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STORE SPACES

Online furniture start-up in first store location

BY Marianne Wilson

Another young digital brand is trying on brick-and-mortar.

Burrow has opened its first physical store, called Burrow House, in the SoHo section of New York City. The brand specializes in American-made sofas — delivered in a box — with a modern mid-century design aesthetic.

Burrow launched in April 2017. It has expanded its original product line from sofas to include ottomans, chaise sectionals, and armchairs. Product is delivered to the customer’s door in a week.

The multilevel Burrow House is designed to represent the brand’s expression of home. Customers can try out the furniture in ways that replicate how they would do so at home. They can relax in front of the fireplace, watch a movie in the private screening room and have fun creating their own videos in the green screen studio.

“Today, by opening the doors of Burrow House to the public, we’re abolishing the idea of the typical furniture store,” said Stephen Kuhl, co-founder and CEO of Burrow. “Burrow House isn’t about shopping, though people can certainly place an order in the store. Burrow House is a place to celebrate the experiences we create in our homes.”

Burrow has successfully raised $18 million in funding to date.

“We wanted to create furniture that’s built to last, wouldn’t take months to arrive, and was mindful of both people’s lives and the planet,” said Kuhl.

For more slideshows, click here.

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Wayne Gretzky
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Untuckit takes store concept global, names hockey legend as brand ambassador

BY Deena M. Amato-McCoy

Untuckit is launching its first international bricks-and-mortar store in a big way.

The fast-growing brand, whose signature shirts are made to be worn untucked, is debuting its first international retail location in Toronto, Canada. The store, which will open its doors on Sept. 12, coincides with the launch of Untuckit’s new Canadian e-commerce experience and product fulfillment center, which is also based in Toronto.

The new location will carry the retailer’s full line of men’s apparel, including shirts, sweaters, pants, and outerwear, among other items.

“Since we began opening stores in the U.S., having a space in Canada has always been a goal of ours — we couldn’t think of a more fitting place than fashion-centric Toronto for our first location,” said Untuckit Founder Chris Riccobono. “Our Canadian customers have been shopping with us for years online, so we’re looking forward to offering them another way to experience Untuckit, this time up close and in-person.”

To further bolster its Canadian launch, the retailer is partnering with hockey legend Wayne Gretzky. In addition to appearing in Untuckit’s marketing campaigns in stores and across digital and print platforms in both the United States and Canada, Gretzky has also invested in the company, according to Untuckit.

“Wayne’s overwhelming success over the years as an entrepreneur made him a great fit as an investor, and his passion for both Canada and the Untuckit brand made bringing him on as a brand ambassador a natural next step,” said Riccobono.

Founded online in 2011, the start-up has grown from five stores at the end of 2016 to 39 physical retail locations across the U.S. The company plans to open an additional 15 U.S.-based stores in 2018. According to reports, Untuckit has been profitable since its second year of business.

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RH doubles down on experiential brick-and-mortar retail—and hospitality

BY Marianne Wilson

Not every retailer includes a quote from a Robert Frost poem in its quarterly financials. But RH (formerly Restoration Hardware) is not your average retailer.

The upscale home furnishings company reiterated its commitment to — and belief in — physical retail in its second-quarter earnings statement. RH reported mixed results, with sales that missed expectations but profit that topped forecasts. It also spent a good amount of time detailing its ambitious brick-and-mortar strategy.

“While most in our industry are closing or downsizing stores, we remain committed to our quest of revolutionizing physical retailing,” Gary Friedman, CEO, RH, wrote in a letter to shareholders that accompanied the earnings statement. “The road of endless promotions, free shipping, and a shrinking store base is resulting in broken and unsustainable retail models. We prefer the road less traveled by, and like Robert Frost, believe it will make all the difference.”

For RH, the “road less travelled” includes sparing no expense to build stunning stores (or “galleries” in RH speak) that, increasingly, include varied food and beverage elements ranging from a coffee bar to a sophisticated restaurant. Its new store in Nashville is the fourth RH location to feature the company’s “integrated hospitality experience.” The company is encouraged by hospitality results and plan to add more in the future.

“With three of our four restaurants trending to generate $5 million to $6 million annually, and our fourth at approximately $4 million, we believe RH Hospitality is now a proven scalable business, and we plan to increase the number of new Galleries with integrated restaurants, wine vaults, and barista bars going forward,” Friedman stated.

RH will go full circle with hospitality next summer, with the opening of its first boutique hotel, RH Guesthouse. It will be located in Manhattan’s Meatpacking District, steps away from its new store. Another hotel is planned for Aspen, Colorado.

In other new store openings, the company will open a location in the Napa Valley, in Yountville, California, on Sept. 23. Befitting the location, the site will include a two-story stone wine vault with outdoor trellis-covered living rooms that can be reserved for wine tastings, an indoor — outdoor restaurant with a glass roof and retractable steel and glass doors, and garden courtyards with outdoor fireplaces.

RH has several new brand extension plans in its development pipeline, including RH Beach House, and RH Color, which it will launch in 2019. The retailer also has developed a new, “multi-tier” market approach that includes a new, smaller RH gallery prototype that will enable it to more quickly move into a market. It will range in size from 33,000 sq. ft. (inclusive of its hospitality experience) to 29,000 sq. ft. without it.

“Due to the reduced square footage and efficient design, these new prototypes will be more capital efficient with less time and cost risk, but yield similar productivity,” Friedman said. “We anticipate these new Galleries will represent approximately two thirds of our target markets and enable us to ramp our opening cadence from three to five new Galleries per year, to a pace of five to seven new Galleries per year.”

In addition, RH is developing an even-smaller gallery format tailored to secondary markets that will range in size from 10,000 sq. ft. to 18,000 sq. ft.

“We believe these smaller expressions of our brand will enable us to gain share in markets currently only served by smaller competitors,” Friedman said. “We expect these Galleries to drive $10 to $15 million of revenues at a net investment of $0 to $5 million, with a payback on our invested capital of 0 to 2 years.”

But the company is not eliminating its pricey “bespoke’ galleries format which targets top metropolitan markets and top second-home markets. In addition to the upcoming Manhattan and Napa Valley locations, one is planned for San Francisco in 2019.

“These iconic locations are highly profitable statements for our brand, and we believe create a long-term competitive advantage that will be difficult to duplicate,” Friedman said.

For Friedman, nothing online can duplicate the RH brick-and-mortar experience.

“We believe when you step back and consider: one, we are building a brand with no peer; two, we are creating a customer experience that cannot be replicated online; and three, we have total control of our brand from concept to customer, you realize what we are building is extremely rare in today’s retail landscape, and we would argue, will also prove to be equally valuable,” he stated.

RH is confident about its long-term outlook. It said it sees “a clear path to $4 to $5 billion in North American revenues, as well as a significant international opportunity that could lead to RH becoming a $7 to $10 billion dollar global brand.”

RH earned $64 million, or $2.33 a share, in the second quarter ended Aug.4, versus a loss of $8 million, or 28 cents a share, in the year-ago period. Adjusted for one-time items, RH earned $2.49 a share. Analysts had expected adjusted earnings of $1.75 a share.

Revenue rose to $641 million from $615 million, less than analysts expected.

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