Closet organizer chains step out: specialty outlets explore new markets

Discount Store News, Sept 3, 1990 by Mary Ellen Kelly

Closet Organizer Chains Step Out

Specialty Outlets Explore New Markets

Look out full-line discount, home center and department store retailers: the organizer specialty store industry is weaving its way into the fiber of most major markets in the United States and is ready to pull the rug out from others that sell organizer products.

The one-two punch; providing not only unparalleled services, but also competitive pricing on basics.

The organizer specialty store business is dominated by a couple of large companies, but today's small operators are evolving into chains and many single-unit firms have come together and formed a buying group called the Storage Sources Group.

Williams Sonoma's Hold Everything stores and catalogs are clearly in the lead in terms of staking out market share. The synergy between Hold Everything and the newly acquired California Closets custom installation firm is expected to propel this Williams Sonoma duo light years ahead of competitors.

Manufacturers are responding to this growing contingency by working with specialty chains for customized product that can be sold in a full-service retail environment.

Kent Heltne, Eastern regional sales manager with vendor Lee/Rowan said the company is already supplying some exclusive products to Hold Everything and provides private label products to several other retailers, often in the form of different product configurations.

"The specialty people have a great deal to do with new product introductions. We are very interested in their opinions," Heltne said, noting that the company brought together 12 of these retailers in St. Louis last October for a two-day conference. He envisions this idea interchange occurring every two years.

Organizer specialty stores were in the top third of leading growth channels for the manufacturer, based on year to date volume through June.

Lee/Rowan recently expanded its ventilated wire storage systems through the acquisition of Space Solvers from American Distributors of Chicago. The new product line is expected to add several million dollars to Lee/Rowan's annual sales.

Mike Reilly, vice president sales and marketing, of Chicago-based Selfix, said the company's business with specialty chains went from nearly zero to nearly $10 million through the acquisition of Independent Products Co. (IPC), this past June. He expects a doubling of specialty business by the end of calendar 1991.

"We perceive the future of organizer specialty chains to be quite healthy," Reilly said. Other acquisitions by Selfix are possible during 1991 that could continue the company's "thrust toward becoming a leader in organizer products," he added.

Bob Miceli, vice president sales and marketing at CorrPak, said his company's business with specialty retailers is growing in certain product areas. "We plan to further enhance our business in the specialty area," Miceli said. "We will be marketing products toward the specialty area in a much more intensive way in the next 90 days," he said, but would give no details.

Neil Balter, president of California Closet, told DSN it was the recognition that "ultimately the retail side of the business will be the driving factor of installation sales," which prompted Balter to join the Williams Sonoma fold. The first 12-foot California Closet section opened within a Hold Everything retail store in Washington, D.C., in June; a second was slated to open in Denver shortly before presstime.

Rivals Concerned by Merger

"Competitors are quite concerned about our combination," Balter said, referring to both the retail sales of Hold Everything merchandise and the availability of California Closet customized service. "We clearly have the opportunity to really control the home organization category."

Most of next year will be spent "combining the two companies," and incorporating California Closet into all Hold Everything stores Balter said, but the expects to open another two or three California Closet factory showroom locations as well. The company currently operates 96 franchised factory showrooms and five company-owned units.

Hold Everything, with stores in California, Washington, Oregon, Virginia and New York, just opened its first locations in Colorado and New Jersey last month.

The Container Store, Dallas, was opening a new prototype store at presstime in Fort Worth, Texas. The new store is 16,000 square feet and is the first freestanding store of the eight-unit chain.

The prototype's unique architecture boasts a huge skylight set in the center of a steepled ceiling. A second prototype unit is slated for Plano, Texas, next spring. The company plans to expand all other stores as close to the new prototype size as possible, starting with its three Dallas locations.

The Container Store will be among the first to go outside the boundaries of its headquarters state. The retailer is said to be eyeing locations in Atlanta for stores by the end of next year. The new prototype also represents the largest multi-unit organizer specialty store format in operation.