Trendsetter - Hilary Billings

From Pottery Barn to the feel of a room at the W Hotel to finding just the right gift at RedEnvelope, Hilary Billings has mastered the art of creating "lifestyle brands" — products and services that forge an emotional connection with customers.

You are one of them, though You may not know it. You fly Virgin Atlantic to London, not British Airways. You buy Your makeup at Sephora and skip the scene at the Saks counters. You wear Patagonia when L.L.Bean would do fine. You cried on the day that Webvan went under. you are one of them, and Hilary Billings is onto you. She's been onto you for a while, actually. In the early 1990s, Billings helped save Pottery Barn by crafting an approach to design that conquered upscale American malls. In the mid-1990s, she served as one of the chief design brains behind the launch of W Hotels. Now she's at RedEnvelope, the Web site and catalog that offers one-stop shopping for frustrated gift givers.

These companies operate in different segments of the economy, but they share the same customer: upwardly mobile people in their thirties and forties whose needs and desires will be familiar to readers of psychodemographic treatises such as Bobos in Paradise or The Cultural Creatives. The companies also share a strategy: the creation of something called a "lifestyle brand."

Billings, having built three of them, probably knows as much about how lifestyle brands work than anyone, and she defines them in two ways. First, lifestyle brands resonate with people who expect to live increasingly stylish lives. "People who once ate only meat and potatoes and had plastic slipcovers on their sofa are traveling more, and they have a much wider range of influences," she says. "At the same time that they're figuring out what's great about balsamic vinegar and cotton sheets, there's a lot more style and innovation in such everyday goods as furniture for the home or the pitcher that pours your water."

For a brand to rise to lifestyle status, however, it must also appeal to consumers who want to lead a particular style of life, who want their homes to feel comfortable and their chain hotels to feel like their homes, who want to mark occasions with a great gift, but who don't want giving to become a chore. "I don't know where I picked up the phrase 'lifestyle brand,' " she says. "But when people started lining up at parties to talk to me about Pottery Barn, I knew I wanted to devote my career to building them. With lifestyle brands, it's not just about serving another consumer need. It's about reaching a higher level in terms of the kind of connection you make with the customer."

The Billion-Dollar Concept

Back in 1991, when Hilary Billings signed on with Pottery Barn, there weren't many people lining up to do much of anything. The company had (and has) a lousy name. Williams-Sonoma, Pottery Barn's parent, was quietly trying to sell the brand after a couple of years of slow sales. The catalog, where Billings went to work as a buyer, did only about $14 million in sales the first year she was there.

But there was room to maneuver. People who wanted to furnish their entire homes in one place didn't have too many options. "You could go to a department store and get a generic choice of furniture," Billings recalls. "Or if you wanted any style in your home, you could use an interior designer to go direct to the trade and spend exorbitant amounts of money." Billings, who spent her childhood in Tanzania surrounded by her parents' collection of African masks and designer furniture, sensed an opportunity.

Because the catalog business was so small, Billings was free to test new merchandise. First, she expanded the line of coir rugs (made of coconut husks), and they became one of the catalog's most successful products. Simple cotton curtains with iron rods were also a huge success. After working around the perimeter of the living room for a year, Billings put a sofa on the catalog cover in 1992 — before Pottery Barn had even attempted to sell one in its stores. "That was the signal that we were serious about this new strategy," Billings says.

But to consumers, it may well have signaled something more. "A sofa isn't just a thing in your closet," Billings says. "It's often the first piece of furniture you buy, and you spend a lot of time engaging with it. It should have more meaning than just a wood frame with cushions. And when you come home, you should feel more deeply about it than you do about something that's simply functional." To drive that point home, Billings and her colleagues shot the catalog pictures of the thousand-dollar sofa in million-dollar homes. "Reading the catalog, you could imagine what your world would be like with that collection of furniture," Billings says. "Compared with the offerings at the time from other merchants, the Pottery Barn sofa was nowhere near as stiff and predictable." Perhaps the lives of the buyers wouldn't be either.

"What Hilary and her team did with the catalog was to tap into some core values that people have in relation to their homes," says Pat Connolly, a 22-year Williams-Sonoma veteran who has long been a mentor to Billings and who is also a RedEnvelope investor and board member. "The new image of Pottery Barn was contemporary but casual, and it spoke to the whole idea of a home as a place of refuge and a private retreat." Catalog sales surged over the next few years, and the company eventually started selling many of Billings's picks in the new, larger stores that are familiar today. By the end of 1999, three years after Billings had left, Pottery Barn helped push its parent company past the billion-dollar sales mark.

Rooms With A (Point Of) View

Billings, 38, wasn't born with the soul of a retailer. In fact, she was an art-history major at Brown and was on her way to graduate school when her father warned her off of the monastic existence she was likely to find there. So she entered Macy's heralded executive-training program, where she realized that her eye for detail could serve her well in an entirely different industry. From there, she went to Pottery Barn, and after her success, she longed to see what it might be like to build a brand outside of the retail business.

Right about that time, she heard from Barry Sternlicht, the style-obsessed chairman and CEO of Starwood Hotels & Resorts Worldwide Inc., now the parent company of Sheraton and Westin, among other brands. "I wanted to find someone who could execute great design at a great price," he says. "At the top of the list was the product offered in the reinvention of Pottery Barn. I wanted to know who had done that." One call to a headhunter turned up Billings, and Sternlicht hired her: "She quickly understood and embraced what I was trying to do."

What he was trying to do was split the difference between stodgy chains that served business travelers well and such stylish boutique hotels as the Mondrian and the Royalton, which Ian Schrager made famous. "The same consumer that was identifying so strongly with Pottery Barn was having a fairly dismal experience with business hotels," Billings says. "If they could get excited about home furnishings, maybe they could get excited about a similar environment inside a hotel." Sternlicht's wife christened the brand "W," which stands for nothing in particular but suggests a question: What took the hotel industry so long to think of this?

Billings's job was to help oversee every detail of the design of some of the first W hotels — and to do it on a budget that would allow Starwood to charge prices comparable to those at a decent Hilton or Marriott. The W brand essence sprung from some of the choices that she and the other designers made, from each room's chaise longue and feather bed to Aveda toiletry supplies and the cushy cotton robes. "Everything had to fit the brand image," Sternlicht says. "My instructions were to find things that would surprise guests."

The biggest surprise for many of those guests was that the room actually looked like the bedroom they might have in their homes — if only they could figure out how to achieve the W's offhandedly glamorous yet utterly comfortable look. "The W had to be affordable yet equal to or better than what people experience in their own bedrooms day to day," Billings says. "Only then, we figured, would people want to book it in another city, to make it an extension of their lifestyle, to buy into it."

She means that literally too. Rather than putting a sign on those robes alluding to the fact that they are for sale, the W now has catalogs in the rooms so that you can buy the robe, the bed, the linens, whatever. The new W Lakeshore in Chicago even has a store that sells the stuff straight out of the rooms.

Many people in the hotel industry thought that the dreamers at Starwood were nuts. The first time that Billings spoke at an industry conference, only a handful of interior designers showed up. Now everyone is paying attention. There are five W hotels in New York today, with others in cities from Atlanta to Sydney. Occupancy rates are nearly the same or higher at W hotels than they are at either Sheraton or Westin, Starwood's other business hotels.

The Gift Of Uniqueness

Today, Barry Sternlicht has a high-class problem with many of his W hotels: how to make the lobbies welcoming for guests when so many locals want to hang out and have drinks there. Creating a door policy isn't a part of Billings's skill set, so she decided to get back into retail when she heard about an effort to create a company that would sell unique gifts.

"I was at a point in my life, as were many people in my peer group, when I had a laundry list of people on my gift list," she says. "My children, my in-laws, as well as business associates. It was such a hassle to go to my five favorite specialty stores in the hopes of finding something, then buy a card, then go to Mail Boxes Etc. to get it all wrapped. Forget it. And as a result, no one was getting gifts.

"Then I wondered, Why am I approaching this as a problem to be solved — as one of the things I least enjoy — rather than as a wonderful part of my life? And how many people were in the same position that I was in because there was no great gift brand?" Billings focused further on these questions after she received a call in 1999 from Scott Galloway, the founder of 911gifts.com, who was in need of a merchant who could transform the site and its offerings.

Billings was sure that she could do it, and in return for joining the team, she got a significant equity stake in the company. She soon realized just how challenging the task would be. "Most specialty retailers aren't focused on gifts," she says. "You can get a dozen roses here or a box of chocolates there, but the choices are pretty standard. For consumers who give a lot of gifts in a year — and who give them to people who can afford to buy a lot of the necessities in life on their own — the gift has to say something about you, the giver, as an individual."

One thing that Billings realized a gift ought to say is that the giver took the time to find something unique. But for a merchant, it's enormously complicated to provide such a service. You have to offer gifts for every occasion, from birthdays to bereavements, and from every category: games, gadgets, food, and flowers. This can create serious inventory problems, so Billings and her staff of nine buyers edit and update their choices mercilessly. They also seize on universal sentiments, such as good luck, that can apply to many gift-giving occasions. The "lucky bamboo" plant has been a big seller at $48, as has a real-life four-leaf clover. More than half of the products are unique to RedEnvelope, and Billings hopes to raise that to 70% within a year or two.

Another thing that a gift ought to do is make the givers themselves feel sophisticated. "We're not servicing trendsetters, the ones who find items six months before we do," says Kristine Dang, the vice president of merchandising, who reports to Billings. "We're looking for status seekers, people a step behind the trendsetters. They want to impress people, to look as if they have a higher income than they actually do."

Dang dreamed up the name RedEnvelope herself: It recalls the Asian tradition of enclosing gifts for special occasions inside a scarlet paper pouch. But it also serves as a nice contrast to the famous blue box. "Tiffany is the American model of a perfect gift business, and there's a lot of brand experience wrapped up in that blue box," Billings says. "But the reality is, it's a luxury experience. The average price point in Tiffany's catalog is more than $500. Ours is $70."

Already, RedEnvelope claims to be ringing up more sales than Tiffany's catalog operation. Company officials figure to sell more than $50 million worth of gifts this year, turn a profit in the fourth quarter, and break permanently into the black next year — all without raising another cent in venture capital.

Now that Billings is running up on three years of working at RedEnvelope, it might seem like the time for her to get antsy and begin looking for another brand to build or fix. But with a potential RedEnvelope IPO looming in two years or so (yes, companies still do this), she'd be crazy to leave right now. Still, what might be her next lifestyle move? "Buying clothes can be impossible for petite women," Billings declares. "I'd love to create a lifestyle brand around clothing and accessories for women like me."

Ron Lieber (rlieber@fastcompany.com) is a Fast Company senior writer based in New York. Contact Hilary Billings by email (hilary@redenvelope.com).

Sidebar: What's Fast

So just what is a lifestyle brand? Hilary Billings has made a high-impact career out of asking and answering that question. According to her, a lifestyle brand has the following attributes.

It makes life easier. RedEnvelope, with its unique gifts for any occasion, is a classic lifestyle brand, since it takes away the need to shop for the gift, shop for the card, shop for the wrapping paper, and stop at the post office to send it. In a world in which lots of people have plenty of money, what they really crave is simplicity and convenience.

It makes your world more stylish. From the sneakers on our feet, to the computers on our laps, to the potato peelers in our kitchens, we expect the products we use to look good. Old-style chain hotels for business travelers had (and still have) polyester curtains, paisley bedspreads, and deserted echo chambers for lobbies. W hotels have velvet curtains, down comforters, and locals having drinks at the ground-floor bar.

It is an orchestrated strategy that is fully formed at a brand's launch. This is one area where first-mover advantage matters. Once a consumer brand gets big, it's difficult to transform it into a lifestyle brand. Target is a notable exception, but it took the company years to achieve lifestyle status. Saturn built its lifestyle brand from scratch, but most long-standing automobile brands have little hope of becoming anything more than a nameplate.

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