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Williams-Sonoma focuses on brands

Williams-Sonoma is firing up brand expansion this year — opening more stores, increasing catalog circulation across nearly all of its properties and, in some cases, expanding the footprint of existing retail stores.

The company also believes that its fledgling West Elm brand, which opened its first store just last year, may become the single most important brand in its portfolio, executives said last week during the Lehman Brothers Retail Seminar here.

"Our research shows that Americans have never been more focused on their homes than they are today," said Patrick Connolly, executive vice president and chief marketing officer.

West Elm, which debuted in early 2002 as a catalog, will open just two additional stores this year (Manhattan and northern California), bringing its store count to three. However, Williams-Sonoma has already expanded its vision of the core customer beyond the urban dweller, Connolly said.

In addition to targeting first-time apartment and home dwellers, West Elm now will pitch to those with second homes, he said. To serve the expanded demographic, West Elm is breaking out of its citrine/lavender/neutrals box to present a fuller color palette and wider variety of styles.

New stores will also diverge in design from the original Brooklyn store opened last November, which displayed product in a flowing, loft-like manner. Instead, they will present cross-merchandised goods segmented by living room, dining room, bedroom and bathroom.

West Elm is one of four emerging brands that Williams-Sonoma will put the push behind this year, Connolly said.

Williams-Sonoma Home will launch its first catalog in late August or early September. Replacing the Chambers luxury bed and bath catalog, Williams-Sonoma Home will target an upscale demographic "with the same classifications and departments as Pottery Barn, but with a different price point and aesthetic," he said.

The furniture component, in particular, will offer luxury consumers the types of goods they typically wait 14 to 16 weeks to have delivered in a window of 4 to 6 weeks, he said.

PB Teen, which launched as a catalog and Web site in April 2003, and generated $50 million in its first 10 months, will increase its circulation and frequency this year. The book reached 18 million consumers last year, he said, and may launch as a retail concept in 2005.

"The biggest learning has been that we don't have to be nearly as trendy as we thought we would need to be," Connolly said, adding that core items are the strongest sellers.

The storage/organizational concept, called Hold Everything, the company's fourth emerging brand, began repositioning in January with small changes in assortment but an overhaul in merchandise presentation. The shifts so far have delivered a "substantial comp improvement," he said.

Although no longer classified as an emerging brand, the five-year-old Pottery Barn Kids nameplate also is showing promise. The company will add nine stores this year and ultimately sees the potential to operate 125.

"We're focusing on optimization," Connolly said. "Pottery Barn Kids customers want to duplicate the room they see in the catalog exactly, so it's very important when they go in the store that they have everything there."

In addition, the catalog will boost circulation from 63 million last year to 75 million this year, elevating page counts and frequency in the process. Its baby and gift registry grew to 68,000 names last year, up 95 percent.

The master Pottery Barn concept, in the meantime, will circulate 150 million catalogs this year — almost 12 million each month — up from 134 million last year. Retail stores will grow from 174 in 2003 to 181 by year-end, and store size in new units will expand by 100 square feet to 11,800 square feet.

The greatest expansion will take place across the Williams-Sonoma retail store base, where the company will enlarge 13 existing stores this year on top of 13 new store openings.

In addition, the company has identified 50 stores in the 5,000-square-foot to 7,000-square-foot range that it believes can be expanded to 8,000-square-foot and 12,000-square-foot units. Another 23 boxes sized at 3,000 square feet also have the potential for expansion, Connolly said.

In addition, Williams-Sonoma, in the past six months, opened two 20,000-square-foot flagship stores: one in San Francisco's Union Square and the other on the upper west side of Manhattan in the Time Warner Center.

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