The Thursday Show: Why succession is so hard for design firms. Plus: Highlights from Las Vegas Market

Summary

Business of Home Podcast: Episode Summary Title: The Thursday Show: Why Succession is So Hard for Design Firms. Plus: Highlights from Las Vegas Market
Host: Dennis Scully
Release Date: January 30, 2025

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1. Global Shipping Developments

Fred Nicholaus opens the discussion by addressing the recent ceasefire in the Red Sea region, which had been disrupted by conflict involving the Houthi rebel group in Yemen. The Houthis had been attacking ships passing through the Suez Canal, leading major shipping companies like Maersk to reroute their fleets around the southern tip of Africa.

Fred states at [04:20] “a new ceasefire agreement could ease tensions in the region, though not all shippers are ready to resume their normal routes.”

Dennis Scully elaborates on the precarious nature of this development: “...feels like there's nowhere on the globe that they can safely park production, they may think, okay, well, we'll bring it to the US...” [07:04].

The hosts discuss the potential impact on shipping costs and global trade, highlighting the uncertainty surrounding the longevity of the ceasefire and its implications for future shipping routes.

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2. Tariff Uncertainty and Its Impact

The conversation shifts to the looming threat of tariffs imposed by the U.S. government. Fred Nicholaus explains that President Trump has proposed a 25% tariff on goods from Canada and Mexico, and a 10% tariff on Chinese imports. However, the specifics regarding which products will be affected remain unclear, scheduled to take effect on February 1st.

At [08:33], Fred mentions, “the tariff conversation has been so complicated and everyone in our industry is thinking... the landscape may be a much more unpredictable...”

Dennis reflects on the broader implications for the furniture industry, noting the challenges of reshoring and friend-shoring production amidst such uncertainty.

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3. The Charles Cohen Foreclosure Drama

A significant segment covers the ongoing financial troubles of Charles Cohen, owner of the D and D Building. Fred Nicholaus references a Forbes profile that delves into Cohen's struggles, including the recent loss of the Dakota in a foreclosure auction.

At [11:52], Fred states, “Charles Cohen is going to be just fine... but ultimately, all five of the people he'd elevated kind of quietly left the firm.”

Dennis Scully adds a personal reflection: “...it's hard to separate my feelings about the design industry being caught up in the maelstrom...” [14:20]. The hosts express concern for the tenants of Cohen's properties and discuss the uncertain future of these design centers.

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4. Succession Challenges in Design Firms

Fred delves into the complexities of succession planning within design firms, referencing his recent feature in Business of Home's print magazine.

At [16:55], Fred shares, “it's hard to make it happen... it's extremely rare for the majority of firms. It does not happen.”

They discuss the case of David Kleinberg, who attempted to implement a succession plan at Parrish Hadley but ultimately saw key team members depart, highlighting the difficulties in transferring leadership within legacy firms.

Dennis underscores the emotional and practical challenges, noting, “...the last thing in the world they want is to retire...”

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5. Defense of Neutral Colors in Design

Addressing criticism of neutral palettes, Fred Nicholaus and Dennis Scully reference a Washington Post article by Cassia St. Clair defending the enduring popularity of muted tones in design.

Fred comments at [24:44], “quiet luxury is probably the best rebranding of beige that has ever been done.”

Dennis supports the use of neutrals by quoting designer Billy Seglia: “Color is easy, neutral is not,” emphasizing the skill required to effectively utilize beige and other neutral tones.

The hosts debate whether neutrals remain relevant or have become overused, with Dennis ultimately defending their sophistication and versatility.

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6. Highlights from Las Vegas Market

Caitlin Peterson, BoH Editor-in-Chief, provides a live report from the Las Vegas Market at the World Market Center.

At [29:55], Dennis prompts Caitlin to explain the significance of the event, to which she responds:

Caitlin: “World Market center is...something in between High Point Market and America's Mart...a blend of the gift world, the home world, and the very design-focused business…” [30:09].

She highlights the presence of major brands like Rock House and Bernhardt, noting their strategic presence in Las Vegas to build relationships with west coast designers. Caitlin observes that the market facilitates deeper connections with brand executives, a contrast to the bustling environment of High Point.

Caitlin emphasizes the unique merchandising strategies, such as Rock House’s integration of multiple brands into a cohesive showroom experience, fostering brand storytelling and customer engagement.

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7. Industry News and Insights

Fred Nicholaus brings attention to R.H. (formerly Restoration Hardware) being targeted by hedge fund Hunter Brook, which released a critical report questioning the company's financial practices. Despite the aggressive stance, the impact on R.H.'s stock appears minimal.

At [45:22], Fred remarks, “it's going to be interesting to see when the next earnings come out, if people raise this at all.”

Dennis Scully discusses LVMH's substantial investment in advertising and marketing, citing their 37% of sales spent on these efforts. He contrasts this with the furniture industry's notorious underinvestment in marketing, advocating for increased spending to enhance brand presence and competitiveness.

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Conclusion

The episode navigates through a blend of critical industry issues—from global shipping turmoil and tariff uncertainties to the personal saga of Charles Cohen and the intricate challenges of succession planning in design firms. It also defends the enduring appeal of neutrals in design and provides an insider’s view of the burgeoning Las Vegas Market. The hosts conclude by urging industry leaders to heed the example of luxury giants like LVMH in prioritizing marketing and advertising to stay competitive.

Notable Quotes:

• Fred Nicholaus: “a new ceasefire agreement could ease tensions in the region, though not all shippers are ready to resume their normal routes.” [04:20]

• Billy Seglia: “Color is easy, neutral is not.” [25:00]

• Caitlin Peterson: “World Market center is...something in between High Point Market and America's Mart...” [30:09]

• Dennis Scully: “if you have to have a naval destroyer sailing alongside you...I can understand the big shipping companies...not wanting to return to the Suez Canal.” [04:36]

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For more insights and detailed discussions, visit Business of Home.

Transcript

[Caitlin Peterson]

Foreign.

[Dennis Scully]

This is Business of Home. I'm Dennis Scully, and welcome to the Thursday Show. Later on, I'll be talking to BoH editor in chief Caitlin Peterson about Las Vegas Market. But first we're going to catch up on the news, including a welcome development in global shipping, an update on the Charles Cohen drama, and a defense of neutral colors. To do all that, I'm joined by Business of Homes executive editor Fred Nicholaus. Hi, Fred.

[Fred Nicholaus]

Hi, Dennis. How's it going?

[Dennis Scully]

Well, trying to fight my way through this, Fred.

[Fred Nicholaus]

For the Thursday show, listeners should know that Dennis Case of Paris Deco off flu has been a brutal one. You're fighting your way through it, though, to bring us the design industry news. Know that the people appreciate it, Dennis.

[Dennis Scully]

Well, exactly. I'm doing it for the people, Fred. That's what it's all about.

[Fred Nicholaus]

Well, I appreciate it as well. Let's quickly look back on Monday's episode, a conversation that you actually did in Paris. I'm gonna try and pronounce this as well as I can. Guillaume Fayet. Is that right, Dennis?

[Dennis Scully]

Yes, indeed, Monsieur Feault.

[Fred Nicholaus]

So tell us about it. It was an incredible workshop. It sounds like I'm jealous that you got to sit there and do it in what sounds like a, what was it, a candy shop for designers?

[Dennis Scully]

Guillaume called it. Exactly. If ever there were a Willy Wonka figure in our industry, it may well be Guillaume Feuille in his magical office filled with curiosities, in his incredible collection of historical archives, wood paneling and fabulous famous libraries and designs over the centuries. It's a remarkable business and one that I had visited in the past, but really got to learn many of the intricacies and the history of the 150-year-old business. And the big news, he's coming to America. He's coming to New York. He's coming to the D and D building.

[Fred Nicholaus]

Yeah, I know, it's interesting. I'm looking forward to checking that out when it officially opens. I just loved hearing about this really interesting little corner of the industry. I mean, it's like there's this crazy international market for these antique decorative wood panels, and people try and corner the market and people come in and buy 50 rooms, and it's just such a fascinating little glimpse at this really rarefied, cool and interesting world. So I loved it for that.

[Dennis Scully]

He has an extraordinary array of the top designers in the world and some of these huge billionaire clients that are just having the most elaborate work done on their homes. And it's a fascinating business and one that it was really fun to learn a lot more about.

[Fred Nicholaus]

What did he say it was like? Well, you know, our cheapest offering is only the price of three Bentleys or something like that. Yeah, it's a rarefied little corner of the industry for sure.

[Dennis Scully]

Well, exactly. Anyway, we're going to get into the news in just a moment, but first a quick break. This podcast is sponsored by Leloy Laloi will be at Vegas market this month, January 26th through the 30th at the World Market center showroom B480. They'll be bringing nine all new rug collections, plus hundreds of one of a kind rugs, wall art, pillows and poufs. Laloyloy highly recommends making an appointment for the best possible market experience, which you can [e-mail] that's L-L-O I rugs.com and follow them on Instagram and TikTok Alloyrugs. This podcast is also sponsored by Anthem Smart Showering Only from Kohler Anthem plus creates a transportive world for body and mind with every shower. It combines water, steam, light and sound in a fully immersive sensory experience with custom settings to match any mood and enhance any routine. Discover how you can design a personalized escape with Anthem plus smart [e-mail] showers and we're back. First up, Fred, a Red Sea update.

[Fred Nicholaus]

Start things off on a light note. A little global diplomacy. But yeah, for over a year, global trade has been disrupted by conflict in the Red Sea. But a new ceasefire agreement could ease tensions in the region, though not not all shippers are ready to resume their normal routes. Very complicated issue. What do you make of all this, Dennis?

[Dennis Scully]

A complicated issue? I feel if you have to have a naval destroyer sailing alongside you as you do your work, yeah, I'd be pretty hesitant to return to that area as well. But we should remind people what we're talking about and how this shift in global trade came about and what it all means.

[Fred Nicholaus]

In 2023, this organization called the Houthis, it's a rebel group in Yemen, started attacking ships that were passing through the Suez Canal on the Red Sea, allegedly in solidarity with Hamas and the conflict with Israel. But they have their own local motivations as well. Anyway, for whatever the complicated geopolitical reasons they were doing it, they were attacking ships. And so all the major shipping companies like your enemies Maersk, decided to reroute their ships around the southern tip of Africa to avoid of this obviously very dangerous hotspot. And that created a very confusing situation in global shipping where things were taking a lot longer to get from Asia, particularly to Europe, but also to the east coast of America and also a lot more expensive. Now, the good news is because there is now this ceasefire between Israel and Hamas, which hopefully will last. There's talk that the Houthis will stop firing on ships that are coming through this passage. And there's optimism that ships will be able to return to pass through the Suez Canal, although the shipping companies have not yet committed to doing this because obviously the ceasefire is only at this point, a couple of weeks old, if that. So it's a piece, but a tenuous one, and it's going to have some impact on global shipping. It's just, I guess, not totally clear exactly what that impact is going to be quite yet.

[Dennis Scully]

Exactly. Like so many of the things we talk about when it comes to trade in general, there's the assumption that it could have a meaningful impact, that if in fact this issue gets resolved, container prices could come down, shipping prices could come down dramatically. But, but no one, no one, and again, justifiably so, feels completely secure that this issue is, is fully resolved and that peace will in fact, last in the, in the area. So I can understand the big shipping companies, including my ongoing feud with Maersk, you know, not wanting to, not wanting to dive in and say, okay, let's get back to business as usual quite yet. But. But it sounds like we're getting closer may what you took away from this.

[Fred Nicholaus]

Yeah, pretty much. I don't think there's any denying that this is getting closer to business as usual in the Suez Canal. I think there's other complicating factors too, which is just simply that the shipping companies have been making more money because they can pad out their margins where they're taking a lot longer to take a longer route to get to Europe or to get to the east coast of the US and so there are some people who are sort of accusing the shipping companies of not wanting to return to the Suez Canal because they're making more money going around Africa. And shocker, there's that Maersk hatred again. But, yeah, I mean, like one shipping executive in a news story said that this would mean freight prices crash down 20, 25%, which is obviously a lot. It's just another variable in the very complicated chess game that is global logistics.

[Dennis Scully]

Well, exactly, and another component of what goes into everybody's cost structures and their estimates for what things are going to cost in the future. And that is just murky at the moment. And as you said earlier, people would love for these prices to come down dramatically, but there's no guarantee that they will. And then, of course, we continue to have the uncertainty around tariffs, which we talked about last week, and we don't really have any greater clarity around that. We almost had some tariffs imposed on Colombia, for example, but they seem to have fallen in line, and so we didn't have to punish them with tariffs. But what's your sense of the latest?

[Fred Nicholaus]

Yeah, I feel like last week we were like, we will bring you clarity on tariffs next week, and we very much do not have it. I mean, just to sort of recap briefly, Trump has promised 25% tariffs on both Canada and Mexico and 10% on China. Even those numbers are not super clear because it's not clear if they'll be applied to home goods and furniture. It's also not clear if they're actually happening. They're scheduled to go through on February 1st, which is Saturday. But I feel like no one is really behaving as though they really will. I feel like the tariff conversation has been so complicated and everyone in our industry is thinking, okay, well, once we get to such and such a date, we'll have clarity and we'll be able to plan around it. And I think it's sort of dawning on people that there may not be a defined resting state of tariffs on any one country, and it may be a much more unpredictable landscape for the next four years than people had hoped for.

[Dennis Scully]

I agree. And we've talked in the past about how many companies are working or were working on the assumptions they had made before that China was the big target and we hurry up and move our production out of China. So we've talked about everyone from Williams, Sonoma and RH and other companies quickly reducing the amount of product that's coming out of there pretty dramatically in some cases. And we've talked about reshoring and friend shoring and everyone shoring together. But now it seems like it could be any number of targets. As you say, Canada and Mexico, I don't think were in a lot of people's earlier forecast, and now it seems as though they should be perhaps.

[Fred Nicholaus]

Yeah. And I mean, ironically, as you were just saying, a lot of people were thinking, okay, well, we'll move production to Mexico. And now it seems like that might not really be a wise idea. So there's just, I think the word of the day is unpredictability, and I think people are trying to get comfortable with that and make a plan around it. I also think that this will actually create some of the increase in domestic manufacturing that is the stated aim of at least some of the reasons for these tariffs is that if people feel like there's nowhere on the globe that they can safely park production, they may think, okay, well, we'll bring it to the US we just saw this is a small example with this betting company. Maloof just announced that they were on shoring a lot of production. I'm hearing in the margins that people who are already domestically producing are increasing their capacity. There's more inquiries around that. But I do think, and we talked about this before, the furniture industry has been moving production overseas for a long time. We can't just turn it back on in the US Overnight. The amount of time it takes to really restart things here is longer than four years. So I don't know what the permanent impacts of this are going to be, but certainly right now it's very chaotic.

[Dennis Scully]

We'll see what the impact of all of it is. But people, as you say, are quite confused and don't know how to invest at the moment. So we'll see. And next week we're going to bring greater clarity, right, Fred? We're going to have a lot more answers next week.

[Fred Nicholaus]

We'll have all the answers.

[Dennis Scully]

Moving on, we're going to talk about Charles Cohen, an evergreen topic here on the Thursday show. In November, the D and D building owner lost the Dakota in the largest foreclosure auction of its kind. A new profile in Forbes explores how Cohen got here and how he plans to come back from the brink. Fred, what did you make of this.

[Fred Nicholaus]

Article, the billionaire brink? I think no matter what happens, I think Charles Cohen is going to be just fine. Yeah, it was really interesting. We've obviously been talking about Charles Cohen, of course, the owner of not only the D and D building, but the PDC in Los Angeles, the Houston Design center, and until last November, the Dakota in Florida. And it's mostly the story you've been talking about is people suing him and trying to take his properties away. But we haven't been hearing directly from him much because he doesn't do a lot of press usually. And this interview, I think, was the first major one to come out since all this drama happened. I have to say there wasn't a ton in it and I don't blame the writer for Forbes. They did a good job of pulling all this information together and getting Charles Cohen on the phone, but it didn't feel like there was any super specific strategy like I'm going to do XYZ it was more of kind of a general proclamation of I'm going to win in court and it's going to be okay. I don't know if you got, if you were able to read the tea leaves more than that. Dennis, what did you make of the article?

[Dennis Scully]

Well, I thought it was interesting that the writer wanted to point out that, as he always does, Charles Cohen called in from a no caller id, unknown number, from his secret lair, his secret evil lair below ground. So I just thought that was an interesting little bit of extra spin he clearly wanted to put on this. But listen, they got Charles Cohen on the phone, and Charles Cohen said, listen, truthfully, you writing this negative story isn't going to help me. And you certainly get the sense that Charles Cohen is trying to do any deal he can do to sort of stabilize this real estate empire of his. And of course, I feel so conflicted because here's our friend from Fayo saying he's coming to the D and D building. He'll be opening a new showroom. We've got so many companies that we talk about all the time that are still in the D and D, still in the pdc. And I want those businesses to thrive and succeed. And so it's hard for me, as I went through this article, to separate my feelings about the design industry being caught up in the maelstrom of all of these different bankruptcies and deals and deleveraging for Charles Cohen. I found myself wanting somehow to extricate, if they could, the PDC and the D and D building from all of this. And I keep hoping that some new power player is going to show up and say, let me take these design centers off your hands, Charles. Let me make things a little bit easier by making that happen.

[Fred Nicholaus]

Yeah. Just to be clear, the Forbes article did not include the words evil lair. To the best of my recollection, that might have been a little bit of a Dennis Scully editorializing, but that's the.

[Dennis Scully]

Image I have in my head at all times.

[Fred Nicholaus]

Yeah, but I mean, like, you know, to sort of, you know, the article was talking about, obviously, he has got a lot of office buildings as well. He owns a theater chain. So there was, you know, there's a lot going on, on in the Charles Cohen expanded universe, but particularly on the design centers. The article pointed out that the D and D and the PDC had dipped below 80% occupancy. And notably in the interview, Charles Cohen did not issue a passion cri de coeur for you will pry the D and D building out of my cold, dead hands. I'm sure he wants to keep it, but I didn't get the sense that that was the number one message he wanted to convey. He's got a complicated business empire, and the design centers are only one part of it. And so, yeah, maybe there will be somebody who comes in and offers to take them off his hands. I don't know. Another question out of all of this is, what happens to the Dakota? It doesn't belong to him anymore. It belongs to this finance giant fortress. They haven't officially announced what they're going to do with it. We've heard some rumors. I'm not sure if we can report them out yet, but maybe if the person who ends up taking over control of the Dakota wants to make an offer for the other buildings, they can. But right now, I would imagine people in those buildings are at least kind of wondering about what happens next.

[Dennis Scully]

We've talked so many times about Charles Cohen, this notion of never counting him out. And as he said at the very end of this article, it's not over by a long shot. You always feel like he's got another card to play. He's got something up his sleeve. So we'll have to wait and see. I wish that we could bring greater clarity.

[Fred Nicholaus]

Yeah, we're just going to have to wait and see. But I do think losing the Dakota in a foreclosure auction was a very clear example of he's not always going to find a way out of this legal and financial drama. So I think that that opens the floodgates to further rumors about what happens next. So I can't say that we'll bring greater clarity to this next week either, but we will definitely keep an eye on it and try and keep people updated as soon as possible.

[Dennis Scully]

Absolutely. And again, we're rooting for the tenants of those design buildings. So that's where my focus is. Anyway. Moving on, Fred, we're going to talk about succession. Designers pour everything into their firms, but then when they retire or move on, what happens to their business? In a recent feature for boh's print magazine, Fred, you wrote about the complexities of passing down a design firm. And there are many complexities to all of this.

[Fred Nicholaus]

There are many. There are many. It's kind of amazing when it actually, it's the rarity when it successfully happens really much more than the alternative. It was a really interesting subject to dive into, I should say. Boh's print magazine is in mailboxes and newsletter stands now. Check it out or subscribe Online.

[Dennis Scully]

Just got my copy.

[Fred Nicholaus]

There you go. But it was really fun to dig into, just because I've often wondered, why is it so hard for a designer to pass on their business to the next generation? Is there a model for succession that works in our industry? And if so, what is it? And so those were the questions I went looking for, and I got some answers to some of them, as is often the case.

[Dennis Scully]

Well, I mean, it seems as if it's often especially hard for these legacy firms. You talked to David Kleinberg for this piece. Here's a historic firm, huge name. He certainly made every effort to create a succession plan, and then it went south. Tell me about that.

[Fred Nicholaus]

Yeah, well, it's interesting because I think David Kleinberg, who worked at Parrish Hadley, the iconic firm, came out of that experience thinking, like, well, I'm not going to do it this way, because I think Parrish Hadley famously never really figured out a succession plan. They kept kicking the can down the road, and ultimately the firm kind of fell apart when, of course, tragically, both sister Parrish and Albert Hadley died. And I think he was thinking, well, I'm going to do things the right way. And so he elevated, I believe it was five people in his firm to be co principals, renamed the firm to be David Kleinberg Design Associates, and got the ball rolling on succession much earlier, way before he was ready to actually retire, thinking, I will make this a clear conversation and set up a plan. And ultimately, what just happened is that some of them ended up moving across the country, I think, just because they got married and their spouse moved across the country. Others wanted to start their own firms, which is, of course, a perennial problem when you're trying to elevate somebody in your firm and just little by little over Covid. I think because Covid was such a disruptive force, I think that really ushered along a lot of the changes. Ultimately, all five of the people he'd elevated kind of quietly left the firm. At the end of the experience. He was like, well, maybe I tried to get this going a little bit too early. Maybe I should have waited until I was a little more ready to retire. But I also think he walked away from the experience thinking, like, this is hard. This is not easy, and there's no really simple right way to do this the way there is with some massive conglomerate or even a local hardware chain where it's not so tied to the name on the door.

[Dennis Scully]

Well, and we also see time and time again how hard it is for some of these greats in the industry to Walk away. Right. We think we want to create some retirement plan. But you talk to so many of these people, as I have, and it's the last thing in the world they want is to retire. The last thing in the world they want to do is stop working. And so many of them say to me, dennis, I will never stop working. So how can you put a succession plan in place and also cling to that notion?

[Fred Nicholaus]

Yeah, I think that's one of the really interesting things about it, is that I kind of walked into the article thinking, like, well, it's probably hard for them to find a buyer who wants to take over the firm, because, of course, like, you know, when you're David Kleinberg or another famous designer, clients want you, and when that name leaves the firm, what is there really left to buy? But it's equally a problem that people just don't want to sell. And I think that's, in some ways, one of the great things about this industry is that you really can keep doing it at a very high level until a very advanced age. I mean, I'm not going to reveal any numbers around designers ages, but some of the most celebrated people in the industry today are well past what you would call a classic retirement age, and they're still doing amazing work, so why not keep going? So there's all these forces that just make it extremely difficult. First of all, not everyone wants to do it, and even if you do want to do it, it's hard to make it happen. And so I think that's why it's so rare. It's truly a very rare thing for the majority of firms. It does not happen.

[Dennis Scully]

What I loved about this article, though, is in the cases where it can happen, or in thinking about how it might happen, the people that you spoke to brought some great clarity to, okay, if and when you are actually going to sell your business, here's the truth about how it's going to be valued and what you should be thinking about.

[Fred Nicholaus]

Yeah, I mean, I think that was a really interesting aspect of it. I mean, I think, like, you know, another problem is that people probably overvalue their own firm and their own business. And, you know, I think that's. That's true across any industry, really. I'm sure we all overvalue our own work a little bit, but I think especially it's true in design. And, you know, when someone takes over a firm, oftentimes they're taking out, like, a loan to do it, like a small business loan to do it. And, you know, the agency that gives out the loan is going to evaluate the business along financial measurements. They're not going to look at, oh, you were on the 8100, and that means it's worth this much money. They're going to look at how much money the firm is actually bringing in, and that can often put a price tag on a firm that's lower maybe than the owner thinks it's worth. That's one little niche of this. But, yeah, there are people who have successfully sold their design firms, and it was interesting. There's a few common threads. I think one of them is that, and this is simple and obvious, but if your firm is named after you, it is harder to sell. Most of the people who came up with the name for their firm that is not Joe Smith Design had better success in selling it. I also think that having some sort of connection to a physical, like a retail store makes it easier because it feels like there's a physical asset, a physical presence of the business. You're not just buying relationships, you're buying a thing that draws in customers. That makes it easier. I also think the Internet has kind of changed things a little bit because again, you have these digital assets like a website that people visit or an Instagram account with a lot of followers, and that's. That's an actual asset that's worth money. And I think that those factors have made it a little bit easier for some people to sell their firms. Another factor is there's just so many more design firms than there used to be. And there's a lot of people who are retiring right now. The baby boomer generation is retiring, and so we're going to see lots more people try it.

[Dennis Scully]

I'll be really curious to see some firms get taken over, and I would love to see more great succession plans work. As we've said, they're few and far between.

[Fred Nicholaus]

Yeah, I mean, I think it's heartening that it can work. I don't think it's ever going to become the norm for everyone. But I think there are reasons to be optimistic about a path for doing it. And I think a lot more people are getting a little more serious about prepping for it in advance. I think that's another thing that people do is they put it off too long. And so I would say if you're curious about what those things are, get on over to businessofhome.com, subscribe to the magazine, and get that in your inbox, because it's worth a read, if I do say so myself.

[Dennis Scully]

Good plug there, Fred. Well done.

[Fred Nicholaus]

Had to get it in.

[Dennis Scully]

Next up, Fred, we're going to talk about sad beige.

[Fred Nicholaus]

Sad, sad beige. For the Washington Post. Last week, Cassia St. Clair came to the defense of neutrals. Despite the online criticism, she argues that natural, muted tones have a lasting grade grip on the design industry. And I don't think most people would disagree with that. I just think people aren't happy about that lasting grip on the design industry. What do you think, Dennis? Do neutrals really need someone to come to their defense?

[Dennis Scully]

You know, if ever a group has a great PR firm working for them, it's neutrals. I mean, neutrals have become the tone and color of money, of stature, of sophistication. I mean, I think they've got great spokespeople working for them, and I think our industry is working overtime to make neutrals look good. I feel like. I feel like it's. Most of what's produced in our industry is neutrals. Right. You go to every fabric presentation, and it's. It's mostly neutrals, and I think it's that way for a reason. Yes.

[Fred Nicholaus]

Yeah. I mean, I think, like, quiet luxury is probably the best rebranding of beige that has ever. Ever been done in the. In the history of rebrands. Yeah. In some ways, like, part of me is thinking, like, like, does someone really need to come to the defense of a thing that is definitively a huge success? The angle of it was a little bit weird, but I do think it taps into sort of a perennial thing in the industry, which is simply that I think designers love color, and they love to experiment with color. And there is a feeling that, especially at the retail level, there really is a samey ness to the palette that's a little tedious and boring, especially when you compare it to past eras that were a lot more colorful. And so, I don't know. I have to say, I personally, I'm going to come to the attack of neutrals. I'm going to take the other side of this bet. I really do think that neutrals are just a little played out at this point. I mean, you look like last year, for example, at the failure of Banana Republic Home, which we've talked about on the show before. It was just like their stylistic playbook was just like, let's. Neutrals are popular. Let's do that. I think it has outworn its ubiquity, I think, if not its usefulness. But what do you think?

[Dennis Scully]

Well, I mean, so to take the other side, I'll use A quote from Billy Seglia, who wrote to me on this. I posted something on Social about it, and Billy says, I love beige. It takes a skilled hand to do it well. And he says, listen, color is easy, neutral is not. And I think so. That was interesting. Several designers wrote into me saying beige is the new black and that it works with everything. I think what's fascinating about our industry, all joking aside, is how many talented people can make neutral palettes look as beautiful as they do. Having just come back from Paris sitting through Rosemary Hallgarten's presentation, which just blows you away, neutral after neutral, but she does it. She creates layer and texture. And the Holly Hunt presentation and the DDAR presentation, they all find ways to make this neutral palette pop and have dimension to it in a way that is fascinating. So, I mean, I get it that people maybe are bored with it or tired of it, and maybe it's all of the rhness of it. And as you say, the Banana Republic presentation didn't blow us away for that same reason. But I just think it's tremendous how good our industry is at making beige and neutral tones look complex and interesting.

[Fred Nicholaus]

Yeah, maybe it's less about sad beige and more about getting rid of bad beige. I think is.

[Dennis Scully]

There you go.

[Fred Nicholaus]

There we go. Where's TikTok when I need to launch a micro trend? Can't get it working on my phone for some reason. Not sure why.

[Dennis Scully]

I know that's another reason to lift that band. Darn it is. So Fred can hop on there and say that. Anyway, I think the point of this whole discussion is beige doesn't need anyone coming to his defense. Right. I think that's pretty clear.

[Fred Nicholaus]

Exactly.

[Dennis Scully]

Yes, exactly. All right, that's it for the news, but there's plenty more to check out on businessofhome.com including February's Can't Miss Design events and the best debuts from Paris Design Week. We'll be back in a minute, but first, a quick break with Anthem plus Smart Showering. Only from Kohler. You can design a showering escape that commands up to 12 water outlets, supports custom lighting environments to match any mood, and allows for three levels of soothing steam set to music from personal playlists. Every moment asks the user to imagine, when you take a shower, where does your shower take you? Explore Anthem smart [e-mail] for over 20 years, Laloy has made its name in home textiles and customer service. Members of the trade have dedicated Laloy sales representatives to answer their needs with an easy to use website samples, fast shipping From Laloy's warehouses, access to exclusive trade only collections and showrooms across the country. Learn [e-mail] that's L O L O I rugs.com for an inside look at all things Laloy. Follow aloy on Instagram and TikTok. And we're back. We are going live on the streets of Vegas now to talk with BoH Editor in Chief, Caitlin Peterson. Kaitlin, you're at the World Market Center.

[Caitlin Peterson]

You can see it in the background here. Hi, Dennis. It's great to be here.

[Dennis Scully]

Yes, you're so great to come out on the street and talk to us because we wanted a live on the ground feel for what's happening at Vegas Market.

[Caitlin Peterson]

It doesn't get more on the ground than this. I've been here for a day and a half. It's been amazing. But I'm excited to tell you all about it.

[Dennis Scully]

I can't wait to hear. And so let's set this up a little bit for people. Let's tell people what World Market center and Vegas Market is all about and who comes to it and then we can get into the mood and what you're seeing.

[Caitlin Peterson]

Absolutely. World Market center is, I mean, the closest comparison I think that's going to be most familiar to the design industry is that it's something in between High Point Market and America's Mart. In terms of markets. It's three towers that are dedicated to the design, gift and home industry. And it's a really interesting mix of vendors in these buildings that are showing twice a year for the kind of home focused markets. And then there's two floors of one of the buildings that are at the Las Vegas Design center that's open year round for the design trade. So it's a really interesting kind of blend of that gift world, the home world and the very design, you know, the retail world and the very designer focused business happening at this market.

[Dennis Scully]

There was a time years ago when this first sort of burst onto the scene that they were positioning it as, oh, it's going to be a West coast high point and it's going to draw a lot of people that might not be able to go to high point every time. Has it become that, has it become that big a market in your mind?

[Caitlin Peterson]

I don't think, I mean, even just from a square footage perspective, these buildings are big, but they aren't going to replace the entirety of High Point Market. So I don't know that saying this is the west coast high point is quite right. But it's getting closer. And I think that's been really interesting to watch at this show. You know, one of the reasons we wanted to come here was that there's been more and more buzz about Vegas from some of the really big brands at the Beat, the big designer brands at High Point Market. You know, the more and more you hear people saying, like, oh, like we're opening in High Point or we're opening in Vegas. We want to get to Vegas. And, you know, Rockhouse Farm opened with six of their residential brands here this market. Bernhardt opened here, this market. You know, I think it felt like a really good time to come see what's happening on the ground.

[Dennis Scully]

Well, and that, I mean, to pick up on what you were saying, that was part of what we were so curious about because as you mentioned, I mean, so Alex Schuford shared with us that Rock House was going to be showing there in a meaningful way and combining a bunch of brands together. And as you say, Bernhardt as well, and some other brands that we think of more typically as showing at High Point sounded like they really wanted to see what Vegas was all about and have a meaningful presence there.

[Caitlin Peterson]

You know, and I think all of I visited all those folks yesterday and today, and they're having a really good show. You know, you walk into these showrooms and I think usually when you go to High Point Market, everyone's there to connect with designers, to connect with retailers, but they're doing it in a slightly different way. They've. They've got maybe a different come to market strategy, a different focus. And so you get this variety of perspective. And something interesting about being here that I've noticed is that for the most part, these kind of more High Point centric brands are coming here with a very similar and singular vision. They are in a smaller footprint. They are showing, maybe it's their bestsellers, maybe it's new pieces, but they're showing a very specific, very edited merchandise assortment. And the idea is really to develop connection, develop trust, you know, further relationships with west coast designers, really, anyone west of the Mississippi, and then have a catalog, have a website for them to shop deeply with the brand. But this is so much about brand experience and relationship building. It's been really interesting and amazing to walk into showroom after showroom and really hear someone tell you kind of the same vision back of just like, you know, we want to be here, it's important to be here, it's important to make this connection. But we don't necessarily need, you know, 100,000 square feet to do it.

[Dennis Scully]

Yeah, well, so when you saw, for example, what Century and Hickory and the Rockhouse brands were showing, could you get a sense of the decisions that they had made about what they wanted to show and how they wanted to present themselves?

[Caitlin Peterson]

Absolutely. And I think that's the perfect example. Actually. I'm glad you asked that, because, you know, when I was in there, one of the interesting things about that space is it's the first time that they've gone into a blank space, you know, a new showroom, and merchandised all of their residential brands together. And so, you know, each zone in that showroom maybe is a little more Hickory Chair, a little bit more Highland House, a little bit more Century. But they're merchandising in a really fluid and dynamic way to really tell a brand story, you know, about the entire portfolio. And I think in a way that they've never been able to do before. And so it's a different expression of those brands. I think it's been really exciting for them to see the designer reaction to that merchandising as well. You know, I think also merchandising in that way, having the opportunity to merchandise in that way way will probably show them really interesting things about how they want to show up together as a family of brands in other markets. You know, this may be a really interesting test for how. For the footprint of how the footprint of other showrooms start to evolve.

[Dennis Scully]

Yeah. It definitely sounded as if many companies felt that there were enough designers that they weren't reaching in High Point. That made it worth their effort and investment, because these shows are a big investment. It's a big production to get at all. Right. It's a lot of money to show up in Vegas and fill the space with furniture and then fill it with people as well. So, I mean, it's a big undertaking. They had been on the fence about it for quite a while this year. It seemed like it was time for many of these brands to take the plunge.

[Caitlin Peterson]

And I think anyone who's coming here, who's been here, maybe this is your first market, your second market, your third market here. This seems to be an incredibly successful market. Everyone who's here who's got numbers to compare to, but also brands who are new and kind of didn't have a barometer of what success was going to look like for them are really happy with the number of designers that are new or who they haven't had touchpoints with in a long time coming through their doors. But also, I think it is Very easy to get to for anyone west of the Mississippi.

[Dennis Scully]

Well, I was interested in some of the feedback that it sounds like you received from at least one designer who shared with you that coming to Las Vegas affords them the opportunity to actually build relationships with some of the executive team of some of these brands that they don't get to spend as much time with in High Point because people are so wildly busy and the spaces are so crowded. Yes, absolutely.

[Caitlin Peterson]

I mean, yeah, the metrics for success here are definitely smaller numbers than, you know, your attendance scans at High Point Market. But I think what that affords you is time. You know, everywhere that I went yesterday, the decision makers at a lot of these brands, you know, had a few minutes to talk. I'm just going to shout him out. You know, Niall Johnson is the person who really told me that, you know, this is a game changer market for him, and he's based in Philly. He's going to High Point twice a year to look at furniture, and he's coming here twice a year to make connections. He told me High Point Market is where you go for inspiration. It's where you go to source for your projects for him, you know, but he said, I'm coming to Vegas to make moves.

[Dennis Scully]

Well, it was interesting talking to many of the High Point brands and hearing that they didn't feel they had relationships with a lot of west coast designers and this. This seemed like a good path to that.

[Caitlin Peterson]

Yeah. And I think so many of them said, you know, we're having designers of, you know, an incredible caliber walk through our doors and say, like, oh, I think I've heard of you. And they're kind of floored. Right. I think it's easy to assume when you. When you've really planted a flag at High Point that everybody knows what you're doing, or maybe they don't shop with you, but they kind of understand what you're about. And I think coming to a new show is a really interesting way to see how far your messaging has traveled and maybe the work you have to do to really tell your brand story to a wider audience.

[Dennis Scully]

So in terms of what sort of has most jumped out at you or what you've seen, that kind of really made an impression. I mean, we were talking about Rock House earlier and seeing that, and interestingly, Alex talked about, boy, I sure would love to have a showroom one day. Right with that, had all these brands together. I mean, when you saw it, did it make sense? And could you imagine that? I mean, if some big showroom brand wanted to put all that together. Do you think that that's something that would make sense?

[Caitlin Peterson]

I think so. I think, you know, actually the same thing is really happening at Hooker Furniture. You know, I think they're doing the same thing. They. They've got 12 brands. They've brought in Caroline Hippel to really start to transform the way you interact with and shop with all of those brands as a family. Like, yes, it's great to have this family of brands. You also have to have a family of brands that's easy to shop. And so I think one of the interesting things in those conversations is that you have to merchandise together, but you also have to make it really a seamless shopping experience once you've gotten the designer interested in. In purchasing from your family of brands. And that's. I mean, you've talked about that on the show before, but that's a feat in and of itself. Right, to build up the infrastructure to make that kind of beautiful, breezy, integrated showroom experience feel the same online.

[Dennis Scully]

Yeah, no, absolutely. And I think, as we've talked about, many of the companies are feeling a little bit behind in their efforts there. Right. And so maybe, maybe this pushes them to make further investment online. It sounds like the Stump family came through Vegas market and walked away feeling as though people were hopeful, if not optimistic. And so I'm wondering, as you've spoken with people, is that your sense. Maybe people feeling more hopeful than necessarily optimistic at this point? But I mean, are tariffs top of mind? Are other issues that we talk about, things that people are talking about with you, or what's your sense?

[Caitlin Peterson]

A lot of the conversations about tariffs that I've had with, you know, manufacturers at some of kind of the higher end of the spectrum, I think they're just, you know, they're looking at what's currently proposed and they're sort of just ready to absorb it for the most part, you know, or that. Or that the price increase that comes to kind of offset those tariffs. Tariffs isn't going to be seismic. I think other parts of this market and of our industry as a whole will be a lot more impacted by that than the folks that I've visited with here.

[Dennis Scully]

Yeah, I mean, it's going to be really interesting to see how so many of these brands come away from Vegas. What they take away, what the lessons that they learn and how it impacts their thinking about their presentation and their business going forward. I. I'm wildly curious to talk to people after all of this is processed.

[Caitlin Peterson]

And I think there are brands who have been here for several years. Four Hands was a really early adopter and took a big space here. I was in Vanguard earlier talking to them and they've been here as well. And I think they are excited. I think they have encouraged other brands to move in around them. I think the critical mass, they are excited about the critical mass of like minded brands who are now here and drawing a really incredible designer audience. But I also think they've been here long enough to know that this works, this is important, this is good business and that also that this market is going really well.

[Dennis Scully]

Well. And so I mean as we were talking about earlier when we were talking about Nile and his experience, I mean if you're a designer and you're, and you're on the fence about coming to Vegas, what do you think some of the reasons are to really reconsider it in a more meaningful way? I mean, as we talked about perhaps a greater opportunity to build relationships with some of the key figures at these, at these companies? It sounds like.

[Caitlin Peterson]

Absolutely. I mean, I think it depends on where you are. I think this is absolutely a regional show, but I think there is, you know, I met earlier this morning with a handful of Vegas based designers. So this is the show in their backyard. Obviously they're shopping the show a little differently than someone who flies in. They're sleeping in their own bed. But you know, they talked about the fact that for them this is a really important market. You know, they're also using the design center here and they're still going to high point maybe once, once again year, once every other year. And that, you know, as we sort of alluded to earlier, this isn't necessarily a replacement for an immersive experience with everything a brand has to offer. But you know, if you are looking to make connections, you know, as Niall said, make some moves, you know, and really make deeper connections with, with the brand. I think this is a great place to be, especially if you are sort of in the mountain west on the west coast and this is where your rep is and this is an easy resource for you.

[Dennis Scully]

Well, and so it's been quite a few years since I've been to this market, Caitlin, but last time I was there, Julia and I had some elaborate Vegas themed dinners and lots of events. And so I mean, is there that whole Vegas element that plays a part in all of this? And do you come for that experience as well?

[Caitlin Peterson]

I think there's a lot of people having a really good time, you know, and I anmore who puts on the show I mean, they hosted a really great designer party last night. So Monday night at one of the kind of event spaces here. And it was fun. It was a scene. There was just a lot of people mixing together. But I think there are also just a lot of dinners. You see people at some of the big restaurants and some of the. I haven't seen anyone at a casino, but you see people in the big restaurants. I had the amazing rigatoni at the Cipriani last night, and it was a good time. I mean, yes, I do think.

[Dennis Scully]

Thank you.

[Caitlin Peterson]

So, you know, we were talking last week about the fact that, you know, it's really hard to turn down a trip to Paris and shop. I think it's also, you know, there's always a good reason to hang out a little bit in Vegas. Right. And I think that is absolutely part of the energy and the vibe and the kind of success of this show is the fact that it's a really fun place to hang out and be well.

[Dennis Scully]

Right. Great dining to be had. It sounds like. It sounds like there's a lot of fun and energy and you get to see some of the brands that you love and see them when they're perhaps not as crazed. Well, I'm thrilled to get to talk with you about it, and I so appreciate you coming out on the street for a little while to talk to us about it.

[Caitlin Peterson]

I got a few more showroom stops and then a steak at the Wynn with my name on it. So.

[Dennis Scully]

Well, have a delicious dinner at the Wynn and enjoy the rest of your trip. And thank you again for talking with me.

[Caitlin Peterson]

Thank you, Dennis. It's always so great to be here here.

[Dennis Scully]

And we're back. We're getting to the end of the show here, but before we go, we like to take a second to highlight anything going on in the industry that might have caught our eye.

[Fred Nicholaus]

Fred, R.H. caught my eye this week. Surprise, surprise there. There was a really interesting. And it's. It's complicated to get into to what Hunter Brook is exactly, but it's a hedge fund that does short selling, so they bet against the stock of companies. But they also released these reports about the companies that they're trying to short, and they did a big, very vicious one against the company formerly known as Restoration Hardware. Largely, the critique of RH's stock and business was sort of like, you know, kind of a bringing together sort of familiar critiques around how they don't have as much cash on hand as they used to and they're spending on jets and yachts. And, you know, stuff that we've talked about before on the show. But they put it all in one place and tried to really make it seem like a very, very explosive expose. It was interesting. It didn't seem to have a huge effect on the stock. I'm sure we'll talk about it more later. But it definitely caught my eye and got me reading. Did you check it out?

[Dennis Scully]

DENNIS I did. I spent more time, honestly, than I should have with it. FRED But I just kept pouring over it, as you say, we've talked about so many of the issues that it addresses, but it really does does drive home this this point that, yes, they are spending a lot of money, yes, they've borrowed a lot of money. And it'll be interesting to see when the next earnings come out, if people raise this at all.

[Fred Nicholaus]

BEN that's going to be a we should host a listening party for that. Get the popcorn out.

[Dennis Scully]

Absolutely. I long to do that. You joke, but I long to have that listening party.

[Fred Nicholaus]

All right. Well, listeners, stay tuned. What caught your eye this week?

[Dennis Scully]

DENNIS well, another thing that I've been poring over is the the earnings report from lvmh, which is such a fascinating, huge luxury good company. And there are often so many parallels to be drawn to with our industry. And, and as we've talked about, a little bit luxury in in this world has been been struggling a little bit. But one of the things that really caught my eye was the level of advertising and marketing spend at LVMH. Last year they spent 31 billion euros, or 37% of sales, 37% of sales went to advertising and marketing. And I have so many companies in our industry say to me, Dennis, what percentage of sales should I be spending on advertising and marketing? And we are an industry in the home world that is notorious for under spending and under investing. And this is why getting back to rh, this is why RH has eaten the industry's lunch, because they spend so much money on marketing and advertising. And I'm always preaching this message that our business is so behind. And when you really talk to business leaders in our industry, they know this, they recognize this, which is why I was glad in the conversation with Caitlin about what what's going on at Vegas market, I was glad that some new companies are showing up there trying to get themselves in front of some new markets. But when you hear that LVMH is spending 37% of its sales on marketing and advertising, it really, I hope, makes this industry ask itself and what are you all doing and the answer should be more. You should be doing a lot more. So get on that industry.

[Fred Nicholaus]

All right. From. From your lips to CMO's ears.

[Dennis Scully]

Well, that. That's my hope. All right. That's all the time we have today. Thanks so much for listening. If you want to keep up with the latest news, browse job listings or take a workshop, visit us [e-mail] if you want to get in touch with the show, write to [e-mail] this episode was produced by Fred Nicholaus and Caroline Burke and edited by Michael Castaneda. I'm Dennis Scully. Have a great weekend, and we'll be back with you on Monday.