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MERRILLVILLE | The flagship showroom of a 43-year-old Northwest Indiana business that once had 167 locations throughout North America has closed.

DirectBuy, a membership-buying service that cuts out retail markups, shut down the Merrillville warehouse across from its corporate headquarters and warehouse at 101 W. 84th Drive in Merrillville. The showroom was owned as a franchise by Jim Gagan II, the son of company founder James Gagan, and his wife, Laurie Gagan. 

They said the corporate office forced the closure by transferring the staff to the headquarters and sending a letter to the 600 current members that the showroom was closing. 

"We're heartbroken; I think that goes without saying," DirectBuy of Southlake owner Laurie Gagan said. "We serve over 600 local families who count on us to help them navigate their home-improvement projects. It's just not as simple as adding a few carpet tiles to a shopping cart and calling it a day."

All of the affected members retain all the same benefits of a club location, in addition to the home shopping service, the corporate office said in a statement.

The corporate office decided to close DirectBuy of Southlake because of low merchandise sale volume and low memberships, the company said in a statement. The Gagans said they were selling millions of dollars of merchandise and ran a model showroom.

All of the affected employees were given the opportunity to work at the corporate headquarters just steps away from the showroom, where more than 400 people work, the company said a statement.

"Our goal is to make this a seamless transition for our local members and valued associates," said Dylan Astle, vice president of member experience. "In fact, I'm happy to report that some of the associates have already transitioned from the showroom to our corporate headquarters."

In 1971, James Gagan founded the business, which sells home furnishings and home improvement items at cost.

The company grew substantially, even during the stagflation of the 1970s, and once brought in hundreds of millions in revenue, Jim Gagan said. The number of locations has dwindled from a peak of 167 to fewer than 100, he said.

"It really grew because the concept was brilliant," he said.

He sold the business to a private equity firm in 2007, when Jim and Laurie Gagan launched the flagship showroom.

James and Laurie Gagan sued the corporate ownership over violations of a franchise agreement in 2008, and the ongoing litigation is scheduled to go to trial next year.

Thousands of members had shopped at the DirectBuy of Southlake showroom over the years. The closure means members, who pay both sign-up and annual fees, only can purchase items online or over the phone without being able to see the goods on display in person.

"It's sad. It's the end of an era," Jim Gagan said. "It wasn't our call."

Any members with questions can call (855) 871-7788.


Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.