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Anticipating the Home Sector in 2009: Lloyd Princeton, Veranda publisher Sims Bray, designer Mark Cutler, Williams Sonoma VP Katherine Stout & aspenhome's Jena Hall

February 24, 2009

Finished! Here's my attempt to bring to you the ENTIRE transcribed account of the insightful panel discussion moderated by Lloyd Princeton at the Las Vegas Market earlier this month, 2009: The Year in Anticipation. And I say “attempt” because my tape recorder didn’t quite behave as expected, but I think I got most of it.This panel of thought leaders with different perspectives in the design and home furnishings industry discuss those perspectives with a large group of designers and retailers during the Winter 2009 Las Vegas Market. Veranda publisher Sims Bray, L.A. designer Mark Cutler, Williams Sonoma's VP-Business Development Katherine Stout and aspenhome's VP-Design & Merchandising Jena Hall follow a brief introduction and opening remarks with an audience Q&A session addressing such topics as survival, recession-proofing, how long the recovery is going to take, and what retailers and designers should be doing right now to get their names out there...
 

Sims Bray, Jr.: a shelter magazine publisher’s view

 

Sims Bray joined Veranda in the early 90s. In 2002, Veranda became part of the Hearst Magazine group. The magazine industry is going through a hard time. Everyone asks me if the internet threatens… I tell them, nope - magazines are not on the way out. Never, as long as you and I can sit there holding that entity in our hands – it’s portable, there’s great photography, energy. You hear all the bad news, Cottage Living, Country Home, other magazines going out of business, about 20% of them now, but there’s probably another 20% that should be out of business because there’s too many out there - the market can’t sustain it. Newsweeklies are even more threatened because the Internet is better at delivering general news… shelters will continue to survive.

 

Designer Mark Cutler: recession-proof with outsourcing, outreach, blogs and brand consistency

 

Australian-born designer Mark Cutler’s Los Angeles design firm was rated by Robb Report as one of the top 40 in the U.S.

 

We did see this coming early. Early on, we asked, ‘what would happen if two of our best clients pulled out tomorrow - where would we be?’ Se we began planning to make ourselves recession proof. As people left due to natural attrition, we stopped replacing and started outsourcing – draftsman, renderer, accountant were all people we started outsourcing… lower costs commensurate with the way our projects were going. We started building up our cash reserves, examining what were the most profitable parts of our company. Were we making more money on draperies? or outdoor furniture or carpets? We knew where our focus was and looked at our business.

 

As it slowed down we started implementing and the slower we get the busier we’ve had to become; the more energy we have to expend. My hours at the office are increasing as time starts to slow… more marketing and strategies I finally have the time to implement.

 

A well-planned strategy and market outreach allowed us to develop a client base that was strong; we targeted people in recession proof industry, so we have a lot of entertainment-based clients. That was an outreach we did, made friends with people who worked in the studios, agents, managers.

 

Also, there’s a lot of marketing you can do that doesn’t cost a lot of money… a lot of these are simple things. When you call our office, it’s ‘Welcome to Mark Cutler Design, one of the top 40 design companies in the country; please leave a message and someone will follow through with you.’ Every staff member who works for me, all have the exact same voice messages on their phones and email. And on every piece of postage that goes out, there’s a picture of one of our projects -- the postage stamps all are personalized.

 

Blogs – We just got two huge projects from a Russian family that saw a post on my blog from two and a half years ago, a 10,000-sq.-ft. commercial space and the other was a $10 million house. We’re going to Moscow in a couple of weeks to start interviewing.

 

Another thing we do is we have a calendar in our office -- after one year every client gets a call back. Maybe suggest it’s time to freshen up, or you have silk draperies that may be starting to fade. Those clients are already the true believers… they know your work.

 

Lloyd Princeton: (regarding the) Seeds that were planted two years ago (Cutler’s blog)came to fruition today. This (design) industry is a long term prospective. If you’re just getting started in it, does take time to get started. And the next big project could be tomorrow.  I’m remembering something I heard at the end of a voice message tape, “Good things come to those who wait but only what’s left over from those who hustle.”

 

…my friends at retailer Williams Sonoma have created a design program to embrace the trade – retail sources, design centers. Katherine Stout is the VP of business development for San Francisco-based Williams Sonoma. Katherine lives in Mill Valley and oversees many initiatives dealing with consumers, retailers, Internet, the trade. Williams Sonoma is well situated, more so than many others, because they have very little debt; they have operated their company very wisely.

 

On retail: Williams Sonoma’s VP of business development, Katherine Stout

 

Owner Chuck Williams is in his early 90s, still comes in every day and reads every recipe before it publishes. He is so dedicated and so inspirational.

 

It’s not a great time to be a retailer in the home sector, so I appreciate a lot of what you said. We have over 600 stores across the country. I started about six years ago, with business to business initiatives. Over the years I found great synergy with the designers. Taking this as a focus area and going after it has been very successful for us; in 2008 we had double digit positive growth compared to the rest of the company.

 

Bigger company view – we are in a situation where we have to think differently. Three key things – not having debt, have cash, make decisions that will really position us for when the market comes back, and we believe that it will. We believe people are going to continue to invest in their homes so we feel positive about that, but I’m a positive person in general.

 

Cost cutting – we’re focusing on the things we don’t have to have. There’s a lot we don’t have to have but let’s not cut too deep. We’re investing in things that make sense, like the Internet. But we’re cutting so that if the situation gets worse we’re not in a situation where we keep laying off. And to keep people motivated we just focus on the next six months, quarter by quarter increments.

 

We’ve got some great brands and good strengths in our stores and in our customer base so let’s really understand how to leverage those. Figure out how to market the mix. Our catalogs -- we look at ourselves as shelter magazines in many ways. In catalogs and on the Internet, we’re saying, ‘What’s the best thing for our customers now? It’s very important to have the feel, the tangible lifestyle we provide in the magazine; we’ll continue that but maybe a little differently now.

 

Focus on the customer. We’re all about customer service. We sell products all day long that deliver solutions to our customers. In this recession we want to look at customers and figure out what’s important to them; how do we market value. You are customers – what do you want to see? One thing new this year is our loyalty designer program… includes store events where designers come speak to our customers about things that are inspirational to them. And there’s a place on our website to do that.

 

We’re also working on a lot of things to bring together our business customers, all of you, with our very valuable and large customer base. There are things we can do on both sides of the business, so we’re very excited about that.

 

Lloyd Princeton: (reiterating) Know your audience -- who do you really want to get business from? Focus. You’ve got to be focused. I’m working more hours than ever. Taking deeper cuts. Keep employees motivated. Even if you’re a small business, you still have a brand to get out there and protect - postage, business cards, signage.

 

Jena Paul, VP design & merchandising for Aspenhome: “look for the back-end”

 

Jena Paul, started career as interior designer; in 2005 joined Furniture Values International, expanded their in-core product line to Aspenhome; also the current president of WithIt. Lives in NYC.

 

I spent many years in my design practice… fell into furniture design. I was designing out of an Italian factory -- someone saw what I was working on and wanted to buy it. I said no, so that  person turned around and knocked off my design.

 

First of all -- Today, cash is king. You need to beef up the reserves because we will come out of this recession but it’s going to be a slow recovery and things are going to need your focus.

 

Couple of suggestions to you as designers. Aspenhome, when I joined, was really a little company based out of Phoenix, Arizona, well-known in the tiny niche of home office. Great functionality, nothing much of a brand image, whatever it did, did it really great.

 

When I got tapped to go talk to them, I’d never heard of them. They pursued me enough to get interested and to help expand/grow their business. I knew they had to diversify their product, move it up-market but wasn’t really sure how and so went looking for a marriage. As I started to look into why consider, I found the back end of the business.

 

In interior design we rarely looked at the back end of who we were dealing with as far as vendors. They had beautiful display and product but we didn’t know how deep their financials were and how suitable they were and how long they were going to be around.

 

Today you have to be a smarter designer – know who you’re putting your deposits with. Today cash is king and credit lines are very tight… and so they started to talk to me about the back end of their business. I joined the company four years ago. We’ve grown it in double digits four years in a row. We are still up and growing, however as everyone here has said, we've started adjusting how we use our dollars, where to make cuts.

 

But - several things we haven’t cut:

 

One is in product development. Because our timelines are very long, our lead times are long and we need to continue to develop for the recovery.

 

We also haven’t given up in development of our brand image, our photography, our beauty-shot inspirational materials that help market our product to our consumers.

 

We have not given up on our public relations image in trying to reach out to a broader audience than this company has in the past.

 

So we’re investing in the future right now … manufacturers at mid market level. This company up until four years ago didn’t have anything in the line that you guys would be interested in even if we gave it to you. It was all very functional or well-made, but unknown. We don’t particularly target the interior design trade at this moment but we’ve moved product so far up-market and we’ve passed not only our competition but are at a much higher level. And now we’re one of the top 25 - we were named supplier of the year by the industry; we’ll be a recipient at City of Hope...

 

We’re all about functionality and multifunctional furniture. I’m talking to you now as an interior designer. (Regarding) today’s consumer, you’re going to have to be more practical than you might have been a few years ago. Where you might have been able to show value in the pieces you’re selecting, add to them a way to justify the investment in those purchases. The other thing to look at is domestic manufacturers… importers can’t customize. Better domestic manufacturers can do mass customization. 

 

Lloyd Princeton: Jena, could you go into a little more detail about the back-end?

 

Jena Hall: Back end – how profitable is the company, how is their credit rating, how clean is the workshop, how organized or chaotic are they, because under stress or bad business conditions, the less likely you’re going to get through. In customization, what is their delivery system? I had a gorgeous custom finish silk sofa delivered to a client and it arrived with six black handprints right on the frame. The client went crazy, I went crazy. I called my old vendor and he said ‘I don’t understand it.’ How did it come on to the site? He hired some guy off the street to deliver because he’s cutting back. Not to go into the back end of the import business which is really complicated, I mean REALLY complicated, but how well financed are your vendors? How well is the installation? How is the liability insurance -- can you collect the liability if there’s damage, because one screw up could really be disastrous right now.

***QUESTIONS & ANSWERS***

AUDIENCE QUESTION: With the market being as tight as it is, what would be the one thing you would recommend to me right now to get my company out there and in front of as many people as I possibly can?

 

SIMS BRAY: Advertise in Veranda (laughter).

 

MARK CUTLER: Embrace a lot of those free marketing ideas to get your name out there. Here’s my favorite – I really like the fact that every time a letter leaves the office, it’s got a photo of one of our projects on it. You can use one of several online stamp companies like zazzle.com/custom/stamps or stamps.com, any of those. I think you pay a penny extra a stamp. We wait until a day after the postage goes up and we buy a year’s worth of stamps.

 

KATHERINE STOUT: Website, Internet – get out there as much as you can; it’s a cheap vehicle… just really work that.

 

JENA HALL: Exposure into your community through the nonprofits, volunteering, any charity that would involve an appropriate customer base. It’s a way to get involved on a personal level, is good citizenship and can come back tenfold.

 

LLOYD PRINCETON: I recently read a study that said 60-65% of wealthy people are more likely to make a purchase when it is attached to a charity or benefits a cause they support.

 

QUESTION: With companies closing, how do designers protect themselves? You take all this fabric in there, have this agreement that all these draperies are going to made; suddenly the doors shut and the fabric’s still in there. Now we’re in trouble. How can a designer protect himself from that type of scenario?

 

LLOYD PRINCETON: Okay so what happens when one of your vendors goes belly up? We’ll start with Mark on this one.

 

MARK CUTLER: I’d rather hear what Jena has to say (laughter).

 

JENA HALL: I have a couple of suggestions. First of all, it is very difficult today. Some of the biggest names -- you wake up the next day and the doors are closed -- and it is terrifying.

 

And while we want to continue to promote high-end quality jobs, I am not suggesting you cease that. I am suggesting, though, that there are opportunities for you -- such as Williams Sonoma and other high-end ‘better’ retailers who have workrooms and who can partner with you.

 

My suggestion for you: The recovery is going to take time. The desperate times are going to be immediate. The stability is going to come but while we’re in this very nervous time I would shy away from, just for the moment, going to the smaller guys and, instead, partner up with reputable larger companies -- after you’ve investigated how stable they are. Publicly held, you’re going to have access to more information about them. If you don’t know how to read a balance sheet, it wouldn’t hurt to learn.

 

But I would shy away from some of these wonderful projects that you might have in your head. Get close to your client, you’re better off telling them, ‘let’s put off doing the real complicated things until we get out of this storm.’

 

You don’t have to be the hero with all the answers. Your clients will appreciate your honesty. Let the dust settle. We’re just in troubled waters for a short time on some of that, especially the little workshops.

 

AUDIENCE MEMBER: I suggest joining the Chamber of Commerce in your area. I used to advertise everywhere and it got to where it just didn’t work. The chamber is working.

 

LLOYD PRINCETON: As with any networking group, the chamber is very regional. The best thing to do is to attend a meeting or two and see if it’s the right group for you.

 

QUESTION: What are you all thinking about in terms of a timeframe for the recovery?

 

SIMS BRAY: If I had the answer, I would be extremely sought after. But I’ll take a stab at it. I’m out there like everybody else and hearing the same things. You’ve got banks that are no longer the same entities they were a year ago – also troubles on Wall Street, Detroit in dire straits, the housing industry. All of these things, which are not small things, are not working right now. My sense is this is going to take a long time, not a year or two years, I’m afraid it’s going to take longer than that. There’s no credit. It’s just a bad situation.

 

Here’s where I’m concerned, and everybody is concerned. You’re interior designers, and you’ve got clients that wouldn’t use you unless they had the wherewithal to use you. They’re cutting back right now like everybody, because it’s almost embarrassing right now to go out there and start spending money. But I think after an initial period of time these people will start spending money again because their lives aren’t coming to a close. They’re going to spend money to make themselves more comfortable in their environs. But I think it will be a long time before we’re going to see the kind of spending we’ve seen in the last ten years.

 

LLOYD PRINCETON: One of my manufacturing clients… says people are happier when they surround themselves with pretty things.

 

You’re looking for certainty and for someone to say ‘in x months this is going to be better.’ But the only thing you can count on today is your positive attitude.

 

SIMS BRAY: The beauty of it is that we’re all in the same boat. (laughter)

 

KATHERINE STOUT: Trillions of dollars have come out of American households and many of us think we’ll never return to where we were before, especially in California, where there’s a lot of excess. In the home category, we believe they’re going to spend money on their homes. People are still cooking, entertaining, which we think is a positive indicator. They may not be buying a lot of furniture right now, but they’re buying decorative accessories, they’re buying cooking things, smaller ticket items, we believe they will continue to do that. But it may never get back to the level it was.

 

LLOYD PRINCETON: When it returns, I think we’re going to see spending return in different ways. Really pay attention to knowing who your customer is and what their values are. It’s going to shift. Things that were important before may no longer be important today. And that might even be a good entree for you: Ask your clients,‘What’s changed? I know things are different in your life, what are you going to be doing in 2009 and 2010? Are you going to be holding on to your property? As far as lifestyle, what can I do for you?’

 

You may not get those full service projects as much anymore, so what are you going to do in between? How is it going to affect how you bill your services -- whether it’s design fees or hourlies or shopping day rates.

 

So you need to shift how you think about things because the playing field is not the same anymore and it’s changed in a fundamental way -- for the good, I believe.

 

 

QUESTION: I have a file of clients that I purge every 10 years. Now I’m wondering if there’s a way to get back in touch again. All of a sudden I think, ‘Wow, I should take advantage of this.”

 

MARK CUTLER: First of all, you should never ever ever purge that list! We still stay in contact, even with people we interviewed with and didn’t get the job! Six months later I send them a letter, ask them ‘How did things work out? How did the designer do? If you have a different project in the future please keep us in mind… I feel this was a missed opportunity, I really enjoyed meeting you and your family, and would like to give it a shot.’

 

AUDIENCE MEMBER: Wow, even the ones who didn’t give you the job? Has it worked?

 

MARK CUTLER: Nope, hasn’t yet! (laughter)

 

LLOYD PRINCETON: The point is Mark keeps getting his name out there, though it doesn’t always work out.

 

MARK CUTLER: We send out a client profile sheet – I know their birthdays, the schools their children go to, if there’s a fundraiser or silent auction at their school I can donate two hours consultation; for birthdays, send a birthday card with a pillow… Just put it on your calendar, and make it a team effort. Our calendar is chock full; every single day, two or three things leave the office – birthday cards, gifts. ‘Mary just called and said the cutest thing – that you remembered the birthdate of their puppy! By the way, we just did the living room, you should come by and take a look.’

 

JENA HALL: It’s all fantastic, not everybody has to dig them out. After ten years, what do you say? If you’re reluctant to make a simple phone call, send a note – ‘It’s been a long time… want to know if you want to renew the friendship.’ It doesn’t have to be fancy. Or send them an updated packet with photography, updated mail piece or a handwritten note.

 

QUESTION: Back to the earlier discussion about the back end. How do we go about investigating?

 

JENA HALL: Local resources like the Better Business Bureau and Chamber of Commerce are a quick reference. Also get from vendors a client referral list if you don’t already have it. Keep it close to your vest and don’t be embarrassed to call back. The records of two years ago might not be valid so you have to keep up to date.

 

LLOYD PRINCETON: (invites speakers to share parting words)

 

SIMS BRAY: Most of you are designers and I submit to you that you are in marketing and sales. Never forget that. You have clients you are selling yourselves to. 
 

MARK CUTLER: For me, it’s an incredibly exciting time. A lot of my competition is falling to the wayside -- this is your chance to really establish yourself in the market so when it ultimately turns, your position is going to be hugely magnified from where it was before the downturn. Hunt them down, be relentless, hunt them like a wounded animal (laughter).

 

KATHERINE STOUT – We’re a traditional retailer. We’ve been around a long time. We try to think differently. It’s not about selling product to people, it’s about getting inside their heads and understanding what’s important to them. What does my customer want? Think differently about your model, your fee structure. Think about your client – tailor it to them instead of how you’re used to working. Be positive. That’s such a big part of this – stay positive, network, it will come back and you want to be right there. Be flexible and think differently.

 

JENA HALL: All of you nailed it. Take this time as an opportunity to readjust, get focused and, to those of you for whom things may have slowed a bit, what a time. This is the time to hone your business skills and public image and really get focused.

Posted by Susan Dickenson on February 24, 2009 | Comments (8)