LAID AWAY.

• Author: Maley, Frank
• Position: Shaw Furniture Galleries

The crash of a brash e-tailer buries the 60-year-old business that Sherrill Shaw had furnished it with.

The night he graduated from high school, Sherrill Shaw swore he'd never come back. He had spent too much time in Randleman, too much time in this old school building. He was ready to see the world. That was in 1947. But after college in Chapel Hill and a hitch in the Air Force -- all stateside duty -- he was back in town, helping run a furniture store.

His dad, George, a silk weaver, had moved from nearby Central Falls, now part of Asheboro, in 1940 to open Shaw's Cut-Rate Furniture Co. Most of its customers worked, as George Shaw had, in the mills along the Deep River. The Shaws changed the store's name when they moved it into the old schoolhouse in 1960. Shaw Furniture Galleries carried the top lines. By the time Shaw sold it in 1999, 90% of its customers lived outside North Carolina.

But one thing never changed. As long as the Shaws owned it, the business made money, grossing $20 million in 1998, he says. "We were a good company. And we were profitable for 59 years. And these idiots come in here and just ruin it."

He warned them their grand plan wouldn't work. They told him they were going to sell furniture on the Internet, and he had what they needed to get started: Thomasville, Century, Lexington, other top brands and more than 300,000 customers. The businessmen, who later revealed themselves as owners of Austin, Texas-based Living.com Inc., met his price -- more than $5 million is all he'll say.

But to sell high-end furniture, you play by the manufacturers' rules, rules often shaped by their long-standing relationships with brick-and-mortar retailers who wouldn't welcome the encroachment of Internet e-tailers. The new owners, flush with millions in venture capital and loans, weren't fazed. "When I told them the problem they would have, they gave me a smirk and said, 'Well, we're going to work it out.'

"I said, 'Sure.'"

Within 17 months after the sale closed, Living.com was bankrupt. So was Shaw Furniture Galleries.

The red-brick schoolhouse is 97 years old. Sherrill Shaw is 72. Behind the wallboard hang the blackboards of classrooms he once sat in, classrooms he turned into showrooms. "They've taken most of the furniture out of here," he says, hustling down a hallway. He's been trying to get more than $1 million from the buyers that had been tied up in escrow, and his lawyers have told him not to talk about certain things. "I pay them big bucks," he explains, "to tell me what to do." But he didn't get where he did by always doing what people told him he should do.

He and his dad were best friends and, in many ways, a lot alike. But he was more intense, more ambitious. "Everybody liked him," he says of his father. "He let a lot of people run over him. He was just too nice. A lot of people would never pay, and he'd just write it off. I never did like that kind of business. I always hated to have to go knock on somebody's door to get them to pay."

"Osmosis" is how he describes the way his dad turned over the business to him. "It was not one day that he said, 'You're it.' He just started taking vacations in the '60s and '70s, and I just started running the show." By the time he bought out his father in 1980, their business, like the furniture business itself, had changed.

In the late '70s, retailers around High Point -- heart of the state's furniture manufacturing and site of the world's largest furniture market -- started to realize they could draw customers from other states with low prices and razor-thin margins. For Shaw, it happened like this: The president of a furniture factory would call to say he had a friend up North who wanted to buy something. But rules against competing with retailers prevented him from selling it. Would Shaw take care of him? "We did that for a lot of factories. And they would go back and tell people in Boston or New York, or wherever they were, about the deal they got, and these people started calling us."

He didn't rely just on word of mouth. He set up a toll-free phone number to take orders. He ran direct-mail campaigns and splashed ads in half a dozen magazines such as House Beautiful and Southern Living. In 1980, annual sales had barely reached $1 million. "We went to $100,000 a month and then to $200,000 a month and $300,000 a month over the years."

His success and that of other discounters didn't go...