WAUKESHA - As a business that began during the Great Depression, Steinhafels has a tradition of taking calculated risks while reinvesting in modest growth.

That kind of approach has kept the Waukesha-based furniture business around long enough to celebrate its 75th anniversary this year and grow in a down economy.

Part of that growth is being seen in Madison. Steinhafels, which opened its store at 2164 W. Beltline in 1995, opened an East Towne store in August at the former Steve and Barry's site. There are plans to replace that with a 100,000 square-foot-store at 2100 E. Springs Drive, between Interstate 39-90-94 and East Towne Mall, in two years.

Gary Steinhafel, grandson of company co-founder John E. Steinhafel, is president of Steinhafels and part of the third generation of the family that is running the business.

"The probability of a family business making it to the third generation is under 1 percent, I think," Steinhafel said. "Most businesses don't get through the first, much less the second."

Steinhafel is one of five members of his generation in the business. His sister Ellen Steinhafel-Lappe is chief financial officer; his cousin, Mark Steinhafel, is chief operating officer; his cousin Steve is customer service manager; and his cousin Tom is team lead at the Menomonee Falls store. Gregg Steinhafel, Gary's brother, is chairman and CEO of Target.

Q: How has the economy affected your business?

A: I would say the furniture industry in our country has suffered as severely as any industry because we are a big-ticket investment, we are a postponable investment. The No. 1 trigger for buying furniture is buying a new home, so the industry has been victimized by the lack of housing movement. Then, to complete the perfect storm, furniture purchases often rely on financing and credit limits and lines have been reduced so it's been more difficult to get credit for some customers.

Q: Yet you've opened a new store in Madison.

A: Because of the values that are out there in commercial real estate, we've been looking for opportunities and the opportunity to lease space in East Towne Mall was advantageous for us.

It's a smaller store than our showroom format but it introduces our company and our products to the East Side of Madison, and within a quarter mile of the store we plan to build. That's what we're working on now.

Q: Why did you get into East Towne right away and not wait for the other store to be finished?

A: There's an expression: Retail is a series of momentary opportunities. And the opportunity that we are planning to open a beautiful new store in Madison is at least two years away. East Towne approached us when Steve and Barry's went out of business and had a mall entrance that was boarded up on either side, an economy that meant there weren't many retailers that were looking to expand. We both went into the negotiations knowing this would be a temporary store.

Q: Madison has the strongest economy in the state. How has this market been for your company?

A: Our business in Madison has been fantastic. We've seen increases more than decreases in Madison, so the decision to open a store on the East Side was pretty easy to make.

Q: Are there any particular trends you're seeing in furniture right now?

A: Most customers can't afford to replace furniture or a car in a few years, so the practical Midwest customer is pretty savvy and we've found that our solid wood products' business has never been better, our leather furniture business has never been better. I believe it's the durability. A little more gets you a lot more.

We're fortunate as an industry that consumers are spending more time at home. They're not eating out as much, they're not vacationing as much. They're entertaining more at home. Consumers who entertain or cocoon at home are more likely to spend much more on furniture. That's helping the furniture business.

Our mattress business continues to grow - the luxury part, Memory Foam and better quality mattresses. I'm sure it's partially an aging baby-boomer population that understands the benefits of getting a good night's sleep and that's maybe one indulgence that consumers are investing in.

Q: Do you get a different business perspective from your brother at Target?

A: That's at a scale and organizational structure that puts everything in perspective. When we finally hit $100 million in sales six or seven years ago, I was so proud of that number. I mentioned it to my brother Gregg, who I think was president of Target at the time, and he said, "We sell that much in toilet paper every year."

Q: What was your first job within the family business?

A: My first job was weeding the flower beds outside our warehouse. I'd weed and cut the grass. Every Wednesday, my father would take me to work in the summer. I wasn't driving because I was 12 or 13. Once I got done, I got to go inside where it was much cooler and sweep the floors.

Q: Will there be a fourth generation in the family business?

A: There is a fourth generation and they've been working as interns and such. I welcome the fourth generation.

Q: Are any of them weeding?

A: No, none of them are weeding, they're in IT. They're smart, young, computer children.

GARY STEINHAFEL

President of Steinhafels, a furniture retailer with seven furniture showroom stores and two mattress stores.

Corporate headquarters: Waukesha.

Age: 56.

Education: Business degree from Marquette University, MBA from University of Minnesota.

Family: Married to Jocelyn Servick.

Web site: www.steinhafels.com

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