Look Who's Reviving Chiasso
Christopher Segal, a crown prince of retail, plucked a failed seller of household fripperies from bankruptcy in 2003. At the time, Chiasso was under water from pricey rents in mall-based stores. Segal closed the locations, added furniture, subtracted knickknacks, and reengineered the Internet site. But a question lingers: Can a big-company kid be satisfied in small business?
Segal, 42, comes to the gig with quite a pedigree. His parents, Gordon and Carole Segal, started Crate & Barrel, and his playpen was in the basement office of the couple's first store in Chicago's Old Town. A paper he co-wrote at Northwestern's Kellogg School of Management, analyzing Gap's (GPS) downscale move with its acquisition of Old Navy, led to CB2, a hip offshoot opened in 2000.
Segal spent seven years at Crate & Barrel, rising to head of direct marketing. Could he have worked there forever? Probably, he says. But with its sale in 1998 to Germany's Otto Group, Crate & Barrel was no longer a family business. Besides, he says, "I was always interested in running my own company."
Gorilla Among Gizmos
Over three years, Segal shopped for a retail business with legs. "I saw a lot of retail that didn't have reason to go on," he recalls. When Chiasso fell into Chapter 11, he and then-partner Greg Kadens pounced. Chiasso had a loyal direct-mail customer base and outlets in upscale malls across the U.S., including Chicago's Water Tower Place. "It also had a unique concept," says Kadens. "Interesting, colorful, whimsical, nonessential doodads and gizmos for the home and office. We were the only bidder, and the price"—it sold for just $700,400—"wasn't wrong."
Segal's background was both a curse and a blessing, says Kadens: "Chris was used to being the 800-pound gorilla." Segal agrees: "At Crate & Barrel, I was the son of the owner. I could get away with a lot of stuff." His chief failing? He was a micromanager.
Segal employs 25 and works from a 2,000-square-foot space in a converted factory on the city's Near North Side. He keeps the heart of his operation—the call center—right outside his office. The sole Chiasso store is a few blocks away on North Clybourn Avenue, a retail stretch that includes a massive Crate & Barrel emporium as well as two of its spinoffs, a CB2 store and a Crate & Barrel outlet shop.
Inspired by the Jetsons
Chiasso sells home and office furnishings that are mod and modestly priced. A fruit bowl ($38) resembles a diagram of an atom; squared sofas could be from the Jetsons' home ($898). Sales have inched up steadily, says Segal, to $10 million in 2007 from $9 million in 2005, and the retailer is close to breakeven.
Segal has a few regrets. One is closing the Water Tower Place store, which had always been profitable but no longer fit when he dropped out of brick-and-mortar retailing. Another is losing his business partner. Chiasso wasn't throwing off enough money, so Kadens opted out earlier in 2007. "I'd put in a lot of time, sweat, and money, but the cost structure was bloated, and I felt like I was part of the bloat," says Kadens, 43, now chief operating officer at American Hotel Register in Vernon Hills.
With his 2,700-square-foot Clybourn Avenue store, Segal ventured back into traditional retailing last spring. He says he'll open more—but not soon. "It's not about getting rich, although I do want to make it into a self-sustaining profitable business. I could be managing money; I'm good at it," he says. "But this is an industry I love."