West Elm Will Open Hotels as Malls Lose Allure for Retailers

  • Williams-Sonoma division will start hotel chain in 2018
  • Companies increasingly looking for ways to hedge their bets

West Elm, the housewares brand owned by Williams-Sonoma Inc., is the latest retailer to look outside the mall for growth.

The retail chain plans to open a line of West Elm hotels, with five locations beginning to open in late 2018. The company is working with hospitality-management firm DDK on the project, according to a statement Monday.

West Elm Hotels

Source: Business Wire

West Elm joins a growing faction of retailers seeking to hedge their bets. Though West Elm has been the best-performing division of Williams-Sonoma, the expansion into hotels would make the company less reliant on an often-shaky retail industry. Others are making their own efforts to diversify: Urban Outfitters Inc. agreed to buy a pizza chain last year, and Barnes & Noble Inc. is opening new concept stores with restaurants attached.

For West Elm, the idea is to build a lifestyle brand. The new hotels will be furnished with pieces that reflect the chain’s modern aesthetic, as well as local decor from the region. The first locations are slated for Charlotte, North Carolina; Detroit; Indianapolis; Minneapolis; and Savannah, Georgia.

“This is about creating experiences, not necessarily retail sales,” said Peter Fowler, vice president for West Elm’s new hospitality business. “We have such an incredible opportunity to work with people outside of where they see us today in retail.”

West Elm Hotels

Source: Business Wire

West Elm, which has almost 100 locations in the U.S., Canada, the U.K. and Australia, includes local designers in its store assortments and has pledged to make 40 percent of its assortment Fair Trade Certified by 2019. The retailer also has teamed up with upstart companies like Casper, which sells mattresses online.

The approach has helped West Elm outshine the other divisions of San Francisco-based Williams-Sonoma. Its same-store sales jumped 16 percent last quarter, compared with a 4.8 percent decline for Pottery Barn and a flat performance for the Williams-Sonoma brand.

West Elm began considering the hotel project three years ago, Fowler said. It chose DDK after a year and a half of talks.

West Elm will probably open a few locations per year and is considering going abroad with the concept, said David Bowd, co-founder of DDK. The retailer looks for cities that have strong local neighborhood areas and are relevant places for West Elm’s customer base to visit.

But West Elm doesn’t plan to turn its hotel rooms into ways to sell more housewares, Fowler said. The interiors will be custom-designed, rather than relying on current product collections, he said.

“The guest -- they’re the focus,” he said. “It’s not about us pushing our product into their travel journey.”

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