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House2Home plots growth plan

Andrea Lillo, Powell Slaughter -- Home Textiles Today, May 7, 2001

NORTH HOLLYWOOD, CA — With its list of grand openings scaled back after undergoing a retail reality check, HomeBase is still forging ahead with plans to open 37 House2Home stores within the next three months, for a total of 41 operating stores this year.

With the grand opening for the store here a few weeks away and 16 others to come in San Diego, central and northern California and Phoenix, executives were ready to share their plans for the future.

"We decided to be a little more conservative in our approach," said Scott Richards, executive vp, merchandising, marketing and logistics. Previously, the HomeBase locations in Colorado, Utah, New Mexico, Texas, Washington, Idaho and Oregon were to be converted to the new House2Home format, but the company decided, given the current retail climate, to "focus on the existing trade areas." House2Home currently has five locations in Nevada and California.

Though some may wonder if the U.S. market needs another home decorating store, Richards said, "we're the only one with this combination of departments under one roof," the equivalent of 17 specialty stores in one place.

"Few in the home decorating arena focus on both the inside and the outside of a house," he added. "The best part is we have it all under one roof. House2Home has created a new retail channel called the home decor superstore. There's no retailer that competes against our entire store — only individual departments."

Though House2Home's target customer is a 25- to 54-year-old female homeowner with a household income of $80,000, the company looks to attract another group as well — Hispanics. Seventeen of the opening stores are in an area where the population is at least 25 percent Hispanic. "Hispanics are outpacing the Anglo market," said Ginger Silverman, vp, marketing and advertising. "They're spending twice as much as Anglos." And the top three product categories this group wants are bedding and linens, furniture, and juvenile products, she added. "They are very interested in nesting."

The retailer hits a broad range of price points for all of its customers. "We start at affordable and go beyond for the more discriminating customer," starting at mass price points and hitting department store levels. "We have 40 plus margins in the categories we dabble in," said Richards.

Bill Langsdorf, executive vp and cfo, added, "We will have as good or better prices here than at other retailers. The margins may be strong, but they will be good values for our customers."

The store also delivers instant gratification to its customer, with several new concepts. Quick 2 You, for example, is a branded concept of shipping bigger items to the customer faster than usual. Instead of waiting six to 12 weeks for delivery of a big-ticket item, customers can get items within three to five days because some big-ticket items will be stored at the distribution center.

2 Good 2 Miss is another concept in which the store will constantly change several product areas, like decorative pillows, every few weeks so that the customers see fresh things every time they shop the store, and will be encouraged to buy on the spot since they know it might not be there later.

"We're a store of instant gratification," said Richards. "We're not about remodeling anymore — we got out of that business."

And the new stores reflect what's been learned from the five test stores. Wallpaper and paint, for example, are gone. "We were displeased with the results," said Richards. In its place is the Room2Grow department, focusing on the important juvenile group from ages 5 to 12. The area is devoted to furniture, domestics — including rugs — and lighting, as well as a "potpourri" of fun things for kids. The five existing stores have already converted to the Room2Grow concept as well.

For its May 26 openings, House2Home will invest heavily in awareness-raising advertising, with television ads — 40 percent of which will be prime time — circulars of 32 to 60 pages, direct mail, credit card outreach and web advertising. Even planes trailing messages will fly overhead on opening days.

In this North Hollywood location, which Langsdorf said was smaller and darker than the typical HomeBase, bedding and bath products were located in the center of the store. The area, which is typically about 20,000 to 25,000 square feet in each store, is one of the largest for the retailer — aside from furniture and outdoor items. The assortment was similar to the other House2Home stores, Langsdorf said, though they will tailor it to the different markets if need be. He also didn't rule out the possibility of private label in the future.

Sheeting was from WestPoint Stevens (Grand Patrician), Utica and Fieldcrest, while Croscill, Revman, Veratex and Hollander were a few of the top-of-the-bed manufacturers. WestPoint's Grand Patrician towels filled out the towel section, which also included embellished towels from Franco Mfg. Shower curtains included Vohann and Creative Bath Products and bath accessories from Croscill, Frenchtex, Arc, Creative and Allure. Regal Design Studio bath rugs and Allure bath mats were also among the assortment.

Flooring reigns in the back of the store, with rugs taking up about 10,000 square feet of space. Rugs from Oriental Weavers' Sphinx division, Oriental Weavers of America, Mohawk, Nourison, and TransOcean were included in the assortment.

Soft window is another important area, including Corona, Richloom and Waverly products.

Decorative pillows fill several aisles alone, and are also placed in related product areas. The assortment focused on solids, with several patterns in animal looks. Table linens and kitchen textiles were located in the cookware section. Table linens consisted mostly of place mats, including designs from Bardwil, Park B. Smith and Tablewear by Marsha Blanke. A small selection of solid-color tablecloths from Bardwil was available. John Ritz and Standard Terry brands were in kitchen.

The HomeBase stores will be phased out by mid-June — and the company's name will change by the end of the year, said Langsdorf — but expansion plans are still in place, meaning that it will now have to search for new locations. The company will look at existing stores and begin adding stores in the same markets it is already in to start, he said, though now real estate considerations are different than when the company was a home-improvement retailer with needs for space with high ceilings. Though he declined to go into details, he said "next year will be a good time to expand."

Though the first half of the year has been difficult for retail overall, Langsdorf felt positive about the second half. With the liquidation process over next month, and House2Home solidified into one format, the company expects to proceed forward more smoothly.

Though some of House2Home categories, like patio furniture, are familiar to the company, it has just begun to assess the performance of the newer categories, said Langsdorf. But he remained positive. "We think the freshness and the novelty of this new concept will bring people in."

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