How does the Nebraska Furniture Mart work? Gisela Baur & Tobias Kramer explore

Here we follow Scott Baker, Tobias Kramer (echtgeld.tv), and the Warren Buffett friend Gisela Baur in the Nebraska Furniture Mart. We are learning more about the company Warren Buffett owns through Berkshire Hathaway.

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In this discussion with Scott Baker Baker, we have covered the following points:

Introduction

[00:00:06] Tilman Versch: Hello Scott Baker. Nice to meet you here in Nebraska Furniture Mart.

[00:00:10] Scott Baker (Nebraska Furniture Mart): Good afternoon. Welcome to the store.

Scott Baker’s Background

[00:0:12] Tilman Versch: Thank you very much for the invitation. I’ve heard you were here the boss in the Furniture Mart, somehow.

[00:00:18] Scott Baker: I’m the Omaha store director. I’m the director of this store that we’re at.

[00:00:21] Tilman Versch: That’s interesting. When did you begin to work here?

[00:00:25] Scott Baker: I started here in 1985. I’ve been here for 34 years.

[00:00:28] Tilman VerschThat’s impressing. What was your first job here?

[00:00:31] Scott Baker: I used to unload the train, they used to bring furniture by train car and I unloaded train cars.

[00:00:37] Tilman Versch: And how did you carry ago since then?

[00:00:42] Scott Baker: I’ve done all kinds of jobs here. Mainly warehousing jobs and maybe seven-eight years ago, I switched over to retail and warehousing and kind of, you know, became a store director, but mostly warehousing for many many years.

Nebraska Furniture Mart

[00:00:37] Tilman Versch: So, what is the mode of the Nebraska Furniture Mart? What makes it special?

[00:01:03] Scott Baker (Nebraska Furniture Mart): Well, one we have everything that you need. We have all the stuff that the customer needs for their home and we offer installation and setup and delivery and you know, we’ve got a big reputation. We’ve been in the city for 82 years now, so we’re big and we are good at what we do and we take care of people and that’s our mode.

[00:01:24] Tilman Versch: That’s a good mode.

[00:01:26] Scott Baker: Yeah.

[00:01:27] Tilman Versch: We’re happy to have a tour now for the Nebraska Furniture Mart. Thank you for having the possibility and showing us the mart.

[00:01:33] Scott Baker: We’re happy to show off the store. You’re welcome and you can walk around, see whatever you’d like.

[00:01:38] Tilman Versch: Thank you.

[00:01:39] Scott Baker: Okay, let’s do it.

The Nebraska Furniture Mart Tour Begins

[00:1:41] Scott Baker: Yeah, we sell furniture, flooring, and beds…

[00:01:53] Tobias Kramer: And how much space do we have here and which percentage is this comparing to the rest we didn’t see until now?

[00:01:59] Scott Baker: Space-wise, so this is about 115,000 square feet.

[00:02:04] Tobias Kramer: 15000 square feet, so which would appropriate to ten thousand meters, right?

[00:02:11] Scott Baker (Nebraska Furniture Mart): I do not know.

[00:02:13] Gisela Baur: Me neither.

[00:02:21] Scott Baker: And I have an *inaudible* and patio store that’s another 100,000 square feet. And then the furniture and flooring store is 250,000 square feet.

[00:02:32] Tobias Kramer: Okay, so double of the space we have here and it does not only take… we also have air hockey here.

[00:02:58] Tobias Kramer: So we have air hockey here, we have several stuff, we have cross trainers… So we have lots of stuff here.

[00:03:17] Scott Baker: The other store’s full. Way more than this.

Kitchen, Garden, and Home Office Equipment

[00:03:24] Tobias Kramer: Kitchen equipment, which is awesome. American refrigerators…

[00:03:31] Scott Baker: Yeah, every brand, every size, every pairing…

[00:03:37] Gisela Baur: Here’s garden and lawn things…

[00:03:40] Scott Baker: Yeah, if you don’t like mowing the grass, it mows the grass for you. Well, it runs on batteries and plugs itself in and charges up and so you never have to mow again. So, this is a typical American refrigerator. Not really, but it’s a big one.

[00:03:58] Gisela Baur: Oh, beautiful! Can you ship it?

[00:04:05] Tobias Kramer: So if you kill somebody you actually could you know, you could put in more than one person. Or you could put one person and you could have your own steaks in the other one.

[00:04:16] Scott Baker: I suppose if you wanted to. I am not sure if we could endorse that, but you could. So we have a little restaurant here in the store.

[00:04:31] Tobias Kramer: Subway sandwich.

[00:04:35] Gisela Baur: I’m hungry.

[00:04:39] Tobias Kramer: So now we are on the way to the main, so this means, we are not actually entering it now, but we see other stuff.

[00:04:47] Scott Baker (Nebraska Furniture Mart): See this is an offshoot and we sell home office equipment in here and TV stands since it’s by the TV Department and so this is, what we call the home office.

[00:04:59:] Tobias Kramer: Okay, have you these tables where you can change the height?

[00:05:03] Scott Baker (Nebraska Furniture Mart): We do. They’re somewhere.

[00:05:08] Tobias Kramer: It’s not so easy to keep track if you manage 250,000 square feet of furniture.

[00:05:17] Scott Baker (Nebraska Furniture Mart): Well and we like to move it around. We like to sort of change things up so it looks nice for the customers. People come all the time, so we want them to see something new and they need change.

Employees and Store Branches

[00:05:36] Tobias Kramer: So, what is your impression Gisela Baur, if you walk around here or which question would you ask Scott Baker?

[00:05:45] Gisela Baur: I already did ask some questions. I learned *inaudible* you have alone in Omaha, you have now how many employees?

[00:05:54] Scott Baker: There are about 1400 retail people here. And that includes warehousing people, it’s all the people who are serving the customers.

[00:06:02] Gisela Baur: So, what are the new stores? There are two or three…

[00:06:07] Scott Baker: We have a store in Kansas City, Kansas. It’s 200 miles from here. And then we have our newest, it’s not our newest, that’s our largest store is in Dallas Texas, North Dallas.

[00:06:20] Gisela Baur: It’s larger than this one?

[00:06:22] Scott Baker: It is larger than this one. It’s unbelievable. It’s open about three or four years. And our Kansas store, our Texas store look similar and they’re amazing, they’re beautiful and then we just opened a small store in Des Moines, Iowa. It sells appliances and flooring.

[00:06:42] Gisela Baur: Which isn’t far…

[00:06:44] Scott Baker: A hundred and twenty miles.

[00:06:47] Gisela Baur: I mean it’s pretty close. Don’t people come here to furnish their homes?

[00:06:54] Scott Baker: They come to both, yeah.

The Second Entrance to the Furniture Store

[00:07:00] Tobias Kramer: So now we’re leaving the one and look over to or walk into…

[00:07:09] Scott Baker: So this is the entrance to our furniture store, there are two entrances. Entrance over here, an entrance here.

[00:07:20] Tobias Kramer: Home accents, recliners, bedrooms, dining, carpet, lamps and accessories, Design Centre, leather, and the last one I can’t read.

[00:07:29] Scott Baker: Area rugs, can’t forget about area rugs.

[00:07:34] Gisela Baur: So the concept is, everything you could equip your home with…

[00:07:39] Scott Baker: Yeah, you can go to one place and get it all in one spot.

[00:07:43] Tobias Kramer: So an early IKEA.

[00:07:46] Scott Baker: Better than IKEA. IKEA is okay. We have more than that. We have an installation of your wood floors and installation of your carpet and you don’t have to put everything together here. So this is the main floor. Generally, upholstery and our Design Centre are here.

[00:08:14] Gisela Baur: Wow. They change the look. I’ve not been here for the last 10 years or so. Really changed.

[00:08:22] Scott Baker: Again, we kind of try to remodel it and open it up.

[00:08:26] Tobias Kramer: It looks very wide. So, quite a distance you can oversee.

[00:08:40] Gisela Baur: So it’s a classic Warren Buffett business. People will always need furniture.

Design Centre and Mattresses

[00:08:47] Tobias Kramer: What is your favorite spot here? So sorry but…

[00:08:50] Scott Baker (Nebraska Furniture Mart): My favorite spot in the store? It’s actually downstairs, I’ll show it to you, it’s really terrific.

[00:08:55] Tobias Kramer: So sorry to interrupt.

[00:08:56] Gisela Baur: No, no, no, no.

[00:08:58] Scott Baker (Nebraska Furniture Mart): So I live in a loft-style place in the downtown area of Omaha and I kind of like the more urban-looking furniture so downstairs, we have an area for that. We have a full Design Centre. So if you have a hard time picking things out, you want someone to assist you, they will come to your house, look at what you have.

[00:09:18] Gisela Baur: Okay, and then get the measures…

[00:09:22] Tobias Kramer: Do you charge anything extra for this service?

[00:09:25] Scott Baker (Nebraska Furniture Mart): There’s a small charge which is refundable when you buy. So, it’s a really nice service and we have really talented people and if decorating isn’t your thing, it’s okay. We’ll help you with that. So you can see we’re selling a few mattresses today.

[00:09:48] Tobias Kramer: Seems so, yeah. What is important is, it’s very important to have a nice sleep quality and to sleep nice and to sleep well, and what do you spend more time on, on a mattress? One-fourth or one-third of your life, you’re lying, you’re sleeping.

[00:10:08] Scott Baker (Nebraska Furniture Mart): A third of your time you spend on that thing. You spend a tenth of your time in your car. People don’t hesitate to spend a bunch of money on that. So we like people to you know, have the health benefits and the well-being of a good night’s rest and it begins with a mattress and we sell pillows and you know, to be healthily happy. So this here is sort of a modern living section of our store and it has kind of a more modern take, more modern feel.

[00:10:43] Gisela Baur: And you have all these small things like cushions also which people buy easier.

Multifarious Store and Life of a Salesperson

[00:10:53] Scott Baker (Nebraska Furniture Mart): So, you know what I think is interesting about the store, is that we have baby furniture for the brand new baby and this could be your furniture; and then when you get to be a teenager, your parents buy you a new bedroom set and when you get married, your spouse will come in and buy new furniture and then over time you may buy your kids a crib for their child, your grandchild and you know… we have lift recliners to help older people get in and out of chairs so, I mean we kind of take care of the whole lifespan, you know, from cradle to grave. And you know, we do that for many generations.

[00:11:33] Tobias Kramer: But you don’t sell anything for the graves, right?

[00:11:35] Scott Baker (Nebraska Furniture Mart): Well, not yet, you never know… but we don’t.

[00:11:41] Gisela Baur: You didn’t sell garden stuff some years back.

[00:11:43] Scott Baker (Nebraska Furniture Mart): We didn’t sell lawnmowers five years ago, so I don’t know. So I really like this part of the store kind of a growing part and kind of new modern kind of feeling things.

[00:11:59] Tobias Kramer: Every time I am in a furniture mart, I get overwhelmed by too many things I can see.

[00:12:06] Scott Baker (Nebraska Furniture Mart): So here’s the thing with a big furniture store like this. You have to have really good salespeople and a salesperson who asks the right questions cuts the sales floor in half with every question. So if you say I’m looking for a sofa. I say are you looking for leather or fabric? I’m looking for leather. I just cut the section in half. And are you looking for modern furniture, you’re looking for contemporary furniture, you’re looking for what kind of and you cut it in half and cut it in half and pretty soon, you and I are standing in front of two pieces.

Like you like that one or that one, you pick it out and we get you going. So we really try to invest a lot in our salespeople to make sure they’re good at qualifying and finding what you want and some people want to wander and look. Some people want to get something and go. And you know, we try to figure out what that is and do that.

[00:12:51] Tobias Kramer: What can a good salesperson earn in a year at the Nebraska Furniture Mart?

[00:12:59] Scott Baker (Nebraska Furniture Mart): A really good salesperson can well earn in six figures here. Well into six figures.

[00:13:05] Tobias Kramer: Well into six figures, okay.

[00:13:08] Scott Baker (Nebraska Furniture Mart): And we advertise that, we advertise in the local newspaper, and on all of our job boards I think, we pretty much tell people you’ll make sixty or seventy thousand dollars…

So this is my favourite section of the store and it’s not a big section, but it’s got really kind of cool things. We have inspiration rooms, so we try to do a bedroom like you might do in your home and we have a whole group of people who do all this work and whether you want your room to look like that or look like this or look like that one and then sort of try to show you a bunch of things to see if we…

And you know, one of the things we try to do is inspire people to come in and go, ‘Wow I love this and I want all of it or part of it or something similar to it.’ So there’s bedroom set after bedroom set, there’s hundreds of them down here. So lots of different kinds of mattresses and we stock tens of thousands of them.

[00:14:14] Gisela Baur: But this traditional mattress and carpets are the traditional…

[00:14:21] Scott Baker (Nebraska Furniture Mart): You have to have them. You know, if you don’t buy a new one every eight or ten years, you’re cheating yourself.

[00:14:31] Tobias Kramer: Five years is better, I guess.

[00:14:32] Scott Baker (Nebraska Furniture Mart): Well it’s better for us for sure, but you know we want people to get the lifespan and the value of it. Well this couple will walk down to that, to the other end and you can see a little bit more of the store. So up on the on the north end of the store, we have a dining department. We have additional upholstery, like all the motion upholstery and all that kind of stuff and then we have a whole dining set and a bunch of lamps and then we have a huge flooring department.

Working at Nebraska Furniture Mart

[00:14:59] Tobias Kramer: And you work here for more than 30 years, right? I got this from your conversation

[00:15:04] Scott Baker: Yeah, like 34 years.

[00:15:07] Tobias Kramer: Okay great. Also quite a time.

[00:15:12] Scott Baker (Nebraska Furniture Mart): There are many people that if they worked here longer than I… And on our list of how long people have been here, I think I’m number 200. I mean, people come and stay. It’s a really good place to work, people come here and they stay here.

[00:15:29] Tobias Kramer: How much time do you work here, a day or a week?

[00:15:32] Scott Baker (Nebraska Furniture Mart): Well, I mean you know… we typically work you know, most employees are working a 40-hour workweek. I might work a little more than that. This week, we work a lot more than that.

[00:15:45] Tobias Kramer: The… meeting week is a little bit more intense, I guess.

[00:15:49] Scott Baker (Nebraska Furniture Mart): Yeah I mean, you’re basically gonna work the 8:00 a.m. to 10:00 p.m., 8 or 9 days in a row. Yeah but you know, it’s short term and it’s fine and it’s fun. So it’s a long week but typically, people work around 40 hours a week here. And I really don’t like people working tons and tons of hours, it’s not a good work-life balance and that’s not what kind of company we are.

[00:16:16] Tobias Kramer: And people are mostly coming from Omaha or do they have longer drives?

[00:16:21]Scott Baker (Nebraska Furniture Mart): No, we service a 400-mile radius from the store.

[00:16:26] Tobias Kramer: Yeah yeah, for the customer, but your workers are mostly within a 30–50-mile range?

[00:16:33] Scott Baker (Nebraska Furniture Mart): Yeah, probably within of 30 to 50 miles. I mean, it’s a pretty good-sized city. Pardon me. And you know, we don’t have a significant turnover so people who start to work here, they stay.

Home theatre equipment and safes at the Nebraska Furniture Mart

[00:16:55] Tobias Kramer: And now I think we are at the part where the massage chairs come?

[00:17:00] Scott Baker (Nebraska Furniture Mart): So over in a corner back there, I’ve got a whole bunch of massage chairs. These are just home theatre chairs. Then we do some home theatre and all this stuff out here is motion furniture, where the electronic leg rest and all the rest of that. It’s really become popular.

[00:17:15] Tobias Kramer: Yeah, they are reminding one of a few series of friends, when the two guys got new chairs.

[00:17:30] Gisela Baur: Can I stay here? Hi! You need a lot of space for home theatre, do people put that in the living room?

[00:17:49] Scott Baker (Nebraska Furniture Mart): Theatre rooms are really popular, and you know, we sell and install all that stuff too. So we put a big screen up at your house. Yeah well, we can build you a whole theatre room.

[00:18:02] Gisela Baur: How do you get a trend like home theatre? You sure have to find it early, how would you find it?

[00:18:10] Scott Baker (Nebraska Furniture Mart): You know the thing is, you sort of got to get into it, you got to get good at it and you have to be able to do the whole thing for people. You know, I can bring it to you, I can set it up, I can hook it up, I can make sure everything is right, I can show you how to use it. You see you have to kind of offer the whole thing. You know, if you just sell it and people can’t…

[00:18:33] Gisela Baur: use it

[00:18:34] Scott Baker: then you know…

[00:18:37] Gisela Baur: And how do you decide okay, let’s try home theatre stuff. There’s a decision behind it, you gotta buy these things, you gotta get knowledge about whatever it needs, you know.

[00:18:50] Scott Baker (Nebraska Furniture Mart): Yeah, I mean when you decide you’re gonna get into one of these categories, you’d better do some homework because it’s an investment, you know. I mean the price of entry…

[00:18:59] Tobias Kramer: Here’s something you never would have; you never could buy in Germany.

[00:19:04] Gisela Baur: Oh, safe!

[00:19:06] Tobias Kramer: Not only safes, but also weapons safe or a weapon cupboard?

[00:19:12] Scott Baker: This is America.

[00:19:13] Tobias Kramer: Yeah, obviously! For the big stuff. For your personal pump gun. Buy a Centurion 18 made in the US.

[00:19:24] Scott Baker (Nebraska Furniture Mart): Yeah I mean, a lot of Americans have weapons. But they do want to be responsible with them.

[00:19:32] Gisela Baur: Yeah, I think that’s a good idea. If you have some, you should put them…somewhere.

[00:19:35] Scott Baker: So many people have these. And you know, for this business, you know this thing weighs seven or eight hundred pounds. So we have a delivery service who will bring it. They’ll bring it out and they’ll put it, you know, in your home and you don’t do all that. So, you know, you asked about getting into these businesses, you know, you’ve got to be able to deliver.

[00:20:00] Tobias Kramer: Yeah, we don’t try if we fit in there because I’m a little bit anxious that we don’t get out again. But this one…

[00:20:08] Scott Baker: We’ll let you out for a fee.

[00:20:11] Tobias Kramer: This one is huge and it costs one thousand dollars, becomes tax so one thousand one hundred and you deliver this thing, put it into the place where I want to have it and it’s free or do you charge extra?

[00:20:23] Scott Baker: There is a charge for delivery, there’s an additional fee for this because…

[00:20:26] Tobias Kramer: It is heavy stuff, that’s four guys.

[00:20:30] Scott Baker: But you know, we’ll put it in the room of your choice. I mean we’ll take it up the steps if you wanted it up there.

Thank you & Goodbye

[00:20:39] Scott Baker: Tilman sent me a video, YouTube video Mr. Buffett and Mr. Gates, sitting chatting and it’s just over here where they were doing that. So this is a dining room department, but over here is where the fellas were sitting. So they were just sitting at a little dinette table right over here.

[00:21:10] Gisela Baur: This one?

[00:21:10] Scott Baker: Yeah well, we’ve changed the store a little bit since that video was made, but in this general area.

[00:21:16] Gisela Baur: What were they talking about? I didn’t see it.

[00:21:20] Scott Baker: You know, the video shoots that way, but this is sort of where they were sitting down, kind of talking over those things. You had talked about, they’re doing something here, so this is…

[00:21:33] Tobias Kramer: So the next big question would be who brings the food?

[00:21:36] Scott Baker: Yeah well, we can go to Subway.

[00:21:43] Tobias Kramer: Thanks for showing us around, thanks for the possibility of filming here. So to sum things up, if you would have to combine all the information you gathered in your 34 years here and try to put it in one or two sentences, what’s the greatest thing about Nebraska Furniture Mart?

[00:22:08] Scott Baker: This is a family business run by a really great family and you can make a great career here. And we’ve been in the city for 82 years and we’re super focused on the customers so if you like people, and you like to meet new people and do things, this is an amazing place to work. And again, the family will treat you like a family so it’s a terrific place.

[00:22:30] Tobias Kramer: Okay great, thanks for having us and sharing time with us.

[00:22:33] Scott Baker: Yeah, anytime guys, I’m glad you guys came in.

Disclaimer

Finally, here is the disclaimer. Please check it out as this content is no advice and no recommendation!

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Tilman is a very enthusiastic, long-term investor. Over the last years he has taught himself important investing concepts autodidactically. He tries to combine a positive climate and environmental impact with his investments.
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