News: Analysis & Commentary
BOBBING FOR THE BIG APPLE
If you live in New York, Cleveland, or any number of other major cities, you may never have shopped Crate & Barrel. But in areas where the privately held chain is established, it draws raves from customers for its service and its chic, offbeat mix of glass and cookware. "It's one of the few companies that routinely goes off our consumer-acceptance charts," says Chris Ohlinger of Service Industry Research Systems, a Cincinnati firm that tracks consumer sentiment about retailers. "They have acceptance on the scale of Santa Claus."
The question now: Can the trendy chain from Northbrook, Ill., make it in the Big Apple? In March, Crate & Barrel will open its first New York store. The planned location: 59th and Madison, the heart of Manhattan's tony shopping district. CEO Gordon Segal, who tightly controls the workings of the $275 million company, says that he spent four years searching for a location before settling on the 54,000-square-foot space. Two more stores will follow this summer in White Plains, N.Y., and Short Hills, N.J.
SLOW GROWTH. Crate & Barrel will attempt to woo demanding New York shoppers with its hallmark glittering displays of stemware and place settings, piped-in classical music, and highly trained salespeople. "We weren't motivated to build a big chain," Segal explains. "We just wanted to build a beautiful store."
Polite salespeople? Beautiful displays? That could spell trouble for Bloomingdale's and R.H. Macy & Co., New York's traditional headquarters for upscale housewares. So why hasn't Crate & Barrel moved into the New York market until now? Segal has studiously avoided overexpansion, even as rivals such as Williams-Sonoma, Pier I Imports, and the Bombay Co. pursued fast-growth strategies. In the past 32 years, Crate & Barrel has opened just 55 stores. Even so, its revenue has grown at a 19% compounded annual rate over the past decade.
Segal says he couldn't have opened stores any faster, maintaining that
it takes at least three years to train
a store manager or display person in the Crate & Barrel style. Even new top-
level executives must agree to spend their first three months working on the sales floor or stocking the backroom. "We don't have a concept constraint," Segal says. "We have a people constraint."
Does putting his rep on the line in New York make Segal nervous? Pier I Imports Inc. CEO Clark A. Johnson doubts it. "Gordon has been on a glide path for a great many years," he says. Segal admits to being tense, but not about his move into New York. "If you're not nervous, you have no business being in retail," Segal says. He may not be a New Yorker, but at least he's got some attitude.Susan Chandler in Northbrook, Ill.