Home Retailers Go Large Even as Fashion Flagships Recede

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The flagship store has been a staple of retailing since…well, practically since retailing started. No self-respecting operation wouldn\’t dare to have a showpiece store, often downtown, but more recently in the dominant regional mall in its marketplace. The concept pretty much transcended merchandise classifications, price points and geography.

But no more. A fascinating dichotomy has emerged in the business: fashion apparel retailers are giving up their flagships while on the other side of the retail table, home furnishings stores are doubling down on emporium-like centerpieces. There are reasons on each side of the coin that say as much about the individual businesses as they do about the retailing industry overall.

On the apparel side, big chains like Gap and Abercrombie & Fitch have said they are closing some of their high-profile locations in big cities to focus more attention on their e-commerce efforts, among other things. They have also worried about tourism-driven locations in the Covid era when out of towners are scarce.

Department stores have been moving away from downtown locations for decades and some of the most recent closings announced by Macy\’s and Nordstrom include what had once been urban mainstay stores. The demise of Bon Ton a few years back also saw many once ubiquitous downtown flagships under such names as Carson Pirie Scott, Younker\’s and others also disappear from the retail landscape.

For the home business, the dynamics are different — and while the trend is clear right now, like everything else in the business of retailing the equation could just as likely flip a few years down the road. Big retailers never met a trending strategy they didn\’t like…even if it was often a 180-degree turn from their current plan.

The RH Factor

When you talk about larger, destination-type home furnishings flagships you have to start with RH…but don\’t call them flagships. The upscale furniture and décor retailer — yes, some people still can\’t stop calling them by their former name Restoration Hardware — has embarked on probably the boldest, most audacious plan to open marquee stores, though CEO Gary Friedman wishes you would call them galleries not flagships. These condominium-sized stores, in high-profile markets like New York, Los Angeles, Houston, Chicago, Atlanta and elsewhere, top out in the 60,000 to 80,000 square-foot range and often include restaurants, bars or at the very least barista stations. They are a far cry from the original stores back in the Resto era that were primarily located in malls and were a fraction the size.

As RH reinvented itself, it realized its old stores no longer represented an accurate physical manifestation of its new merchandising positioning so, they began to close them. At first, they were replaced by mammoth print catalogs, but Friedman has said the plan was always to have the new galleries as the centerpieces of the company\’s resurgence.

And it\’s worked. RH has prospered, its stock is up four-fold from not too long ago and more big stores are in the works…not to mention hotels, free-standing restaurants, a yacht and assorted spin-off concepts. As such, they are clearly the role model for home products retailers looking to up their games.

Furniture Futures

By the very nature of their products stores selling furniture have always needed bigger footprints, but more recently those are getting even bigger. Nebraska Furniture Mart only has four stores, but each is in the 500,000 square-foot range and sells far more than just couches and dining room sets. Merchandise ranges from consumer electronics to home décor to housewares to china and glassware. Their newest stores, in the Kansas City and Dallas markets, have become anchors for home furnishings retailing districts as both competitors and complimentary retailers piggyback on their traffic.
NFM is one of several regional furniture chains owned by Berkshire Hathaway and though they are operated independently, usually by the original family management that once owned them, other brands in the group also embrace the flagship strategy. Jordan\’s, in New England, goes so far as to incorporate IMAX theaters and other entertainment venues into some of its larger stores, reasoning that an entertained customer is one more likely to stick around and buy a credenza.

All Flagships All the Time

No report on home furnishings flagships would be complete without bringing Ikea into the equation. This is a retail chain that is based around the very concept of large destination locations and its 50 or so stores in the U.S. are all the very personification of a destination lure. They are designed to attract shoppers and, even more importantly, keep them shopping with their maze-design layouts, meatball-festooned restaurants, kids\’ play areas and enough merchandising distractions to make you forget you had something else to do that day…like leave and go home. It\’s been the linchpin of Ikea\’s strategy since its early days and is employed around the world at its locations in Europe, Asia and elsewhere. And even as the company has recently experimented with smaller units, often focused on a single product like kitchen design, the flagship remains at the heart of Ikea\’s market positioning.

So, Why Home and Not Fashion?

These three examples are just the tip of the home iceberg. The At Home chain espouses very large destination stores, going back to its Garden Ridge days. Williams Sonoma\’s most successful format for its namesake brand has been the Grand Cuisine format, larger stores in big regional malls and lifestyle town centers. Even Bed Bath & Beyond traces its success back to its adaption of the supersized layout and its Ladies Mile flagship on Sixth Avenue and 18th Street in Manhattan is most certainly its single highest volume store among the 1,000 locations it operates.

So, the obvious answer why the flagship concept works better in home than apparel right now is of course scale: home needs more space. But it goes far beyond that. When consumers are shopping for their homes, be it furniture, sheets and towels or pots and pans, it often represents a much larger, more substantial purchase than a t-shirt or pair of leggings for next season. As such, they want to see more of a selection, and often they want to see it in the context of other home products.

All of that takes space and larger stores provide that. But flagships also provide the visibility that creates the initial impulse to shop in the first place. Who hasn\’t driven by an RH temple of temptations and not thought, hey, we really need a new table? The other factor for home versus apparel is e-commerce. Yes, online penetration continues to grow across all merchandise classifications, but home furnishings products are likely to always lag behind apparel, again reflecting the nature of the purchase. Physical stores will play a larger role in the furnishings picture for a longer time than perhaps in any other category.

The year we just wrapped up was certainly unlike anything any of us ever seen before. That was absolutely true for the business of retailing. For now, the home furnishings sector is embracing the concept of bigger flagship-format stores. Bigger is better…at least until some newer idea comes along and it\’s not.

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