In Business of Home’s series Shop Talk, we chat with owners of home furnishings stores across the country to hear about their hard-won lessons and challenges, big and small. This week, we spoke with Birmingham, Alabama–based Michael Carey, the president, CEO and founder of Stock & Trade Design Co.
Here, Carey shares the extraordinary story of how he launched a furniture business at the height of the 2009 recession while maintaining his day job for another decade. And in case that wasn’t enough to keep him busy, he also fell into wholesale, importing, distribution, manufacturing and more, as the massive Stock & Trade showrooms expanded from Birmingham to two locations along the Gulf Coast as well as Atlanta and Nashville. How has he pulled it all off, and when exactly does he sleep? Let Carey explain.
What is your professional background, and why did you want to go into furniture, especially around the recession?
Actually, I was a police officer. I started my career as a police officer in 1996. I also had my builder’s license, and I was building and renovating homes. I purchased some properties that I was leasing out, short-term rentals, so I was buying furniture for those properties directly from furniture markets.
When I started getting involved in the design aspect of construction, furniture really interested me, but it took several years of feeling out the market. When I attended the Tupelo Furniture Market in 2005 or 2006, there were so many people there I remember parking in a cow pasture and taking a shuttle over because the lots were full. It was an exciting industry! When things started to slow down in ’08 and ’09, that is when I saw my opportunity to step in, because I was able to get the first brick-and-mortar retail location with pretty low risk.
For the first five years, I really didn’t make any money. I kept my day job—or better yet, my night job. By then [I was] so close to my police retirement that I had to see that through. I didn’t retire from my police career until 2020. For 11 years, I worked from 11 p.m. until 6 a.m. I would go home and go to sleep until 10 a.m. Then I’d be at the store from 10 a.m. until 6 p.m., then sleep for a few hours before I went to work. That’s one of the things that gave me the ability to take some risks in the furniture business; it allowed me to invest 100 percent back into the company. Twelve years in, I’ve never taken a salary. That’s helped us to grow exponentially.
Incredible! At what point did the business go from vintage furniture to your own production?
After I opened the first Stock & Trade, I started seeing the need to control the inventory better because a lot of vendors were still having inventory flow [issues]. Everybody had pulled back during the [Great Recession]. Probably about five years into it, I realized that I needed to do some direct sourcing and get some product variety—because when the economy picked back up, more places opened and a lot had the same product.
So I started working directly with some upholstery factories and importing. I saw an opportunity to fill containers faster, so I began bringing in product for stores in other markets, and that turned it into a small mom-and-pop wholesale business. It just grew, and I partnered with Beyond Borders Imports and distributed for them out of our Birmingham warehouse. We have eight different vendors there now, at a 200,000-square-foot distribution center in central Alabama.
How are all of the stores laid out? How have you differentiated the aesthetic of a Stock & Trade establishment?
The stores are very similar, but there is a little bit of diversity based on the market. We have found we have a lot of customers in common. Our new Santa Rosa location is a 70,000-square-foot showroom down in Santa Rosa Beach [Florida]. So many of our Nashville, Birmingham and Atlanta customers have second or vacation homes in that area [of Florida]. Our Nashville customers shop at our showroom in Santa Rosa Beach for their Nashville home, and vice versa.
Down here in Santa Rosa, we are not your typical beachy furniture store. We’re still pretty contemporary, kind of moody. We use a lot of dark woods and deep, rich colors. There is nothing in that showroom that screams “beach only.” When we do our buying, typically we’re buying for all locations. We are sometimes surprised: We buy something with Nashville in mind, but we place it everywhere, and it ends up being a top seller in Santa Rosa.
What category are you known for, or what category moves the fastest?
Upholstery and large case goods, because we sell off the floor, where we keep a large stock of upholstery. It can be everything from custom upholstery—we have designers put together fabric combinations—to a program where we keep hundreds of the same sofa in stock in our distribution center. Our number-one-selling upholstery is still our own product. It’s usually a linen, neutral-color sofa with some accent pillows. That is what we sell hundreds and hundreds of each month. That’s largely because you can buy it off of our floor, and we have a truck that’s coming from a distribution center every couple days.
How much of your customer base is the trade? Do you have trade programs?
We actually started a new trade program right before COVID. It was something that I’d been working on for a while. When I’m speaking of trade, I’m speaking of not only designers, but architects, home builders, developers, even realtors. We sell certain products to the trade at wholesale pricing, just because we know the designers are doing lots of projects. We want to grow partnerships and allow them to keep their margins as strong as possible. We handle all the back-of-house stuff: ordering, shipping, getting it here, getting it delivered.
I put that program together back before COVID, and then when COVID hit and the supply chain was obliterated, we did not launch it because there was no inventory. We were struggling just to keep our stores stocked. Once things settled down, we launched that program in 2022. It’s called Wholesale Pro, and it has had phenomenal response. We can’t do all the design projects that we want to do, but we want to be involved in as many as we can.
How did you weather some of the other issues of the pandemic, and was there one that hit you hardest?
Yeah, it was horrible. We dealt with labor shortages and containers sitting in ports for weeks at a time. The freight rates went from $3,500 to... I think the most that we paid was $27,000—for the same container.
We absorbed so much of that because there’s no way that you could stay on top of it. The repercussions are going to be pretty long-lasting, because everyone still has inventory on their floor and in their warehouses that they paid top freight for. We made adjustments directly as they impacted us, so as freight rates came down, we started dropping the prices again. We’ve spent so much time changing our pricing. Every day, we’re sending out directives to the stores to lower prices. If, going forward, our freight [prices are] better and we’re able to cut the price, then we do. Of course, our margins got really hurt the past couple years, but we did a lot of volume. It’s a little give and take everywhere.
Yes, how much of the pandemic “pleasures” did the business experience, from people investing in their homes? Or couldn’t you deliver the things that people wanted to buy?
The good thing is that since we do a lot of our own direct sourcing, we have some factories in Indonesia and India and China that were completely devoted to us, so we were able to push out as much as anybody. However, you had no control over the ships. It seemed like every time you might see some light at the end of the tunnel, ports would shut back down.
We were in the process of opening the Nashville and Spanish Fort [Alabama] stores a year ahead of COVID, so we had already done some pretty heavy buying for those openings. Not to mention the Santa Rosa Beach store was scheduled to start construction right before the pandemic. We thought that was going to be the death of us—as soon as Nashville and Spanish Fort were ready to open [in spring 2020], they had to be locked up. But as soon as things started opening back up, they gave us an immediate bigger footprint and a lot more inventory.
Yeah, it was crazy times. We have tractor trailer trucks moving furniture around from location to location to fill orders. Interstore transfers are extremely costly and resulted in a loss in margins, but we tried to fulfill as many orders as we could.
Going backward a bit, how have you selected the markets that you have?
Birmingham was my backdoor. I was born and raised there, so I knew that market really well. The next location was the one [in Santa Rosa] on the [Gulf] Coast, and it was still a very soft market. I don’t feel like there is any market data that could’ve told me, “Oh, yeah, that’s where you want to be.” I spent a year driving, just exploring, looking at housing growth. I have a binder where I printed out every piece of property along the Panhandle. This land we have the Santa Rosa location on, I wasn’t ready to move on it [right away]. I leased a building for a year, to see what the market held, then bought this land. We brought in some tenants—a coffee shop, a flooring store—and we have some corporate apartments. We’re planning on investing in this location and making it our corporate home. Phase two includes some restaurants.
Nashville was the same thing. I spent a lot of time going up there, understanding the market, understanding the city. I found the location I wanted to be in, but it was tied up in a 65-year lease. I looked at, I don’t know, 30 or 40 more locations, and I just was not happy with any of them, so I began looking in Atlanta. As we were opening Atlanta, my original location in Nashville came back around. Being patient, that’s the thing. It’s never, “Oh, this is a hot market. We’re going to jump into it.” Every one of these stores was several years of my own personal research, driving the area.
I don’t ever go into other furniture stores, which people find odd. When we do our buying, I specifically ask to stay away from what somebody else is doing. There’s no purpose in somebody going store to store and seeing the same thing. I want them to come to us and see something that they haven’t seen anywhere else.
That’s what excites me about the industry and has pushed me into product development. I spent most of January at Maison&Objet, then traveling through Belgium and Holland, then factory visits in Indonesia. That’s all about product development and finding stuff that you can’t find anywhere else.
Not that Bed Bath & Beyond is the paragon of success right now, but still—how do you compete with the big boxes, with Wayfair and the internet?
We don’t have as much crossover as you would think. I’m very conscientious about staying away from product that is all over [the internet]. When we go to market, I will search to see if it’s readily available online. I’m not even looking at the price point as much as I just don’t want the same thing. We try to price as aggressively as we can. … We don’t price based on what we think we can get for it. We run the business as lean as we can. We pass whatever the minimum amount is that we can afford to sell something. Of course, we take hits here and there, but at the end of the day, if we’ve got people coming back to us because we were fair on pricing… [And] a lot of our sofas and things on the floor, you can’t buy online because we custom-built them.
What’s your favorite day as a retail owner? Is it the thrill of development? Do you get to the floor occasionally?
The most exciting thing is having people tell me how beautiful our stores are and how excited they were to do a project with us. I ran into a designer in the Santa Rosa store who’s based in Atlanta and introduced herself. She said, “I just want you to know that I absolutely love shopping in your stores. The service I get as a designer is just incredible.” We have dedicated trade client-service people, and she named the ones that she works with specifically. No matter how bad a day that I could be having, to have somebody pass along their experience like that? It’s not just furniture. It’s helping somebody establish their home and make them complete.
Of course, my heart goes back to construction and design and product development. I’m always anxious for product development. I love for designers to come to us and say, “Hey, I have a big need for this, and I can’t find it anywhere.” [I like] taking that and running with it. There’ve been times when a designer has sent me something, I sent it to the factory, and the factory whipped out a sample overnight. To take an idea and then bring it into the store in 60 days, then to a High Point showroom, then start selling it by the hundreds? That’s what really thrills me.
Hompage image: Carey launched a furniture business at the height of the 2009 recession and maintained his day job for another decade | Courtesy of Stock & Trade Design Co.