Inc., through a division called Pacific Coast Lighting, is also the largest supplier of lighting for hotels in the country. Lamps Plus Centennial, another division, makes lamps for the home construction business.

With all this volume, Lamps Plus has lots of leftovers--extra lampshades from a big hotel order, too many swing lamps from a home construction project or a slightly imperfect floor lamp from a production run.

Eager to make the most out of every lamp manufactured, Lamps Plus owners Dennis and Manja Swanson created Lamps Plus outlet stores to unload the items that don't quite fit in at a regular store. Most of the price tags in the store claim markdowns of 30% to 50%.

"The customer gets a tremendous value," said Swanson, the company's president and chief executive.

The 40 stores are located in most western states, reaching as far east as Denver. Plans are in the works to expand into Texas. The company is privately held and has revenue of between $150 million and $200 million, according to industry sources.

Swanson admits the Chatsworth store is the best of his 10 Lamps Plus outlet stores because it's adjacent to the company's headquarters and a manufacturing plant. That means this outlet store gets most of the production overruns and irregulars from the manufacturing plant.

Also, all the sample products sent to Lamps Plus employees who create the merchandise lineup typically end up on sale in the outlet store. That means the store is filled with items that company buyers may have rejected but that might be the perfect, hard-to-find fixture for someone's living room.

"Companies will send us samples of items we may not want to carry. So we stick it in the outlet store and sell it for cost," said Michael Berman, the store manager.

Pacific Coast Lighting, the hotel-lighting arm of Lamps Plus Inc., does much of its business manufacturing special orders for hotels, making custom lampshades.

"They want a unique product," Swanson said. "We are designing for hotel designers who are right on the cutting edge."

If the manufacturing plants make too many lampshades for a particular hotel, the overruns are shipped to the outlet store.

"You don't realize how often hotels change their lampshades," said Berman, the store manager. "Sometimes the decorators will order something and then change their minds, to go with pink instead of white. We get all that stuff here."

The store also gets any item that comes off the production line with defects. Berman said typically the defects are very minor and the store staff attempts to fix them.

The outlet does not receive defective or returned materials from Lamps Plus stores. Swanson said it costs too much to ship a damaged product back to Chatsworth.

"Shipping it can make a small defect a major defect. It's cheaper to just have the store where it is sell the product at a low price and get rid of it," Swanson said.

Swanson added the regular Lamps Plus merchandise to the Chatsworth outlet after the 1994 Northridge earthquake destroyed the Lamps Plus store in Northridge.

"We took a big hit. We lost hundreds of thousands of dollars of merchandise," Swanson said.

The Northridge store never reopened. Instead, Swanson decided to introduce the full Lamps Plus line of merchandise into the Chatsworth outlet store. The combination of regular Lamps Plus merchandise plus the outlet fare was such a hit that Swanson has since introduced outlet components at several other stores.

"Even though [the earthquake] was a disaster, it changed the nature of our business," Swanson said.

While Lamps Plus stores sell items from other manufacturers, the company makes many of its own lamps. However, most of the manufacturing is done to supply the hotel and home construction business, Swanson said.

"Only a small portion of what we manufacture goes in our stores," Swanson said.

In fact, Lamps Plus started as an outgrowth of a lighting manufacturing plant in North Hollywood that the Swansons opened 24 years ago. They had extra space at the manufacturing plant and decided to sell lamps out front.

"We set out everything on cardboard boxes," Swanson said. "It was really a warehouse."

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