Design Within Reach
We all have our favorite consumer complaints: having to sit home half the day to let in the cable repairman or trying to compare offers for cellular phone service, to name just two. What used to exasperate Rob Forbes, a designer with an MBA from Stanford University, was waiting months for new furniture to be delivered. Unlike most of us, though, he did something about it. Six years ago, he opened Design Within Reach Inc. (DWRI ).
LOCATION San Francisco, Calif.
Minimalist furniture sold through stores and direct mail. Sales have jumped an average 43.9% annually over the past three years.
Forbes, 54, now sits on the board of the San Francisco company, which has a large online and catalog business and 38 stores in locales that range from posh to hip, including West Palm Beach, Berkeley, and Boulder. DWR, as it's known, has upended many of the conventions of modern-furniture boutiques. Often at such stores, customers have to work just to get in the door: Appointments are required and so too are interior designers. At DWR anyone can walk in. And the stores themselves aren't so high-style that they intimidate. ``I've seen traditional design studios with signs that say: 'Don't touch,''' says Wayne L. Badovinus, 61, DWR's chief executive since 2000 and the former head of clothier Eddie Bauer Inc. ``We wanted to do this business differently.'' Most important, perhaps, is that instead of special-ordering items, DWR actually keeps an inventory of Isamu Noguchi chairs and Philippe Starck tables in a single warehouse in Kentucky. That means furniture can be delivered within seven business days, or overnight if you pay more.
``10% IS ENOUGH''
So far it's an approach that has sat well with customers. In 2004, DWR posted net income of $3.74 million, a 26% increase from the year before. Sales, almost half of which come from its catalog and Web site, rose an impressive 49%, to $120.6 million, placing it at No. 8 on BusinessWeek's ranking of Hot Growth Companies. DWR expects to open at least 18 stores this year.
DWR'S minimalist pieces may be available online, but the company isn't aiming at the masses. A chrome coffee table designed by Le Corbusier sells for $898; a simple maple bookcase by Niels Bendtsen is $1,998. The average household income of DWR's customers is $125,000, about a third have a master's degree, and many work in creative fields such as architecture, art, and theater. ``We aren't going for 90% of the population,'' says Badovinus. ``The other 10% is enough for us.''
The company also has an unusual behind-the-scenes strategy. Since about 100 items account for 80% of sales, DWR limits itself to selling just some 700 pieces, which makes managing inventory far less complicated than at most furniture chains. And keeping its stock all in one warehouse ``is a highly efficient model,'' says Peter S. Benedict, an analyst at CIBC World Markets.
But a stronger euro and higher shipping costs are squeezing margins. In response, Badovinus may raise prices and look for suppliers outside Europe. Meanwhile, companies from Crate & Barrel to Williams-Sonoma Inc. are adding modern furniture. So Badovinus is planning a line of sleek furniture -- even cribs -- for children. That leaves parents tired of fussy kid stuff with one less thing to complain about.
By Louise Lee in San Francisco