1 00:00:02,720 --> 00:00:16,360 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:18,520 --> 00:00:21,520 Speaker 2: Hello and welcome to another episode of the ad Blots podcast. 3 00:00:21,600 --> 00:00:23,160 Speaker 2: I'm Tracy Alloway and I'm Joe. 4 00:00:23,200 --> 00:00:24,400 Speaker 3: Why isn't thal Joe? 5 00:00:24,440 --> 00:00:26,880 Speaker 2: Can I start this conversation with what will seem like 6 00:00:26,880 --> 00:00:28,880 Speaker 2: a random story, but I swear I have a point 7 00:00:29,040 --> 00:00:31,479 Speaker 2: and go on. Okay, So, a long long time ago, 8 00:00:31,560 --> 00:00:34,680 Speaker 2: when I was visiting my mother in Beijing one winter, 9 00:00:34,800 --> 00:00:37,640 Speaker 2: she was working out there. Beijing winters are really cold, 10 00:00:38,040 --> 00:00:40,720 Speaker 2: they're really dry, and I was sat in her apartment 11 00:00:40,760 --> 00:00:42,800 Speaker 2: and all of a sudden, I hear this giant crack 12 00:00:43,400 --> 00:00:45,960 Speaker 2: and I run downstairs and it turns out the console 13 00:00:46,000 --> 00:00:48,400 Speaker 2: that the TV was on had just like completely split 14 00:00:48,440 --> 00:00:51,600 Speaker 2: in half because the air was so dry and it 15 00:00:51,680 --> 00:00:54,480 Speaker 2: was so freaking cold. And I had never considered that 16 00:00:54,520 --> 00:00:58,160 Speaker 2: you could have weather locations where the weather was so 17 00:00:58,280 --> 00:01:01,440 Speaker 2: extreme that you actually had to fact that into your furniture. 18 00:01:01,520 --> 00:01:02,080 Speaker 4: I never thought. 19 00:01:02,080 --> 00:01:06,319 Speaker 3: I mean, I do have one sort of connection to that, 20 00:01:06,360 --> 00:01:10,240 Speaker 3: which is we're going to start bragging about our international experiences, etcetera. 21 00:01:10,520 --> 00:01:13,440 Speaker 3: You know, I've mentioned my family lived in a Malaysia 22 00:01:13,480 --> 00:01:15,560 Speaker 3: for a year. We bought this big round table that 23 00:01:15,600 --> 00:01:17,480 Speaker 3: we brought back with us to Illinois, and I do 24 00:01:17,600 --> 00:01:21,240 Speaker 3: remember now that there was some discussion about like, oh, 25 00:01:21,280 --> 00:01:24,199 Speaker 3: this was designed for the humidity of Malaysia, et cetera. 26 00:01:24,280 --> 00:01:26,920 Speaker 3: Maybe have some natural give, et cetera. But it's fine. 27 00:01:26,920 --> 00:01:29,440 Speaker 3: But it's funny you say that, because yes, now, I 28 00:01:29,440 --> 00:01:30,960 Speaker 3: would not have remembered that otherwise. 29 00:01:31,040 --> 00:01:32,880 Speaker 2: All right, Well, the reason I bring it up, we're 30 00:01:32,920 --> 00:01:36,640 Speaker 2: so sophisticated in the Internet, sophisticated. I hope everyone's factoring 31 00:01:36,720 --> 00:01:41,480 Speaker 2: in climate considerations into their furniture. But there is actually 32 00:01:41,480 --> 00:01:43,560 Speaker 2: a reason that I'm bringing that up, which is we 33 00:01:43,600 --> 00:01:46,959 Speaker 2: are in Alaska, and Alaska does have cold, very very 34 00:01:47,040 --> 00:01:50,800 Speaker 2: dry winters, and it's also very very large. It's very 35 00:01:50,840 --> 00:01:53,880 Speaker 2: hard to get things into and out of the state, 36 00:01:54,320 --> 00:01:56,520 Speaker 2: and so I think it would be really interesting if 37 00:01:56,520 --> 00:01:59,880 Speaker 2: we actually talked about the furniture industry within Alaska. 38 00:02:00,080 --> 00:02:02,600 Speaker 3: We need no more introduction, we need no more. 39 00:02:02,560 --> 00:02:04,600 Speaker 2: Let's do it, all right, So we do, in fact 40 00:02:04,640 --> 00:02:06,360 Speaker 2: have the perfect guest. We're going to be speaking with, 41 00:02:06,520 --> 00:02:10,040 Speaker 2: Dave Cavit. He is the CEO and founder of Furniture 42 00:02:10,200 --> 00:02:13,560 Speaker 2: Enterprises of Alaska, so really the perfect person to speak to. 43 00:02:13,680 --> 00:02:13,880 Speaker 5: Dave. 44 00:02:13,919 --> 00:02:15,320 Speaker 2: Thank you so much for coming on all. 45 00:02:15,240 --> 00:02:17,480 Speaker 4: Thoughts Thank you so much for having me here. 46 00:02:17,639 --> 00:02:21,639 Speaker 2: So tell us about furniture enterprises of Alaska. What exactly 47 00:02:21,720 --> 00:02:22,440 Speaker 2: are you doing there? 48 00:02:22,639 --> 00:02:27,720 Speaker 4: Yep, we are furniture retailers. We have fourteen stores under 49 00:02:28,360 --> 00:02:33,160 Speaker 4: six different brand names, and so we have our stores 50 00:02:33,200 --> 00:02:37,040 Speaker 4: are Sadler's Furniture, Williams and k Holme Furnishings, which is 51 00:02:37,280 --> 00:02:42,360 Speaker 4: more design and custom order products. Saders's mid market. We 52 00:02:42,400 --> 00:02:47,440 Speaker 4: have two Ashley stores that are a licensee of them. 53 00:02:47,919 --> 00:02:51,200 Speaker 4: We have three Mattress Firm stores, a Lazy Boys store 54 00:02:51,600 --> 00:02:54,040 Speaker 4: and a Ultimate Mattress Store, which is a higher end 55 00:02:54,040 --> 00:02:59,160 Speaker 4: mattress retailer. So what we do is we segment the 56 00:02:59,200 --> 00:03:04,160 Speaker 4: different demographic in the marketplace and then combine the operations 57 00:03:04,200 --> 00:03:07,480 Speaker 4: back behind it to be able to deliver the furniture 58 00:03:07,520 --> 00:03:11,600 Speaker 4: at a lower cost than other companies. And tell us a. 59 00:03:11,600 --> 00:03:13,680 Speaker 3: Little bit about as you mentioned the size of the 60 00:03:13,720 --> 00:03:16,640 Speaker 3: retail footprint. Tell us a little bit about the history. 61 00:03:16,680 --> 00:03:19,960 Speaker 3: How did you get into this? Are you a native Alaska? 62 00:03:20,800 --> 00:03:23,520 Speaker 3: We learned the term sourdough recently. Are you a sourdough 63 00:03:24,040 --> 00:03:25,680 Speaker 3: what's the story of you and your company? 64 00:03:26,040 --> 00:03:28,880 Speaker 4: Yes, I am a sourdough now I am sixty nine 65 00:03:28,960 --> 00:03:32,960 Speaker 4: years old. I grew up in central California in the 66 00:03:33,000 --> 00:03:35,680 Speaker 4: farming area, and it was not the right fit for me. 67 00:03:36,160 --> 00:03:39,080 Speaker 4: So two weeks out of high school, I hitchhiked up here. 68 00:03:39,640 --> 00:03:44,360 Speaker 4: Kind of thing by myself. Already that I did several 69 00:03:44,360 --> 00:03:48,240 Speaker 4: different odd jobs a short term as a commercial fisherman, 70 00:03:48,360 --> 00:03:51,160 Speaker 4: but we sunk the boat that was not good. I 71 00:03:51,240 --> 00:03:54,920 Speaker 4: was a janitor and bedmaker on the North Slope during 72 00:03:54,960 --> 00:03:57,400 Speaker 4: the building of the pipeline, and then I went as 73 00:03:57,400 --> 00:04:01,280 Speaker 4: a day labor to a furniture company and stayed there 74 00:04:01,320 --> 00:04:01,840 Speaker 4: ever since. 75 00:04:02,720 --> 00:04:05,400 Speaker 2: This is already really fascinating. So one thing that Joe 76 00:04:05,400 --> 00:04:07,960 Speaker 2: and I are learning about Alaska in real time is 77 00:04:08,040 --> 00:04:10,680 Speaker 2: it is incredibly cyclical and sort of you have these 78 00:04:10,720 --> 00:04:13,240 Speaker 2: boom bust cycles that are tied to what's happening in 79 00:04:13,240 --> 00:04:16,320 Speaker 2: the oil industry. So you mentioned making beds when the 80 00:04:16,320 --> 00:04:19,240 Speaker 2: pipeline was getting constructed. Is it fair to say that 81 00:04:19,360 --> 00:04:22,960 Speaker 2: furniture sales follow that boom bust cycle as well. When 82 00:04:23,000 --> 00:04:25,039 Speaker 2: there's a lot of activity, lots of people moving to 83 00:04:25,120 --> 00:04:28,440 Speaker 2: Alaska and building stuff, do you suddenly see demand for 84 00:04:28,480 --> 00:04:30,919 Speaker 2: furniture ramp up, and then when it kind of goes bust, 85 00:04:31,080 --> 00:04:33,480 Speaker 2: do people start selling their I don't know their beds 86 00:04:33,480 --> 00:04:34,080 Speaker 2: on the corner. 87 00:04:34,880 --> 00:04:39,240 Speaker 4: Yes, we definitely have our cycles, They're not as extreme 88 00:04:39,279 --> 00:04:43,400 Speaker 4: as that they once were. The largest of those booms 89 00:04:43,440 --> 00:04:46,480 Speaker 4: and bust was the building of the pipeline and then 90 00:04:46,520 --> 00:04:49,159 Speaker 4: the first years of the oil revenue for the state 91 00:04:49,240 --> 00:04:51,279 Speaker 4: that came in, and then the state built a lot 92 00:04:51,320 --> 00:04:54,719 Speaker 4: of infrastructure and those were booming times and that would 93 00:04:54,760 --> 00:04:57,919 Speaker 4: behold subdivisions built on spec and that type of things. 94 00:04:58,120 --> 00:05:01,880 Speaker 4: It was growing. And then the oil prices dropped to 95 00:05:02,040 --> 00:05:05,520 Speaker 4: around eight dollars a barrel and the construction stopped and 96 00:05:05,560 --> 00:05:07,760 Speaker 4: the people moved out of the states. So back in 97 00:05:07,800 --> 00:05:11,560 Speaker 4: the mid nineteen eighties, Alaskans knew all the terms of 98 00:05:11,600 --> 00:05:16,080 Speaker 4: your house being underwater and people mailing their keys back 99 00:05:16,120 --> 00:05:18,000 Speaker 4: to the bank and that kind of thing. And about 100 00:05:18,000 --> 00:05:19,880 Speaker 4: a third of the homes and anchorage at that time 101 00:05:19,960 --> 00:05:25,400 Speaker 4: were walked out on vacated by the owners. So that 102 00:05:25,520 --> 00:05:26,440 Speaker 4: was worst of the bust. 103 00:05:26,760 --> 00:05:29,080 Speaker 3: How did the furniture how did you at that point? 104 00:05:29,080 --> 00:05:31,520 Speaker 3: Had you already started your furniture operations? Like where were 105 00:05:31,520 --> 00:05:32,679 Speaker 3: you in your career at that point? 106 00:05:32,880 --> 00:05:36,000 Speaker 4: Yes, I was then half owner of the furniture company 107 00:05:36,040 --> 00:05:38,599 Speaker 4: that had gotten to work for and it was just terrible. 108 00:05:38,640 --> 00:05:42,480 Speaker 4: I mean, revenues dropped like seventy percent type of things. 109 00:05:42,600 --> 00:05:46,280 Speaker 4: We had fourteen banks and savings and loans at that time, 110 00:05:46,760 --> 00:05:49,400 Speaker 4: and half of them were closed by the FDIC or 111 00:05:49,720 --> 00:05:52,360 Speaker 4: whatever the savings and loan when is called again at 112 00:05:52,400 --> 00:05:54,880 Speaker 4: that time, and so we ended up having to do 113 00:05:54,960 --> 00:05:58,680 Speaker 4: workouts with the banks and the FDIC and people along 114 00:05:58,720 --> 00:05:59,279 Speaker 4: that line. 115 00:05:59,520 --> 00:06:01,719 Speaker 3: Sorry for I forgot. Were you really on a commercial 116 00:06:01,720 --> 00:06:08,320 Speaker 3: whaling or sir? Listeners, listeners need no further context. 117 00:06:08,400 --> 00:06:10,800 Speaker 2: Does everyone know that Joe is obsessed with moby dick 118 00:06:10,880 --> 00:06:13,479 Speaker 2: and whaling at this point to the point where you 119 00:06:14,000 --> 00:06:16,839 Speaker 2: accidentally introduce it into sentences. 120 00:06:16,520 --> 00:06:20,040 Speaker 3: You're on a commercial fishing boat? Did it really crash? 121 00:06:20,200 --> 00:06:21,920 Speaker 3: And were there any sort of did that? 122 00:06:22,040 --> 00:06:22,280 Speaker 4: You know? 123 00:06:22,320 --> 00:06:22,480 Speaker 2: When? 124 00:06:22,839 --> 00:06:25,320 Speaker 3: Is there lessons from business that you could take from 125 00:06:25,360 --> 00:06:27,800 Speaker 3: the allegory of going down on a ship? 126 00:06:28,160 --> 00:06:30,760 Speaker 4: Yeah, I think it would be too. It didn't go 127 00:06:30,880 --> 00:06:33,640 Speaker 4: down with us on on on it. It did go down, 128 00:06:34,560 --> 00:06:38,640 Speaker 4: and I think it would be to interview the person 129 00:06:38,760 --> 00:06:43,880 Speaker 4: leading that I was. I just got up to Alaska. 130 00:06:44,040 --> 00:06:46,480 Speaker 4: I met another fellow who was the same age I was, 131 00:06:46,560 --> 00:06:49,240 Speaker 4: but we were both just turned eighteen. But he had 132 00:06:49,240 --> 00:06:53,680 Speaker 4: a fishing boat and said that I could work on it. 133 00:06:53,920 --> 00:06:57,280 Speaker 4: He wouldn't pay me, but I'd get experience. And we 134 00:06:57,320 --> 00:07:00,240 Speaker 4: went out and he ended up not knowing what he 135 00:07:00,360 --> 00:07:03,560 Speaker 4: was doing, and we got caught into a storm, heavy 136 00:07:03,600 --> 00:07:06,160 Speaker 4: seas and that boat took on a lot of water 137 00:07:06,880 --> 00:07:10,120 Speaker 4: and the engines died. And we were hailing a may 138 00:07:10,200 --> 00:07:15,280 Speaker 4: day out in the Gulf of Alaska, and luckily another ship, 139 00:07:15,320 --> 00:07:17,960 Speaker 4: a tanker, heard it and said, do you want us 140 00:07:18,000 --> 00:07:21,080 Speaker 4: to call the Kodiak Coastguard for you? We said absolutely, 141 00:07:21,120 --> 00:07:24,320 Speaker 4: because we are sinking. And they came back and said, boys, 142 00:07:24,320 --> 00:07:27,520 Speaker 4: we got bad news for you. It's too rough. Oh 143 00:07:27,560 --> 00:07:28,600 Speaker 4: they're not coming. 144 00:07:29,000 --> 00:07:30,120 Speaker 2: And they came out and got you. 145 00:07:30,640 --> 00:07:33,480 Speaker 4: That tanker did Yeah, the coast guard it was too 146 00:07:33,560 --> 00:07:36,200 Speaker 4: last guard couldn't. But yeah, couldn't do it. And so 147 00:07:36,240 --> 00:07:39,040 Speaker 4: they came out. And it took us a little while 148 00:07:39,080 --> 00:07:41,240 Speaker 4: of the boats bumping together. They were five hundred and 149 00:07:41,280 --> 00:07:44,120 Speaker 4: fifty feet long, we were forty two feet and it 150 00:07:44,280 --> 00:07:46,160 Speaker 4: slapped together at one time, and they had hung a 151 00:07:46,240 --> 00:07:48,440 Speaker 4: ladder off the edge of that boat, and I saw 152 00:07:48,480 --> 00:07:51,640 Speaker 4: that and I scrambled up to the satisfied ladder. 153 00:07:51,640 --> 00:07:53,000 Speaker 3: You're seeing in your whole life. 154 00:07:53,040 --> 00:07:57,080 Speaker 4: Absolutely, we thought we were We thought we were Gonners, 155 00:07:57,560 --> 00:08:00,640 Speaker 4: you know, because the only last half an hour in 156 00:08:00,680 --> 00:08:01,520 Speaker 4: that cold water. 157 00:08:02,080 --> 00:08:05,720 Speaker 2: So okay, So no more fishing. From fishing to furniture. 158 00:08:06,360 --> 00:08:10,040 Speaker 2: What should people know about furniture sales in Alaska? What 159 00:08:10,120 --> 00:08:13,480 Speaker 2: are the special considerations versus say, furniture sales in the 160 00:08:13,520 --> 00:08:14,280 Speaker 2: Lower forty eight. 161 00:08:14,640 --> 00:08:17,000 Speaker 4: Yeah, the biggest thing that separates us from the Lower 162 00:08:17,080 --> 00:08:21,360 Speaker 4: forty eight is the additional freight costs to Alaska. You know, 163 00:08:21,400 --> 00:08:24,200 Speaker 4: we're a long ways by road. We only have the 164 00:08:24,200 --> 00:08:27,040 Speaker 4: one road, the Alaska Highway, which goes through Canada and 165 00:08:27,120 --> 00:08:29,960 Speaker 4: up to us, and only heavy equipment really gets shipped 166 00:08:29,960 --> 00:08:33,840 Speaker 4: over that. Everything else is shipped to the port of 167 00:08:33,840 --> 00:08:38,160 Speaker 4: Seattle and then put onto ships and it takes three 168 00:08:38,240 --> 00:08:42,200 Speaker 4: days for those shipments to arrive to us. And it's 169 00:08:43,520 --> 00:08:46,640 Speaker 4: we pay more for that freight from Seattle to Anchorage 170 00:08:46,679 --> 00:08:49,040 Speaker 4: than we do from the containers that we bring in 171 00:08:49,120 --> 00:08:52,439 Speaker 4: from China and Vietnam, Malaysia in those areas. 172 00:08:52,520 --> 00:08:57,920 Speaker 3: Yeah, So explain that more intra US shipments are costlier 173 00:08:57,960 --> 00:08:59,640 Speaker 3: than Transpacific shipments. 174 00:08:59,760 --> 00:09:02,120 Speaker 4: Yes, so I just checked it because I figured it 175 00:09:02,240 --> 00:09:05,600 Speaker 4: might come up. We're paying currently nineteen hundred dollars China 176 00:09:05,679 --> 00:09:10,520 Speaker 4: to Seattle. Then we have to reload that onto a 177 00:09:10,600 --> 00:09:13,719 Speaker 4: carrier that can bring it up to here, and it's 178 00:09:13,720 --> 00:09:17,320 Speaker 4: about nine thousand dollars from Seattle to here. Wow? 179 00:09:17,679 --> 00:09:18,679 Speaker 3: Is there Jones acting? 180 00:09:18,800 --> 00:09:19,160 Speaker 4: Sorry? 181 00:09:20,080 --> 00:09:21,520 Speaker 3: I have to is there a Jones acting? 182 00:09:21,600 --> 00:09:25,280 Speaker 4: Go to this story? Jones act is a part of that, for. 183 00:09:25,280 --> 00:09:29,679 Speaker 2: Sure, Jones act everywhere? Can you not get shipments direct 184 00:09:29,840 --> 00:09:31,320 Speaker 2: from China? Could that happen? 185 00:09:31,679 --> 00:09:34,840 Speaker 4: No? There is nowhere near the volume out of the 186 00:09:34,880 --> 00:09:38,720 Speaker 4: Anchorage area and where the port goes there's maybe six 187 00:09:38,800 --> 00:09:41,400 Speaker 4: hundred and fifty thousand people. We have about seven sixty 188 00:09:41,400 --> 00:09:43,720 Speaker 4: in the state, I think, and so we just don't 189 00:09:43,760 --> 00:09:45,840 Speaker 4: have geno economies. 190 00:09:46,559 --> 00:09:49,360 Speaker 2: So I have to imagine that one of the keys 191 00:09:49,400 --> 00:09:52,680 Speaker 2: to running a successful furniture business in Alaska is you 192 00:09:52,760 --> 00:09:56,240 Speaker 2: have to be really really good at shipping and logistics. 193 00:09:56,280 --> 00:09:58,600 Speaker 2: And to some extent, it sounds like you're basically running 194 00:09:58,600 --> 00:10:01,800 Speaker 2: a distribution center for furniture, right. Is that the thing 195 00:10:01,840 --> 00:10:04,080 Speaker 2: that you're sort of competing on or is that the 196 00:10:04,160 --> 00:10:06,800 Speaker 2: area of expertise that you really have to have in 197 00:10:06,880 --> 00:10:08,480 Speaker 2: order to be successful in this business? 198 00:10:08,800 --> 00:10:11,439 Speaker 4: I would say, yes, we are good at the merchandising, 199 00:10:11,480 --> 00:10:14,440 Speaker 4: we're good at the market segmentation, the advertising. We're good 200 00:10:14,640 --> 00:10:18,840 Speaker 4: at everything, but we excel in logistics. We have a 201 00:10:18,840 --> 00:10:21,400 Speaker 4: full time person. We're not that big a company, but 202 00:10:21,480 --> 00:10:24,480 Speaker 4: a full time person that puts together those and is 203 00:10:24,520 --> 00:10:28,520 Speaker 4: always negotiating the rates and trying to make sure that 204 00:10:28,720 --> 00:10:31,560 Speaker 4: every container is filled to the maximum that can be. 205 00:10:31,679 --> 00:10:35,040 Speaker 4: We can't pay for dead air space and containers. What 206 00:10:35,120 --> 00:10:36,440 Speaker 4: was twenty twenty one like? 207 00:10:36,559 --> 00:10:39,640 Speaker 3: So, you know, we as a podcast first started getting 208 00:10:39,640 --> 00:10:44,080 Speaker 3: really interested in, you know, shipping in logistics and is 209 00:10:44,200 --> 00:10:47,320 Speaker 3: very important because like everyone else, we didn't think about 210 00:10:47,320 --> 00:10:49,640 Speaker 3: it much in the twenty tens when there was plenty 211 00:10:49,640 --> 00:10:52,480 Speaker 3: of access capacity. And then what was twenty twenty one 212 00:10:52,520 --> 00:10:55,239 Speaker 3: and twenty twenty two like, during the sort of extreme 213 00:10:55,600 --> 00:10:59,640 Speaker 3: levels of both inflation and just bottlenecks in the supply chains. 214 00:11:00,360 --> 00:11:03,680 Speaker 4: You know, those were trying times for us, but at 215 00:11:03,760 --> 00:11:06,600 Speaker 4: least everybody was in that same boat kind of thing, 216 00:11:07,200 --> 00:11:11,000 Speaker 4: and we had to put out our orders. Where we 217 00:11:11,360 --> 00:11:14,440 Speaker 4: usually try to put them out a few months in advance, 218 00:11:14,559 --> 00:11:17,080 Speaker 4: we were having to put them out up to eight 219 00:11:17,080 --> 00:11:20,360 Speaker 4: to ten months in advance, and of course the freight 220 00:11:20,440 --> 00:11:23,440 Speaker 4: rates were coming in. We had been paying about seventeen 221 00:11:23,559 --> 00:11:27,760 Speaker 4: hundred dollars a container transpecific before that, and I think 222 00:11:27,800 --> 00:11:31,600 Speaker 4: our peak was around twenty two thousand for a container. 223 00:11:32,200 --> 00:11:35,520 Speaker 4: But the demand was there, you know, and during that 224 00:11:35,720 --> 00:11:38,760 Speaker 4: time it was the biggest boom for the furniture industry 225 00:11:38,840 --> 00:11:42,680 Speaker 4: that's ever been because as people in COVID times could 226 00:11:42,760 --> 00:11:46,040 Speaker 4: not go to the bars and the restaurants, they weren't traveling, 227 00:11:46,760 --> 00:11:50,200 Speaker 4: and they decided to take that money that they usually 228 00:11:50,240 --> 00:11:53,640 Speaker 4: spend deather places and put it into furniture. And so 229 00:11:54,280 --> 00:11:56,440 Speaker 4: we had to pass on those costs to the consumers, 230 00:11:56,480 --> 00:12:00,640 Speaker 4: of course, but it happened, and it worked at. 231 00:12:00,440 --> 00:12:02,680 Speaker 2: Times like that. How does it work in terms of 232 00:12:02,679 --> 00:12:08,000 Speaker 2: getting inventory? Because I imagine it's not just Alaskan residents 233 00:12:08,000 --> 00:12:10,200 Speaker 2: that want a whole bunch of new furniture because they're 234 00:12:10,280 --> 00:12:13,200 Speaker 2: stuck inside and everyone feels like redecorating their house at 235 00:12:13,200 --> 00:12:16,000 Speaker 2: that particular moment in time. People in the lower forty 236 00:12:16,000 --> 00:12:18,920 Speaker 2: eight are doing the exact same thing. It's probably not 237 00:12:19,200 --> 00:12:22,360 Speaker 2: enough furniture stock to go around at that particular moment. 238 00:12:22,400 --> 00:12:25,360 Speaker 2: How are you actually placing orders? And I guess how 239 00:12:25,360 --> 00:12:28,600 Speaker 2: does it work in general when you're buying inventory from 240 00:12:28,800 --> 00:12:31,680 Speaker 2: big brands like a Lazy Boy or like a mattress firm. 241 00:12:31,960 --> 00:12:34,840 Speaker 4: Right, that's really two different things. One, if we're talking 242 00:12:34,880 --> 00:12:38,440 Speaker 4: about during the COVID times, we had to align ourselves 243 00:12:38,440 --> 00:12:40,840 Speaker 4: and ensure that the people that we're placing the orders 244 00:12:40,920 --> 00:12:44,280 Speaker 4: with would actually ship them, and we put a lot 245 00:12:44,280 --> 00:12:46,760 Speaker 4: of focus into that. We did narrow down our selection 246 00:12:46,840 --> 00:12:49,720 Speaker 4: to people that could get it shipped to us finally, 247 00:12:49,720 --> 00:12:53,520 Speaker 4: even though there was rolling delays on that at all times. 248 00:12:53,840 --> 00:12:57,200 Speaker 4: And then along with the manufacturing delays, then they would 249 00:12:57,240 --> 00:13:02,280 Speaker 4: go and put the containers into the Vietnam are China 250 00:13:02,360 --> 00:13:05,400 Speaker 4: parts and you couldn't get the bookings on the shipping. 251 00:13:06,080 --> 00:13:10,320 Speaker 4: There was overburdened type of thing. But it's different now. 252 00:13:10,400 --> 00:13:13,440 Speaker 4: It's back closer to how it has been in the past, 253 00:13:14,120 --> 00:13:16,680 Speaker 4: and we go to the furniture markets, we go to 254 00:13:16,880 --> 00:13:19,920 Speaker 4: four of them a year, and we select the items, 255 00:13:20,080 --> 00:13:24,280 Speaker 4: and then when we bring something into our showrooms, we 256 00:13:24,360 --> 00:13:27,640 Speaker 4: start the backup process and ordering in what we think 257 00:13:27,679 --> 00:13:31,120 Speaker 4: demand is going to be. We do keep those items 258 00:13:31,160 --> 00:13:34,480 Speaker 4: on our showrooms and then we sell our backstock and 259 00:13:34,520 --> 00:13:37,280 Speaker 4: we sell into incoming stock. So we're keeping a close 260 00:13:37,360 --> 00:13:40,600 Speaker 4: hand on when the arrival dates are going to be 261 00:13:41,000 --> 00:13:44,040 Speaker 4: so that our sales staff can say this is out 262 00:13:44,040 --> 00:13:47,520 Speaker 4: of stock right now. It's coming in in three weeks 263 00:13:48,040 --> 00:13:50,160 Speaker 4: and we can even book a delivery date from that 264 00:13:50,679 --> 00:13:51,160 Speaker 4: that point. 265 00:13:51,480 --> 00:13:53,840 Speaker 2: So I didn't realize there are furniture markets, but I 266 00:13:53,840 --> 00:13:56,000 Speaker 2: guess that makes sense. So the ideas these are big 267 00:13:56,200 --> 00:13:59,600 Speaker 2: wholesale furniture markets where you have the wholesalers sort of 268 00:13:59,679 --> 00:14:02,520 Speaker 2: uniling what they might have available to the retailers. 269 00:14:02,559 --> 00:14:06,160 Speaker 4: Every year. Yes, there's two in high Point, North Carolina, 270 00:14:06,720 --> 00:14:10,800 Speaker 4: and then two in Las Vegas that we attend. The 271 00:14:10,880 --> 00:14:13,680 Speaker 4: ones in high Point where you should find out. 272 00:14:13,600 --> 00:14:15,240 Speaker 3: A little bit about it. 273 00:14:15,240 --> 00:14:19,880 Speaker 4: It is just a massive market that's tens of millions 274 00:14:19,880 --> 00:14:36,560 Speaker 4: of square feet, manufacturers displaying the new products. 275 00:14:39,080 --> 00:14:42,600 Speaker 3: I want to talk about the contemporary economy a little bit. 276 00:14:43,040 --> 00:14:46,880 Speaker 3: One angle that strikes me is very furniture relevant is housing, 277 00:14:47,120 --> 00:14:51,119 Speaker 3: and due to interest rates, there's a lot of perceived stagnation. 278 00:14:51,560 --> 00:14:53,920 Speaker 3: I mean, there is a lot of stagnation in the 279 00:14:53,960 --> 00:14:56,920 Speaker 3: housing industry in general. A lot of people aren't moving 280 00:14:56,960 --> 00:14:59,480 Speaker 3: to the mortgage lock in. There's not a lot of 281 00:14:59,560 --> 00:15:02,760 Speaker 3: new construc diduction happening right now due to financing costs. 282 00:15:02,920 --> 00:15:03,720 Speaker 3: What are you seeing like? 283 00:15:03,760 --> 00:15:04,880 Speaker 4: I don't know much about. 284 00:15:04,600 --> 00:15:07,280 Speaker 3: The Alaska housing market, but you know, what are you 285 00:15:07,320 --> 00:15:09,600 Speaker 3: seeing in the Alaska housing market right now? And I 286 00:15:09,680 --> 00:15:12,680 Speaker 3: have to imagine whatever is happening feeds into the impulse 287 00:15:12,720 --> 00:15:13,840 Speaker 3: to buy new furniture or not. 288 00:15:14,360 --> 00:15:19,960 Speaker 4: Yeah, Unfortunately, in twenty and fifteen Alaska, the oil prices 289 00:15:20,080 --> 00:15:23,840 Speaker 4: took a dip and when that went down, then the 290 00:15:23,880 --> 00:15:27,480 Speaker 4: oil companies laid off their people and a lot of 291 00:15:27,520 --> 00:15:31,240 Speaker 4: them and since then we've not recovered. So we are 292 00:15:31,280 --> 00:15:35,360 Speaker 4: now in the ten years of a recession. In my opinion, 293 00:15:36,040 --> 00:15:39,560 Speaker 4: home building and Anchorage has been very slight. Only a 294 00:15:40,280 --> 00:15:43,000 Speaker 4: twenty five to fifty homes a year been built in 295 00:15:43,040 --> 00:15:46,120 Speaker 4: the past decade, and so each one of those is 296 00:15:46,120 --> 00:15:49,720 Speaker 4: an opportunity for us to furnish. But it's been pretty slow. 297 00:15:49,800 --> 00:15:52,440 Speaker 4: We've had a decrease in our population from about three 298 00:15:52,560 --> 00:15:55,920 Speaker 4: hundred and five thousand to about two hundred and eighty 299 00:15:55,960 --> 00:16:00,960 Speaker 4: five thousand, maybe somewhere in that right now. Home building 300 00:16:01,080 --> 00:16:03,120 Speaker 4: in the rest of the state has been slow. The 301 00:16:03,120 --> 00:16:06,680 Speaker 4: only place that is happening is in the Mattinuska Valley, 302 00:16:06,680 --> 00:16:10,600 Speaker 4: which is about thirty five miles outside of Anchorage. Land 303 00:16:10,680 --> 00:16:14,080 Speaker 4: is less expensive there, there's less municipal regulation and that 304 00:16:14,200 --> 00:16:16,840 Speaker 4: kind of thing, so they're building several hundred homes out 305 00:16:16,840 --> 00:16:19,800 Speaker 4: there a year, and that's our hotspot right now. 306 00:16:20,200 --> 00:16:22,760 Speaker 2: Talk more about that. So when you see a particular 307 00:16:22,840 --> 00:16:25,680 Speaker 2: area of Alaska booming, or when you hear that, I 308 00:16:25,680 --> 00:16:28,480 Speaker 2: don't know, there's going to be some new oil project 309 00:16:28,480 --> 00:16:31,880 Speaker 2: built in one particular town or city, do you immediately 310 00:16:31,920 --> 00:16:34,280 Speaker 2: start thinking like, well, maybe we need to open a 311 00:16:34,320 --> 00:16:37,880 Speaker 2: store over there. Do you sort of direct your business 312 00:16:37,960 --> 00:16:39,600 Speaker 2: to where that oil money is going. 313 00:16:40,480 --> 00:16:43,480 Speaker 4: No, it's a good question, but no. Where the oil 314 00:16:43,600 --> 00:16:48,200 Speaker 4: is developed is on the north slope of Alaska, and 315 00:16:48,520 --> 00:16:52,320 Speaker 4: there is no town there. It is just the oil camps. 316 00:16:52,440 --> 00:16:57,960 Speaker 4: They're the closest to that are some Native villages like Barrow, 317 00:16:58,000 --> 00:17:02,440 Speaker 4: which is now called Upi offic and there's another native 318 00:17:02,520 --> 00:17:05,000 Speaker 4: village up there, but those are a few hundred people 319 00:17:05,600 --> 00:17:09,560 Speaker 4: kind of thing. So no, no market. All the infrastructure 320 00:17:09,680 --> 00:17:11,200 Speaker 4: is through the Anchorage area. 321 00:17:11,600 --> 00:17:15,199 Speaker 3: Talk to us about tariffs. What substantively are you seeing 322 00:17:15,320 --> 00:17:16,040 Speaker 3: on that front? 323 00:17:16,960 --> 00:17:22,159 Speaker 4: Tariffs are troubling to me. I lean as a conservative, 324 00:17:22,560 --> 00:17:26,159 Speaker 4: I'm not really I'm not a Democrat nor a Republican. 325 00:17:26,280 --> 00:17:31,760 Speaker 4: I'm an independent, nonpartisan kind of thing. It's troubling, you know, 326 00:17:31,840 --> 00:17:36,000 Speaker 4: because we buy product from China. But now there's all 327 00:17:36,119 --> 00:17:38,880 Speaker 4: the tariffs that are happening there that can price out 328 00:17:38,920 --> 00:17:43,960 Speaker 4: that product to the marketplace. Today, I heard that India 329 00:17:44,160 --> 00:17:48,000 Speaker 4: is doubling from twenty five to a fifty percent, and 330 00:17:48,640 --> 00:17:51,880 Speaker 4: we have now switched over, just had recently switched over 331 00:17:51,960 --> 00:17:55,560 Speaker 4: some of our imports to India, and I was looking 332 00:17:55,560 --> 00:17:58,120 Speaker 4: at those yesterday and thinking, oh, those are a couple 333 00:17:58,160 --> 00:17:59,200 Speaker 4: of good bedroom sets. 334 00:17:59,400 --> 00:18:02,960 Speaker 3: So planning, I mean sitting sitting us at cost, and 335 00:18:03,080 --> 00:18:05,280 Speaker 3: it's a cost, just the idea of like any sort 336 00:18:05,280 --> 00:18:06,400 Speaker 3: of forward planning. 337 00:18:06,119 --> 00:18:09,000 Speaker 4: It's brutal. Right now, you know, if you're the size 338 00:18:09,000 --> 00:18:12,160 Speaker 4: of a Walmart or you know, these home depots or something, 339 00:18:12,160 --> 00:18:15,200 Speaker 4: you can probably get the manufacturers to guarantee you prices. 340 00:18:15,800 --> 00:18:18,760 Speaker 4: We are way under that level and we just have 341 00:18:18,840 --> 00:18:20,840 Speaker 4: to take what they are going to add on to it. 342 00:18:21,440 --> 00:18:24,880 Speaker 4: But they're into lack of confidence and how things are 343 00:18:24,880 --> 00:18:28,640 Speaker 4: working out themselves. They're skittish, and so some of them, 344 00:18:29,200 --> 00:18:32,800 Speaker 4: the manufacturers won't ship if they think that there's going 345 00:18:32,880 --> 00:18:35,880 Speaker 4: to be a sharp increase in the tariffs because they 346 00:18:35,880 --> 00:18:38,560 Speaker 4: don't want to ship, and then have the people they're 347 00:18:38,560 --> 00:18:41,200 Speaker 4: shipping to say not pay it, not pay it? 348 00:18:41,359 --> 00:18:44,439 Speaker 2: Yeah, Oh interesting, and what about just in terms of 349 00:18:44,480 --> 00:18:47,200 Speaker 2: the added price from the tariffs at the moment, are 350 00:18:47,200 --> 00:18:49,840 Speaker 2: you planning to absorb most of that yourself or do 351 00:18:49,880 --> 00:18:52,119 Speaker 2: you pass it on to customers in a state where 352 00:18:52,240 --> 00:18:55,000 Speaker 2: you know, costs are already pretty high just because it's 353 00:18:55,000 --> 00:18:56,880 Speaker 2: so remote and everything has to be shipped. 354 00:18:56,600 --> 00:19:00,280 Speaker 4: In, right We're having to look at those and some 355 00:19:00,359 --> 00:19:02,760 Speaker 4: of them we go hard back onto the manufacturer saying 356 00:19:02,840 --> 00:19:05,560 Speaker 4: they're going to have to take on a lot of that, 357 00:19:05,840 --> 00:19:10,680 Speaker 4: and they did originally disabsorb portions of that and then 358 00:19:10,800 --> 00:19:14,520 Speaker 4: started adding some back to the cost and then we're 359 00:19:14,600 --> 00:19:18,359 Speaker 4: absorbing some and like we tell, we were tinging the 360 00:19:18,400 --> 00:19:20,679 Speaker 4: markups where we can, but in some of it it's 361 00:19:20,760 --> 00:19:23,320 Speaker 4: too priced sensitive and we're just having to eat that 362 00:19:23,359 --> 00:19:25,240 Speaker 4: for right now and it's too volatile. 363 00:19:26,640 --> 00:19:29,240 Speaker 2: Yeah, I think I told you, Joe. But I went 364 00:19:29,359 --> 00:19:34,000 Speaker 2: to there's like a local British import shop in I 365 00:19:34,040 --> 00:19:36,800 Speaker 2: think it was in Vermont recently, and so they import 366 00:19:36,840 --> 00:19:39,200 Speaker 2: everything from the UK. It's like I'm here to get 367 00:19:39,240 --> 00:19:42,359 Speaker 2: British candy and British groceries. And they basically just stopped 368 00:19:42,359 --> 00:19:45,560 Speaker 2: publishing their prices because the tariffs were changing on an 369 00:19:45,560 --> 00:19:47,560 Speaker 2: almost daily basis, and they were like, you know what, 370 00:19:47,680 --> 00:19:49,720 Speaker 2: it's too much trouble to try to update all our 371 00:19:49,760 --> 00:19:51,959 Speaker 2: pricing to take this into accounts, so we're just like 372 00:19:52,320 --> 00:19:53,080 Speaker 2: not putting them on. 373 00:19:53,960 --> 00:19:57,359 Speaker 3: Say more about because this is from the perspective of 374 00:19:57,400 --> 00:19:59,520 Speaker 3: the FAED, I mean, this is the trillion dollar question 375 00:19:59,560 --> 00:20:02,840 Speaker 3: about the agreed to which tariffs can be passed on 376 00:20:02,960 --> 00:20:05,679 Speaker 3: to the consumer or not, et cetera. And I'm just curious, 377 00:20:05,720 --> 00:20:08,480 Speaker 3: like how you think about like pricing in general, and 378 00:20:08,840 --> 00:20:11,320 Speaker 3: how you sense when there's an opportunity to push price 379 00:20:11,359 --> 00:20:14,080 Speaker 3: a little bit more, have the customer dephrase some of 380 00:20:14,080 --> 00:20:16,479 Speaker 3: those costs or not. Like talk just a little bit 381 00:20:16,520 --> 00:20:17,879 Speaker 3: about what you're seeing on that front. 382 00:20:18,200 --> 00:20:20,920 Speaker 4: Our pricing, even though we're pretty remote and everything like 383 00:20:21,000 --> 00:20:25,040 Speaker 4: that goes back to national pricing. And if we get 384 00:20:25,080 --> 00:20:29,000 Speaker 4: too high in our pricing, then consumers will shop in 385 00:20:29,040 --> 00:20:32,840 Speaker 4: the lower forty eight and pay that additional shipping up 386 00:20:32,880 --> 00:20:36,800 Speaker 4: to hear themselves. So that's always something we always have 387 00:20:36,880 --> 00:20:40,120 Speaker 4: to make sure that we're you know, negating that difference. 388 00:20:40,440 --> 00:20:42,720 Speaker 3: The sense just in terms of like the economic cycle 389 00:20:42,840 --> 00:20:46,760 Speaker 3: right now, like setting aside tariffs, how does n demand 390 00:20:46,960 --> 00:20:50,080 Speaker 3: feel among consumers in August twenty twenty five than it 391 00:20:50,080 --> 00:20:51,720 Speaker 3: would have been in August. 392 00:20:51,320 --> 00:20:52,320 Speaker 4: Twenty twenty four. 393 00:20:52,840 --> 00:20:55,040 Speaker 3: Is there any slowdown in any of the segments that 394 00:20:55,119 --> 00:20:57,440 Speaker 3: you perceive. Are there some segments that are more robust 395 00:20:57,480 --> 00:20:57,920 Speaker 3: than others? 396 00:20:58,280 --> 00:21:01,800 Speaker 4: Yeah, it's softer right now, and a large portion of 397 00:21:02,200 --> 00:21:05,560 Speaker 4: that softness, I do believe goes back to consumer confidence. 398 00:21:06,080 --> 00:21:10,720 Speaker 4: And whenever the consumer confidence wanes, then they push off 399 00:21:10,800 --> 00:21:15,240 Speaker 4: deferable large ticket purchases, and we see that right now. 400 00:21:15,440 --> 00:21:17,080 Speaker 2: Well, one of the reasons we wanted to talk to 401 00:21:17,080 --> 00:21:20,199 Speaker 2: you is because you have, you know, furniture brands that 402 00:21:20,280 --> 00:21:23,600 Speaker 2: cover a sort of spectrum of consumers. So you have 403 00:21:23,720 --> 00:21:27,000 Speaker 2: higher end versus maybe you know, more budget items. Do 404 00:21:27,040 --> 00:21:30,200 Speaker 2: you see segmentation and consumer demand between you know, maybe 405 00:21:30,280 --> 00:21:34,240 Speaker 2: people who are buying slightly more modest furniture versus the 406 00:21:34,240 --> 00:21:36,720 Speaker 2: people who are buying more higher end or custom. 407 00:21:36,760 --> 00:21:40,520 Speaker 4: Yes, right now, And with my knowledge of the furniture 408 00:21:40,560 --> 00:21:45,679 Speaker 4: industry nationwide, is that, of course the higher end is 409 00:21:45,720 --> 00:21:49,679 Speaker 4: more insulated from that and when it gets down to 410 00:21:49,720 --> 00:21:54,440 Speaker 4: the starting price points that we have for people that 411 00:21:54,600 --> 00:21:57,480 Speaker 4: say that our apartment, you know, dwellers and renters and 412 00:21:57,480 --> 00:22:00,960 Speaker 4: stuff like that instead of homeowners, and with the inflation 413 00:22:01,359 --> 00:22:05,120 Speaker 4: taking a bite out of their incomes, that's where we're 414 00:22:05,119 --> 00:22:06,520 Speaker 4: seeing it hit us the hardest. 415 00:22:06,960 --> 00:22:09,520 Speaker 3: What are you seeing on the labor supply particularly imagine 416 00:22:09,520 --> 00:22:12,800 Speaker 3: like movers or people who deliver the furniture, or either 417 00:22:13,000 --> 00:22:16,399 Speaker 3: retail workers and the showrooms, et cetera. How easy is 418 00:22:16,440 --> 00:22:18,040 Speaker 3: it to hire right now? 419 00:22:18,640 --> 00:22:21,600 Speaker 4: Not easy at all. It's a little bit better now 420 00:22:21,680 --> 00:22:23,520 Speaker 4: than it was a couple of years ago, but it 421 00:22:23,680 --> 00:22:24,640 Speaker 4: is very difficult. 422 00:22:24,720 --> 00:22:26,840 Speaker 3: Lie's the what's the constraint? 423 00:22:26,960 --> 00:22:30,280 Speaker 4: Well, it's there's more jobs available than people. 424 00:22:31,000 --> 00:22:33,120 Speaker 3: You're the sectors that are like where are they when 425 00:22:33,160 --> 00:22:36,800 Speaker 3: you look at like, okay, there's some prospective employee and 426 00:22:36,840 --> 00:22:39,000 Speaker 3: they could choose to work between you and someone else, 427 00:22:39,200 --> 00:22:41,200 Speaker 3: and you're competing with some other employer. What are these 428 00:22:41,280 --> 00:22:44,680 Speaker 3: sources of employment demand that you're competing with here in Alaska? 429 00:22:45,119 --> 00:22:48,760 Speaker 4: With us, you know, we're a very non skilled labor force, 430 00:22:49,080 --> 00:22:52,919 Speaker 4: and so we bring in the people pre pandemic, we 431 00:22:52,920 --> 00:22:55,439 Speaker 4: were starting people at about fifteen dollars an hour for 432 00:22:55,720 --> 00:22:59,560 Speaker 4: any position, and now we're at twenty one to twenty 433 00:22:59,600 --> 00:23:02,200 Speaker 4: five dollar dollars an hour type of thing. And they 434 00:23:02,200 --> 00:23:04,600 Speaker 4: come into us unskilled, and then we have to build 435 00:23:04,600 --> 00:23:07,840 Speaker 4: the skills with them type of thing. So we're not 436 00:23:07,960 --> 00:23:10,760 Speaker 4: looking for people with degrees and education and that kind 437 00:23:10,800 --> 00:23:15,159 Speaker 4: of thing. Just workforce. And again they if they don't 438 00:23:15,200 --> 00:23:18,000 Speaker 4: like being retailed, we need to work weekends. If they 439 00:23:18,000 --> 00:23:20,160 Speaker 4: don't want to work a weekend, they can find another 440 00:23:20,280 --> 00:23:21,399 Speaker 4: job someplace else. 441 00:23:23,359 --> 00:23:26,399 Speaker 2: Since Joe brought up constraints on labor, I'm going to 442 00:23:26,400 --> 00:23:28,919 Speaker 2: ask what's becoming I guess a classic question in a 443 00:23:28,920 --> 00:23:30,840 Speaker 2: lot of these episodes, but what would you say is 444 00:23:30,880 --> 00:23:34,160 Speaker 2: the biggest constraint on your own business. Whether it's finding 445 00:23:34,240 --> 00:23:38,800 Speaker 2: enough workers, whether it's sourcing enough furniture, whether it's shipping costs. 446 00:23:38,880 --> 00:23:42,600 Speaker 2: Maybe it's regulation that's limiting the amount of homes that 447 00:23:42,640 --> 00:23:45,760 Speaker 2: can actually be built around Anchorage. What's the biggest one 448 00:23:45,800 --> 00:23:46,080 Speaker 2: for you? 449 00:23:46,359 --> 00:23:50,280 Speaker 4: The biggest one for us is the decline that we've 450 00:23:50,320 --> 00:23:54,879 Speaker 4: had in the population, and it is now rebounding from that, 451 00:23:55,000 --> 00:23:57,200 Speaker 4: but it's going to be slow or it is slow, 452 00:23:57,840 --> 00:24:01,359 Speaker 4: and so it's just the size of the marketplace. We 453 00:24:01,400 --> 00:24:06,399 Speaker 4: have stores in Anchorage, Fairbanks, the Kenai Peninsula, and the 454 00:24:06,440 --> 00:24:09,800 Speaker 4: Mattinuska Valley, and in between that, it's about five hundred 455 00:24:09,800 --> 00:24:12,680 Speaker 4: and fifty thousand people in our total market that can 456 00:24:12,760 --> 00:24:15,879 Speaker 4: drive to one of our stores. We do sell some 457 00:24:16,119 --> 00:24:18,440 Speaker 4: to the people of what we call the bush communities 458 00:24:18,840 --> 00:24:20,480 Speaker 4: where we sell it to them, but we have to 459 00:24:20,480 --> 00:24:22,760 Speaker 4: load it into airplanes and that type of thing, and 460 00:24:22,800 --> 00:24:25,800 Speaker 4: that has to be flown out to them type of thing. 461 00:24:25,880 --> 00:24:27,960 Speaker 4: So it is just the population. 462 00:24:28,680 --> 00:24:31,400 Speaker 3: Is there a rate sensitivity aspect of your business either 463 00:24:31,480 --> 00:24:34,080 Speaker 3: towards your own cost of capital or I have to 464 00:24:34,119 --> 00:24:38,320 Speaker 3: imagine some of the buying is borrowed or the consumer 465 00:24:38,400 --> 00:24:40,639 Speaker 3: is borrowing money to buy the bed, et cetera. Do 466 00:24:40,680 --> 00:24:44,080 Speaker 3: you see any sort of clear link between high interest 467 00:24:44,160 --> 00:24:47,000 Speaker 3: rates right now and how your business operates. 468 00:24:46,640 --> 00:24:50,280 Speaker 4: The amount of consumers that are financing the purchase that 469 00:24:50,480 --> 00:24:53,560 Speaker 4: we do do like the fin we have that available 470 00:24:53,640 --> 00:24:56,120 Speaker 4: for them, and then we run the promotions where we 471 00:24:56,240 --> 00:25:00,720 Speaker 4: do thirty six months up to sixty months with interest 472 00:25:00,840 --> 00:25:04,360 Speaker 4: that we pay for that interest upfront to the finance company. 473 00:25:04,800 --> 00:25:07,760 Speaker 4: But that is still that has slowed way down over 474 00:25:07,800 --> 00:25:11,680 Speaker 4: the peak that it was pre pandemic, as people are 475 00:25:11,720 --> 00:25:14,960 Speaker 4: just not they're concerned about getting into too much debt. 476 00:25:15,640 --> 00:25:19,680 Speaker 2: How much of the slowdown in customer demand post pandemic? 477 00:25:19,760 --> 00:25:22,240 Speaker 2: How much of that has to do with just people 478 00:25:22,280 --> 00:25:24,840 Speaker 2: bought a lot of stuff in twenty one twenty two, 479 00:25:25,119 --> 00:25:28,160 Speaker 2: And maybe you don't need another new bed for a while, 480 00:25:28,280 --> 00:25:31,600 Speaker 2: or another new coffee table or something like that, versus 481 00:25:32,160 --> 00:25:35,440 Speaker 2: actually we are seeing a sort of fundamental structural slow 482 00:25:35,480 --> 00:25:37,560 Speaker 2: down in the amount of stuff that people are able 483 00:25:37,600 --> 00:25:38,600 Speaker 2: to buy. 484 00:25:39,200 --> 00:25:43,359 Speaker 4: Yes, I am not smart enough to understand that during 485 00:25:43,359 --> 00:25:46,600 Speaker 4: the pandemic what we did was made up for past 486 00:25:46,640 --> 00:25:49,800 Speaker 4: purchases that they didn't make or if they bought into 487 00:25:49,840 --> 00:25:53,639 Speaker 4: the future. I really don't know the difference. In maybe 488 00:25:53,640 --> 00:25:56,720 Speaker 4: a few years now, some smart people will write something. 489 00:25:56,720 --> 00:25:59,280 Speaker 4: I'll read it and say, oh, yeah, that's it kind 490 00:25:59,320 --> 00:26:01,240 Speaker 4: of thing. But it had to do it now. Furniture, 491 00:26:01,320 --> 00:26:05,280 Speaker 4: when you buy it, like a dining room table, most 492 00:26:05,320 --> 00:26:07,920 Speaker 4: people are expecting to get twenty twenty five years out 493 00:26:07,920 --> 00:26:11,400 Speaker 4: of it unless it splits from too much moisture left 494 00:26:11,760 --> 00:26:15,159 Speaker 4: in the wood kind of thing. But furniture does last 495 00:26:15,480 --> 00:26:19,680 Speaker 4: five to twenty five years, so it's a very slow cycle. 496 00:26:20,320 --> 00:26:23,560 Speaker 3: What would you tell your eighteen year old self about 497 00:26:23,600 --> 00:26:27,679 Speaker 3: life in Alaska and doing business and a career in Alaska. 498 00:26:27,720 --> 00:26:30,520 Speaker 3: That is maybe the most surprising, your most interesting, or 499 00:26:30,600 --> 00:26:33,080 Speaker 3: the most important lesson for that trajectory you've had. 500 00:26:34,080 --> 00:26:36,199 Speaker 4: All right, So being kind of personal. When I was 501 00:26:36,560 --> 00:26:39,680 Speaker 4: a teenager and stuff I had no self confidence, that 502 00:26:39,720 --> 00:26:41,439 Speaker 4: type of thing. I didn't do well in school. I 503 00:26:41,440 --> 00:26:44,199 Speaker 4: didn't understand why, but I have some learning disabilities and 504 00:26:44,200 --> 00:26:45,640 Speaker 4: that type of thing. I got up here. I thought 505 00:26:45,680 --> 00:26:48,160 Speaker 4: I'd be a laborer, that kind of stuff. So then 506 00:26:48,200 --> 00:26:50,199 Speaker 4: any way, I got into the furniture business. Turned out 507 00:26:50,240 --> 00:26:52,879 Speaker 4: to be pretty good at it, and I'm running a 508 00:26:52,920 --> 00:26:56,880 Speaker 4: good business. There still is the economies come and go 509 00:26:57,000 --> 00:26:59,600 Speaker 4: to Alaska and that kind of stuff, but the basic 510 00:27:00,040 --> 00:27:04,119 Speaker 4: of the state has never lost its luster for me. 511 00:27:04,240 --> 00:27:07,440 Speaker 4: I love living here. I love the mountains. I love 512 00:27:07,560 --> 00:27:10,800 Speaker 4: the animals. I mean, we have hundreds of bear and 513 00:27:10,880 --> 00:27:13,720 Speaker 4: thousands of moose that live within the city of Anchorage, 514 00:27:13,760 --> 00:27:15,399 Speaker 4: and you see them and that kind of thing. I 515 00:27:15,440 --> 00:27:17,080 Speaker 4: still get all excited about that. 516 00:27:17,080 --> 00:27:18,040 Speaker 3: I was walking down the street. 517 00:27:18,560 --> 00:27:21,240 Speaker 4: I'm telling you that can happen more in the winter 518 00:27:21,400 --> 00:27:24,000 Speaker 4: time than the summertime. But in the wintertime, yeah, you 519 00:27:24,040 --> 00:27:26,879 Speaker 4: got to break and let them go through walk through midtown. 520 00:27:26,920 --> 00:27:31,760 Speaker 4: And they're big animals too. Anyway, good times, bad times. 521 00:27:31,800 --> 00:27:32,600 Speaker 4: I'm staying here. 522 00:27:33,359 --> 00:27:38,200 Speaker 2: Have you ever had a furniture delivery disrupted by wild animals? 523 00:27:38,840 --> 00:27:40,240 Speaker 4: Not that I can think of all. 524 00:27:40,840 --> 00:27:44,280 Speaker 2: Well behaved moose. Then I have just one more question, sure, 525 00:27:44,359 --> 00:27:46,960 Speaker 2: I think. Which is the other thing that I think 526 00:27:47,040 --> 00:27:50,439 Speaker 2: maybe unusual about Alaska is again because it's so remote, 527 00:27:50,440 --> 00:27:54,200 Speaker 2: because it's quite difficult in some respects to get new materials, 528 00:27:54,280 --> 00:27:57,000 Speaker 2: new items here. I imagine there must be a lot 529 00:27:57,040 --> 00:28:00,120 Speaker 2: of competition from the used market. So if you have 530 00:28:00,440 --> 00:28:03,200 Speaker 2: a bed, you know, a bed's not a great example. 531 00:28:03,200 --> 00:28:05,359 Speaker 2: If you have a couch or a coffee table, you 532 00:28:05,400 --> 00:28:07,399 Speaker 2: want to buy something new, You're not just going to 533 00:28:07,440 --> 00:28:09,880 Speaker 2: throw that coffee table away. You're probably going to try 534 00:28:09,880 --> 00:28:13,040 Speaker 2: to sell it on Facebook Marketplace or something like that. 535 00:28:13,280 --> 00:28:16,080 Speaker 2: Do you feel a lot of competition from the used 536 00:28:16,200 --> 00:28:17,320 Speaker 2: furniture segment. 537 00:28:17,760 --> 00:28:21,320 Speaker 4: It's not that much competition for us except for it. 538 00:28:21,480 --> 00:28:24,800 Speaker 4: It is there, and it is the Facebook marketplace is 539 00:28:25,960 --> 00:28:29,160 Speaker 4: where it is. So probably some of these items get 540 00:28:29,160 --> 00:28:32,000 Speaker 4: bought and sold a few times, but again that's usually 541 00:28:32,359 --> 00:28:37,520 Speaker 4: for younger people just getting started and or a temporary 542 00:28:37,960 --> 00:28:40,320 Speaker 4: They're just going to get something to you know, last 543 00:28:40,400 --> 00:28:43,680 Speaker 4: maybe six months to a year and then buy better 544 00:28:43,760 --> 00:28:47,720 Speaker 4: quality furniture once they're established. So yes, it is there. 545 00:28:48,240 --> 00:28:49,960 Speaker 4: It's off our radar for the most part. 546 00:28:50,400 --> 00:28:52,360 Speaker 2: All right, Well, Dave, thank you so much for coming 547 00:28:52,360 --> 00:28:53,640 Speaker 2: on all th lots that was really fun. 548 00:28:53,800 --> 00:29:08,680 Speaker 5: Thank you so much too, Joe. 549 00:29:08,760 --> 00:29:12,200 Speaker 2: Imagine hitchhiking to Alaska to become a commercial fisherman and 550 00:29:12,200 --> 00:29:13,800 Speaker 2: then get into the furniture business. 551 00:29:14,120 --> 00:29:20,040 Speaker 3: Imagine getting into the commercial fisherman business finding someone roughly 552 00:29:20,120 --> 00:29:23,600 Speaker 3: your age and experience. You know, it's hard not to 553 00:29:23,680 --> 00:29:27,880 Speaker 3: be either. The mind comes to Ishmael and from the 554 00:29:27,880 --> 00:29:32,520 Speaker 3: eighteen fifty one novel by Herman Melville movie Dick and 555 00:29:32,560 --> 00:29:37,160 Speaker 3: then and then your boat crashing and then and then 556 00:29:37,840 --> 00:29:41,400 Speaker 3: saving your life, et cetera. You goes hard not for 557 00:29:41,480 --> 00:29:42,720 Speaker 3: the mind to drift there. 558 00:29:43,240 --> 00:29:45,520 Speaker 2: Can I ask if we go on a whale watching tour, 559 00:29:45,760 --> 00:29:49,040 Speaker 2: am I just going to hear like Captain a references 560 00:29:49,160 --> 00:29:49,920 Speaker 2: for three hours. 561 00:29:49,920 --> 00:29:51,440 Speaker 3: I'm just gonna go round to everyone on the boat. 562 00:29:51,520 --> 00:29:54,200 Speaker 3: I'm going to say the ab, the Ishmael or the Starbuck, 563 00:29:54,360 --> 00:29:56,000 Speaker 3: and I'm just going to ask, and I'm going to 564 00:29:56,120 --> 00:29:58,720 Speaker 3: categorize everyone on the boat. But No, that was a 565 00:29:58,760 --> 00:30:01,520 Speaker 3: great like he was a great Alaskan character. 566 00:30:01,480 --> 00:30:04,160 Speaker 2: Great Alaskan character. And also I still think the furniture 567 00:30:04,200 --> 00:30:06,840 Speaker 2: industry is such an interesting one to kind of look 568 00:30:06,880 --> 00:30:07,920 Speaker 2: at the economy. 569 00:30:08,000 --> 00:30:08,840 Speaker 4: Yeah, yeah, totally. 570 00:30:08,880 --> 00:30:10,960 Speaker 2: It's an interesting lens to look at the economy through 571 00:30:11,240 --> 00:30:12,760 Speaker 2: and there were a couple of things that I would 572 00:30:12,760 --> 00:30:15,640 Speaker 2: pick out of that conversation. So one just on the tariffs. Yeah, 573 00:30:16,160 --> 00:30:18,320 Speaker 2: there's a theme that we've heard over and over again, 574 00:30:18,360 --> 00:30:21,280 Speaker 2: which is the big guys probably have the pricing power 575 00:30:21,320 --> 00:30:24,080 Speaker 2: and the relationship power in order to get a lot 576 00:30:24,080 --> 00:30:26,240 Speaker 2: of their manufacturers to try to absorb some of the 577 00:30:26,360 --> 00:30:29,080 Speaker 2: terraff costs in a way that the smaller guys do 578 00:30:29,200 --> 00:30:30,240 Speaker 2: not have well. 579 00:30:30,280 --> 00:30:34,840 Speaker 3: And to this point, it's really interesting that the manufacturers 580 00:30:34,840 --> 00:30:39,560 Speaker 3: themselves won't accept certain orders because they're not confident that 581 00:30:39,600 --> 00:30:42,160 Speaker 3: the economics will make sense at the end, and that 582 00:30:42,200 --> 00:30:44,680 Speaker 3: the customer will just walk away from it, which is 583 00:30:44,720 --> 00:30:47,080 Speaker 3: just a really interesting dynamic. Here's like no, you could 584 00:30:47,160 --> 00:30:49,200 Speaker 3: just imagine like no, I swear i'll pay it. I 585 00:30:49,200 --> 00:30:51,080 Speaker 3: swear I'm going to pay I'm good for it, And 586 00:30:51,120 --> 00:30:53,080 Speaker 3: that adds another and then this gets to like the 587 00:30:53,120 --> 00:30:55,640 Speaker 3: idea of not just tear off level, but terar of volatility. 588 00:30:56,000 --> 00:30:57,560 Speaker 3: Just like you wake up one day in the tariffs 589 00:30:57,560 --> 00:31:00,080 Speaker 3: double in India and then you're like, rethink you're planning. 590 00:31:00,120 --> 00:31:03,280 Speaker 2: Exactly and I suspect you know, like the longer the 591 00:31:03,400 --> 00:31:06,760 Speaker 2: tariff uncertainty persists, like the more behavior like that, you're 592 00:31:06,760 --> 00:31:08,440 Speaker 2: going to see where people are just like, I don't 593 00:31:08,480 --> 00:31:10,800 Speaker 2: know this is we want to strike this contract at all. 594 00:31:10,960 --> 00:31:14,000 Speaker 3: There's like two levels here, right, because tariff's mechanically raise 595 00:31:14,080 --> 00:31:16,640 Speaker 3: the cost of doing business. But then on a more 596 00:31:16,640 --> 00:31:19,080 Speaker 3: sort of abstract level, is it business gets more costly 597 00:31:19,120 --> 00:31:20,760 Speaker 3: in this environment? And you know, you always hear of 598 00:31:21,320 --> 00:31:23,920 Speaker 3: people hate on certainty, et cetera. And sometimes there's just 599 00:31:23,960 --> 00:31:27,160 Speaker 3: this cliche that people say because whatever, but here is 600 00:31:27,400 --> 00:31:29,360 Speaker 3: extremely extremely concrete. 601 00:31:29,680 --> 00:31:31,680 Speaker 2: The other thing that was really interesting to me, and 602 00:31:31,720 --> 00:31:34,080 Speaker 2: again this is a sort of broad theme that comes 603 00:31:34,120 --> 00:31:36,680 Speaker 2: up quite often on the show, but this idea of 604 00:31:37,240 --> 00:31:40,000 Speaker 2: if you're a homeowner in the current environment, you kind 605 00:31:40,000 --> 00:31:42,440 Speaker 2: of you haven't made right. I mean, I guess depending 606 00:31:42,480 --> 00:31:44,680 Speaker 2: on what your mortgage rate is. But if you bought 607 00:31:44,880 --> 00:31:47,400 Speaker 2: before rates went up, yeah, you have a lot of 608 00:31:47,440 --> 00:31:51,160 Speaker 2: excess purchasing power with which to buy new furniture for 609 00:31:51,240 --> 00:31:54,440 Speaker 2: your home, Versus, for instance, if you're a renter and 610 00:31:54,600 --> 00:31:57,600 Speaker 2: you're paying those higher rents, you don't have that cushion 611 00:31:57,680 --> 00:32:01,000 Speaker 2: from like pre pandemic rates, and so it feels like 612 00:32:01,080 --> 00:32:04,040 Speaker 2: there's still this issue of haves and have nots in 613 00:32:04,080 --> 00:32:06,880 Speaker 2: the housing market that still feeds into something like furniture 614 00:32:06,920 --> 00:32:07,480 Speaker 2: sales too. 615 00:32:07,880 --> 00:32:11,840 Speaker 3: I also think like the economics of population decline are 616 00:32:11,960 --> 00:32:15,479 Speaker 3: just really interesting because right small in population that's very 617 00:32:15,520 --> 00:32:18,280 Speaker 3: hard to reverse because and we've talked about this in 618 00:32:18,320 --> 00:32:21,400 Speaker 3: other areas, which is that you have some capital stock, right, 619 00:32:21,400 --> 00:32:23,560 Speaker 3: like you have one hundred houses, okay, and then you 620 00:32:23,560 --> 00:32:26,520 Speaker 3: have people move away. Those houses don't just stay there, 621 00:32:27,040 --> 00:32:30,200 Speaker 3: they deteriorate over time, you don't. You lose that capital stock, 622 00:32:30,240 --> 00:32:32,160 Speaker 3: and so like, how do you like reverse. 623 00:32:31,800 --> 00:32:34,000 Speaker 2: Especially in Alaska if you're not doing up keys. 624 00:32:34,040 --> 00:32:36,520 Speaker 3: Yeah, that's right, And I mean we didn't get into this, 625 00:32:36,600 --> 00:32:38,080 Speaker 3: but like that is just like a sort of like 626 00:32:38,120 --> 00:32:41,320 Speaker 3: problem of like the sort of negative it's very hard 627 00:32:41,360 --> 00:32:44,160 Speaker 3: to reverse the sort of decline in any business or 628 00:32:44,200 --> 00:32:48,280 Speaker 3: any industry because of just sort of the constriction in 629 00:32:48,520 --> 00:32:51,520 Speaker 3: supply side capacity that occurs from structural decline. 630 00:32:51,600 --> 00:32:55,400 Speaker 2: It's also just broadly amazing how big a deal the 631 00:32:55,520 --> 00:32:59,800 Speaker 2: twenty thirteen twenty fifteen oil bust actually was. And I 632 00:32:59,800 --> 00:33:02,600 Speaker 2: guess you know, we were covering the oil market at 633 00:33:02,600 --> 00:33:04,400 Speaker 2: that time, and so we wrote a lot of stories 634 00:33:04,440 --> 00:33:07,520 Speaker 2: about you know, the feed through into the bond market 635 00:33:07,600 --> 00:33:10,040 Speaker 2: and stuff like that. But a place like Alaska is 636 00:33:10,120 --> 00:33:12,760 Speaker 2: really feeling it in a very real way. I'm still 637 00:33:12,840 --> 00:33:15,520 Speaker 2: write like almost a decade later, or a decade later, 638 00:33:15,600 --> 00:33:18,080 Speaker 2: I should say kind of amazing. All right, shall we 639 00:33:18,120 --> 00:33:18,440 Speaker 2: leave it there? 640 00:33:18,520 --> 00:33:19,160 Speaker 4: Let's leave it there. 641 00:33:19,280 --> 00:33:21,560 Speaker 2: This has been another episode of the auth Thoughts podcast. 642 00:33:21,600 --> 00:33:24,320 Speaker 2: I'm Tracy Alloway. You can follow me at Tracy. 643 00:33:24,000 --> 00:33:26,560 Speaker 3: Alloway and I'm joll Wisenthal. You can follow me at 644 00:33:26,560 --> 00:33:30,400 Speaker 3: the Stalwart. Follow our producers Carman Rodriguez at Kerman armand 645 00:33:30,440 --> 00:33:33,320 Speaker 3: dash El Bennett at dashbod and Kale Brooks at Kilbrooks. 646 00:33:33,560 --> 00:33:35,880 Speaker 3: For more odd Lots content, go to Bloomberg dot com 647 00:33:35,880 --> 00:33:38,320 Speaker 3: slash odd Lots, where the daily newsletter and all of 648 00:33:38,360 --> 00:33:40,520 Speaker 3: our episodes, and you could chat about all of these 649 00:33:40,560 --> 00:33:43,560 Speaker 3: topics twenty four to seven in our discord discord dot 650 00:33:43,640 --> 00:33:44,920 Speaker 3: gg slash od Lots. 651 00:33:45,200 --> 00:33:47,320 Speaker 2: And if you enjoy odd Lots, if you like it 652 00:33:47,360 --> 00:33:50,200 Speaker 2: when we go on field trips to far flung places 653 00:33:50,200 --> 00:33:52,560 Speaker 2: in Alaska, then please leave us a positive review on 654 00:33:52,600 --> 00:33:55,280 Speaker 2: your favorite podcast platform. And to remember, if you are 655 00:33:55,320 --> 00:33:57,719 Speaker 2: a Bloomberg subscriber, you can listen to all of our 656 00:33:57,760 --> 00:34:00,800 Speaker 2: episodes absolutely add free. All you need to do is 657 00:34:00,800 --> 00:34:03,480 Speaker 2: find the Bloomberg channel on Apple Podcast and follow the 658 00:34:03,520 --> 00:34:05,479 Speaker 2: instructions there. Thanks for listening.