Shop Chairish’s Upscale Vintage Furnishings & Decor

In this episode of TD Cowen’s Retail Visionaries Podcast Series, Gregg Brockway, Co-Founder and CEO of Chairish joins Max Rakhlenko, Retail & Fitness Analyst on the Cowen Insights podcast. They discuss the growth of the online vintage furniture and décor industry, and factors driving the rise of furniture re-sale. They also discuss secular tailwinds supporting growth, the impact of the pandemic on the industry, Chairish’s relationship with the design community, recent acquisition of Pamono, and plans ahead.

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Transcript

Speaker 1:

Welcome to Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Max Rakhlenko:

This is The Visionary Podcast series about visionary ideas and people. Hi, my name is Max Rakhlenko and I’m Cowen’s Retail and Fitness Analyst. In this episode, we will delve into a topic of the fast growing furniture resale industry, which is attractively positioned at the intersection of high growth secular shifts. We are pleased to be joined today by Chairish Co-founder and CEO, Gregg Brockway. Founded in 2013, Chairish is the leading online Emporium where designers and tastemakers shop for exceptional home furnishings and art. Chairish’s a leading marketplace, connecting buyers and resellers of antique and other categories of home furniture and decor. Thank you Gregg for joining us and I look forward to our conversation.

Gregg Brockway:

Great to be here. Thanks for having me.

Max Rakhlenko:

Great. So, just to kick things off, can you please describe to the audience what Chairish is and how it’s differentiated in the marketplace? What did you see back then that suggested Chairish could disrupt the traditional furniture industry?

Gregg Brockway:

Oh, interesting question. Good start. Chairish, yes, we’re marketplace for furniture, decor, and art. We aspire to be a delightful way for design lovers to find exceptional items, but we didn’t start off to disrupt the home furnishings industry. This is a huge industry. We started Chairish because we saw big problems that needed to be solved and that’s what we have tried to do. We saw a community of design lovers who have a hard time buying and selling, and we thought we could do a better job at helping both of them solve that problem. So, today we’re the design communities emporium for furnishings in our division for what we’re growing up to be is the global design communities resource for home furnishings, design, and art. And I think global is the newest step in our journey and we’ll talk more about that in a minute.

Max Rakhlenko:

Gregg, I think that’s very helpful to the audience. So, I think the simple follow up here is how big is Chairish now in terms of items listed, the size of buyers and sellers and who are you marketing on both sides here?

Gregg Brockway:

Now that we are a global marketplace, we have lots of buyers and sellers. On the seller side, we cater to when we service both professional sellers and individual sellers, we’re a curated marketplace, so we don’t take everything. We try and take the things that we think are appropriate for our buying audience and through that process, we have a team of people who help us make sure that we’re assembling a collection of items with style and chicness. On the buying side of our community, in the center of our customer bullseyes, the interior designers, these are the people who are power shoppers in our industry. But really we’re attracting design lovers of all shapes and sizes and budgets. We are focused on the high end of the marketplace, but we’re not trying to be just in the breathtakingly expensive part of it. We do have some of the beautiful, expensive things around but we try to be accessible and our aspiration is to be an open accessible marketplace as well.

Max Rakhlenko:

No, that’s very helpful. And what do you view to be your addressable market? How big is it? And what do you think your share is today? And then just longer term, how big do you think the opportunity is?

Gregg Brockway:

One of the reasons we got into this marketplace is the home furnishings market alone is huge. In the US, it’s 280 billion and when you look at that on a global basis, it several times that. And when you add in art on top of that, it becomes even bigger. And so, our focus, our definition of the marketplace is we are focused on the living spaces. We’re trying to help our buyers, our community buyers to kid out attractive, comfortable, stylish living spaces and assembling all the things that go into that. So, in terms of our addressable market, it’s the high end of the home furnishings and art market. It is very large. It is very global from both a buyer and a seller perspective.

Max Rakhlenko:

That’s very helpful. And something that I think is important to discuss at the beginning of this podcast is the topic of sustainability and how Chairish and broader industry are taking a leadership position in a category that is maybe be not really known for it. So, can you talk to this factor in the way that Chairish is leaning into sustainability and really, how does that resonate with your shoppers?

Gregg Brockway:

Very well. We started Chairish because we are personally passionate about great, one of a kind style, and we are so thrilled to see that millions of design lovers have come to appreciate the practical and environmental benefits of reCommerce. So, sustainability is something that all industries are paying more attention to given what’s been happening in the world and sustainability is a multi multidimensional problem. It’s what ingredients go into an item, how they items made, how the people are employed, how the items are delivered to market, et cetera, et cetera. The part of it that we can help address is to support the circular economy. So, what happens when items have been used and it’s time to move on? Do you throw them in the landfill? In the home furnishings industry in the US alone, there’s 12 million tons of home furniture that goes into the landfill every year.

Gregg Brockway:

What we try to do is to rehome pieces and help them have a second or third life and that’s the circular economy. So, we did put out a paper recently, Home Furnishings Resale Report to talk about how we’re playing a part and how important the circular economy is to supporting sustainability. And we’re very happy to see how that’s resonating with our community and that people are coming to appreciate that buying through a eCommerce channel is a practical, stylish, and environmentally supportive way to get furnish their homes.

Max Rakhlenko:

Yeah, I think that’s absolutely right. A column we run, a number of surveys and in one of them, we ask participants what’s your view on sustainability as you think about purchasing furniture? And younger shoppers, especially millennials, it really is important for them and we can see that in our data and it continues to grow. So, I think we’re aligned with you there. And guess just switching gears a little bit, what about your relationship with the design community and what do you see as the top opportunities to grow it? And do you view increasing the base or increasing the conversion as bigger opportunities for you?

Gregg Brockway:

So, the design community for us are all the people who love design. These are the people who sell it as well as the people who buy and I think we get a lot of credit for being a community supportive resource and trying to help people adapt to this evolving world we all live in. In terms of how we grow that, we are trying to grow both sides of the marketplace with buyers and sellers. And in terms of unlocking that, I think it’s in part awareness. We get world class net promoter scores from the folks who know us and use us and that’s one of our metrics for how we’re doing. But we have very modest brand awareness. And so, and opportunities just to introduce ourselves to more folks out there and help them understand how we can help solve their problems.

Max Rakhlenko:

Yeah. The community is very large and it’s a massive opportunity to continue to grow, penetration. So, just switching gears again, can you discuss your category mix? How has that evolved over time and what do you see ahead?

Gregg Brockway:

Sure. So, Chairish is in multiple categories in the home furnishing space, and yes, it has changed over time. We started with exclusive focus on vintage in the resale marketplace. But what we’ve come to appreciate is when we’re helping design lovers, we’re trying to solve a problem. They’re trying to furnish their living space and we had sellers who were trying to list contemporary, meaning newly made items with us and we’ve let that roll. And what we’ve come to appreciate is people are looking for a solution. And so, given how big this industry is, how many small sellers there are who would like to connect with our buying audience, we have opened it and contemporaries is now one of the fastest growing parts of our marketplace. So, that’s been a change over time. And in terms of the vertical categories within home furnishings, over the last two years we have seen some changes.

Gregg Brockway:

Part of it’s driven by seasonality, but some of the unusual changes we’ve seen have been when the pandemic arrived, all of a sudden home office was unusually hot, then outdoor became tremendous attractive. And today, what people really are resonating to is that resale pieces are ready to ship. They are sitting in someone’s gallery or warehouse or store room or home, and they’re available now. And in a world where supply chain challenges have become so difficult, it’s pushed out lead times on newly made items from a couple of weeks to many months. And that makes it harder to rely on as the only channel. And so, resale, we’ve seen a tremendous uplift in the interest in the resale marketplace.

Max Rakhlenko:

Yeah, it really speaks to your ability to be nimble and be able to take advantage of all these situations that have come up over the past 18 to 24 months. So, on this topic Gregg, can you discuss the ways that the pandemic has changed the growth trajectory of the business? Any plans that were potentially accelerated or conversely, anything that might have been scaled back or pulled back?

Gregg Brockway:

Well I think as hard as it has been on everyone for so many reasons, it’s been a giant leap forward for our industry in terms of changes that were already happening. So, the home furnishings industry has been in the early stages of this offline to online migration that every industry goes through eventually. Home furnishings is one of the last industries to move in that direction. But even before the pandemic arrived, home furnishings was one of the fastest growing, if not the fastest growing e-commerce category. When the pandemic arrived, online home for furnishings, leaped forward pick your term 3, 5, 10 years. But anyway, it jumped forward tremendously and it helped people appreciate the benefits and the advantages of shopping online. So, it has accelerated our trajectory, it’s accelerated the industry’s offline to online migration. That’s been helpful for Chairish, but it’s been something that was already happening and I think what we’re trying to do is do it in a way that supports businesses. Again, this is an industry that’s made up of tens of thousands globally, small sellers who have to navigate this offline to online transition.

Max Rakhlenko:

Sure, that makes sense. And is there anything that you can share in terms of sort of the type of growth you’re seeing, or how much to growth accelerated by during the pandemic? Just anything at a high level.

Gregg Brockway:

Sure. Well, we’ve shared some of the numbers. When we came into 2020 growing at a healthy rate and at the end of the year, it accelerated dramatically, it more than double. In 2021, it continued to be very strong just year over year from 2020 to 2021, our business was up 54%. Now that we’re lapping such tremendous growth years, we don’t expect the forward trajectory to be quite as strong, but we’re continuing to see positive year on year growth come out of this as I hope the world reopens and people can go about their lives in so many other ways. But we’re still early days in this offline to online transition and we expect very high growth going forward as well.

Max Rakhlenko:

That’s very helpful to contextualize the business today. So, you recently expanded into Europe through the acquisition of Pamono. Can you discuss your framework more generally, as you think about build verse buy, both for Pamono and then any potential future acquisitions, just trying to understand how the management team thinks about opportunities ahead?

Gregg Brockway:

Sure. Well, it comes out of a clear view on what it is the mountain that we’re climbing and what we’re trying to become is the global industry’s go-to resource for home furnishings. And so, Europe is the source of many of the beautiful iconic objects that is our trade. And so, we’ve been thinking, how do we become a player in Europe? And as we went through that exercise the make versus buy conversations or debates strategy sessions, we got to know the team at Pamono. We liked them a lot, we liked what they’re doing, their approach to the business is very similar to ours and it felt like a great fit. And so, we combined last year, we acquired Pamono last year and it’s been a wonderful addition to the family.

Max Rakhlenko:

That’s very helpful. And so, just as a follow up, can American shoppers now be able to purchase European products? Can shoppers in Europe purchase products from the US? What’s the latest there in terms of integration and what do you see ahead?

Gregg Brockway:

We acquired Pamono in the middle of last year and we are thrilled to see today most, but not all of their items for sale on the Chairish platform and available to our US community, which is larger than our European community. But this is the direction that we’re going because the vision is to be showcasing the most beautiful things from everyone in the world and making those things available to design levers all over the world. And I think starting to allow that product to flow back and forth will make us a more interesting place to shop and a more important place to have a presence as a seller too.

Max Rakhlenko:

Yeah, it seems like that’s a very unlock for the business. So, just switching gears a little bit, how do you think about growing the lifetime value of your customers and how does marketing tie into all of this? What do you see as the top opportunities and just comparing your LTV:CAC today to where you think it can go over time?

Gregg Brockway:

Yeah, so we think a lot of about that because the home furnishings industry is different from other categories, especially at the high end, the long considered purchase cycle. So, we pay a very close attention to our marketing efficiencies and our LTV to CAC. And we’re able to watch what our public compatriots are doing and I think our numbers stack up very well. That said, we’re always trying to make it better and I think there’s an opportunity to improve our LTV to CAC on both sides of the equation. I think increasing lifetime value is about offering more of the items that our shoppers are looking for. So, to continue to expand our inventory, increasing our repeat rate and engagement with those shoppers, all of which will increase the lifetime value part of that. And then on the customer acquisition cost side, like everyone, we’ve been seeing the cost of digital acquisition continue to rise through traditional channels or the channels that we’ve used.

Gregg Brockway:

So, what we do is continue to explore and test new opportunities to bring that acquisition cost back in line. So, we’re continuing to experiment and focus on how do we spend our dollars even more efficiently. We’ve started to test the waters in terms of moving in a more physical direction with the launch of our magazine, we call it The Magazine-ish, and it’s a print public that we put out to high value customers and potential customers, which it’s a blend it’s somewhere between a catalog and a magazine. But it really is designed to showcase our point of view from a style and collection perspective.

Max Rakhlenko:

So, Gregg it’s interesting that you brought that up. It’s actually a question that I was thinking of asking you, but what can you share with us regarding where trends and styles are going? You sit in a really interesting position where you’re able to see things change on almost a daily basis, if not faster. So, just anything we should be aware of as we look to redecorate or homes now and in the future.

Gregg Brockway:

Great question. I get that a lot. I mean, what we’re running is essentially a 24/7 focus group where we’ve got 850,000 items available. We’ve got millions of visitors every month coming and browsing and favoriting and buying. And so, we are able to see design trends and we try to give that information back to our community, so that they know what to look for when they’re thinking about selling with us. But we also make it available to the press and elsewhere. What we also appreciate is there is no single style. There is no one way to do it.

Gregg Brockway:

So, our brand positioning is about helping people personalize their home experience, make it their own, that’s really what we try to do. So yes, we’ve seen the macro trends of shifting more towards whether it’s home office or outdoor, but the broader trend that I think is true, that we’re all in experiencing is that the home just means more. It is become a multifunctional thing. It’s no longer just where you sleep and where you eat. It’s where you go to school, it’s where you work out, it means so much more. And so, that’s opened up new opportunities and new ideas for everyone. So, I can’t tell you what exactly to buy, it’s up to you to make it your own, but I do have a sense that you’d find some really interesting things on Chairish.

Max Rakhlenko:

That’s right. Fair enough. So, Gregg we can’t let a CEO go without asking how you think about balancing growth versus profitability? And what do you view as the most critical or the lowest hanging fruit to improve profitability going forward?

Gregg Brockway:

Yes, I mean as an early stage company that started from scratch, that’s a debate that we have with ourselves con constantly. And the way we balance it is we like to have profitability within striking distance, but when the industry is evolving so quickly, solving for profitability right now feels like a missed opportunity. There’s so many unsolved problem but that’s a debate that we have constantly and as every company does. So, we have our plan, we have our strategy, we see profitability, a clear path to profitability but that’s not where we are today.

Max Rakhlenko:

Yeah. There’s massive growth opportunity-

Gregg Brockway:

It really comes back to what are the unit economics that you’re able to generate along the way? Things like what are your LTV to CAC metrics? What are your operating efficiencies? All of those things go into that exercise as well.

Max Rakhlenko:

Sure. Yeah, that makes sense just given where you are in your growth trajectory today. So, just the last question, but curious what is ahead? What are your top priorities> and really, what can we expect next and how does this tie into your long term vision for Chairish? And then also just any closing remarks?

Gregg Brockway:

Sure. Well, yeah it’s been nice to chat with you, but in terms of our vision for where we’re going, hasn’t really changed in many years. We’re still becoming the global design community’s resource for home furnishings. And the strategies, the things we’re doing to get there continue as well. We’re continuing to focus on and becoming a more global platform. We’re continuing to focus on adding more of the right inventory into the platform to meet more of people’s design project needs. We’re continuing to work on delivering world class net promoter scores. Customer support expectations, continue to go up and so, you can’t just do what you did last year. You got to keep getting better as well. And we’re continuing to look for new and efficient and interesting ways to solve the problems of our home design community. This is a very, very large industry that still has many unsolved problems, which is why it’s such an exciting time for us to be growing Chairish.

Max Rakhlenko:

Gregg, thanks a lot. It’s truly been a pleasure speaking with you and we look forward to all the success in the future.

Gregg Brockway:

Thanks for having me Max. Good to be here.

Speaker 1:

Thanks for joining us. Stay tuned for the episode of Cowen Insights.

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