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How Pottery Barn Wins With Style

BY: LINDA TISCHLERWed Dec 19, 2007

Plenty of companies compete on price and features. How do you keep demanding customers coming back for more? Pottery Barn's secret for growth in a brutally competitive business: "Our brand is a state of mind," says one top executive. "And customers can make it their own."

Shortly after Hadley MacLean got married in the fall of 2001, she and her husband, Doug, agreed that their old bed had to go. It was a mattress and box spring on a cheap metal frame, a relic of Doug's Harvard days. But Hadley never anticipated how tough it would be to find a "grown-up" bed, one that would be able to accommodate her lawyer husband's lanky six-foot-six-inch frame. "We couldn't find anything we liked, even though we were willing to spend the money," says Hadley, a 31-year-old marketing director at a Cambridge, Massachusetts - based educational-travel company.

The couple finally ended up at Pottery Barn on Boston's upscale Newbury Street, where Doug fell in love with a mahogany sleigh bed that Hadley had spotted in the store's catalog. Not only would the bed go well with the antique dresser that Doug had inherited from his family, but its low footboard would also allow his feet to flop happily over the edge. The couple was so pleased with how great it looked in their Dutch Colonial home that they hurried back to the store for a set of end tables. And then they bought a quilt. And a duvet cover. And a mirror for the living room. And some stools for the dining room.

"We got kind of addicted," Hadley confesses. "We like really classic pieces that can stand the test of time, and Pottery Barn's stuff is great quality for the money."

In the face of geopolitical chaos, economic meltdown, and technology overload, there's something comforting about the timeless challenge of newlyweds shopping for a bed. It speaks to hope and faith in the future -- to the satisfaction that we draw from being able to exercise control in at least one small corner of our harried and pressure-filled lives. Creating a place that's cozy yet stylish -- a sanctuary from a troubled world -- is not just a matter of finding the right furniture at the right price. It's also a matter of emotion: There's a need to identify with the products that we bring into our homes.

All of that bodes well for Pottery Barn. The company's smart yet accessible product mix, seductive merchandising, and first-rate customer service have made it the front-runner in a fragmented industry -- not just because of the products that it sells, but also because of the connections that it makes with customers. "It has built a furniture brand into a lifestyle brand in a way that nobody else has done," says Carole Nicksin, a senior editor at the home-furnishings trade weekly HFN.

Pottery Barn has built a successful business along the way too. Revenues at Williams-Sonoma Inc., Pottery Barn's parent company, were $2.36 billion in 2002 (an increase of 15.3% over 2001), and they were driven primarily by sales at Pottery Barn, Pottery Barn Kids, and Williams-Sonoma. Pottery Barn's sales were up 11.8%, while those of Pottery Barn Kids increased 51% on net revenue of $293 million.

With consumer confidence at a nine-year low, furniture-industry executives say that consumers have lately been balking at big-ticket items. But while customers may be reluctant to pull the trigger for a $1,400 red-leather club chair, no matter how delicious, they're still willing to spring for a $34 flowered pillow or pay $42 for a great set of wineglasses.

That's why, 3,000 miles away from the MacLeans' home in Somerville, Massachusetts, Laura Alber is obsessed with a towel. A tall, slim blond with pale-blue eyes and no makeup, Alber could be the poster child for a Pottery Barn ad. The 34-year-old Marin County mother of two says that she enjoys entertaining, describes herself as living "holistically," and has just bought the company's Westport sectional sofa, with its kid-resistant twill slipcovers. She also happens to be Pottery Barn's president.

"Feel how great this is," she says, pulling a large white bath towel from a stack at Pottery Barn's store in the tony Village at Corte Madera mall, just over the Golden Gate Bridge from San Francisco. "It's thick, it's got a beautiful dobby [the woven band a few inches from the towel's edge], it's highly absorbent, and it's $24. I can say with great confidence that you can't top this."

To some merchants, a towel is just a towel. But to Pottery Barn, this $24 towel is a fluffy 800-gram icon of everything that the store aspires to be. "We wanted to produce the best towel on the market," Alber says. "For us, this represents a combination of design, quality, and price -- in that order. If this were $60, you'd still like it. But your perception of it would change because it would be superexpensive. But at $24, you go, 'This is incredible!' "

The towel, introduced this past spring, joins a family of products that Pottery Barn designers think of as "great basics." It includes perfect sets of white dishes, classic wineglasses, and, soon, luxurious 430-thread-count sheets.

While sexy seasonal offerings such as espadrille-striped pitchers and pineapple-shaped candleholders keep customers stopping by to see what's new, Pottery Barn executives know that the bread and butter of their business is based on a select group of merchandise. And they aim to keep adding best-of-breed products to that collection of essentials, especially as they grow their bridal-registry business, one of the company's key initiatives for 2003.

"We are focused on making sure that the core level of our business is superstrong," says Alber. "This is what customers think of us for and why they come back."