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I’ve been looking for investment lessons for today’s investors in the analysis and approach Warren Buffett took when buying the shares in the dominant furniture and appliance retail chain in Utah. When Buffett bought it for Berkshire Hathaway, R.C. Willey commanded one-half of all furniture sales in Utah and one-third of all electrical goods sales. It has since gone on to dominate furniture and electrical goods retailing in a number of other states.
The R.C. Willey story is one of mid-western values of hard work, decency, business-smarts and devotion to community leading to outstanding success. It is the story of three men who epitomised those values: Rufus Call Willey, Bill Child and, of course, Warren Buffett.
Rufus Call (or RC) Willey sold electrical appliances in 1932 from the back of a pick-up truck in the area north of Salt Lake City, Utah. A consummate salesman he had an amazing ability to engage with people, often to sell them things they thought they didn’t need. When people in the farming communities around his home town of Syracuse said they could not afford a refrigerator he would gently suggest that they just try it for a week without charge, “and if you don’t want it after a week I’ll come back and take it out – no obligation”. Naturally, once they experienced the benefits they generally found the money from somewhere.
When competitors complained to manufacturers that RC had a competitive advantage in avoiding the overheads of a store, and therefore they should stop supplying him, RC simply built a simple 600 square foot cinder block store next to his house and stocked it with fridges, stoves and other appliances.
His 22-year old son-in-law, Bill Child, helped out in the store evenings and Saturdays when he wasn’t studying at the University of Utah in preparation to take up a teaching position in Syracuse.
When RC died suddenly in 1954 the responsibility for the tiny store landed in Bill Child’s lap. While it had a tremendous reputation with customers there was pile of debts and it was touch and go as to whether it could survive.
With tremendous resolve, ingenuity and a family pulling together, it got through. Over time, extensions were added to the single storey building. Low prices and great customer service drew customers back time and again despite being located down a side road. Then a second store was added. Eventually there were six, all in Utah. By 1995 annual revenue was over $250m, profits and return on capital was great and there was little debt.
Bill Child, at 63, looked to secure the future of the enterprise beyond his tenure as CEO. Remembering that RC had died at a much younger age, he was concerned that his own death might result in enormous taxes to be paid which the family would only be able to afford by selling a large portion of their shares. A much better solution was to swap those R.C. Willey shares for Berkshire Hathaway shares. Not only would the tax burden be better managed, but the team and its unique ethos would be preserved.
Warren Buffett could see the values he most admired lodged in Child. He wrote, “Bill Child represents the best of America. In matters of family, philanthropy, business, or just plain citizenship, anyone who follows in his footsteps is heading true north…By doing the right things for his customers and associates, he eventually left once-strong competitors in the dust…He just applied the oldest and soundest principle ever set forth: Treat the other fellow as you would like to be treated yourself” (Warren Buffett’s foreword to Benedict, Jeff (2009) How to build a business Warren Buffett would buy: the R.C. Willey story).
Buffett advises us to examine the lessons from Child’s life and apply them to our own, to lead a happier, more productive life. This short series of newsletters describes those lessons and values, and why Buffett was more than willing to pay $175m for the company.
Rufus Call Willey
Rufus Call, born in 1900 in Syracuse, 25 north of………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
Bill child and the rcwilley company is hands down the greatest owner and retailer In the west side of the United states the company has given so much over the years to local communities and associations I know this because I’ve been employed by rcwilley for 25yrs and I’m proud to say they saved me with the greatest retail sales job of all time.
Sincerely. Craig ekstrom employee #4402
R C Willey has gone down hill recently. I have always bought from them before but will take my business elsewhere. Customer service is terrible. I always referred people there but cant do that now.
I’ve been buying here since 1998, when I bought my first cordless phone…..and loved it! And throughout the years I’ve purchased so many things that I’m so happy with. The selection is like nothing I’ve ever seen before and the financing is made so easy. And everything in between is professionally handled by a great, well trained staff. If you look at the architecture of this company, you’ll find that it had a creative and brilliant architect. Incredible job Bill. His success and dominance was made possible, in part, by the 2 amazing women by his side who did an incredible job (not perfect cuz they human lol) raising his 8 children. A couple of his daughters married brilliant men as well (this is factual, no need to google it, just trust me). And we’ve all heard stories about those two nights he had to work until after 10pm. Oh shoot….what have I done? Where is the white out? It was only two nights that he came home before 10pm….my bad 🤦🏼♂️. Definitely an exaggeration, but that’s how he did it. He worked harder and smarter than everybody else. Not many people know about the! That Bill left on that Utah furniture industry. The!, Is that he did all of this with the worst location out of all of his competitors. Out of the top 3 to 5 furniture companies nobody had an original store as pathetic as Bill. What everyone should be studying is who built him!! How was he made? What made that man the incredible businessman he became? Able to do things that nobody else before him had done. And not just in Utah. Try to find another operator in another state they did a better job than Bill during that same time. The chances are, there might be a few others who did a better job than him. But there wouldn’t be many and I wouldn’t be surprised if he had out performed everyone else who’s similar in our country…..extraordinary 🤩. There’s no other companies selling high priced items that treats you as well as this place does. Everywhere I turn, society has lost touch with what makes a company great….so dang simple. Become extrodinary and your creations will be as well…..I think lol.