Gold Standard

By: Ron LieberWed Dec 19, 2007 at 12:23 AM

The Mitchell Gold Co. is bringing overdue change to an out-of-touch industry: home furniture. But unlike so many other mavericks, its primary competitive weapon isn't the Internet. Instead, the company is deploying a smart sense of design.

Gold and Williams also make a point of trying to get their furniture into places where their target customers are hanging out. "The boutique hotels are a real niche for us," says Brad Cates, 33, director of sales for the Mitchell Gold Co. "It's great for us to be in places like the W hotels, because they're making a style statement that appeals to the same kind of customer that we're trying to reach." Club Monaco, a clothing chain owned by Ralph Lauren, just launched a new store called Caban. Rather than outfitting the store with the Ralph Lauren line of furniture, the company turned to the Mitchell Gold Co.

Perhaps the most interesting experiment that the company is conducting in the sales and marketing of its furniture springs from a relationship that it has been developing with Bose Corp., a manufacturer of high-end audio equipment. Six years ago, Bose started building concept stores. Today, there are 80 of them, and almost half of the floor space displays the company's wares in a living-room-type setting, as the pieces would be used in a house or an apartment. "We wanted the look to be distinctive and upscale, but also approachable," says Peter Theran, 39, Bose's director of marketing. "I started doing some research and sort of stumbled onto these stories about how Mitchell Gold was having a lot of success in non-traditional retail environments."

Theran called Gold out of the blue, and soon Bose had outfitted its stores with Mitchell Gold furniture. Not long after, customers began asking if they could buy a sofa to go with their speakers. "We're still in the process of discovery around that," Theran says. "We're trying to figure out a way to communicate that the furniture is for sale without resorting to hanging big tags on the sofas. When Mitchell first came to talk with us, he told us that all he cared about were our customers' needs and that he didn't expect to do any business with us for at least 18 months. I thought, 'Yeah, sure.' But he really meant it."

That sort of patience is also paying off for the Mitchell Gold Co. on the Internet -- a place where patience has never been considered a virtue. Three years ago, plenty of venture capitalists placed big bets on the fact that furniture could be sold on the Web as easily as books or computers. Today, there's a lot of red ink on the floor. Living.com is dead; Furniture.com is on life support.

What went wrong? The most obvious problem is that furniture is a high-touch product. Consumers carry a book around with them for a week or two, but they sit on their sofas for 10 or 15 years. So most of them at least want to test the sofa out. If online retailers can clear that hurdle, then they need an order-and-delivery system that can track thousands of customized orders and a cost structure that can absorb the outrageous shipping bills that result from driving hundreds of miles to deliver a couch.

The Mitchell Gold Web site catalogs everything that the company makes, but up until now, no one has been able to buy anything on the site. Gold and Williams's excuse is pretty standard these days: They don't want to alienate their retail partners by selling directly to customers. Gold, his department-store years far off in his rear-view mirror, also doesn't have much desire for getting into retail again. He insists that it's not as easy as everyone seems to think it is, and the spate of bankruptcies among furniture retailers both online and off prove him right.

"I firmly believe that there is an enormous opportunity on the Internet for our industry, but it's for established brands like Pottery Barn and Restoration Hardware that have a good brick-and-mortar presence along with a paper catalog," says Gold. "What concerned me from day one about Living.com and some of the others was that they were not run by people who have a passion for home furnishings. They were run by people who thought that they could build companies really fast and make a lot of money."

Of course, moving onto the Web too slowly can cost a company too, and Gold and Williams have received plenty of complaints from customers who have visited their site, liked a product, and were irritated to learn that they couldn't click and have a sofa show up seven days later. That will change sometime in the next six months, as the company plans to provide links to at least one retailer for each of its products.

In the meantime, Restoration Hardware and a couple of other retailers have been offering a limited selection of Mitchell Gold products on their Web sites, and both retailer and supplier have been surprised by the results. As a percentage of overall sales at Restoration Hardware, upholstered furniture sells 10 percentage points better online than it does in the brick-and-mortar stores. "We were not expecting it to do so well," says Marta Benson, 32, a Restoration Hardware vice president who runs the company's Web-site and paper-catalog operations. One possible explanation may be that people test the products in stores, discover that the Mitchell Gold Co. makes them, check the company out on the Web, and then go back to the Restoration Hardware site to make the purchase. Also, the fact that Restoration Hardware has built such a strong brand so quickly probably makes it easier for customers to trust the retailer enough to buy a sofa online.