RoomPlace rebuilding after blaze destroys distribution center

May 21--Rebuilding a 104-year-old furniture company -- out of a temporary space, no less -- is no small feat.

Paul Adams had just finished calling the owner of furniture retailer The RoomPlace to let him know that despite the frightening news that the warehouse serving as the company's hub was on fire, everything looked to be under control. All employees were safely outside. The smoke was white, signaling a dying blaze, not the acrid black of burning fabric and leather.

Adams, CEO of the family-owned business, immediately started working on solving the problem. He was worried about smoke damage and dialed a real estate agent to look for a temporary space to store merchandise.

He's still shocked at how quickly things changed. Within seconds, he said, flames reignited and raced through the 320,000-square-foot building packed with flammable merchandise.

Fighting it, Adams said, "would have been like trying to put a bonfire out with a squirt gun."

"There was not a moment I didn't believe we would get back to where we want to be," he said. "But that was a scary moment."

Family businesses often talk about crisis management and recovery, but fewer actually make concrete plans, said Gezinus Hidding, an associate professor at Loyola University Chicago's Quinlan School of Business. Even those that talk about risks they face often aren't well-prepared for catastrophic problems they haven't experienced, said Serhat Cicekoglu, former director of Quinlan's Center for Risk Management.

Even so, Cicekoglu said it's "highly likely" companies selling commodities, like The RoomPlace, can build themselves back up after a crisis if they take the right steps after the fact.

Three weeks after the April 21 fire that destroyed the Woodridge distribution center, Adams walked the aisles of The RoomPlace's temporary home in Romeoville, proud and upbeat about the progress so far. The company's 700 employees are back at work. More delivery trucks are being sent out each day. A deal for a new, larger distribution center is in the works.

Adams says he's feeling confident, but that doesn't mean getting the Lombard-based company back to full strength will be easy. May -- a popular time for moving, weddings and graduations -- is the hottest time of year for furniture retailers and a bad time to struggle with out-of-stock product, Adams said.

"Over the last three weeks people have been really understanding. Over the next three months, who knows? People have lives. That's why we're moving as fast as we can," he said.

One competitor tried to recruit Adams' employees, saying they'd be smart to jump from a sinking ship, while another offered to help, Adams said. He estimates the company's insurance claim will total nearly $80 million, including the loss of $29 million of inventory and 15 of its 35 delivery trucks.

The fire also shut down services and systems housed in the distribution center, including the work of "deluxers" who clean and repair products, and the customer service department. Many messages on The RoomPlace Facebook page cheered the company on. Some customers said they understood times were tough, but found delays and lack of communication frustrating.

The RoomPlace has good insurance, Adams said, but he knows it's going to lose business to competitors, at least in the short term while deliveries are delayed.

Canceled orders are only up about 2 percentage points, running roughly double The RoomPlace's normal rate, Adams said. People are still coming into stores, but sales took a hit, dropping 35 percent the week of the fire compared with the same period the year before, Adams said. This week, sales are trending above last year's level, aided by a sale.

Some customers won't face any added delays, but restocking a product coming from overseas could take eight to 14 weeks, Adams said.

The RoomPlace had made plans to open a second distribution center serving its Indianapolis market before the fire, something Hidding said may have given them a head start in finding a temporary and long-term replacement for the building that burned.

Johanna Parra, operations director at Roy's Furniture in Lincoln Park, said she understands what company leaders are going through.

Roy's only store was destroyed in a fire related to a gas pipe leak in summer 2012. The 45-year-old company was able to operate out of its Pilsen warehouse during the year and half it took to rebuild the store, but business dropped off significantly, Parra said.

"You get nervous and think customers might forget about you and move on to someone else," she said.

Parra said business is still slower than before the fire, but customers have been loyal, and sales have picked up since Roy's reopened in their old location.

When the fire alarm went off at The RoomPlace's Woodridge distribution center, supervisor Diego Delgado assumed it was a drill or a false alarm related to a cookout held earlier that day. He said he helped evacuate roughly 80 employees working that afternoon, went back into the warehouse for a final check and saw white smoke.

Delgado and another employee directed firefighters to the smoke-filled aisles, then waited outside with their workers for about an hour and a half, when firefighters said they had things under control, he said.

Employees were walking back to the building to hold a meeting in the lobby when a firefighter opened the door and told them to run.

"It was unreal," Delgado said. "It was an inferno in there."

Employees tried to gather in a building across the street but had to leave when heavy winds threatened to spread the blaze, he said. So they stood outside, farther away, watching as smoke "turned the sky dark" and the roof and walls collapsed, he said.

It all started with the flick of a lighter, authorities said. After forklift operator Ruben Antonio Ochoa Cruz's boss confronted him about missed days at work, he allegedly set a packing slip on fire and tossed it to the floor, according to court records.

Cruz, 20, was arrested April 28 and charged with one count of intentionally damaging property by fire.

The night of the fire, executives jumped on a conference call to figure out what to do next.

They never calculated how many customers' orders burned that day -- it would have been in the thousands, and demoralizing, Adams said.

Instead, they made sure everyone had a task to focus on. Delgado was among the employees who turned The RoomPlace's small overflow warehouse into a distribution center and tried to figure out how many customer orders they could fill with its contents. Others worked on setting up a call center to replace the customer service department that had been lost.

In two days, Adams found the temporary warehouse in Romeoville and had closed on it in about a week. That took much of the stress off, Adams said, as did figuring out they'd be able to pay employees who had nowhere to report for work until the company secured the temporary facility and guarantee compensation for those working on commission.

It was the right thing to do for a business that's been in the same family for more than 100 years, said Adams, brought in as CEO four years ago. Owner Bruce Berman's grandfather founded the company, known as Harlem Furniture, in 1912.

It also reassured employees they'd have a job to come back to amid the alleged attempt at poaching employees that still rankles Adams.

But another competitor, Bob's Discount Furniture, tried to help, offering to let employees work out of its facilities and asking vendors to fill The RoomPlace's orders first.

"They said they wanted to beat us, but they don't want to beat us this way," Adams said.

Two trucks with deliveries left the overflow warehouse the day after the fire. It was a small number but felt like a win, Delgado said. "Our systems were down, we were missing a lot of resources, but it felt like little by little we were making it happen."

The RoomPlace released an ad promising it would outlast the fire and vowing, "We're here, we're open, we got this."

It was a way to thank customers for their support while being upfront about the fact that there would be some short-term challenges, Adams said, but both he and Delgado said there was never a moment they doubted the slogan.

"Nobody put their head down and said, 'This is it,'" Delgado said.

Mary Schmidt said she initially found the message overly optimistic when she struggled to get anyone at the company to return her calls to find out when her chairs, ordered the day after the fire, would be delivered.

"My dilemma was they'd charged my card and I had to pay before I even knew if I was going to get it," she said. "I understand they need time to get reorganized, but I didn't think I should have to be accruing interest on something I don't have."

After posting her concerns on the company's Facebook page, The RoomPlace offered to cancel the order or waive her delivery fee if she was willing to wait a couple more weeks, she said.

Schmidt said she was happy with the free delivery and is now in regular contact with the company, noting it's not unusual to wait weeks for furniture.

The company expects to move into a permanent distribution center in four months. That center, along with an Indianapolis facility opening in the fall, will serve the RoomPlace's 19 Chicago-area stores and six in Indiana.

As an added bonus, two hubs would keep a similar fire from disrupting the company's entire distribution network, though the new site was planned well in advance, Adams said.

"We're well-capitalized, we're in a good position to recover and do the right things for our people," Adams said. "You always worry about competition and regaining market share, but we'll be able to put it back together better and stronger."

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