Capitalizing on life styles - Pottery Barn Inc - HomeMarket Trends: Special Supplement - company profile

Discount Store News, March 4, 1991

Capitalizing on Lifestyles

The Pottery Barn's Pantry of International Tableware Expands as Americans Respond to Ethnic Influences

Pottery Barn's pantry of international tableware is destined for expansion as this Williams-Sonoma division further develops its commitment to lifestyle merchandising strategies.

Store count and distribution center space are rising as the Pottery Barn specialty chain accounts for a larger portion of Williams-Sonoma's total sales volume.

Michael Del Viscio, vice president of the Pottery Barn operation, said the consumer will "see a lot of global and ethnic influences," in future Pottery Barn merchandise. "The world has opened to any retailer, right now, a panorama of lifestyles and lifestyle products--everything from the South Seas to Russia," he noted. Among consumers there is a "general awareness of other cultures on all levels . . . There are so many opportunities to express different cultures and lifestyles."

Apparently, Pottery Barn is selling the lifestyles America wants; the division is among Williams-Sonoma's highest sales volume producers, second only to the original Williams-Sonoma format. Williams-Sonoma accounts for roughly 65% of total sales, while Pottery Barn has climbed to 17%. Three other divisions account for the balance of total sales: Gardener's Eden, mail order sales of outdoor furnishings, accessories and garden items; Hold Everything organization/storage products catalog and stores; and the Chambers bed and bath catalog.

Speaking before a Montgomery Securities financial analysts meeting, Kent Larson, Williams-Sonoma president and chief operating officer, estimated Pottery Barn's 1990 sales for the year ended Jan. 27, 1991, will reach $45 million, up from $36 million last year. Store sales will account for $30 million of the 1990 figure, with catalog sales providing the other $15 million.

Store count was 27 when Williams-Sonoma first purchased Pottery Barn from The Gap in 1986. The chain then opened two stores by 1989 and another six last year for its current 35-unit total.

While Del Viscio could not say how many new stores would be opened during the current fiscal year he noted that the company is "not limited in any way in terms of store growth. It depends only on the availability of retail space with the right demographics."

Mail order catalogs are mailed monthly. Catalogs mailed during the first quarter have a heavy furniture emphasis, while those during the second and third quarters focus more on outdoor entertainment merchandise. Gift items are highlighted in fourth quarter catalogs.

Tableware generates a little over half of Pottery Barn sales, a ratio the company plans to maintain. The category is also the chain's profit center, earning the highest gross margins.

While tableware is not the retailer's only category, it is a key element to the development of a lifestyle focus. For example, rustic Americana stars & stripes pitcher, railroad stripe plates and mugs, and aspen wood handled flatware work in concert with a rustic silverware caddy with hand-forged steel handle, and a weathered pine spice/mug cabinet.

"We start with the fundamentals like tableware," said Del Viscio. "We then layer fashion onto that core using a seasonal color palette," always keeping specific lifestyles the primary focus. "Previously we were more of an item business," he said. "From this point forward, lifestyles are the key." Among other "anchor" categories are textiles and furniture, he added.

While Pottery Barn is not the only retailer merchandising tableware with an Italian or Chinese flair, it is among the first to experiment with collections like its Menagerie tableware which have an African flavor. Yellow tableware features jungle animals like lions, tigers, elephants and giraffes. The collection--which includes plates, mugs and tea sets--are among Pottery Barn's exclusives.

Recently featured were Kitchen Classics (blue and white colors on Fiestaware styled pitchers, cobalt glass bottles, splatter bowls, speckled canisters, blue shell towels); Kitchen Style (black & white bowls, carafes, towels); and Italian (red and white with black accents on tomato-shaped salt and pepper shakers, pasta bowls and table linens.)

Whimsical merchandise has also been highlighted this year, including a pitcher shaped like a strawberry, cabbage leaf salad bowls, scallion-shaped salad tongs, and the like.

Nearly all Pottery Barn merchandise is sourced abroad to take advantage of both the lower cost of the tableware and, more importantly, the availability of handcrafted styles. "It would make good business sense to source in the U.S., but most tableware that either has a handcrafted look or is in fact handcrafted is made overseas," Del Viscio explained.

Williams-Sonoma operates a single distribution hub in Memphis, Tenn. The DC is currently being expanded from 433,000 square feet to just under 500,000 square feet. The company's overall distribution costs as a percentage of sales have decreased during each of the past six years.