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CB2 Takes Manhattan

Third Store for Crate & Barrel Offshoot

Carole Sloan, November 12, 2007

New York —With its third-ever store now open in an all-new market — the Big Apple — CB2 has entered the big time arena of retailing, and home textiles is a major winner in the merchandise mix.

Gordon Segal, ceo of CB2 and its older and larger sibling Crate & Barrel sees the seven-year-old home furnishings retailer opening as many as 20 CB2 stores in the next three years. Real estate will be the critical issue, Segal explained, since there is a specific target audience — an urban demographic with a broader age range that the company envisioned with the opening of the first store in Chicagoland in 2000.

Coming to New York was a major challenge, both in terms of the right location, which is at 451 Broadway in the trendy SoHo section of lower Manhattan, “and we had to take it slow. We're bringing it to 'Broadway' — we can't come to New York with just an 'OK' store.”

The 8,000-square-foot store that opened last week is on a busy shopping street in a century old building, next to the first Z Gallerie store in New York and a soon-to-open MujiLife store on the other side — both situations that sit very well with Segal, who likes being in that kind of retail company.

Orange is the color du jour throughout all merchandise areas as well as display fixtures, mixing with green, lots of white and gray. The orange theme also extended to the color of the CB2 martinis served at the preview opening event.

The store here also has a number of eco-friendly elements — all the ceilings and floors are bamboo, and the balance are simple materials. “We're on a drive for eco-friendly stores and products,” he said.

Going forward, CB2 will open in San Francisco next March “and we're searching for sites in Boston, Miami and Los Angeles. It's difficult to find the right real estate — at the right price.”

Segal has paced the opening of additional CB2 stores on a cautious basis since the debut of the concept in 2000. “We had a great look but the wrong mix of merchandise. We sold a lot of little things — it was more tabletop things.”

With the opening of the second CB2 in 2004, again in Chicago, “We changed the mix; it had more home furnishings than the original — bigger ticket items to make it work since we had to generate such a scale of dollars.”

And from the second store, which is located near a full-line Crate & Barrel and a Land of Nod children's store that is 50% owned by Crate, “We changed the assortment to fun, unusual, practical and utilitarian — and it works. It can't just be fluffy, but creative and imaginative, not wild way-out crazy.”

The assortment at CB2 is somewhat familiar to customers with a bit of gray in their hair, Segal acknowledged. “With CB2 we recreated the '60s and '70s. We wanted to go back a little bit to our roots. Crate & Barrel reflects us as we got older,” he said. “And we were finding older people shopping in our Chicago CB2 stores.”

When CB2 was launched it was keyed to customers in their 20s, “but the lifestage we thought we were catering to doesn't exist as we saw it. Today's CB2 customer ranges from 25 to 50ish, and the customer buying at the high end of the age bracket “likes buying here because it reminds them of their younger years.”

The move to New York was abetted by the strength of the CB2 internet business that drew customers from this area.

“Our home textiles business is fabulous, as is textiles. The team is doing great,” enthused Segal. The bulk of the bedding mix is exclusive designs from Marimekko of Finland. Furniture, which was underplayed in the first store, “now has better product, price point merchandising and marketing.”

The internet is key in the fledgling chain's marketing. There will also be ads on bus stands, phone kiosks and train stations, magazines and a broad-brush distribution of the catalog “which expressed best what we have.” The illustrations for the store were created by New York-based illustrator Maira Kalman.

The internet “is definitely a shopping and buying tool. We find that between 10 p.m. and 7 a.m. we get a tremendous amount of orders. But we can't do it without the catalog,” Segal emphasized. Furniture is a tremendous pull on the website, he said, “and returns of furniture are less from internet sales than in the stores.”

But he noted, “We constantly have to make the site better and stronger, constantly update it.”

The company opened a new Crate & Barrel in San Diego the week before this opening, and in deference to the effects of the wildfires that swept the area, cancelled the opening party and donated the monies to local charities plus a quarter-million dollars worth of textiles and furnishings to people who lost their homes.

Despite the effects of the wildfires, “our San Diego sales were way over plan,” Segal remarked.

Immediately after the opening here, Crate executives were off to an opening of a store in Cherry Hill, N.J.

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