Chapter 11. Compete Like Mrs. B
There's no operation in the furniture retailing business remotely like the one assembled by Berkshire. It's fun for me and profitable for you.
I have often asked my friends and colleagues about their thoughts on investing in furniture retailers. Not surprisingly, most of them consider the business mundane and have never thought of investing in one. In 1983, Berkshire acquired a 90 percent interest in Nebraska Furniture Mart, which was run by its then-owner Rose Blumkin, popularly known as Mrs. B. Why did Buffett purchase this business? The answers we get further strengthen our conclusions in the previous chapter.
Know When Not to Compete: Nebraska Furniture Mart
Regarding the Nebraska Furniture Mart acquisition, Buffett wrote:
One question I always ask myself in appraising a business is how I would like, assuming I had ample capital and skilled personnel, to compete with it. I'd wrestle grizzlies rather than compete with Mrs. B and her progeny. They buy brilliantly, they operate at expense ratios competitors don't even dream about, and they then pass on to their customers much of the savings. It's the ideal business—one built upon exceptional value to the customer that in turn translates into exceptional economics for its owners.
Clearly, the main reason for the success of Nebraska Furniture Mart is that it is run by incredible managers who remain focused on customers and cost. Their philosophy is not very different from Wal-Mart's ...