Peter Dunham takes Manhattan

0:03This is Business of Home. I'm your host, Dennis Scully. Every week I'll be speaking with leaders and innovators from all corners of the home industry. My guest this week is Peter Dunham. By day, Peter runs a busy design firm. He's also the owner of one of LA's most notable showrooms, Hollywood at Home. Last time Peter was on the show, he was navigating the confusions of COVID. Now Peter's going by Coastal and opening a new showroom in New York under his own name. I spoke with Peter about the difference between design culture in New York and L.A., why textiles are like lipstick, and how he knew he was finally ready to expand.

0:54This podcast is sponsored by Lalloy, whose latest introductions include seven new handmade good weave certified rug collections, as well as new collections from Bridget Romanek, Magnolia Home by Joanna Gaines, Amber Lewis, and Jean Stouffer. Visit lalloyrugs.com to explore them all. That's L-O-L-O-I rugs.com. And follow them on Instagram and TikTok at Lolloy Rugs. This podcast is also sponsored by Krypton. Krypton Fabric and Rowe Furniture are transforming domestic performance upholstery through their commitment to responsible manufacturing and timeless design. Rowe's trade program is designed to elevate and simplify the designer experience, offering 24-7 access with full pricing transparency, enabling you to customize pieces in real time, order fabric samples, place orders, or save selections for later, all at your convenience.

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2:38Listeners know that you can go back into the archives way back in March of 2020 and find an earlier conversation that Peter and I had during the depths of COVID. And it was quite a fun conversation. Much has happened for you since then. And I want to talk about all of it. But Peter, for listeners who might not be familiar with everything that you do, tell us how you spend your very busy days. Well, I'm going to preface, if you think my maths is bad, just bear with me. But I spend about 60 % of my time on interior design projects. Currently, we have about six ground up or gut renovation projects, which tend to be the kind of projects we're pulled into.

3:24So that takes up a lot of time. You have to spend a lot of time with clients and getting them through every slab, every faucet, every door handle. It takes a lot of time and energy, and I love doing it. And then I spend about 25 % of my time on textiles and another 25 % or 30 % on Peter Dunham Home and Garden and Hollywood at Home in Los Angeles. And, you know, essentially developing and designing the furniture collection, then spending time going out there promoting it, doing photo shoots and all the other stuff you have to do in that type of business. I don't really do the day-to-day management.

4:05God forbid. But I do, you know, obviously all the creative and all the promoting and the using and kind of like keeping all the pieces working together. So it doesn't come up to 100%. My point is, I think it's very hard to just be a designer and work just 100 % of the time. So it's like that for design. I think we're so overstimulated that it's hard to put down the pen and switch off completely. So when you have more than one thing to do in this business, you definitely work more than 100 % of the time. Yes. Yes. Well, it definitely sounds like it's a lot more than 100 % of the time. And we should explain Hollywood at home for people who haven't had the pleasure of coming and seeing that amazing space with your furniture line, as you describe, your textile line, but also a range of other things in there as well.

5:00So I started being a designer about 25 years ago when I moved to Los Angeles from New York. I was very happily ensconced in New York. I was working in the real estate business, primarily doing residential sales, but also doing some renovations and developments. And I fell in love with somebody in Los Angeles. And for anyone, for the record, I do not recommend upending your whole life and moving across the country. Chasing after someone for love, Peter? You don't recommend that? it kind of worked out well and what it really gave me was the opportunity to reinvent myself because suddenly i had the time to think about it and i just made this this chunk of money selling a crack house in greenwich village that i bought when it was a crack house and converted into a single family house and restored it to its kind of federal style you know charm and with the money moved to los angeles and i started flipping houses and then people kept on asking me to renovate and it was during the clinton period where you know i think a dog could go to get a resale license and become a designer there was so much work to be had so i started designing and very quickly afterwards i started doing textiles for some of my projects for private clients and i did a show house pushed hard by Mary McAvoy, the legendary Mary McAvoy.

6:27And with that, I used my fabrics on the walls and all these things that I'd been making. And after about the fifth person asked, you know, where can I buy your fabrics? A little bell went on in my head. I should quickly get a collection together before the House Beautiful publishes the piece on the show house in Los Angeles. this. So I did that quickly rushed around and got about eight designs together. And when the magazine came right off the press, I was in New York with a wheelie. I went to see Albert Hadley, who was the first person I called him because I had a friend of mine working there.

7:03And he said, wow, this is great. And he was peeling through the things. And he was very, very charming, working at his small office after he had left Parish Hadley and he was working on his own. and he picked up the phone and sent me off to John Rosselli saying to John, hey there's a kid here that you need to see, I think you'll like his stuff. So off I wheeled off to the D &D building, met John, he said I'll take you and then I went to Thomas Lavin in LA who took me there and then a couple of years later I decided in LA that I really wanted to have my own space. And then two years later, the 2008 crash happens and the rents plummet on La Cienega and the space comes up on La Cienega.

7:48And I said, OK, well, let's go. So that's what we did. And we were in the first space, which was about 1 ,100 square feet for a couple of years. And then we opened another one a little further up the street. And Joe Lucas in Harbidjian followed me also to La Cienega. he took advantage of the lowered rents. And we were next door to each other, and there was Lucre Antiques and Pat McGann. And it was just like suddenly this revitalized community that had begun to be sort of pushed out of Las Cienega by fashion brands. And fashion always pays much more than home does for their stores. So suddenly the fashion business collapsed.

8:30You know, they all went bankrupt. They left all the spaces. They ran away. and we were left to pick up the pieces and re-establish ourselves as a as a design community and from that came of course the Los Angeles design quarter and legends of the Cienega so five years later another big space opened up across the street with our same wonderful landlords so we popped across the street to a bigger space which is now about 4 ,500 square feet and we sell vintage. We sell our line of made-to-order furniture. We sell our in-stock tea collection. So it's kind of the mix. Plus we sell seven other indie lines.

9:15And now we're taking it east, as you know, to the New York Design Center and just opened. But that was kind of the nexus of the textiles and Hollywood at home. When did you first start thinking about New York? Because I know, and you've shared with me in the past, that you were getting a lot of interest from the East Coast. And I wonder when you started seriously thinking about it and how you ended up at the New York Design Center and why now is the right time in your mind and all of that. So take me inside that process? Well, it's the term, there's no time like the present. We'd actually been thinking for a couple of years.

10:00Obviously, you know, we'd just moved into this big space, so that put us on hold, and then COVID put us on hold. But I think before that, we'd already were looking very seriously in New York. I lived in New York for 15 years straight out of university. New York is definitely my first home where I've always felt most at home, like many gypsies like me. So, you know, it was always in the background. And I think part of what was holding us back was kind of the financial commitment and also the bandwidth commitment. You know, we were always struggling with management. Once I got the management in place and really strong team, which I have for the past five years or so, it felt a good time to go.

10:49I mean, I wouldn't have been able to do it on my own or with anything less than the team I have, who are great. So, and the real point is also, is that you wake up one day and realize, oh, wow, you have a fantastic production team. You have a great management team, like I just said. You have a great production team. You have a big warehouse. house, you have people who move the stuff around, you have really good social media, PR promotion, a creative department, all the things that different people have these tasks. And you realize, wow, you actually, maybe that's a fixed cost that I can defray by having a second location and not increase that part of the overhead, but hopefully capture two streams of revenue.

11:38And for the past few years, we've been doing more than 50 % of our business east of the Mississippi. And, you know, it feels I've heard somebody else who came, the guy who runs Romo on your podcast saying, you know, the eyes of the world are on you in New York. And I think everyone comes to New York to shop, but also New York is such an enormous dynamic market on its own doing jobs everywhere. And in addition, people from America go shop in New York, certainly from the East coast. They want to, and even from the West coast, they want to see what's going on in new york and there are lots of amazing events that pull people you know like icff and what's new what's next and you can go on and on about all the different events and all the big antique shows and so i think that it's very important well it was important to us to have somewhere in new york where and the designer came in the first day we were opening literally peel the paper off the windows and oh i'm so-and-so and you know we I buy from you through LA, but thank God you're here now.

12:42I can try out this chair I've been dying to try. And I can test it for the client and then maybe take it with them to show it to them. I said, you've made my day. That's made it worth all the expense and effort to open because that is what I believe is missing, is people being able to drop their butts in my chair and see that we make very comfortable furniture and seeing the quality and the touch of what we do. Yeah, no, no, it's, I mean, it's remarkable how much you do still need to see and touch and feel and sit. I'm wondering, in thinking about New York, and where exactly to be? So here you are in LA on the street.

13:26And my sense from you was that you never really wanted to be in the Pacific Design Center, for example, you seem happier on the street. But in New York, there are different options. So the James showroom decided to go in the interior arts building on 61st street, right? And John Rosselli is in the D &D building and there's the New York design center or Zach and Fox decided to go on the street yet again and try and make that work. And so, I mean, there are choices. How did you think about that decision? I would say, and I'm going to say I love all the showrooms you mentioned, that all friends. I know, I know you know them all.

14:05John Russo has been the most supportive partner since the beginning, as I mentioned. And as I told Jonathan Gargiulo, his nephew who runs the business, we would never have left you for another showroom. We only left you because we need to market our furniture with our textiles. So it makes complete sense and tell our story in a kind of a broader way. James is a huge supporter, you know, is a huge supporting partner. We do a lot of business through their showrooms in Dallas and Houston and before in Austin. And Zach and Fox was a friend and somewhat collaborator before he even started, you know, his wonderful collection.

14:45So all these different places have their different vibe and different reasons to be in different places. So I would say for us, primarily, the relationship, I mean, Jim Drutton was a very big part of that decision. The building works so incredibly for the design community. We don't, we sell 80 % of, at least 80 % of our business to the trade. Designers are the core of our business. And we love it when retail customers come in and share what they like and buy. but you know they take a lot longer for each transaction and they spend a lot less than the designer so the new york design center was traditionally a much more furniture friendly place and jim's done an amazing job in promoting um and attracting textile lines to the showroom and it keeps on growing so you know we took a while to see how strongly that was happening and then we were going to plunge in a year ago and then economically california was very sort of stretched with the strikes and the real estate market being sort of frozen etc so we gave it a break for a year and then we thought okay now's the time to pivot 2024 is the pivot year we've got this election feels like interest rates are probably going to come down it feels like okay we've got to do it now or we're never we're going to be opening our showroom the subway underneath 200 flex and not in the actual building so it just kind of was a no-brainer for us opening the street makes a lot of sense if you want to attract retail you're paying a premium to get foot traffic from retail but if you sit which i have in the show and seen the traffic that come around the floors of the New York Design Center, you get a lot of really pre-qualified people walking through.

16:43In addition, you've got like a freight elevator. You have a loading dock. I don't know how I can even repeat it. It's amazing off-street loading dock. So it's just like very easy, particularly if you're from far away. It's incredibly convenient building to be in. And I see why in a very challenging commercial real estate market, Jim Druckmann is probably envied by many other landlords. I think his occupancy rate is basically almost 100%. No, absolutely. And I mean, I'm so glad that you mentioned that because I feel like recently I've been beating up on some of the Cohen properties. And it's important for me to point out that the New York Design Center is one of several examples that one could point to around the country of design centers that are actually doing quite well.

17:36And people remind me all the time about ADAC in Atlanta and the Dallas Design Center. And there are markets where design centers play such an important role. And often when I ask people what makes them work so much better, it tends to be the landlord, the owner of the building is what makes the difference. And that is certainly what makes the difference at the New York Design Center. And I don't need to do any more PR for Mr. Druckmann than I already do. But you and I are on the same page about what makes that building work so well. And part of it, as I shared with you, it's just his excitement at your arrival.

18:17I mean, Jim took me to your showroom as quickly as he could when he and I were having lunch, is he couldn't wait to show it off and he couldn't wait to see all of it coming together. And I think that that enthusiasm is contagious and just speaks to what makes that building have the energy that it does. But it's interesting, too, you mentioned about John Roselli. And so often, and the people from the James showroom shared this issue with me as well when they were on the show. So often when you move to a different market, you've got some lines that are already shown in a market that might have been in your space, or you were in a showroom and had to move out of.

18:59So you don't have everything that you have at Hollywood at Home in this new Peter Dunham home and garden space. And so tell me how you thought about that. And is it tricky to kind of maneuver all of that? Well, the trickiness I'm going to tell you in a year when we see how our sales are doing as a standalone showroom versus being in a multi-line showroom that has decades of clientele and decades of skill at selling their fabric and and great teams so it's a big focus of ours i think the world sort of changed now unfortunately you have to do all these different things to sell your same yardage or your same furniture you really do have to have some kind of brick and mortar if you're selling luxury furniture you really need to have an outside sales team you really need to have fantastic promotion you need to do have pr company you need to do things like books participate in show houses i mean you need to hit everything from every angle i mean you know we have a fantastic pr company this with blitzer you probably know who has made a huge difference to our business and you have to have all these different costs built in to make it work and one them is obviously um that but to answer your question the the the cross the the i will miss i think the sense of community with the other lines without a doubt um i will miss the the talks we have and the things we share this in the same way that when we go to do those those um design social pop-ups you know you sit down at dinner and you compare printers and techniques and all these things together that said i think it was i was at a stage now with the size of the textiles that i could i think i could stand alone particularly in a building that had a lot of other brands in it in in los angeles we were in a standalone territory in a standalone building I was incredibly smaller textile line at the time when we did it so I think it it attracted the traffic but I'm hoping that in New York it'll make up for the fact that we're in a building with a lot of traffic into itself that my line is bigger than it used to be that we also sell a lot more other stuff than we used to you know Hollywood at Home started as a textile show with a little bit of furniture for my storage or that I would be making for clients in all the corners just to fluff it up and then people kept on buying the stuff and i realized oh i need to keep reproducing furniture making or buying vintage now we have a vintage business and now we have a furniture business so it's it's so much more fleshed out that we felt it was less distracting to be on our own and we could tell our story on our own you know at hollywood at home we make a huge effort both on social media and in the store itself to represent the different lines so that they have walls and they have furniture covered in cushions and and we tag every single thing that anyone ever uses of their fabric on our on our instagram and you know it takes a lot of uh effort and focus to be doing that whereas now we can sort of concentrate that bandwidth just on our own brands which kind of makes more sense so it's it's difficult to be i think to be in New York in a more mixed in a more mixed environment would be more challenging for us to keep the interest and the focus

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23:55It's interesting, Peter, what you mentioned about, oh my goodness, today you need to be hitting people in so many different places. We had the great Thomas Lavin and Joby Blocky on the show recently telling us, okay, so we had to go out on the road because all these people kept telling us they weren't going to come to the showroom. So we show up in all these different places and have a very different kind of conversation. You, as you mentioned, you show up at the Design Social Pop-Up all over the country, introducing yourself to people and the social media. And you have a book coming out in the spring, which I assume will be another big roadshow for you.

24:33So rest up now because that's coming. But I wonder in all of that, you also have an e-commerce component to your business. And I wonder, we've talked recently about the challenges of e-com. How has that been for you? This has been really interesting. I mean, I'm relatively un-techy in general and the only type of shopping I love to do online is live auctioneers, basically. But it's actually been good. I think we're going to hit a million dollars for the first time this year on e-commerce, which is when you're selling primarily throw cushions, blankets, in-stop teak, more and more. It's pretty good.

25:18I mean, I would say one of the challenges of the business, particularly when you come to furniture, is shipping. Shipping is a huge part of it. And the ever feared abandoned shopping cart is, I think, the shipping when you get to the end. So I think that was part of also opening in New York is my ambition is to get together with a group of makers in LA and we share our same truck going ourselves with our own driver once a month, once every six weeks so that we could really reduce the cost of the shipping, which I find prohibitive across the country. I mean, I think people do spend the money on it, but I think if the shipping was much more comparable to shipping it from Connecticut to New York or from North Carolina to New York versus Los Angeles to New York, I think we'd sell a lot more.

26:14So I would say it's a big challenge for people like us who don't have these huge, huge margins to be able to ship for free or close to free. I mean, I remember for a long time, First Dibs was doing really well because they were offering really, really subsidized shipping. So we would tell people, don't buy directly from us. Just go to First Dibs and buy it off of their shipping is way less. I think they've given up that money-losing, that money-draining idea. Yes. And I think the rest of the community is slowly beginning to come up to the fact that they need to charge the cost of shipping to the consumer, which is a problem.

26:54Well, so how did you think about that with the New York operation? So as you've been getting the showroom ready, all these trucks have been arriving from the West Coast, I gather, with all the throw pillows and everything else. How have you been thinking about how you're going to handle that out of New York? Well, we've been talking about it to my friends at Nikikiho. We were talking about the struggles of shipping, how we're gonna handle it because they opened recently and they do a slightly different business than we are. But essentially they're moving stuff from LA to New York to fulfill orders.

27:30Lawson Fenning's about to open in, I think in November in New York. There's a couple of others. I knew of a brand in New York that's shipping to LA once a month and then they're sending the truck back empty. So we're going to sort of figure it out. But one of my biggest focuses is to bring down the cost of shipping by shipping it ourselves regularly and cramming in our own trucks and sending somebody across the country, whether it's consolidated between us or alone. But I think that is going to be the only way to beat the third-party shipper and bring it to a warehouse in New York, and then people can ship from there or pay to pick it or pick it up from there.

28:12Okay. And will there be cash and carry in New York? Can I walk out with some throw pillows if I go next week and buy some? Oh, my God, yes. We'd love to do that. Okay. And we do, you know, weirdly enough, somebody said to me, oh, we don't do that in New York. I said, you don't do memos in New York? I said, much less than you do in LA. I mean, people literally walk off with half your inventory to do an instruction. To shoot. Yeah, yeah, yeah. And you hope they bring at least only 40 % back. You know, they took 50. But people, that culture of taking things to people's houses and doing it's huge.

28:46And you can do that with us in New York. Like, go try the lamps out for a few days and try the cushion. Just don't use them for a party and bring them back on Monday. We'll know. Exactly. You'll know. So tell me, we talked about interest rates coming down and Jerome Powell coming out and telling us, yes, good news. We're getting ready to move. And it sounds like they're going to do several rate cuts over the next few months. Do you think that that's going to have a meaningful impact on our industry? Is that going to free up the housing market in some meaningful way? Or have we overplayed that a little bit?

29:30Oh, I don't think so at all. I think the real estate market has been frozen for different reasons. In Los Angeles, obviously, we now have a mansion tax, which Jamie talked about. Jamie Bush got quite worked up about. Yes. Yes. I mean, you know, and I agree with him. The money. You share his sentiments. Absolutely. I mean, you're never going to resolve the enormous, enormous cost of rehabilitating people who are, you know, who are homeless. It's huge. It's a daunting problem. And I think just these small things like taxing people's$5 million houses, I mean, how many transactions do you think there are every day in Los Angeles above$5 million?

30:18And I don't know what the tax is, but let's say it's 2 % of it. I mean, how many of those$100 ,000 are contributing to doing anything meaningful for the housing problem? So yes, I completely agree with Jamie. The mansion tax issue. Yeah, yeah, yeah. No, absolutely. It's so, I mean, listen, it's so easy to say, let's just tax people who have the money. Nobody's going to miss it. And we can go like, and we'll put it to this. But like James said, the money's very small and the problem is very, very big. So that aside, I think the interest rates, what's happened. And I feel the same. I went on a bit of a real estate glut, having a real estate background in the last 20 years because i thought okay i'm gonna buy assets that i can you know retire on if nothing else works and i can't make any more lampshades or cushions or ashtrays whatever i'm making um i can you know have some red estate but i can't really afford to sell them because they're all with loans under 4 and what am i going to do pay capital gains and thing what am i going to do instead and if i buy anything you know i'm gonna have to pay seven or eight percent interest so if you think about how much the average person spends when they buy a new house it's a big engine of economic activity and if you want to slow down the economy and you want to stop people buying refrigerators and dishwashers and new dining room tables and whatever it cuts back a lot of expense but i think you know we We have this huge, there's a huge buildup of people who have not been able to move into the house they want to.

31:58They're still living at home. They've been making money. They've been saving. This combination of very high prices because there's no supply and very high interest rates means the cost of owning a house is like more than doubled in the last three or four years, which is insane to think that. I look on Zillow all the time and like you look at something and it's like a one bedroom apartment in New York it says you know estimated monthly cost twelve thousand five hundred dollars I mean like that's insane you know so the problem is that a lot of people who have savings in my generation obviously like getting five percent return on safe investments so you've got to look at that too the one thing that's been a godsend for us is that we have textiles and textiles always seems like the lipstick in a recession or in a depression where you know a woman might not be able to buy a whole outfit or a new handbag or a new pair of shoes but she could always go and buy herself a beautiful chanel lipstick and the textiles feel like okay i'm going to change the cushions on my sofa and i'm going to change the curtains i can't stand it anymore So while sales of furniture might be down, as I hear from business of home quite a lot, I think sales of textiles have been quite strong.

33:22I don't know if I've heard that completely from you. But I think at least people, I'm not hearing a lot of bankruptcies that you're reporting on in textiles. I'm hearing them in furniture retailers and furniture manufacturers a lot more. No, no, no. It's a great point. And interestingly, I think at the beginning of this cycle, we thought there might be far more consolidation. You remember when we first went into COVID, we lost Dongia to bankruptcy. And many people thought that was the first of many dominoes to fall. And then that didn't happen because, of course, business exploded and took off and everyone was wildly busy.

33:58And the people like you who had furloughed people had to quickly bring them back and have them fulfill all these orders that showed up. But the question has been for the furniture industry, we seem to have pulled forward years worth of business. And that didn't seem to happen as much for the textile industry. The textile industry seemed to hum right along. To your point, maybe people just wanted to change the curtains or the throw pillows. And now the question is, if people are at least convinced that rates are going to come down enough, will that bring all of that business back and all of that turnover?

34:38And will we catch up with all the pull forward that we've had? Did I get the statistic from business at home that 70 % of real estate belongs to baby boomers? Well, it's a huge number. You know, this huge amount of money is basically of asset, basically held by baby boomers who are retiring, who are empty nesting, who are moving to Florida or Texas or wherever they were moving to and want somewhere smaller. Maybe they want two homes, not one. They've spent almost the last five years frozen. So there's this huge sort of buildup of people who desperately want. I mean, I would love to change my house.

35:21I didn't intend it to be a long-term solution for me. I have a warehouse that I would love to convert into Hollywood at Home in Los Angeles, but I can't really borrow the money to do the work on it for less than 11%. So even for people, not just for people starting up, but for businesses where they want to make business decisions and expand and open a new store and opportunity or whatever, my move to New York was financed out of cash. There was no bank there giving me a line of credit at 5 % or the SBA. And so you think about those decisions and you pass them out very, very carefully. Every big investment like that.