Aarons 2013 Annual Report Download - page 18

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Manufacturing
Woodhaven Furniture Industries, our manufacturing division, we believe, makes us the only major furniture lease company in
the United States that manufactures its own furniture. Integrated manufacturing enables us to control critical features such as
quality, cost, delivery, styling, durability and quantity of our furniture products, and, we believe, provides an integration
advantage over our competitors. Substantially all produced items are leased or sold through Company-operated or franchised
stores.
Our Woodhaven Furniture Industries division produces upholstered living-room furniture (including contemporary sofas, chairs
and modular sofa and ottoman collections in a variety of natural and synthetic fabrics) and bedding (including standard sizes of
mattresses and box springs). The furniture designed and produced by this division incorporates features that we believe results
in reduced production costs, enhanced durability and improved shipping processes all relative to furniture we would otherwise
purchase from third parties. These features include (i) standardized components, (ii) reduced parts and features susceptible to
wear or damage, (iii) more resilient foam, (iv) durable and soil-resistant fabrics and sturdy frames which translate to longer life
and higher residual value and (v) devices that allow sofas to stand on end for easier and more efficient transport. The division
also provides replacement covers for all styles and fabrics of its upholstered furniture for use in reconditioning leased furniture
that has been returned.
The division consists of five furniture manufacturing plants and nine bedding manufacturing facilities aggregating
approximately 818,000 square feet of manufacturing capacity.
Aaron's Office Furniture
Prior to 2010, we operated Aaron's Office Furniture stores which rented and sold new and rental return merchandise to
individuals and businesses. Its focus was leasing office furniture to business customers. In June 2010, we made the strategic
decision to wind down the operations of the remaining Aaron's Office Furniture stores, and the last remaining store was sold in
August 2012. We did not incur significant charges in 2013, 2012 or 2011 related to winding down this division.
Operations
Operating Strategy
Our operating strategy is based on distinguishing our brand from those of our competitors along with maximizing our
operational efficiencies. We implement this strategy by (i) emphasizing the uniqueness of our sales and lease ownership
concept from those in our industry generally, (ii) offering high levels of customer service, (iii) promoting our vendors and
Aaron’s brand names, (iv) managing merchandise through our manufacturing and distribution capabilities and (v) utilizing
proprietary management information systems.
We believe that the success of our sales and lease ownership operations is attributable to our distinctive approach to the
business that distinguishes us from both our rent-to-own and credit retail competitors. We have pioneered innovative
approaches to meeting changing customer needs that we believe differs from our competitors. These include (i) offering lease
ownership agreements that result in a lower “all-in” price, (ii) maintaining larger and more attractive store showrooms, (iii)
offering a wider selection of higher-quality merchandise and (iv) providing an up-front cash and carry purchase options on
select merchandise at prices competitive with traditional retailers. Most of our sales and lease ownership customers make their
payments in person and we use these frequent visits to strengthen the customer relationship.
A critical component of our success is our commitment to developing good relationships with our customers. We believe
providing high levels of service attracts recurring business and encourages our customers to lease merchandise for the full
agreement term. We demonstrate our commitment to superior customer service by providing customers with rapid delivery of
leased merchandise, in many cases by same or next day delivery. We also have an employee training program called Aaron’s
University which includes a 150-plus course curriculum designed to enhance the customer relation skills of both Company-
operated and franchised store personnel.
Our marketing targets both current Aaron’s customers and potential customers. We feature brand name products available
through our no-credit-needed lease ownership plans. We utilize national and local broadcast advertising to promote our brand
and for special promotions throughout the year. We also maintain a presence with our target consumers via our sponsorship of
NASCAR Sprint Cup Racing, digital and social marketing, direct mail and email sent to our database, and a national shared-
mail program distributing a circular to millions of households 12 months a year.