Crate & Barrel's baby gets a new store

DSN Retailing Today, Dec 13, 2004 by Laura Heller

OAKBROOK, IL -- It's a small retail operation, for small people, but Land of Nod has high standards and even bigger backers. The children's home furnishings and accessories chain opened a new store near Chicago last month, the first that clearly links it to financial partner Crate & Barrel in the form of an open doorway between the two stores. The 5,000-square-foot store is the four-year-old chain's fourth location. With a growth rate of roughly one store per year, the company has more in common with its partner than financial backing.

Land of Nod began in much the same way as Crate & Barrel. As newlyweds, Crate founder Gordon Segal and his wife couldn't find stylish and affordable items to stock their home, so they opened a store of their own. Nearly 35 years later, new parent Scott Eirinberg went shopping for baby furniture with his wife and couldn't find stylish, high-quality product that was priced affordably. So he teamed up with a childhood friend, Jaime Cohen, and Land of Nod was born in his garage. After four years of operating as a catalog company, the duo got a call from Segal in 2000.

"They really have the same edge and direction that Gordon had," said Crate & Barrel spokeswoman Lisa Ridolfo. "He said, 'I see the creativity; let's nurture it.'" Both companies are privately held and don't discuss numbers. The relationship between the two chains is termed a "shared partnership," according to Ridolfo.

"We aren't a corporate spin-off," said Eirinberg. "We were solving a need, very much like Crate & Barrel was when it started, appealing to people like themselves."

Land of Nod also is riding high on the home decorating trend, appealing to new parents who have put time and money into other areas of their homes and want to do the same with the kids' rooms. Williams Sonoma, Ethan Allen and Bombay Co. are all cashing in on the craze, too, though Eirinberg is quick to point out that his catalog was three years into operation before Pottery Barn Kids hit the market.

There are no hard numbers to quantify the market for children's furniture, but it clearly is a growing revenue stream. "Anecdotally, it's growing for two reasons," explained Neil Stern, a consultant with McMillan/Doolittle. "Generation Y, the children of the boomers, are starting to have kids, and the boomers who waited to have children now have more to spend on those kids." Whereas a child's room typically remained intact until that child moved out of the house, today's kids are having their rooms redone an average of four times prior to college, he said.

Which is where stores like Land of Nod fit in. The chain offers furniture at a slightly higher premium than Pottery Barn Kids, much like Crate & Barrel does for adults. The shopping environment caters to both parents and kids and seeks to reflect what Eirinberg describes as the "whimsy of childhood." Vignettes of boys' and girls' furniture for sleep and play are accented by accessories, bedding and toys that appeal to kids and their parents, with much of the merchandise selected for nostalgia, as well as quality and popularity. Whimsical sayings are inscribed on walls and over doorways, and Eirinberg handpicks the music. "One Chipmunks song a day, that's the rule," he said.

As for that open doorway into the Crate & Barrel next door, "Those doors say to people, we are Crate's children's business," Eirinberg said. Throughout its 42 years in operation, Crate & Barrel offered just a small selection of children's furniture. In the past year, it has discontinued the program entirely, and in-store signage directs customers to the Land of Nod. "This is our baby now," said Ridolfo.

In addition to funding, the two chains share warehouse facilities, distribution, delivery and installation services, while Land of Nod benefits from Crate & Barrel's sourcing partnerships and expertise. The catalog business continues to be run separately with a circulation of several million, and according to Eirinberg, sales have tripled since the partnership.

That is just four stores--three in the Chicago area where both Land of Nod and Crate & Barrel are based, and one in Seattle--Land of Nod looks to be on the same slow and steady growth path as its mentor. Merchandise mix is still progressing with more accessories being added, which is necessary to increase the frequency of visits, according to Stern. "It's a retail store that's a work in progress," he said. And Eirinberg isn't in a hurry to grow up, again, much like Crate & Barrel, which after four decades in operation has just 130 stores. "Others might have moved more quickly," he said. "We're watching the details."