Rose Blumkin : An Inspirational Story of the Retail Queen

This is the story of a women, who turned a 500$ investment into 60 million dollars. Rose Blumkin (aka Mrs. B) was born in 1893 and grew up in poverty in Schedrin, a village near Babruyusk in present day Belarus. She was one of eight children of Soloman and Chasta Gorelick. Her father was a Rabbi and her mother ran a grocery store.

When she was twenty, Rose married Izya (Isadore) Blumkin. Mrs. B is a Russian Jewish immigrant who left Russia and landed in Seattle in 1917 during the period of war. Mrs. B had no Formal Education. She could not speak a word in English when she arrived in the US and was struggling to learn the language. After shortly living in Fort Dodge lowa, she moved to Omaha Nebraska. Because there were other Russian Jewish there and atleast she would have someone to talk to.

She eventually learned English by having her four children teach her what they would learn at school when they returned home everyday, although she never attended a day of school in her life. Mrs. B was thrifty, she found ways to make money by opening a used clothing store and other items in their store. She lived like a peasant aggressive saving her money. By 1937 she had saved up five hundred dollars. She got on a train and went out to Chicago to the American Furniture Mart. Mrs. B didn’t go out there for a shopping spree, she went out there with intent and purpose.

She purchased about $2000 worth of merchandise. She was thinking a entire train ride home, that how she is going to pay off the $1500 that she owned purchasing $2000 worth of goods and only having $500 worth of Equity. When Mrs. B returned to Omaha. She started selling the Furniture out of the basement of the store. The store – Nebraska Furniture Mart eventually outgrew the basement. The model of the Mart is still listed on the company website today.

" Sell Cheap and Tell the Truth"

And selling cheap was something she did really well. Nebraska Furniture Mart grew to be a local monopoly with more than 4,50,000 sqft of retail space and 1 million sqft in warehouse space. It was able to stomp out the competition in both merchandise selection and price. The company was simply able to buy in such large quantities that commanded a deep discounts from manufacturers, This according to both lower operational costs and lower merchandise costs.

Which means that they could offer the lowest price to the customer by wide margin. Mrs. B’s Business grew to become so strong that customers simply stopped shopping elsewhere because that they knew Nebraska Furniture Mart would offer them the absolute best deal money could buy. Now the company sold goods at such a cheap price that their margins left more money over after paying for operating expenses. Will razor – thin but they made up for the low margins by having a high inventory turnover. Can you think of any businesses today that have this model Costco, Amazon, Walmart!

Mrs. B sold her business to Warren Buffett in 1983 for 60 million dollars and not a penny less as she said. Rose Blumkin was 89 at that time, she lived until the age of 104, running her business until she was 103.

An illiterate, immigrant who came from nothing during a time was much more difficult for women than it is today was a pioneer in the low-cost provider retail space. She didn’t have a degree, she never went to school a day in her life but what she did have was grit in determination. Mrs. B’s determination for success made up for her disadvantages. She didn’t start on the same social economic level as many of her competitors in life, but in the end she put them all out of business and got a deal with the World’s most notorious investor.

There is a market out there for nearly anything, according to Mrs. B, Rules for Success is

1. Work and earn money

2. Live modesty and save money

3. Self educate yourself

4. Take calculated risks

She believed that

" Formal education will make you a living
  Self education will make you a fortune "

And she is a great example for that. She proved that age is just the number. Rose Blumkin inspired a lot of people and Buffett says ” one question I ask myself when appraising a business is how I would like to compete with it. I’d rather wrestle grizzlies than compete with Mrs. B and her progeny”.

gokila

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