Crate & Barrel, new chief exec navigate retail dive

Fresh out of college, Barbara Turf walked into a home furnishing store in Chicago in 1968, seeking a part-time summer job at an upstart boutique called Crate & Barrel.

Four decades later, she's ascended as well as the store morphed to a national chain whose products are contemporary home staples.

The 64-year-old president of the privately held retailer became chief executive this month, replacing founder Gordon Segal, who had held the post since he and his wife opened their first store in Chicago's Old Town neighborhood in 1962.

Turf's new role comes as the Northbrook-based company, now owned by Germany's Otto GmbH, tries to weather an economic and housing downturn that's sending the housewares sector into a tailspin while causing some other retailers to file for bankruptcy protection, close stores or scale back operations.

Howard Davidowitz, chairman of the retail consulting firm Davidowitz & Associates, said Crate & Barrel's product development, attractive merchandise and affordable prices mean it's among the best-positioned chains to ride out the turmoil.

"This company's in the worst segment of retailing, where almost no one is doing well," he said. "(But) I think they are positioned to succeed. I think they're among the best out there, but it's just very hard right now."

The company, which operates 170 Crate & Barrel, CB2 and Land of Nod stores, had sales climb more than 10 percent to $1.31 billion last year and expects those figures to hold steady while it opens eight new locations this year.

In an interview with The Associated Press, Turf acknowledged the effects of the worsening economy on the closely held company's financial results, but said she's confident Crate & Barrel's conservative strategy will help it thrive while rivals stumble.

Q: Can you walk me through what some of your goals are for the company under your leadership?

A: Well, I think there are certain areas of the company that are non-profitable that we need to focus on and pay attention to -- whether it's repositioning a store or repositioning operational issues that can make it more profitable. (We're looking at) growing the business beyond the traditional ways. That means you don't have to put a store in every mall as much as you have to look at how the Internet has changed retail bricks and mortar. ... I think the catalog has to be addressed with the green environment. ... Beyond North America's borders, we're trying Canada right now for September.

Q: With the catalog, do you think you'd ever phase that out?

A: First of all, our direct marketing business is critical. We're not going to ever phase out of the catalog. That's too important. And it means too much the customer. But does it have to be so big? That's what I'm talking about.

Q: What's the status of a possible store in Dubai?

A: We're still exploring it under due diligence, like lots of other retailers are, to see if it makes sense.

Q: Are there other markets that you're examining?

A: We're going to put an international committee together with our partners in Germany to start to look at globalization. Does it make sense to go into China? Does it make sense to go into India someday? What about Europe? We just have to do a whole lot more homework, but I think it's an opportunity for Crate & Barrel along with other retailers to look at borders beyond the United States.

Q: How is the company weathering the economic downturn?

A: Certain pockets are definitely suffering. I'm actually pleased that we're holding as strong as we are. I think the economy is such a challenge right now. Maybe there's just too many stores or too many weak sisters in the playing field and that's what happened to them. Maybe there was too much growth too quickly. We've always been such a conservative growth company in the sense of being able to capitalize and not just do growth for the sake of growth, but to grow more methodically.

Q: Do you expect sales this year to increase?

A: We expect it to be very tough. And I think that's why we need to focus on profitability as well. You're not going to see increased sales jumps like we've been used to for the last 10 years with home furnishing.

Q: Do you believe your company's history of conservative growth insulates you?

A: I don't think anybody's insulated. I think we have a solid financial sheet and I think we're going ahead with plans as usual and hoping for the best. But I think you can't retract yet until you see what's really going to happen.

Q: Do you think that there's going to be more bankruptcies within the home furnishings market?

A: Yes, I do. I do think there was too much growth in the last 10 years with some weak competition. And I think a lot grew too fast.

Q: You don't anticipate Crate & Barrel being among them?

A: No! I really don't.

Q: How do you keep shoppers coming into stores?

A: It's a challenge. I've had so many people describe the joy of being in the store. And I think sometimes, even when you're a little bit depressed about your economic status, if you go in and buy four yellow placemats at $3.95, that's going make you feel better. So I guess I feel we're still a fun place to be.

Q: Do you think that you're going to slow down your (expansion) pace to deal with the economy?

A: I think that will be under discussion depending upon how things go. I just think we have to be very careful about where we put our bricks and mortar in the next couple of years. Because of the Internet, we really have to think about making that more synergistic with the store and making it easier and more seamless for the customer to shop both channels.

Q: How do you think Crate & Barrel will be different in the future?

A: We have always been a company that has evolved and we will continue to evolve, reflecting the American lifestyle -- whether it's healthy eating, or it's storage, or being more environmental. Whatever is addressing America, we will try to reflect that.

Q: The green living and green products seem to be in right now. Is that just a fad?

A: No, that's not a trend. It's here to stay. I think everyone with education really realizes that the planet is definitely in trouble and we need to worry about it more. And I think it's coming down the mainstream.

Q: Are customers willing to pay more for a product that's green?

A: I would absolutely say yes. I think people will be committed to it.

Q: How long do you think you're going to stay on as CEO?

A) My legacy will be to the put the next generation in place. Because both Gordon and I are committed to keeping this company going for the next 20 years. And I certainly won't be around when I'm 80. I definitely feel my commitment is to put the next leadership generation in place.