Rose Blumkin: The unauthorized biography of the retail queen
What’s your favorite thing to do on a nice evening?
Mrs. B: “Drive around to check the competition and plan my next attack”
Rose Blumkin was born in a time when dreams were often deferred, and opportunities seemed scarce. This, however, did not deter Rose Blumkin, who was born in a village called Shchedrin in 1893 from achieving remarkable success. She ran one of the largest furniture retailers and became the first female manager in Berkshire Hathaway’s history.
At the age of 13, Mrs. B, as she was fondly known, left for Gomel where she went shop by shop looking for a job. One shop owner exclaimed that she was too young, but she finally relented and gave the 13year old Rose a job. The uneducated Rose effectively ran the store and became the store manager at the tender age of 16.
After squeezing every penny, in 1917, Mrs. B was off to America. She however had no passport and when she reached the China- Russia border, she was confronted by a soldier standing guard. She told him that she was going to buy leather for the army and that she will bring him a big bottle of vodka on her way back. It’s safe to say he is still waiting for that bottle of vodka. Once she reached the coast, she boarded a Japanese vessel and after 6 weeks she arrived in America where she reunited with her husband, Isadore, who had left years earlier.
Once they had settled in Omaha, Isadore started a second hand clothing store. However, in complete contrast to Mrs. B, he wasn’t an astute businessman. He would sell the clothes at the same price he had paid for it. Mrs. B advised him to sell the merchandise at 10% over cost and she even joined him in the store to give him a helping hand.
In 1937 with $500 in her pockets, Mrs. B went on the train to Chicago to the American Furniture Mart. She bought $2000 worth of furniture, $500 in cash and $1500 in debt. She used this furniture to start the Nebraska Furniture Mart which she ran from the basement of her husband Isadore’s pawn shop. The same day she opened NFM, another furniture store was opening, while Mrs. B only took out 3-line ads to advertise, the competitor had a full-blown orchestra and Hollywood stars. The orchestra and Hollywood stars didn’t seem to help though as Mrs. B soon ran them out of business.
Mrs. B business model was simple: “Tell the truth, Buy Right and Sell Cheap.” She was hyper-focused on providing the best deal to her customers and would only sell at a 10% markup thus undercutting all her competitors. Using nothing but “common sense” Mrs. B, who could not read or write, soon ran her competitors out of business. Warren Buffett, arguably the world’s greatest investor, exclaimed that he would rather wrestle grizzlies than compete against Mrs. B.
Mrs. B’s competitors did everything to try to curb her success. She was sued and went to court 4 times. She once bought carpet from Marshall Fields at $3/ yard, which she went to sell for $3.95/ yard, while her competitor sold it at $7.95/yard. Her competitors proceeded to take her to court for “unfair trade.” She told the judge that she only sells at 10% above cost, isn’t she allowed to give her customers a good deal? The judge agreed with her, dismissed the case and bought $1400 worth of carpet from her the next day.
Two stories, that make me chuckle, just prove how business obsessed Mrs. B was. There was a luncheon that was hosted to honor Mrs. B, but as the luncheon dragged on, Mrs. B stood up and said “What’s wrong with you people? Don’t you have jobs? I’m going back to work” and she hastily left. In 1957 when she was taking her American citizenship classes after 37 years in America, one of her classmates asked her why she waited so long, to which Mrs. B said: “I was busy.”
Mrs. B did face some challenges along the way. When the Korean war broke out, the business wasn’t performing well, and Mrs. B was struggling to pay her bills. A local banker who had come to buy a cabinet gave Mrs. B a $50 000 loan after hearing about her troubles. Being the strategist she is, Mrs. B. came up with a smart way to pay back the money. She rented the Omaha City Auditorium for $250/ day and ran a 3-day sale. She made $250 000 from this sale, which she used to pay her loans and she never borrowed money again.
In 1983, Warren Buffett offered $60 million for 90% of NFM which Mrs. B accepted. This wasn’t the first time Warren Buffett tried to buy NFM, he had offered $7 million for the business back in the 1960s which Mrs. B refused, and she even called Warren Buffett “cheap.” Warren Buffett did no due diligence or audits in this deal; Mrs. B’s word was enough for him. She sent Mrs. B. a one-page contract on which she scribbled her signature, and it was a done deal. Warren, however, did not make Mrs. B sign one document which he would come to regret.
Mrs. B. had a fallout with her grandsons who took a major carpeting department decision without consulting her, they decided to self-carpet they bought at $14 for $6. Mrs. B, who considered carpeting her forte, grew frustrated and decided to quit. She then started a competing store; Mrs. B’s Warehouse which directly competed with NFM. She eventually resolved her issues with her grandsons and Buffett, who she viewed as siding with her grandsons, and agreed to sell Mrs. B’s Warehouse to NFM for $4.94 million. Buffett, however, made sure to make the 99 year old Mrs. B sign a non-compete clause.
In conclusion, Rose Blumkin’s indomitable spirit and relentless determination propelled her to overcome challenges and leave an enduring legacy. Her journey from humble beginnings to building Nebraska furniture Mart stands as a testament to the power of perseverance and entrepreneurial vision.
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