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Business of Home Podcast
The Thursday Show: Are four out of five designers using AI? Plus: The state of home retail
00:57:29
Host Dennis Scully and BOH executive editor Fred Nicolaus discuss the biggest news in the design world. Later, columnist Warren Shoulberg joins the show to talk about the state of home retail.
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- [00:08]
A
This is Business of Home.
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B
I'm Dennis Scully, and welcome to the Thursday Show.
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Later on, I'll be speaking with columnist.
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Warren Shoelberg about the state of home retail. But first, we're going to catch up.
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On the news, including a surprising AI.
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Study, why Zillow walked back, a climate risk feature, and what happens when decor scares off home buyers.
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To do all that, I'm joined by.
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Business of Home's executive editor, Fred Nicholas.
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Hi, Fred.
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Hi, Dennis. How's it going?
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A
Great. How are you doing?
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C
Good. Did you have a good Thanksgiving?
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A
Delightful. On the Upper east side, Lovely. Although turkey, I don't know, has its time come and gone? Fred, I'm not sure. How about you?
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C
I feel like you're such a traditionalist normally. Dennis, I'm surprised to hear this blasphemous take on turkey. I had a good Thanksgiving. You know, we hosted and cooked, and I like to sort of plan everything out in advance. And then an hour into the plan, I'm covered in gravy and everything's burning. So it's kind of an enjoyable little slice of chaos. But we had a good time, and I thank the 15 listeners who listened to the Thursday show we put out on Thanksgiving that we agreed to do for some reason. Thanks for sticking with us on your holiday.
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A
Thanks for spending Thanksgiving morning with us. That small group of you that did.
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B
We're grateful.
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C
Exactly. Just what you needed, some tariffs with your turkey. Let's quickly look back on Monday's episode, A conversation with interior designer Thomas Fell. A very lovely conversation with a huge talent out of Washington, D.C. absolutely.
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A
How often do we get to talk to a designer out of Washington, D.C. not nearly enough. And clearly the city had a big impact on Tom's work. And he shares a little bit of that as well as. Yes, of course, I make him talk about page rents.
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C
Yes.
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A
And nighttime photography. Right. We got into a fun page rent story, a little nighttime photography. We also got into some great stories about how he almost said no to that big licensing collection that he would become so famous for. Yeah, he was a shrewd negotiator in the early days.
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As he shares a.
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C
Lot of very near misses in Thomas Besson's career. He was such a great storyteller. He had all these great stories about how early on in his career, especially his very first clients, he. He felt almost sort of like rigid when he was talking to them. They were like, well, we want to pay you this way. And instead of having a conversation, he was like, can't do that. Got to go.
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I remember that when I was much younger too, I sort of felt kind of uptight and I couldn't get out of the little box I'd put myself in. And it was just, I don't know, great lessons for people who are just starting out in their career in that episode. A lot of fun stories as well.
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A
And I loved his willingness to be so candid. Obviously, he's incredibly successful designer, but I loved that he shared stories of the first time he got published and, well.
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D
Not much came from that.
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A
So we had to pick himself up, dust himself off. So it was a really great conversation and I'm grateful to him. And what about pheasant for Thanksgiving Day? I mean, I'm just saying, can we plant that seed? I just feel like a lot of people felt like turkey just wasn't doing it for them this year. So we'll have a separate conversation about that on another show. In the meantime, we're gonna take a quick break and then we'll get into the news.
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This podcast is sponsored by June Laloy June Laloy is a total home furnishings destination from the family behind Laloy Rugs, recently celebrating their first birthday. Over the past year, June Laloy has brought us into their world of imaginative design, artisan craft and thoughtful curation across rugs, fabric, furniture, lighting, decor and more. With decades of laloy rug experience behind them, their trade program provides a seamless experience with special pricing and priority support. Always visit junelloy.com to explore their collection and sign up for a trade account today. That's J-O-O-N L O L O I.com this podcast is sponsored by Programa. Studios run into trouble when specs drift, files break and teams lose track of what's current. Programa puts structure around every specification so schedules, selections and client approvals stay clear. It keeps projects stable when things start to move fast. Use BOH25 for 25% off. Find the link in the show notes.
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A
And we're back. Any week that we don't start with tariffs is a good week. Fred so this time it's AI polls.
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C
Two recent reports shed some light on how designers are interacting with AI, with both pointing to an uptick in usage over the past year, though one pointed to a much bigger uptick than the other. This is very much a tale of two AI studies.
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A
Yes, and I wonder what that tells us about what's going on with those FirstDibs users. But we'll get into it.
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C
Let's get into it. So the two studies we're talking about here are First Dibs annual designer trend survey. And of course FirstDibs does this to talk about aesthetics and all kinds of things, but we're just gonna ignore all that and talk about specifically AI usage. And this is a great study actually, because they've been doing it since 2023, at which point the usage was 9%. Last year was 16%, this year was 29%. So that's actually impressive rate of growth. That's basically doubling every year. So if you project forward, basically every interior designer who takes this survey is going to be using AI in 2027. Pan over to Mato Board, they're already there. Mato Board, which is sort of a 3D rendering mood board software. We've actually had the founder on the podcast. Very interesting episode, but they did a similar poll and they found that 81.7% of designers use AI regularly. So they're already in the future with their designers. What did you make about the discrepancy between these two surveys?
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A
Well, I wonder what it tells us. Perhaps it has to do with the kinds of work that people who are coming to Mattow Board are doing. Maybe they're more, as we've talked about in the past, more commercial, more contract related. But I thought it certainly was. Was striking and I don't know how you feel, but I. I feel like Mata Board's numbers are much closer to what I get a sense of when.
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B
I talk to people, that a lot.
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A
More people by now are using AI in one way or another.
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C
Yeah, I mean, I think that's a good point. I also think probably because Matoboard itself is sort of like a tech oriented product, that the kind of designer that's likely to use it and answer a survey for Matter Board is probably a designer who's also eager to try out new tools, of which AI obviously is one. So maybe that's part of it as well. I don't know. I'm wondering about how valid my anecdotal evidence is, but I certainly think 81.7% is closer to what I hear. And I don't think designers are using AI for everything all the time. It's really not like that. But I think at this point the number of designers who haven't at least tried out chatgpt or played around with some version of it is relatively small. I think the 81%, if not the truth of the matter today will very much be the truth of the matter next year and certainly the year after that.
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A
I agree, although I'm curious about. So I Think first dibs called out that 24% of those that they surveyed strongly opposed using AI in their.
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C
Almost as.
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Exactly. Almost as many as are using it, which I thought was very curious and I wonder how dug in that 24% really is. And no, we're just not using AI in any way, shape or form. But interestingly, the Mattoboard poll suggested that 54% of the people that they spoke to said they too were. Not that they were refusing to use it, but they were worried that it was going to lead to this homogeneity and the diminished originality that actually many people that we've had on the show have talked about this sameness and lack of new designs because of course it's not going to show you new designs in the same way that people are imagining. But what do you think?
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C
It's kind of like how everyone feels about their smartphone. It's like, yeah, everyone's addicted to their smartphone, but I have a controller. I'm using it responsibly, but I'm worried about what it's doing to culture. But hold on, I'm going to check Instagram real quick. I do think that probably what this points to is just this sort of weird trick of psychology where the stuff that AI makes useful in our own lives we think is cool and helpful, but we sort of think that it may have a sort of negative effect on a broader level. I mean, I do think these points are fair. I do think that AI creates sort of homogenized design, and I think that a designer who only relies on ChatGPT to do a lot of their work is going to put themselves in a box. So I don't think these fears are unfounded, but I wonder if they're a little more sort of speculative than they are based in how people are actually using these tools. I think most people are just kind of like kind of plugging it in the gaps and using it to sort of, you know, write marketing copy or just run ideas by. I don't think most people are really using it to do a ton of, you know, quote unquote design work, even though I think overall usage will be close to 100% in a couple of years. I don't think it's going to 100% replace many jobs in a couple of years. I'm starting to. Starting to bank on that. I don't know, I'm a little more optimistic today than usual.
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A
Are you becoming more of an AI skeptic? Is that what I hear?
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C
Yeah, I don't know it depends on the data. Right now in my post Thanksgiving haze, I'm feeling optimistic that AI can help us, but it won't replace us. So that's my current feeling. But I don't know. Where are you at on the AI Fear Hope index at the moment?
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A
It's interesting because we're in this moment where the stock market has become a little nervous about AI's promise. And so I think much of what you have just been defining that maybe it isn't coming for jobs as quickly as we thought. I think people are feeling like it doesn't feel like the miracle product we thought it might be by now. But I do think that it is so ingrained in many people's work life that were you to take it away, there would be a very strong reaction already. And that tells me that it's in there pretty hard. Despite the skepticism of the people in these two polls.
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C
It's funny you should mention the stock market because in some ways I sort of feel like we have all these conversations about how much does it matter for designers in terms of impacting their workflow. But I think the most important part of AI is that it's propping up the stock market. I mean it's lifted valuations to all time highs. Absolutely. Everybody's clients now has this incredibly robust stock portfolio. They're feeling really flush and it's I think keeping the, you know, the top end of the design projects going is that AI stocks are through the roof and clients are feeling flush even though overall housing is down. So in some ways, whether or not you use AI or not, you should be glad it's there because it's keeping clients rich and spending. So that's kind of a weird knock on effect of our modern age and.
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A
Therefore we should speak well of it on the show as it is supporting the entire economy that is supporting the industry that we discuss every day. Excellent. I like where this is going. Okay, so AI, great. We're all for it. Moving on, we're going to talk about Zillow.
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Last month the platform removed a climate risk feature from listings after agents and.
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Brokers complained that it was. Wait for it, Fred. Hurting sales. Yeah, shocker, shocker. The warnings of the climate risk were hurting sales. Couldn't have seen that coming.
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C
Yeah, it's not, not necessarily the marketing hook you want to lead with when you're list your home. Just to explain this a little bit, there was this feature that Zillow introduced last year put out by this company called first street, which is a climate Risk company that's been in the news a lot recently. What it does is it looks at where your property is, where the home is, and talked about the risk of it being affected by extreme weather. Obviously, this is something that was cheered at the time because it was making the realities of climate change present in people's daily lives. I also think it's a potentially useful consumer tool because you want to buy a house, you don't want to buy a house that's going to get hit by a flood the next year. At the time it was celebrated. I'm sure we talked about it on the show. Now they're pulling it back because there is a perception that it hurts sales. This thing called the California Regional Multiple Listing Service, which is the database that provides listings to Zillow, is a very powerful entity. They did not like this. And Zillow, I think, has to bow down to the commercial pressure of one of its biggest partners not wanting them to do it. I also think real estate agents were also complaining that it impacted. Impacted sales, as you mentioned. That kind of butts up against sort of something more complicated, which is that there is, I think, legitimate discourse among climate scientists around whether it's really fair to say that any one individual property has this much of a risk of flooding. Based on climate science, I think it's sometimes hard to exactly pin risks to individual properties. It's a very complicated issue. But certainly the immediate read is climate change is a bummer, and Zillow doesn't want to have that on its listings. I don't know. But it is complicated than that.
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A
It is complicated. And when I first heard this news, I was so indignant, feeling that a great injustice was being done and that this vital information was being kept from people. But as you say, the science can be a little wonky, and who's to say what house has a particular greater risk than another? But I do feel, and I was reminded of this speaking to a Realtor recently about this subject, that you are going to find out about the risk eventually, because, yes, when you go to get insurance on that home, they're going to be happy to tell you about the flood or fire risk that you face and how much more you'll be paying in insurance as a result. So the news will reach you eventually, even if it doesn't reach you on Zillow.
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C
Yeah. Sadly, Zillow taking this listing away does not remove the risk of the flood, it just removes the listing of the risk. Yeah. I don't know. It's so complicated. Right. And this is the challenge with climate change is that, that there's widespread consensus that it's happening, but it's very difficult to pin it to a specific storm or a specific property getting flooded. And so there's always this kind of get out of jail free card to be like, well, that may not have been climate change, and maybe this doesn't really make sense to apply here. And as the founder or the CEO of First street has been saying in the media a lot that this is coming up against a very difficult economic climate, no pun intended, for the housing market. And so they're doing everything they can to try and sell homes. And they're thinking like, okay, well, the science is murky. All of our customers who are paying us because Zillow obviously makes money through real estate agents are saying they don't like this, there's a strong economic incentive for them to pull it away. I think that kind of gets it. If this was a platform just for consumers, if consumers paid to use Zillow, then this feature would still be on there because it does give you some information that's probably at least a little bit useful for consumers. But as they always say on Silicon Valley, if you're not paying for the product, then you are the product. It's your information that, that they're selling and collecting and using to sell to other people. And those other people don't like this.
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A
Yeah, and as, as we've talked about in the past, many people know the risks that they're taking on. And we've talked to a lot of designers who say, listen, my very high end client wants that house that is on a cliff or is on a bluff. And they, they can see darn well that that house is not going to be there for much longer. But they want to invest in it for as long as they can. And they feel like it's their prerogative, it's their money. They're not even going to get insurance on the house because they get it. They're like, yeah, so that's an interesting component of it as well. And I'm sure that designers are hearing about this issue because many of their wealthy clients want what they want.
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C
Yeah, I hear that all the time, too. It's funny. Like the, it's like the building on the Wiley E. Coyote cliff, you know, like, you know, there's been a lot of that in recent years. And it, it's tough, I think, to some degree not to get on another soapbox here, but this sort of gets at the sort of the crazy income inequality we have is that people who have the budget to make whatever they want can build in an incredibly risky place and take the hit if the house burns down or gets flooded and move on and build another home. And I think a lot of other people don't have that option. There's no real easy light end to this item, Dennis. So I'm just going to kick it over to you for a quick joke that's going to transition us out of it.
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I think it's interesting. And maybe we should have the guy from first street on the show to talk about what's going on here because as you said, whether or not these risks are listed on Zillow, they are real and people will find out about them. So we should keep talking about them.
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B
Absolutely.
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And there's any number of soapboxes we could get on related to this whole subject, but we're not because we're going to move on to talk about an acquisition bid.
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B
Fred?
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C
Yes, I do not have a soapbox about Leggett and Platt. This week, furniture component maker Leggett and Platt is facing a surprise takeover bid. Mattress conglomerate Somni Group is offering 1.6 billion to buy the whole kit and caboodle. It's like barbarians at the gate for the modern betting industry. Little deep cut. Dennis, what'd you make of this?
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A
Well, and a betting giant that we don't often talk about, but Somnigroup, right, Has very quietly gobbled up Temper, Pedic and Sealy and is suddenly a $19 billion market cap company that's now coming.
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B
After little beleaguered.
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C
$1.6 billion. Legged and Platt.
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A
Exactly. And Leggett and Platt was once just a giant that had never missed its dividends since the Second World War and was supplying, you name a company in North Carolina, they're absolutely getting product from Leggett and Platt. And so was Somni Group buying quite a bit from Leggett and Platt and thought, hey, why don't we just buy the whole darn thing? It's only 1.5 billion. It's back on its heels, right?
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C
Yeah. I mean, I think, you know, as you said, Somnigroup is not a company that we talk about that much and probably will not talk about that much. We don't talk about Leggett and Platt that much either. But as you said, Leggett and Platt, I mean, if you're sitting in a chair right now, you're probably sitting on something related to Leggett and Platt because they make the stuff that goes inside of stuff. So it's a big company that has a lot of tentacles spread throughout the home industry. Even though it's not a household name, it is very much a company that matters. I think, as you said, this is happening because Leggett and Plaid has really been on its heels recently. They've really suffered in the post Covid home boom slump. Their stock has really been languishing. It's a stock that pays a dividend to holders, and they cut back on that. They've been firing people. We haven't always talked about it on the show, but they've very clearly been pulling back on their production, their expenses. And so this is an opportunistic buy. I think somnigroup is seeing that the stock is undervalued, the company's having some troubles, and they want to make in and make a deal while it's on the cheap. That's kind of the story of what's going on here. I think, in a weird way, even though this may not be great news for Leggett and Plaid, who knows what will happen with this merger? It may happen, it may not. But in some ways, I actually feel like there's a good signal here, which is that for most of the past six months, MA activity has just been totally frozen. People haven't wanted to make big financial moves because they were like, well, who's going to say a tariff is going to pop up and totally change the game plan? Or what's going to happen with the economy, or what's the Supreme Court going to do? And I feel like we're kind of getting to the end of that initial period of chaos. I think people understand what the tariffs are. They feel like they're not going to get any bigger. And they're starting to think like, okay, at some point people are going to buy furniture for their homes. May not be next year, may not be the year after that, but at some point they're going to do it. There is some light at the edge of the horizon, and so they're going to try and make moves now to get really strong and really big, to take advantage of that when it finally comes. So, I don't know, am I being naive to see some light at the end of the tunnel of this little acquisition deal?
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A
Can we see this Leggett and Platt deal as the green shoot that we're looking for as the bottom somehow being in? I do think it's a very opportunistic acquisition, and perhaps it suggests that more of these acquisitions are soon to come. As everyone, as you say, prepares for what has to eventually be the ReBo we absolutely. The market has completely shifted into believing that rates are going to get cut next week and that probably this new Fed chairman that it sounds like the president has already chosen is going to be eagerly cutting rates even more next year. And so maybe that's the sign that the bottom really is in for the home industry. And Somnig Group says, yes, let's buy Leggett and Platt. And maybe. And listen. And maybe we start to hear like we, like we have in previous cycles, we start to hear from designers, oh, my favorite room just got acquired or my favorite window treatment company. Or we start to hear more of this. It certainly sounds like the folks at the Stump Group are busy, lots of activity going on. Maybe we'll hear more from them in the weeks ahead. But it sounds like a lot of conversations are happening and that people are feeling there's a greater openness to deals being done.
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B
Certainly.
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C
Yeah. And I think look like no interior designer listening to this should think like, oh, this Leggett and Platt takeover bid means I'm going to get a client next week. That's not what I'm implying. But I do think, as we've talked about, the very, very high end is doing fine. The people who own all the AI stocks are more affluent than ever. They're still hiring the very thin slice at the top of the interior design world, but certainly below that, the kind of aspirationally affluent have been hurting a little bit and pulling back. And this kind of move suggests to me that people are starting to really think that things are going to get better on the housing market at some point in the not too distant future. They're thinking that the tariffs are no longer freezing people in their tracks. I think that starts to trickle down a little bit over time. So, yeah, I don't know, maybe that's too much of a speculative take. We'll have to see how this actually plays out. But as I'm clearly in an optimistic mood today, I chose to see the bright side of a hostile corporate takeover of legatnblatt.
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A
And surely those are the bells ringing suggesting the end of the tariff war. Perhaps. And perhaps this all suggests that. I don't know. It certainly suggests perhaps a different landscape in the near future. We can only hope, Fred. In the meantime, we're gonna move on.
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B
To talk about home staging for Curbed.
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A
This week, Kim Velsey consulted real estate.
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Agents about sellers who have been reluctant.
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A
To adjust their eclectic tastes to meet the market. Wait, tell me that all the people we've been encouraging to personalize their homes and make them their own, and now curbed is saying, no, no, don't do that.
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C
Well, yeah, I mean, this is such a fun story. So this is about, like, real estate agents whose, you know, clients refuse to get rid of their decor to stage the home, to sell it, and how it impacted this, you know, the sale price of the home. And it's. It's a really fun read, mainly because, you know, I think interior designers are very reluctant to criticize their client's taste on the record, understandably. But I don't think real estate agents care that much. So there's a lot of really funny, sort of like, salty quotes in this article where real estate agents are talking about how, like, their client had, quote, unquote, a sophisticated Lisa Frank style, which apparently impacted the sale price of a home. So, I don't know. I would say read it just for that. But, yeah, you know, we talk all the time on the show about how you shouldn't be afraid to make your home your own. Don't think about the sale price when you're designing. This is the dark side of that. If you stick to your guns and refuse to pull out the purple wallpaper when you're showing your home for sale, it will impact your ability to sell it. So this is sort of an interesting, kind of the other side of that coin.
- [24:26]
A
Well, it's also this funny. Listen, I'm here to help you, okay? I'm trying to help you sell this darn thing and help me out. I love the real estate broker who says, gosh, my idea of staging in the past was getting some bodega flowers and bringing them in. Like that was the extent that they went to in the past. But now staging, which for years didn't have great legitimacy and everyone, many people were skeptical about the need for it. Everyone has bought into staging, and now they wish that there was more staging. And these clients are sadly making it difficult for them to. What I thought was funny was making it difficult for them to turn many of these apartments to look more like a West Elm store, which I thought was a funny decor to choose.
- [25:13]
C
Well, it was interesting because they were talking about how some of their clients had very ornate, complicated, antique, dark design. Probably something you maybe associate more with the 80s and 90s. And they were talking about, yeah, people really want minimalism right now. Which is sort of interesting how the kind of the signature aesthetic of the affluent really shifts over time. It was funny. One of the real estate agents was talking about a client who had all this great really old Renaissance era or great master paintings and he was trying to get her to pull them down. And the quote in the article is that she said there has been an epidemic of puerility in the art world and I will not allow it in my home. I just love that. So yeah, I mean, I don't know, there's a lot to pull away from this article, but I think as you pointed out, this is the triumph of the stager. Staging is really a real thing.
- [26:02]
A
It is. And this article certainly drives it home.
- [26:05]
B
Home. Finally, sadly, we have to move on.
- [26:08]
A
To remember Robert a.m. stern, the acclaimed New York architect passed away at the.
- [26:13]
B
Age of 86 last week. Stern founded his eponymous firm in 1977, leading the 300 person team through projects ranging from museums and schools to homes and libraries.
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A
In 2008, Stern debuted his most iconic work, a pre war style building at.
- [26:32]
B
15 Central Park west, which became a magnet to high end buyers and architecture enthusiasts.
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A
I'm not considered avant garde because I'm.
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B
Not avant garde, stern told the New York Times in 2007. But there's a parallel world out there of excellence.
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C
Yeah, a great architect, great man, great talent. We've had several people on the show who worked at his firm who learned a lot from him. I think the rare example of someone who's incredibly talented has indelibly changed the industry, but also was really seen as a kind teacher who's somebody who brought other people up to the industry. So he certainly has been celebrated over the past week and he'll be missed indeed.
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A
His son Nick was a longtime schoolmate of mine and we were in touch over the weekend. I send all of my sincere condolences.
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B
To him and his family. All right, that's it for the news.
- [27:23]
A
But there's plenty more to check out on businessofhome.com including the latest industry new hires and a guide to Miami Art and Design Week. We'll be back in a minute, but.
- [27:32]
B
First, a quick break.
- [27:38]
A
Most studios don't fail from big mistakes.
- [27:41]
B
It's the small, silent errors that slip through scattered spreadsheets. Programa replaces that patchwork with one structured workspace for specs, budgets and client dashboards. Fewer surprises. Fewer corrections. Fewer late night fixes. Use BOH25 for 25% off your annual plan. Celebrating their one year anniversary, June Laloy is your newest destination for total home furniture. As a young brand, they bring a fresh perspective. But as the brand run by the same family behind Laloy rugs. They bring plenty of hard won expertise. And if you're a member of the trade, June Laloy's trade services remain unmatched, backed by 20 years in the industry and exclusive benefits including special pricing, a dedicated support team and a seamless sourcing experience. Visit junelaloy.com to explore the latest and sign up for a trade account that's J-O-O-N L O L-O I.com.
- [28:50]
A
And we're back. I'm joined now by boh's retail columnist, Warren Shohlberg. Warren, welcome back to the show.
- [28:58]
D
Always nice to be here, Dennis.
- [29:00]
A
Well, I'm so eager to get your perspective on everything that's happening in retail and what an interesting challenging year this has been. Black Friday just just passed us by. Were you out doing some shopping? What do you, what can you tell us?
- [29:16]
D
I have to admit that I played hooky this Black Friday weekend, but obviously I've talked to a lot of people and checked out a lot of the reports. It was a curious weekend. You know, I think Black Friday is not what it used to be because, because retailers just are promoting all the time now. And also E commerce means that people lining up to get a cheap toaster oven at 6am in the morning at Kmart just isn't there anymore. And yet I see that Black Friday as a single day will probably still hold onto its place as the biggest single shopping day. So for some people who thought it would be disasters, too strong a word. But for those who thought it would be soft, it seemed okay. You know, there were low single digit increases in traffic and in volume and just about any, any place that you saw anybody that was tracking it again, I think you got to put that in perspective that a lot of this is because prices are higher. Whether it was tariffs or inflation or just greed, people were paying higher prices for stuff. So when you look at unit sales, they were probably flat or maybe even a little off. So take those 3 to 5% increases in context that a lot of this is just higher prices.
- [31:02]
B
Right.
- [31:02]
A
So, so unit sales probably were flat to down a little bit.
- [31:06]
D
That seems to be the case. Yeah.
- [31:07]
A
And it certainly seems, as you say, as if Black Friday, which was always figuratively at least the time that all the retailers would break even for the, for the year and this was their big time. It certainly to your point, seems like that is, that is no longer the big focus, still still important. And many retailers still hope that, that it gets cold in December so they can sell outerwear and all of that But I definitely got the sense that they weren't counting on it in the way that they have in years past.
- [31:37]
D
Yeah, I think that's a fair read on things. Yep.
- [31:40]
A
But to your earlier point as well, it seems like the terribly pessimistic predictions about what this retail season was going to look like, which many earlier in the year when tariffs and all of that were first rolled out, thought, well, this'll be disastrous. There goes Christmas. There were only going to be two dolls available and seven boxes of crayons. Now it seems like it hasn't been as bad as all of that. I was out shopping on Friday just to do a little research myself. Pretty darn crowded at Saks Fifth Avenue and Fifth Avenue was pretty jam packed. So I mean, there were a lot of people, there were a lot of people out and stores seemed busy. So I mean, again, the doom and gloom predictors, once again, it all might have been a little exaggerated.
- [32:24]
D
Yeah. People who were trying to stuff coal into the forecasts I think got. Got a reality check. Absolutely.
- [32:36]
A
It seems like there are a lot of different retailers that are in different positions or conditions, depending on who you refer to. Walmart just seems to be winning on every channel. I feel like they've, they've moved a little bit higher end. They've got some Veuve Clicquot on the site that's available now. It seems there's $146,000 gold bar you can buy on the Walmart site. But they also, and they're moving to the NASDAQ and talking about themselves as a technology company. And they seem to be, as you and I were discussing just before we came on air, they seem to be front and center with embracing AI in a big way. Tell me about that.
- [33:17]
D
Well, I think Walmart is the best retailer in America right now. I don't think there's any dispute about that. They're just, no doubt they're just doing so many things right. And for somebody to say this, you know, a couple of years ago you would not have thought this at all. So the stores look better, the products look better, they're doing a lot of creative things in, in, in merchandising. Their TV ad campaign is very clever, but they're doing something this year that I think is just a game changer. So They've hooked up.
- [33:56]
ChatGPT people and they've always used, or not always, but the last couple years have used AI and you could go on AI and said, hey, I need a, a $10 gift from my Uncle Leo and they would give you suggestions and then you'd have to go back to the Walmart site and actually buy it. And now you can make that purchase directly in the chat GPT app and, and just hit buy. And this has the, the opportunity to really change the way people shop. I think it's going to be big. Target is, is apparently doing it as well. I haven't seen it but I understand they are REI is doing it. By this time next year every big box retail America will be doing this. And so for shoppers it's a great, it's a great tool and for stores it's good. But you know there is a downside we have to think about which is if that Uncle Leo present and you have to go back to the Walmart site, who knows what else you'll find there. You know when Walmart is saying well you bought this or you're buying this, would you also like something for Aunt Emily? And God, these names are old.
- [35:16]
But they offer lots of add on sale and also there are ads on that Walmart site that Walmart has paid for based on views. So there is a downside for retailers and we're going to have to see how that plays out. But in the meantime big change and I think you need to understand that this is just the beginning of how we're going to see AI really change the shopping process.
- [35:47]
A
No, I think you're absolutely right. Agentic AI is here and it's just going to get bigger. And as you say, Walmart leading the way. They've been investing heavily in AI for years and have been talking about it well before everybody else was really talking about it. And they just invest very heavily in retail. I don't know if that's going to be enough to help our friends at Target turn some things around. This is, this has been a challenging year for, for them and unfortunately when things aren't going well, everything seems to be going wrong. And that unfortunately is the case at Target and they've already announced that the, the current CEO is going to be leaving and, and the next fellow is going to take a swing at it. But what do you, what's going on there? First of all let's, let's tell people what's, what's been happening at Target and, and then we can get into what do we think needs to happen in the future.
- [36:39]
D
So something to put in into context about just Walmart versus Target. A lot of Walmart's gains are also coming at the expense of Target. They are gaining market share because things that people used to go to Target for, you know, a little more fashionable apparel, a little more stylish product. They are now getting that at, at Walmart. So Walmart's definitely getting market share, but Target just continues to make colossal mistakes. And I'm sure by the time people are watching this they will have read about the, the swag bag debacle that, that Target offered, you know, a goodie bag to the first hundred people in line in their stores on Black Friday morning morning. And it turned out to be, you know, a couple of sticks of gum and some playing cards and some jujubes and it was terrible. And so this is another example of folks back at Target HQ in Minneapolis saying here's a great idea and everybody going, yeah, this is a great idea. And then the stores being unable to execute it. So we're seeing a lot of that. Target just continues to make mistakes and, and we'll see what the change at the corner office does. Let's remember the guy that they have brought in or promoted to run it is the guy who was in charge of logistics and operations for the last.
- [38:12]
A
Two or three years.
- [38:14]
D
And that's not exactly something to be proud of. That's been one of their biggest problems out of stocks and the inability to execute. And in the meantime, the outgoing CEO Brian Cornell is been promoted to chairman of the board. So don't we all love when we get a new job when our predecessor is looking over our shoulder saying don't do that, don't do that. So Target needs some big changes. And the best example is Cornell himself when he came in, what was that, 11 years ago? He came in from the outside. He was the first outsider ever, ever to run Target. And he came in and said, hey listen, we're going to be a mess for two years. Our stock's going to be terrible, we're not going to make a lot of money, but we're going to fix a lot of stuff. And he had the opportunity to do that, this new guy. I just don't know if he's going to have that opportunity. Plus he's competing against a much better Walmart. 10 years ago Walmart was almost as screwed up as Target. So.
- [39:29]
A
Well, which shows that it can be done.
- [39:31]
D
Absolutely.
- [39:32]
A
I mean the turnaround at Walmart is remarkable in case studies written and I mean the fact that, and now that they're taking so much market share, as you say, away, I don't know what the Walmart equivalent of the Target nickname would be for Walmart, but, but they have definitely Taken a lot of that customer base. I feel like Target needs a great merchant. Right. I feel like they need someone who really understands product. I feel they need to put a lot of the political missteps that they made behind them and then they need to get those stores looking good again. Those stores just reportedly look terrible all around the country. I mean, people put up photographs of empty shelves and horrible. I mean, dreadful. Yeah. And it's sort of heartbreaking because I mean we all remember a time when there were these fun home collections that would sell out, you know, really quickly. And they still have some great, they have some great home partners, but it feels like they'll need to do a lot more than that. Let's shift gears and talk about a similar brand, TJX, which also seems to be executing really well with HomeSense and home goods. And they seem to, to have really tapped into a consumer that feels very stretched. They seem to be servicing that consumer very well.
- [40:49]
D
Yeah, the shopper just loves to get a deal. And whether they're actually getting one at TJX or not, that's to be debated at some other time. But the perception is there and TJX executes to their plan, which is lots of stuff and it looks like it's a great price and it's working. And it's not just the off price channel. The other big players there, Burlington and Ross, are doing well, but not as well as tjx. So you can't just say it's the off price model that is responsible for TJX's success. It's them. They're doing a great job job and.
- [41:35]
A
It'S interesting to see. And we should talk about Costco as well because they're another one that has really effectively straddled the value customer, but also this higher end customer. And I feel like Walmart and Costco both have just moved higher and higher in their offerings and it has suited them well.
- [41:56]
D
Yeah, Costco also doing a great job. We all know about the, the, the gold bars and, and the things that are, that they're selling. But you know, the best, the best way to look at Costco is to look at the parking lot. There's a whole lot more Lexus and BMWs there than there are Toyotas and Hyundais. So that's their customer. And if you want a 55 gallon drum, a mayonnaise, that's, that's, that's Costco's Costco.
- [42:29]
A
That's what red blooded American does. Yes.
- [42:31]
D
Come on.
- [42:31]
C
Huh? Right.
- [42:32]
A
Come on.
- [42:35]
We were talking recently about Williams Sonoma Group, they came out with their earnings and it seemed like they're another retailer that's being very efficient and trying to use technology and trying to control costs. I couldn't help but listen to that call. And I know you referenced this in one of your recent columns. I couldn't help but but feel like maybe RH wishes they had some holiday merchandise or some cash and carry merchandise. After I listened to Laura Albert talk about some of the brands getting ready for the holidays. What's your sense there?
- [43:09]
D
Well, I think Williams Sonoma's kind of hidden secret is that they've got this fabulous balance. I mean, first off, they're very balanced on in store versus online. You know, if you remember as a catalog seller, they got direct to consumer before just about anybody else. So they, they, they had the systems in place, they knew how to do that. But they've also got this great balance in merchandise. So in the Williamson Omer Kitchen stores, that business is still pretty good. People are cooking more at home and they're entertaining. And so, so people are buying blenders and they're buying spatulas. And so when the furniture business is a little soft.
- [43:59]
They'Ve got the kitchen side. And when the kitchen side gets a little soft and furniture starts to pick up, it goes back the other way. So they've got this great balance and nobody else has that. Certainly RH doesn't. But Crate and Barrel does have some kitchen and some housewares, but it's nowhere near what Sonoma has. So they do a good job.
- [44:26]
A
Yeah. I mean, it's obviously been a challenging time in furniture land, as we know and we've talked about consistently. And so I feel to your point, their mix has really helped soften some of the volatility of some of those numbers. And if things only get a little bit better, which you keep saying is just around the corner, Warren, we just don't know what corner is.
- [44:50]
D
Yeah, I have 100% track record of being wrong for when this turnaround is going to come. I kept thinking the housing market would, would turn around. And certainly none of us could have predicted some of the insanity of the past year. Housing is still not coming around that.
- [45:12]
The New York Times had a great graph that basically showed the number of homes built in America in the last 20 years. And you look at it and there it is. There are just not enough houses being built. And so that flow of people to new homes and other people moving into old homes, it's not happening. And that's still a big factor. In the home furnishings business. So, yeah, that corner's out there, but I'm not seeing which one it is anymore.
- [45:46]
A
Well, I mean, it's hard to feel terribly optimistic after all that we've seen this year. We've had some companies come out of bankruptcy recently and are trying to bring themselves back At Home, which was a company I never really fully understood, to be honest, is back at it. And Bed, Bath and Beyond is trying. Trying to bring itself back in a meaningful way. Is there anything that we should be paying attention to there?
- [46:14]
D
So At Home ended up closing only, I don't know, 25, 30 stores out of 300. So about 10% of their stores. But they've still got a lot of stores that are in the wrong locations that are too big. And the bankruptcy proceedings wiped out most of their debt. What it didn't do was change their business model. Model. And so I'm with you. I don't quite understand how they're going to make this work when they still haven't changed what's in the stores and how they go to market. You know, they have no E Commerce at all. And I mean none. And yeah, if I want to buy a rug, they've got 6,000 of them on display, and that's great, but when I'm done buying a rug, I don't know when I'm going back there. So at home, I'm still not optimistic about Bed, Bath and Beyond and its new partnership, which is now ownership of what was Kirkland's. You know, I guess the skeptic in me says I don't see it adding up. But full disclosure, I've not been to any of the new stores that have opened, but I've seen pictures of a bunch of them and I have to say I'm at a impressed. The pictures look good, but they're Talking about opening 300 bed, bath and beyond stores by next summer.
- [47:42]
B
Oh, dear.
- [47:42]
A
That's the mistake they made last time.
- [47:45]
D
That's tough to do. You know, the dollar stores are the only guys that can pull that off. And we know what those stores look like. So I just don't know if this is going to work. And now there's speculation, I'm hearing speculation that they that Bed, Bath and Beyond is buying up some Container Store bonds. And again, this is not confirmed. Nobody has said, yeah, this is happening, but it wouldn't be a surprise. You know, they snooped around them once before and they may still be interested in it. So you put together Bed, Bath and Beyond, Overstock, Kirklands and Container Stores and you tell me what you got and.
- [48:32]
A
You'Ve got something really special in there. Yeah. That is a jambalaya of great former great retail brands that I don't know that you can really make that work. And I say that having loved the Container Store.
- [48:45]
D
Sure. Me too.
- [48:45]
A
Was always wanting it to succeed. And truthfully, back in its heyday, Bed Bath and Beyond was, was an incredible retailer. And I'm just sad that it, that it couldn't, that it overstored back in the day and, and didn't embrace technology as, as you and I have talked about.
- [49:01]
D
Well, and there is a place for a retailer in that category. You know, how many friends do you have who say I wanted to go out and buy a new toaster oven and I didn't know where to go. You know, I wanted to see it in a store. And Macy's has four of them and you know, Walmart has six. But they're not the premium brand. So where do you go to buy those kind of products? There's nobody out there that's doing it. So there's a place for that. Whether they're the place, I don't know.
- [49:34]
A
Well, it's interesting that you say that because I mean, and again to your point, back in the day it used to be Macy's Cellar.
- [49:41]
C
Right.
- [49:42]
A
Which was, I mean, we don't want to date ourselves. Waxing lyrical about that great special floor. But department stores played such a huge role. I feel like anyone who talks optimistically about them making a big comeback is not seeing what's happening. I just don't see the big department stores coming back in a meaningful way. But there does need to be that sort of superstore of sorts that Bed, Bath and Beyond and some of these others represent.
- [50:08]
D
Yeah, I agree. And I don't know who takes that role.
- [50:13]
A
Yeah, no, no, it's challenging. I don't know know if one of the retailers we haven't talked about because I'm still wrapping my head around thinking them as a retailer is Wayfair and Paragould and they seem to have gotten a pretty good reception from their store openings. What's your sense?
- [50:31]
D
So there's still only one full scale Wayfair store and that was outside of Chicago. And it's a great store. I saw it when it opened. One of the best stores in America that I, that I've seen in years. But the second one is not opening until I think spring of 26 and that's here in Atlanta and there'll be two more in the pipeline after that. So this is still just a couple of stores. They've got some small format stores for their sub brands, Josh, and main pattern. And as you mentioned, first Paragould store opened in Houston and it was impressive, it looked nice, but again, that's one store. So when you have.
- [51:22]
Wayfair going on analyst calls and saying our stores are doing great and this is making a big difference, this is an $11 billion company. So. So 20 stores, even counting all the sub brands, they're not going to move the needle a lot. So I hope that these new stores work. But the closest retailer to Wayfair, believe it or not, is Ikea in terms of the product mix and the scale. So IKEA has 50 stores in America, 50 full size stores. And to me that's what Wayfair is going to need to be effective in in store retailing. So they've announced four and that's 50, 46 more to come.
- [52:13]
A
Well, so do you think. So do you think that one of the big surprises out there might be that suddenly they, they hire a whole bunch of teams to, to open stores around the country, that they embrace this? Or do you imagine that this very conservative, conservative snail like pace that they've been going at will continue because they did open another pair of gold in Florida and that seemed to have been well attended and I've heard good things about that as well. I mean, it does seem like they're serious about this just not moving as quickly as it sounds like you and I might want them to.
- [52:45]
D
Yeah, they just don't have the money to do it. I mean, opening these stores takes a lot of money and Wayfair is just starting to show a profit. Profit for essentially the first non pandemic time that they've done that in the history of Wayfair as a public company. So for them to take whatever money they've got and make that kind of investment in opening 10, 20 stores a year, Unrealistic, not going to happen. And so it's a slow, painful buildup out and I don't know how long it will take, but stores are not going to be a significant part of their business for at least a few.
- [53:33]
A
More years in wrapping things up. It seems as though a surprisingly strong consumer given everything that's been going on.
- [53:42]
C
Right.
- [53:42]
A
Is certainly a takeaway.
- [53:43]
D
Yes, absolutely.
- [53:46]
I am surprised, shocked might be a better word, that this consumer's resilient.
- [53:56]
A
And what do you think that's about? Why is that?
- [53:59]
D
Well, I think they've still got jobs, unemployment.
- [54:04]
Is still not creeping up to any great degree. Some of these jobs are paying more than they used to. People who are current homeowners are seeing the value of their homes going up, and that's making them feel good. And it's. It's Christmas, God damn it.
- [54:23]
A
And, you know, and we need a little Christmas.
- [54:27]
D
Yes. And yes. People are always gonna. Are always gonna shop for Christmas. So it's a very resilient consumer. And I guess that's.
- [54:38]
A
You can't deny that shopping is the national pastime. And clearly that is right. That is still the case here in good old America, even with all the consumer has had to deal with.
- [54:48]
D
Yep.
- [54:49]
A
Well, I'm so glad to get this opportunity to talk with you. I know we're going to be talking with you in the coming weeks about the year in review, and I look forward to that. But I really appreciate getting your perspective today.
- [55:00]
D
Thanks, Dennis. Bye.
- [55:05]
A
And we're back. We're getting to the end of the show here, but before we go, we'd like to take a second to highlight anything going on in the industry that. That might have caught our eye. Fred, what caught your eye?
- [55:13]
C
First of all, did you buy anything for Black Friday or Cyber Monday? Dennis, what did you buy for me, I guess is what I should say.
- [55:19]
A
Quite a few things for you, Fred, but I don't want to give it away here on the show, but I want you to be surprised. Okay.
- [55:26]
C
All right. Well, I'm excited to see what. What you put on the company credit card for me, but it is gifting season, and I wanted just to quickly call out our own market editor, Caroline Biggs did a number of gift guides for our website that are online right now@businessofhome.com Caroline is a great market editor. She always does a really good job on these gift guides. And normally she does a big omnibus one, but this time she sort of broke it down into individual guides for different types of clients, which I thought was a really fun, you know, way to buy, you know, holiday gifts for your clients, you know, chosen by other designers. So really fun concept, really good gift guides. I love gift guides. I know we're a little bit saturated in the marketplace, but I will always click on a gift guide. So we've got some@businessofhome.com so check them out. What about you, Dennis? What caught your eye?
- [56:12]
A
Well, one of the early Christmas gifts that came along for us, Fred, is the new AD100 list, which I feel perhaps came a little bit earlier than we're used to seeing it, but always always excited when that hits to see who's who's been naughty, who's been nice and right, who's made the cut and and who didn't. I was delighted to see a debutante, Jessica Helgerson, made the made the list, big fan, hoping to actually talk to her very soon for the show. And I saw that both Andre Malone and Nicole Hollis made the list as well. I'll be talking with Andre Malone Thursday evening at Nicead. And December 11th, I'll be talking with.
- [56:52]
B
Nicole Hollis at Nice It.
- [56:54]
A
So congratulations to the two of them and everyone who made the list. It's a big, it's a big feather in everyone's cap. All right, that's all the time we have today. Thanks so much for listening. If you want to keep up with.
- [57:04]
B
The latest news, browse job listings or take a workshop, visit us online@businessofhome.com if.
- [57:11]
A
You want to get in touch with.
- [57:12]
B
The show, write to us@podcastusofhome.com this episode.
- [57:17]
A
Was produced by Fred Nicholas and Caroline.
- [57:19]
B
Burke and edited by Michael Castaneda.
- [57:22]
A
I'm Dennis Scully.
- [57:23]
B
Have a great weekend and we'll be back with you on Monday.