Segal: Speed and Flexibility Matter
June 8, 2009-- Home Textiles Today,
Retailing over the next few years will have to change radically, becoming quicker and more flexible to keep pace with consumers.
To remain successful, "we all will have to focus on logistics, custom products and quick availability," said Gordon Segal, co-founder and chairman of Crate and Barrel, the 166-unit lifestyle specialty store retailer.
In home furnishings especially, "we will have to be very quick and flexible," he said pointing to fast fashion apparel retailers like Zara and H&M as examples of the new direction.
"Consumers will no longer have biases about the type of stores they will shop in. Their demands are going to rise — and retailers will have to change and be better than the next guy," he remarked in an exclusive conversation with Home Textiles Today ahead of receiving the Lifetime Humanitarian Award by the Anti-Defamation League.
The award will be presented June 11 at a dinner/dance sponsored by the National Home Furnishings Industry division of the ADL.
"The ones that succeed in retailing in the future will be the ones most agile and quick. Customers are going to be more demanding than ever," he said.
And for the home furnishings segment of retailing, the focus will be on speed of delivery while at the same time providing custom products. "Customers want what they want and they want it quick. Look at the growth of special medications, clothing to order and specially outfitted cars."
Gordon cited his own company's track record in furniture — typically one of the slowest in terms of customization and delivery. "It used to be a matter of weeks to deliver stock furniture, now we deliver in five to seven days, and customers now expect two to three days."
To accommodate this aspect of the new retailing climate, the company is contemplating a new warehouse in New Jersey.
Pointing to Amazon as having set the standard for delivery service, Segal emphasized the new consumer mantra is "I want to get it when I want it."
Segal also pointed to the entire scope of product development as undergoing immense change. "Today, by the time a product is developed and sent to the manufacturer, it is knocked off."
In addition to speed to market, Segal views constant attention to quality as a critical piece of retailing survival in coming years. Again using furniture as an example, he said, "No matter where we have the furniture made it has to be good like hardwood construction with quality springs and upholstery — high quality with no defects."
In textiles, there is the challenge of offering more variety. "The consumer has a lot more creative choices, so many more options, more variety and opportunity for selection." If coming from overseas, "we have to have the ability to communicate effectively, help design a fabric and get it into production before you get home."
Overall, Segal opined, "Our job is to deliver quality. It has to be good even at lower prices." And while the marketplace has shifted in large measure from handmade to mass produced, "we still will have handmade in glassware and textiles." In fact, he observed "the whole shift in product production has shrunk the world."
And while product and product differentiation are key elements in Crate's success, Segal has his eyes closely fixed on the stores and the company's burgeoning direct business.
Looking at the company's roster of stores, which now also include six CB2 stores dedicated to a younger, urban customer, Segal said "I'm increasingly asking, 'Do we need stores this big? Is it necessary to carry a full array of product in every store?' " The question is key especially in view of the growing significance that catalogs and the internet have on company sales.
Using furniture again as the example, he pointed to the category's success on each medium.
But in questioning the need for big stores, he asked, "How far do we cut back the assortments without challenging the full array of product that gives us the impact?"
Similarly, "if we make the catalog smaller by too much it completely changes the impact and the impression of the offering. The breadth of offering is as much a factor as price in our success. We have to give selection, range of price and variety of choice in look, style and price."
Looking at an area of retailing that many others have cut back, Segal emphasized, "Well trained personnel are more important than ever — they're critical. In these times and ahead, consumers will be even more demanding than ever." The ability to communicate with customers will be more important than ever, and a skilled sales force is the front line for that, he said.
Turning to overall business, Segal said, "What we're going through now is a tsunami. The forecast is that the GDP will be down. There's never been a more spectacularly interesting time than now. The big question is how much retailing will come back from what it was."
One of the critical keys to future success, he emphasized, will be the ability to be very quick at change — "better than the next guy with a greater need for flexibility, and customer service. It was much slower 20 or 30 years ago."
Crate now changes its assortment store-wide six times a year — "all products except furniture, which is now twice a year."
Segal, who started the company in 1962 with his wife Carole, stepped down as ceo of the company in 2008, handing the reins to long-time associate Barbara Turf . He now serves as advisor and chairman, in addition to his many outside interests. "Barbara has done a great job in very difficult times," he emphasized.
Segal has been the recipient of numerous awards, including the Cooper-Hewitt Design Patron award and the National Retail Federation Gold Medal award. He is a member of the World Congress' World Retail Hall of Fame. A former chairman of the National Retail Federation, he also is a member of the World Presidents' Organization and the Chief Executives' Organization.
As for himself, Segal said "It's been an incredible journey. I've been able to develop and sell quality merchandise in quality stores — and make a living."
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