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126: Catching Up with Kelly’s Home Center

Written by Rob Stott

July 5, 2022

Kelly's home center independent thinking podcast retail

Over the last few years, Kelly’s Home Center has seen its retail footprint grow. We talk with second- and third-generation owners Jeff and Scott Kelly about the business, what’s working, and what they’ve learned through their acquisitions.


 

Rob Stott: All right, we are back on the Independent Thinking podcast and heading out to Salem, Oregon for this episode of the podcast, and we got to do it with a couple of generations of Kellys out there at Kelly’s in Salem and all throughout the Oregon area. But, Jeff and Scott, appreciate you guys taking the time and calling in and joining us today to share a little bit of your story.

Jeff Kelly: Thanks, Rob. We’re thrilled to be here.

Rob Stott: Yeah, absolutely. Yeah, so we got the second and third generation of Kelly’s owners on with us today. Jeff, I’ll let you kind of start. Tell us a little bit about your background and how you guys got into the business and your path to Kelly’s.

Jeff Kelly: Well, being the second generation and Scott the third, you could say we were born into it. So, my parents started the company back in 1974, both my mother and my father. And then, I got involved obviously at the early years and finished my schooling and joined the family business, gosh, 35 years or so ago now, and it’s been a great ride ever since. So, Scott, how about you?

Scott Kelly: Can’t say it’s terribly different, but there would be opportunities on Saturdays to where, instead of hanging out with friends, I got invited to go to work. So, whether it was cleaning the parking lot or washing trucks or being on a truck, working security on outside tent events, just kind of all was recruitment of after school or on weekends, and then just kind of evolved from there.

Rob Stott: Was it ever a thought for either of you? Did you have a choice in the matter, I guess, is one way to ask of whether or not you would be involved in the business?

Scott Kelly: Go for it first.

Jeff Kelly: Oh, we all have choices, but I think natural progression. It’s a family business and one that’s created opportunities, and obviously we’ve grown up in it, so we have capacity to some degree and interest and familiarity. So, I think when I entered the business out of school, my thought was, “Hey, I’ll sign on for five years,” and I keep re-upping. So, how about you, Scott?

Scott Kelly: So, my story would be similar but slightly different. So, I went to school in Utah, and I actually joined a different retailer there to really see if this was something I wanted to do. I worked at RC Willey, which would be a Berkshire Hathaway company, and I was there for a couple of years in sales, et cetera. And so, tried that out, and it felt logical that joining the family business would make sense, but I want to… I don’t know if he and I counseled together, but try it before you get fully involved to where, if there wasn’t a good fit, it wasn’t a big deal. But, there was always in the back of my mind of, “Well, let’s go see if I can find something else to do,” but it kind of kept calling me home if you will.

Rob Stott: No, that’s awesome to hear, and I mean, funny enough, I don’t think that uncommon when you see a multiple generation independent businesses. What do you think for you guys? What is it that kind of called you back to Kelly’s and kept you involved with the business?

Scott Kelly: Well, I can give you a story on that one. So I graduated, I’m going to say, in December from BYU, and then I’m going to say within about a week, I got a phone call from this guy just saying, “What are you doing?” “Well, I was going to go skiing today, and I have anticipation of trying to get a season pass at one of the resorts there.” “Well, I’ve got a job for you. Pack up your stuff. Let’s get to work. How soon can you be here?”

Scott Kelly: All right. So, a little change of plan, obviously still my opportunity to select it. But, I had an opportunity in our electronics department at the time and so jumped in with two feet and just started running. So, that was kind of, I graduated, and then he said, “Let’s do it.” So, that was kind my calling back home.

Jeff Kelly: So, he got a week’s break.

Scott Kelly: Yeah.

Rob Stott: Gave him a little bit of time. No, that’s awesome. How about for you, Jeff?

Jeff Kelly: Well, I think again, Rob may be a similar situation. So, at the time, I was married just out of college and decided that I’d probably better find a job. I think actually my wife, Bonnie, was pregnant with Scott on the way. And so, all of a sudden I had responsibilities, and again, I had always thought the family business had a lot to offer, and I had some ideas that I wanted to see if we could grow it and scale it and put in some better processes. So, yeah, it’s been a natural fit, natural progression, and natural succession.

Jeff Kelly: So, we’re one of the lucky ones. Our family business has worked. I have a brother also of the second generation that’s still involved in the company, and we work extremely well together. Dad’s still alive. He’s 84 now, and he usually shows up when it’s lunchtime and wants to know who’s buying lunch, and then he’s gone shortly thereafter. So, that’s dad’s contribution these days, but very grateful. So, we have three generations, again, in the second generation, both my brother and I, and then Scott in the third generation.

Rob Stott: Now, if I had to guess at who started at the youngest age, Scott, you made a TV commercial appearance. Am I right about that? Is that the youngest that a member of the family has been involved in the business?

Scott Kelly: We get them young.

Rob Stott: Just a few months old at that point.

Scott Kelly: We get them young. So, I don’t remember signing on for that commercial, but yep, when I was just a couple of months old. And then, what’s kind of ironic is our Eugene crew has taken onto that commercial, which we have on YouTube, and the slogan there is Scotty. My name doesn’t work much. And so, actually two weeks ago, one of our guys in Eugene drew a really big sketch about yea big of that commercial on paper. It’s actually pretty funny, so it was ironically funny that you asked that question and saw that commercial. So, that gets a lot of attention.

Rob Stott: Oh, that’s awesome. I mean, obviously a family affair, and the business is… There’s more involved than just you guys, but what’s it like for you? I always like asking this question. What’s it like working with family?

Scott Kelly: So, one thing that helped was we decided that one roof for all three of us, that was a little cramped. So, we decided we needed to expand into Eugene. And so, I think logically I said, “I’ll go.” So, I was able to create a little bit of separation so I could stretch my wings if you will, and just, “Hey, you know what? We are a family business, but we’ve got now a couple locations. So, let me go down there and try some of my ideas to where we’re not having to double-check all the decisions at once.”

Scott Kelly: So, part of it is just, as we do work well, there are also moments of because we’ve done it this way, it’s not always necessarily the same way I would do it. So, there’s synergy, but at the same time, some independence that allows us to operate simultaneously and independently, but with a joint mission statement of wanting to all the right things.

Rob Stott: No, that makes sense. To the point about the different locations, I want to ask, what’s it like walking into a Kelly’s today? Are the locations different, or do you guys do anything to differentiate one store from another?

Jeff Kelly: Yeah. So, again, our anchor store, home store’s here in Salem, Oregon. The building, the facility we’re in, we built 16 years ago. It’s a world-class facility. We rolled into Eugene five, six, seven years ago now, and we bought two independents, consolidated them into one, bought the real estate, remodeled it. So, the offerings for the most part would be the same. We do a few more things in Salem, just based on, we have a little more square footage. We have a cooking school and a kitchen store and some things, mattress department.

Jeff Kelly: Corvallis is a small store. We put that in right during COVID. We had at the time several Ashley Furniture home stores, and we were mandated by the governor to close non-essential businesses. Furniture fell into that bucket, so that store got shut. There was a crack to where Ashley’s was agreeable for us to place appliances in there to open that store up. So, we did so, so we’ve got a store in Corvallis, which is different than the other ones. It’s a much smaller footprint. And then, Medford, we added to the package here to the business about a year ago.

Scott Kelly: Year and change.

Jeff Kelly: And it would have also a larger furniture presence under the same roof.

Rob Stott: Jeff, maybe more for you, you’ve kind of seen the business for a little bit longer as the second generation. How’s it evolved over time to what it is today, as opposed to maybe what you were working in early in your career?

Jeff Kelly: It’s evolved a lot. So, obviously we’ve grown exponentially since I got involved or since the first generation, and we’ve increased in volume. We’ve increased in breadth of our offerings. So, it’s a much different business, but the foundation’s the same. We show up. We work hard. As we’ve often said, we’re not the smartest, certainly not the best looking, but we can work pretty hard. We were raised to work pretty hard. So, that’s really our approach. We show up, we roll up our sleeves, we go to work. So, that’s still our core. We strive to do the right things for the right reasons day in, day out. So, we’re not fancy people. We just go to work.

Rob Stott: And as far as the evolution of the business, what are the things you guys kind of… Obviously new verticals can come into a store, and you mentioned taken by location adding appliances maybe. But, what sort of things are you keeping an eye on as you look to evolve to make sure that the Kelly’s business is still relevant and having success?

Scott Kelly: That’s a good question. So, I think one thing that in the last couple of years, I’m going to say the last three to four years, one thing that I’ve noticed we’ve done and continue to try to do is align ourselves more with Nationwide Marketing Group and all its offerings. So, I mean, one thing I do specifically is I listen to your podcast, and I listen to the other members, and just as an example, as I believe Roddey with Queen City, I actually reached out to our Nationwide rep and had a phone call with Roddey after you did your podcast with him and just said, “Hey, asking about the Winston-Salem store they’re opening, what are you guys doing that’s aligning with Nationwide?”

Scott Kelly: So, we from a marketing perspective now use Kim with Site On Time Nationwide. They do all of our marketing now, so we felt that aligning with Nationwide would give us the best offering. So, from an online, a digital perspective of evolving with our digital advertising, trained to use that team and the resources they have, and just, I’m going to say more alignment with the Nationwide program than ever, and want to continue to evolve that. So, we push them as hard as they can be pushed in a good way and want to learn and grow and utilize that program. So, I feel like you guys are outside finding cutting edge ways to evolve and are studying that.

Scott Kelly: And so, that’s, in my opinion, been a big change point for us because we can’t be good at everything. And so, I think it’s all about people and understanding the team. So, it’s all about surrounding ourselves with the best we possibly can and allowing them to swim, if you will. And then, if they’re sinking, let’s help them find the right path, et cetera. So, I think that’s kind of how I think we’re staying relevant, just using the tools that are available.

Rob Stott: For the podcast mention, the 20 will be in the mail. Just keep an eye out for that coming your way. That was not planned, I swear. So, that wasn’t a planted question. But, no, I love the answer, and it’s cool to hear how you guys are kind of staying on top of it and being engaged too. That’s always cool to hear, I think, from our members. But, how about, you talk about diving into the Nationwide offerings. What do you think it is that Kelly’s does well? This is the both of you too because maybe it’ll be interesting to hear what… Maybe you each have a different take on what it is that Kelly’s does well. But, what’s that one thing that either you think sets the business apart in your market or just that you guys are doing really well?

Jeff Kelly: Well, at the end of the day, it always comes down to the people, right? So, it’s the team. And so, we are very fortunate. We have a remarkable group of people that we get to spend our time with and work with. We’ve got those, of course, have since retired from our company. I think our longest team employees now is 40 years, 41 years. So, we have a lot of tenured team members. And so, as we can get some mission and alignment, vision, mission aligned amongst the team, we just have synergy.

Jeff Kelly: So, that’s probably, if there’s anything, Rob, that we strive really to achieve is to just have that collaboration, that alignment, that synergy to where we don’t have to micromanage. Just take care of customers, right? It’s not rocket science. So, we like to empower people to do the right things, and let’s just execute and improve quality, reduce costs, do more business, make a profit so we can stay in business. That’s something we talk about most days, and people understand that principle, and let’s just go to work. Right?

Rob Stott: So, how about you, Scott?

Scott Kelly: So, I was thinking about that question as you had emailed us kind of just a couple of ideas that we would talk about. So, the same thing I’d written down on my piece of paper right here was just people. So, I think it really goes down to whether they’ve been with us for a couple of days or years training. So, every single morning, all locations, whether it’s through a joint Zoom like what we’re doing or in store, we do a 30-minute team training every single day, and again, utilizing some of the resources Nationwide has of the e-learning, commerce platforms, et cetera. So, training, training, training, training, training. So, what do you do in this situation, and some situations are unique. You go off of, “Okay, is it the right decision that benefits all parties involved? The customer, the employees, the business, the owners, et cetera. Is it good for everybody?” So, if the answer is yes, it’s probably the right decision to make.

Rob Stott: Oh, it makes perfect sense.

Scott Kelly: So, to answer your question, just truly people. Without the team, there wouldn’t be Kelly’s.

Rob Stott: No, that’s awesome to hear. It is cool to hear that the answers are somewhat similar and in-line. Shows that you guys are kind of on the same page too, I think, which is certainly important as well. But, something you mentioned a little earlier that I want to ask about, you talk about the acquisitions and the business growing. Kind of give us the backstory on that. How did that come about? I know you mentioned you are in the middle of or have just finished rebranding everything at those locations. What was that process like, and we can dive a little bit deeper?

Jeff Kelly: Well, I think in each case, it goes back to relationships. So, sometimes in our industry, there aren’t always good succession plans for the next generation. So, we’ve been in a position is maybe those that have wanted to retire that are in our greater market area, we’ve been able to engage and find a win-win. It’s always our goal is to find a win for everybody. And then, so doing that’s how we’ve done our acquisitions. Just as people are ready to time out, if you will, and we’re able to come into the market, help them have a good exit out, keep the team intact, try to add yet even more value to the community and the customer base. So, that’s how we’ve done most of our acquisitions. We’ve done some things outside of our, say, related and furniture and all that are maybe a little bit different, but yeah. So, we’re always looking for opportunities. We’re not aggressive in doing so, but we’re always in the game. Right?

Rob Stott: Gotcha, and this one, now, correct me if I’m wrong, was it a Nationwide member that you guys came in touch with, West Coast Appliance? Is that right?

Jeff Kelly: That would be the most recent acquisition. That was a year ago on May 1st, and again, after several months or whatever, we concluded that, “Hey, we can add value, if you will, and find a way to get a win out of it for everybody,” so yeah. West Coast, it’s a little further geographically for us. It’s about, what is it, 250 miles away?

Scott Kelly: About a four hour drive approximately, depending on how fast you go.

Jeff Kelly: So, it’s a little more of a challenge for logistics, et cetera. But, we’re figuring it out, and we’re going to start a remodel in that store, relaunch in branding, et cetera, next month, July. So, we have some plans, some vision and see if we can, again, add value there.

Rob Stott: Yeah. Well, the nice thing is, obviously you mentioned that you have experience doing this. So, you kind of have a template, or you’ve at least learned from past experiences of doing this. What have you learned? What makes a transition like that successful, not only for you guys because obviously the acquisition’s important in getting everyone onboarded, but the team that’s already in place and making sure that it’s smooth and everything goes according to plan?

Scott Kelly: So, nothing ever goes according to plan.

Rob Stott: Yeah, right? The best laid plans.

Scott Kelly: Well, I mean, I think the one thing I’ve learned is just patience. So, there are moments of a lot of anxiety just because whether it was our first Eugene acquisition or our second or even down in Medford, the one thing that I’ve learned is it takes about five years for the business to, I’m going to say settle down or to be more self-sufficient. So, in Eugene, it’s taken us truly about six years for it to kind of, I can sleep pretty well at night knowing that we have a system and procedure. The culture’s there.

Scott Kelly: Medford, we were blessed with a really good, talented team, but still there, there’s still just things that they did up this way, and we are used to doing it this way. So, trying to merge that marriage, if you will, of trying to, “Let’s all remember that we’re all in it together,” and there are moments of frustration. But, there’s also tons of moments to celebrate. So, I think just patience in that regard and us adjusting to them and vice versa. But, it does take time for our culture to become their culture, hopefully in a really positive manner.

Rob Stott: Oh, it makes perfect sense. Jeff, anything from you?

Jeff Kelly: Well, we’re still trying to master the process, but yeah, and again, I think the biggest thing is culture as Scott referenced. So, we want to hold onto the team members, and that’s not always the case. Some choose to leave for different reasons, but we want to create a culture, hold a culture, keep the team intact, and build on that. So, it takes some effort and time. There’s definitely energy required.

Rob Stott: Certainly understandable. But, is there anything, obviously in terms of rebranding it, is it as simple as just kind of facelifting some of the things and adding the Kelly’s? What do you guys do from that perspective?

Jeff Kelly: What we’ve done, Rob, is we’ll try to blend the two. So, we will keep the existing name up, introduce the Kelly’s name, and then in due time remove the prior name. So, I’m going to say for us, it’s been more of a process than a singular event.

Scott Kelly: One thing I might just add to that. So, with both vocations in Eugene, we had the two store fronts and then eventually merged them into one, which is kind of always the plan maybe. But, if you were to walk into that store today, we still have a lot of the old signage that says Oldfield’s, or we had a really special banner made, which a customer today probably wouldn’t notice, but called the TV & Appliance Center, which was a former Nationwide member as well. So, we tried to pay some homage, some patriot, just trying to remember those brands. We may not advertise it, but when we first bought Oldfield’s, we used to answer the phone by saying, “Kelly’s Appliances, formally Oldfield’s. How may I help you?” But, over time now it’s transitioned, but we’ll still even four years later still have customers call in and say, “Hey, I want to talk to Oldfield’s.” It’s like, “Well, actually that’s changed about four years ago.” So, it takes time.

Rob Stott: Yeah. That’s the other interesting part too. Obviously, I ask about the teams that are there and things like that, but within the market and the customers that are there. Talk about that a little bit and the efforts that you put towards making people in the area aware of the changes that are happening.

Jeff Kelly: Yeah. So, I’ll give you a side story. So, we bought a furniture company here four years ago. This year, they literally celebrate having been in business for 104 years. So, in that particular case, we left the name as it was. Obviously there’s a lot of brand equity after a hundred years of being in business in the same marketplace. So, I think even there, there’s some wisdom. Our name to us means something, but to most people it doesn’t mean anything, right? So, it’s not an ego thing. It’s just, for that market, what’s the right thing to do? Obviously, on the appliances, if we can create alignment under a single brand for website and digital and advertise and all that, there’s synergy to that. So, where it makes sense, we align under a single brand, but we have some other secondary brands that we operate under as well.

Rob Stott: Gotcha. I feel like a million ways I can go with questions and things like that, but one more I want to ask about, and I know you guys are busy. But, when you think about for independents that are in a position where maybe they can approach the idea of an acquisition, what’s the process like for you guys determining whether it makes sense? Or, what’s that internal discussion like as you’re considering maybe expanding or something along those lines before you actually decide that it’s something that you want to pursue?

Jeff Kelly: So, here’s the template we use, Rob, which maybe answers the question. So, we have as a mission statement for our company very simply, our business exists to improve the lives of all it serves: owners, employees, customers, vendors, and community. Five groups. So, any decision, whether it’s, again, a frontline decision, or whether it’s an acquisition, it’s the same question. Is it good for all five groups? So, is it good for the ownership? Is it good for all the team members involved? Is it good for the vendors, the community, and who did I miss? Owners, employees, customers, vendors, and community. So, if we can answer yes to all five, then we run fast. If it’s only good for us in any decision, we run away from it. I’m not interested. It’s only when it’s good for all five groups, then we can align resources, and we run hard at it.

Rob Stott: Oh, that’s awesome. It’s not that it’s just another decision because obviously it’s a big decision, but the way you approach it and think about it and address it is like it’s any other part of the business.

Jeff Kelly: Yep. Same process.

Rob Stott: No, that’s awesome. Well, Jeff and Scott, I appreciate you guys taking the time. This was cool to learn about, not only Kelly’s, but the way you guys kind of go about the things you do and your business. So, appreciate you kind of letting us under the covers and into the store, if you will, in talking a little bit with us today. So, we appreciate it. Hope to connect again soon.

Scott Kelly: Thank you. We’ll see you, I think, in Prime Time in Orlando.

Rob Stott: Hey, awesome to hear, so yeah. We’ll get the word out that you’ll be down there, and we’re certainly looking forward to it, and I know we’ll have some fun down there for sure. We got some cool things planned, so we’re looking forward to it.

Scott Kelly: Awesome. Thank you, sir.

Jeff Kelly: Thanks, Rob. Appreciate it.

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