Next Gen Home

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\"LifeStyleThe business of selling home furnishings to the next generation is about to undergo its biggest change in 20 years. The new kids on the block are moving into town and they are threatening the same old players who are…well, the same and old.

There’s no known record of who first coined the term “lifestyle retailer” (or exactly what lifestyle actually means for that matter) but the phrase entered the retail lexicon decades ago to identify stores like Pottery Barn and Crate and Barrel.

These retailers became the foundation of the home decorating business for a generation, the go-to choice for a demographic that wanted some style at a price – but didn’t want to shop at more traditional department or furniture stores. Both Pottery Barn and Crate thrived with this approach and their stores and catalogs were iconic choices for furniture, decorative accessories, kitchen and entertaining goods and bed and bath products. Each company – Pottery Barn’s corporate parent Williams Sonoma and Crate’s Otto Group – rode the wave until the demographic temperature began to change. When each sensed it was starting to age out and a next generation was coming along that might have different tastes and needs, both of these stores spun off younger sisters: West Elm from Pottery Barn’s Williams Sonoma parent company and CB2 from Crate.

Each of these offspring has evolved differently. West Elm has expanded dramatically and now has more than 70 stores and a robust direct business. It has matured its merchandising mix and gotten away from the very kitschy, juvenile look where it started. CB2 on the other hand has grown much more slowly, with just over a dozen retail locations. It too has moved beyond its rather teen-oriented origins but is still nowhere near the level of design sophistication of its key competitor. To some extent that represents the larger issues at Crate and Barrel. It has never regained momentum after the retirement of founder and guiding spirit Gordon Segal and the passing of his successor Barbara Turf. Under Otto Group, the retailer has clearly lost its vision and has been without a chief merchant for longer than any retail operation would ever want.

So, while the two competing retailers have proceeded on divergent paths, they both face a similar problem: like their big sisters 20 years before, they are in danger of a changing demographic in the home business. But this time Sonoma and Otto are not nearly as well positioned. That’s because the next gen home retailers are Zara Home and H&M Home and as the previous generation upended the status quo so too will they.

Right now all of this is in a very preliminary state. H&M has just started putting home into a small handful of its apparel stores while Zara is only selling home online. There are no freestanding stores now and there aren’t likely to be anytime soon. That said, each retailer has a pretty broad assortment that is heavy on the bed and bath side with some home décor products like lighting and wall décor as well as tabletop items such as dinnerware and flatware. There isn’t furniture, which is still the cornerstone of the previous generations of lifestyle stores, but one wonders if that isn’t just a matter of time.

Some might say all of this is premature. Apparel retailers like Gap and Banana Republic have tried home assortments before with dismal results. But you can make the case that Zara and H&M are different. Look how they’ve turned the fashion business upside down. They can do it in home too. They have that vaunted Millennial customer already shopping in their stores. They have become accustomed to the fast fashion model and will look for the same things in their home products. Why would they spend $1200 for a sofa or $79 for a set of dishes when they can get them for half that price at these stores? They are only going to keep them for a couple of seasons anyway. And they like the of-the-moment designs on the products these stores sell as opposed to the Baby Boomer-influenced sea of beige chairs, brushed nickel accessories and off-white sheets and towels.

Williams Sonoma was willing to cannibalize its Pottery Barn business to some extent because it knew it was keeping the revenue in the family. Same with Crate and CB2. But this is different. These are outside corporations that are threatening to take the business away. This new generation of stores is going after a target customer that its predecessors have, if not abandoned, strategically decided not to move on to. It’s a calculated gamble that will most certainly pay off in the short term but as those Millennials continue to move into their prime household buying years where do you think they are going to shop? Maybe not now, but eventually.

Warren Shoulberg is editorial director for several Progressive Business Media home furnishings business publications. He’s way too old for Zara and H&M but has been known to shop there for home sometimes.

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