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Are smaller living spaces to blame for slumping Pottery Barn sales?

(BUSINESS NEWS) Pottery Barn sales are down after 30 years of growth, yet sister company West Elm is killin’ it – but why?

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30 years of sales growth, now this?

With brick and mortar retailers closing shop left and right, it’s hard to be surprised that Pottery Barn – your suburban mom’s favorite décor store – has hit a bump in an otherwise smooth road. Excluding the Great Recession, the home furnishings chain has had over thirty years of solid sales growth, ever since it was acquired in 1985 by Williams-Sonoma.

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But recently, Williams-Sonoma reported that the Pottery Barn brand has seen a 1.4 percent downturn in comparable sales (online and at stores that have been open for over a year) over the past three months.

This marks the fourth consecutive quarter of decreasing sales for the furniture emporium.

On the other side of the retail success coin, there’s sister brand West Elm, which is absolutely killing it with the upper-middle-class millennial crowd, and boasts quarter after quarter of insane growth.

What’s going wrong with Pottery Barn?

Well, size matters. If you’re an urbanite with a tiny apartment or condo, a lot of Pottery Barn’s rustic-traditional offerings literally won’t fit in your space (or up your stairs, or through your doorway). And even if you can manage to fit that giant furniture into your small space, you likely want it to be more than just furniture – it should offer the storage space that tiny apartments often sorely lack. Bed frame? Cool, where are the drawers? Coffee table – without a shelf, what’s the point?

“We know that the opportunity is often size, because as people move to smaller living arrangements and the urbanization happens, the large-scale furniture is difficult,” said Laura Alber, Chief Executive of Williams-Sonoma.

Pottery Barn on the tiny track

In February, Pottery Barn set out to address the scale issue by introducing more pieces designed with small spaces in mind, and on Wednesday executives said those pieces earned “strong demand” in the last quarter. So if Pottery Barn keeps on that tiny track, will they be fine?

Maybe not. No matter how space-efficient that dining table is, if it’s perceived to be overpriced, no one is going to want it. Thorough customer research last year found that non-loyal Pottery Barn customers saw the brand as “expensive, too predictable, and not for them,” said Alber.

Luring millennials without alienating boomers and Gen-Xers will be tricky, as will remaining “aspirational” while hitting some lower price points.

It seems like there are plenty of competitors at both the high and low end of Pottery Barn’s reach, and maybe that middle ground is just destined to dissolve. Is another type of retail downfall on the horizon that can be blamed on our shifting space preferences?

#PotteryBarn

Staff Writer, Natalie Bradford earned her B.A. in English from Cornell University and spends a lot of time convincing herself not to bake MORE brownies. She enjoys cats, cocktails, and good films - preferably together. She is currently working on a collection of short stories.

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2 Comments

2 Comments

  1. COLLEEN

    May 29, 2017 at 11:12 pm

    LET ME JUST TELL YOU WHY SALES ARE SLUMPING AT POTTERY BARN. fIRST THEY ARE PROBABLY ONE OF THE MOST INFLEXIBLE COMPANIES I HAVE EVERY ORDERED FROM. NOT ONLY ARE THEY DIFFICULT THEY ARE RUDE AND EVERYONE OF THEIR SALES PERSONS LOOK AS IF THEY HATE THEIR JOB. GOING TO THE STORES IS USELESS BECAUSE THEY DON’T CARRY ANTHING IN THEIR STORE THAT THEY HAVE ON-LINE AND CAN’T HELP YOU. SO WHY YOU ASK ARE THEY DECLINING IN THEIR SALES THEY ARE OUTDATED, JUST LIKE PENNEYS, MACYS AND SEARS HAVEN’T DONE ANYTHING TO ADDRESS THE CUSTOMERS NEEDS.

  2. Christina

    May 31, 2017 at 1:12 pm

    I agree with the comment above! I think their Customer Service policies are to blame for their slumping sales. I vowed to stop using Pottery Barn last year after having many issues with their policies time and time again.

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Business News

What you need to know about the historic TikTok deal (for now)

(BUSINESS NEWS) No one really knows what’s happening, but the TikTok deal’s impact on business, US-China relations, and the open internet could be huge.

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Male black hands holding app opening TikTok app.

So, maybe you’ve heard that Oracle and Walmart are buying TikTok for national security!

Um, not exactly.

Also, Trump banned TikTok!

Sort of? Maybe?

But then he said he approved the Oracle-Walmart-TikTok deal!

We guess?

The terms of the proposal seem to shift daily, if not hourly. The sheer number of contradictory statements from every player suggests no one really knows what’s going on.

Just one example: Trump said the deal included a $5 billion donation to a fund for education for American youth. TikTok parent ByteDance, said, “Say what now?”

Here’s what we think we know (as of this writing):

Oracle and Walmart would get a combined 20 percent stake in a new U.S.-based company called TikTok Global. Combine that with current US investors in China’s ByteDance, TikTok’s parent, that would give American interests 53 percent. European and other investors would have 11 percent. China would retain 36 percent. (On Saturday Trump said China would have no interests at all. But that does not jibe with the reporting on the deal.)

Oracle would host all user data on its cloud, where it is promising “security will be 100 percent” to keep data safe from China’s prying eyes. But reporting has differed on whether Oracle will get full access to TikTok’s code and AI algorithms. Without full control, skeptics say, Oracle could be little more than a hosting service, and potential security issues would remain unaddressed.

Walmart says they’re excited about their “potential investment and commercial agreements,” suggesting they may be exploring e-commerce opportunities in the app.

The US Committee on Foreign Investment in the United States, which is overseen by Treasury Secretary Steven Mnuchin, still has to approve any deal.

As for the TikTok “ban” – which isn’t really a ban because current users can keep it – the Commerce Department postponed the deadline for kicking TikTok off U.S. app stores to September 27, to give time for the deal to be hammered out. Never mind that it’s still not clear whether the U.S. government has authority to do that. Unsurprisingly, ByteDance says it doesn’t in a lawsuit filed September 18.

Whatever happens with the whiplash of the deal’s particulars, there are bigger issues in play.

According to business news site Quartz, moving data storage to Oracle mirrors what companies like Apple have done in China: Appease the Chinese government by allowing all data hosting to be inside China. A similar move could “mark the US, too, shifting from a more laissez-faire approach to user data, to a more sovereign one,” says China tech reporter Jane Li.

More obvious: Corporate sales and mergers are now part of the parrying between the U.S. and China, which adds a whole new playing field for negotiations among businesses.

In the meantime, TikTokkers keep TikTokking. White suburban moms continue to lip sync to rap songs in their kitchens. Gen Z continues to make fun of the president – and pretty much everything else.

And downloads of the app have skyrocketed.

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Business News

Hobby Lobby increases minimum wage, but how much is just to save face?

(BUSINESS NEWS) Are their efforts to raise their minimum wage to $17/hour sincere, or more about saving face after bungling pandemic concerns?

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Hobby Lobby storefront

The arts-and-crafts chain Hobby Lobby announced this week that they will be raising their minimum full-time wage to $17/hour starting October 1st. This decision makes them the latest big retailer to raise wages during the pandemic (Target raised their minimum wage to $15/hour about three months ago, and Walmart and Amazon have temporarily raised wages). The current minimum wage for Hobby Lobby employees is $15/hour, which was implemented in 2014.

While a $17 minimum wage is a big statement for the company (even a $15 minimum wage cannot be agreed upon on the federal level) – and it is no doubt a coveted wage for the majority of the working class – it’s difficult to not see this move as an attempt to regain public support of the company.

When the pandemic first began, Hobby Lobby – with more than 900 stores and 43,000 employees nationwide – refused to close their stores despite being deemed a nonessential business (subsequently, a Dallas judge accused the company of endangering public health).

In April, Hobby Lobby furloughed almost all store employees and the majority of corporate and distribution employees without notice. They also ended emergency leave pay and suspended the use of company-provided paid time off benefits for employees during the furloughs – a decision that was widely criticized by the public, although the company claims the reason for this was so that employees would be able to take full advantage of government handouts during their furlough.

However, the furloughs are not Hobby Lobby’s first moment under fire. The Oklahoma-based Christian company won a 2014 Supreme Court case – the same year they initially raised their minimum wage – that granted them the right to deny their female employees insurance coverage for contraceptives.

Also, Hobby Lobby settled a federal complaint in 2017 that accused them of purchasing upwards of 5,000 looted ancient Iraqi artifacts, smuggled through the United Arab Emirates and Israel – which is simultaneously strange, exploitative, and highly controversial.

Why does this all matter? While raising their minimum wage to $17 should be regarded as a step in the right direction regarding the overall treatment of employees (and, hopefully, $17 becomes the new standard), Hobby Lobby is not without reason to seek favorable public opinion, especially during a pandemic. Yes, we should be quick to condone the action of increasing minimum wage, but perhaps be a little skeptical when deeming a company “good” or “bad”.

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Business News

RIP office culture: How work from home is destroying the economy

(BUSINESS NEWS) It’s not just your empty office left behind: Work from home is drastically changing cities’ economies in more ways than you think.

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An empty meeting room, unfilled by work from home employees.

It’s been almost six months since the U.S. went into lockdown due to COVID-19 and the CDC’s subsequent safety guidelines were issued – it’s safe to say that it is not business as usual. Everyone from restaurant waitstaff to start-up executives have been affected by the shift to work-from-home. Even as restrictions slowly begin to lift, it seems as though the office workspace – regarded as the vital venue for the U.S. economy – will never truly be the same.

Though economists have been focusing largely on small businesses and start-ups, we are only just beginning to understand the impact that not going back into the white-collar office will have on the economy.

The industries that support white-collar office culture in major cities have become increasingly emaciated. The coffee shops, food trucks, and food delivery companies that catered to the white-collar workforce before, during, and after their workday, are no longer in high demand (Starbucks reported a loss of $2 billion this year, which they attribute to Zoomification). Airlines have also been affected as business travel typically accounts for 60%-70% of all air travel.

Also included are high-end hotels, which accommodate the traveling business class. Pharmacies, florists, and gyms located in business districts have become ghost towns. Office supplies companies, such as Xerox, have suffered. Workwear brands such as J. Crew and Brooks Brothers have filed for bankruptcy, as there is no longer a need to dress for the office.

In Manhattan – arguably the country’s most notorious white-collar business mecca – at least 1,200 restaurants have been permanently lost. It is also is predicted that the one-third of all small businesses will close.

Additionally, the borough is facing twice as many apartment vacancies as this time last year, due to the flight of workers no longer tied to midtown offices. Workers have realized their freedom to seek more affordable and spacious residence outside the city. As companies decentralize from cities and rent prices drop, it isn’t all bad news. There is promise that particular urban white-collar neighborhoods will start to become accessible to the working class once again.

Some companies, like Pinterest and REI, are reporting that their shift to work from home is in fact permanent. The long-term effects of deserted office buildings are yet to make themselves evident. What we do know is that the decline of the white-collar office will force us to reimagine the great American cities – with so much lost due to the coronavirus, what can now be gained?

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