The Thursday Show: A tariff turnaround. Plus: The quest for a designer-approved recliner

0:07This is Business of Home. I'm Dennis Scully and welcome to the Thursday show. Today we're catching up on the biggest news in the design industry, including a tariff rollback, Lawson Fenning's surprising deal, and the rise of the recliner. To do all that, I'm joined by Business of Home's executive editor, Fred Nikolaus. Hi, Fred. Hi, Dennis. How's it going? Great. How you doing? Doing good. Was sorry to miss you last night at the conversation with Stephanie Sabi. How'd that go? Well, it was an exciting evening when Stephanie Sabi comes to town, and then the after party with my mother for dinner.

0:41I mean, how could you not? You can't taunt the audience with the after party, Dennis. I'm sorry about that. We should get someone to sponsor the after party with Dennis's mom. That would be a fun event. Well, I was sorry to miss it, but I had a very good excuse, which is that I was staying up until the middle of the night writing 2 ,600 words about recliners. So that's been my life recently. I know. So listeners might not know this, but often you'll get an email from Fred around two in the morning when he's wrapped up a story. And I felt terrible when I saw that. But that's your dedication, Fred.

1:15That's what you do for this industry. That's when I get my best thoughts about recliners at 1.30 in the morning. Let's quickly look back on Monday's episode, a conversation with celebrated and buzzy design duo, Pearson Ward. Fun one. Exactly. I got so many notes that people talked about having met them or seen them and how much fun they are. And they clearly have a lot of fans. They have this wonderful partnership that was built out of a friendship. They once lived in the same place, but not for long. And suddenly they're running what has turned out to be a fairly sizable design firm and retail shop while living in two very different locations, one in Alabama, one in L.A.

1:57and yet they make it work seamlessly. Yeah, we often talk about like, how do you make a design partnership last long-term? Maybe one solution is just live in a different state. I don't know. They seem to get along really well, but they talked about how it's always kind of like fun when they meet up and they really miss each other. So that was kind of sweet and fun. One thing I liked from the conversation was them talking about how they do installations. And it's interesting because they were talking about how like they do a lot of improvisation when they're actually like installing the stuff in their client's home.

2:25Yes. There's a lot of last minute shifting things around. I don't know. There's something really cool about that because I do think there's an inclination to have everything planned out to the inch. And I understand why a lot of designers do things that way. And I think it's probably a more efficient way to run a business. But I do think you get interesting ideas when you kind of make changes at the last minute. I certainly apply that to the podcast and much of my editorial output here at BOH. So I'm a huge fan of last minute panic and improvisation. And I was glad to hear there are fans too. Well, and I was so interested to learn about their constantly acquiring things, not with a specific project in mind, but knowing they'll use it somewhere.

3:05It was interesting because at one point they said, yeah, and if it doesn't work out, you know, we'll put it in the warehouse sale. And I said, oh, well, so do you do a lot of those? And they said, no, we've only had one. So, I mean, it seems to work out for them. And it's a really interesting process. And the final result is very compelling. So many designers wrote to me about how they just, they love the look that they have created. They have a great look. I will say, just as a warning, the buy everything and put it in a giant warehouse strategy is a difficult business move. Try that at your own risk, but it definitely works for them.

3:40Financial experts will advise you against it, but if you can pull it off, oh, what fun. All right, we're going to get into the news in just a moment, but first a quick break.

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5:20And we're back. Guess what, Fred? We have to talk about tariffs again. And you know what that means. It's time for a patented Thursday show timestamp. We're recording this Wednesday, May 14th at 3.13 p.m. Over the past week, the Trump administration announced that it moved to roll back tariffs on China and the UK following negotiations with both countries. Happy days are here again, as you posted on Instagram. The empire is saved, Fred. The nation will thrive and everybody celebrated, right? Stock market went bananas and RH and Wayfair, huge rallies. Let's talk about what really happened here, though, besides all of the celebrations.

6:01You know, maybe the more important one for our neck of the woods is the tariffs on China, which as most listeners will know, are up to a staggering 145%. So the US and China met over the weekend and came to a deal to roll back the tariffs. So now the US is charging 30 % on most Chinese goods on top of the tariffs that had been put in place in 2018. And China's charging 10 % on us. So we've reached this kind of rollback of the very high 145 % tariffs, which is good news. But we've still got 30 % tariffs. And also these are just framed as a 90 day pause. So, you know, maximum uncertainty, but it is it should be celebrated.

6:40I think, you know, it is good news to roll back from 145 percent. Want to make that clear. And it seems as though many have begun to believe that the word pause really means we're not going to do this. The markets and so many of the companies that we talked to, they recognized this couldn't continue and they're going to fix it somehow. Is that your sense? I mean, that's my sense as well. We talked about this last week, how there was this bizarre sort of twin reality of, you know, shipments at the port of Los Angeles are 80 percent down and tariffs are crazy high. But no one was making plans like that would last forever.

7:18So it's it hasn't lasted forever. The question is, where is it really going to land? And it's very hard to kind of like situate yourself amid this rapidly changing landscape. I think, you know, for right now, that's very much the story for me, because on the one hand, you know, commerce with China was really frozen. This will thaw it out and melt it. And certainly some people will start to bring over shipments. But there'll be some brands who, you know, for them, 30 percent is still too high. There'll be some brands who rush to stock up to try to take advantage of the 30 percent window. And there are some brands who will wait and think, OK, maybe at the end of this 90 day so-called pause, we'll have a deal and it'll get down to 10 percent.

7:55So, you know, there's still a lot of uncertainty in the mix here. Indeed. I was with a company, as you know, for an upcoming episode of the podcast. I had been with them last Thursday when everyone was very downcast and the 145 % tariffs were in place. And this company was already paying those tariffs for product that was coming in. And they had sent out a communication to designers saying that for now, any project that's ongoing, they'll cover and they're not going to increase prices while they figure out what happens. And so when I saw them on Monday, just on the heels of this news, it was a very different mood and a very different conversation that we ended up having.

8:40but they felt that even if it lands at 30 or somewhere around there, that's something they can maneuver around versus 145. Yeah. I mean, it's funny. I'm sure you're familiar, Dennis, with the concept of anchoring, where you walk in and you tell the consumer, it's going to be$1 ,000. Wait, no, it's$200. And that makes it seem like a deal, even though maybe$200 is expensive for whatever it is you're selling. This is a classic anchoring scenario where you got really afraid of 145 and severing the relationship with China and 30 % seems like a good deal. Whereas as we've discussed, that will be very impactful for companies who are really, with their entire supplier bases in China, they don't have the margins to accept that.

9:21I think for designers, it's been a really interesting period because Caroline Burke, our producer on the show, did a great article about this for Business of Home talking about how designers are getting absolutely flooded with communications from brands. Understandably, brands want to let designers know what they're doing, but it becomes hard to really track what's going on because you're getting, we're not raising prices, we're raising prices this much, we're adding surcharge. It's almost like an organizational challenge for designers, some of whom are just kind of tuning it out saying, hey, just tell me the price when you know.

9:50And while I think this rollback will probably give vendors some breathing room and they won't be sending out another flood of emails about this next month, it doesn't set these numbers in stone. So I wish I could tell designers there aren't any more emails coming, but there may be. Just one final thought on this. I mean, I said at the beginning of the conversation that this is good news, and I think it probably is. It's probably better for the economy overall. But, you know, there were some domestic producers, I'm thinking in particular of textile mills in North Carolina, who were excited about being on a level, you know, pricing competition with Chinese imports.

10:22And they were they had a great market. They were having a lot more conversations with upholstery manufacturers, and some of them were gearing up to hire more people. I do wonder if this rollback to 30 % makes them think like, oh, I'm not competitive anymore with Chinese imports. And, you know, this kind of up and down tariff policy really demonstrates why it's hard for these people to build a new factory. You know, if it's going to be 145 one month, 30 the next month, it's impossible to plan for the very long term, which is the timeline on which factories get built. Yeah, no, no, absolutely. Which is why I think we've talked all along about how perhaps it was a pretty naive notion to think that suddenly many factories were going to get built here as a result of all of this.

11:00But I do get the sense in talking to a lot of people that their conversations to try and continue to move more production out of China is still very much ongoing. I think this has everyone feeling as if fool me twice. Thrice now at this point. Exactly. You know, so I do think that a lot of conversations are going on about where production can be moved. I'm not sure a lot of it is coming to the states in our industry, although on the upholstery side, there's still a lot of conversations happening there. So we'll see. Let's move on, though, because we've got to talk about Lawson Fenning's deal. The Los Angeles furniture brand has sold a majority stake of its business to a holding company called Standout for Good, the owner of several faith-based apparel retailers.

11:50Fred, I'm eager to get into what is going on here. Yeah, this was kind of a surprising one, not least because we just had Lawson Fenning on the podcast a couple months ago. I think they were talking about, like, we don't want to grow. You know, we want to take it slow. And, you know, this deal is, you know, part of the press release was this is about national expansion. So, you know, maybe they maybe they had their head turned. It's an interesting deal for for sure. I guess we should just sort of start by explaining what stand out for good is. Is this a name you'd heard before? It wasn't a name that was on my radar.

12:18I've since learned quite a bit about it since. But no, it wasn't one I was familiar with. Yeah. So I wasn't overly familiar with it either. So stand out for good is kind of the parent company of a bunch of different brands, largely built off the success of this retail company called Altered State, based out of Tennessee, but has become a national brand with more than 100 stores. They've got a bunch of spinoff brands, like one for children and one for weddings. And as you said, it's a faith-based company. The founder talks about how Christian values inform a lot of what they do. They have, I think it's called a Mission Mondays program, where they denote some of their proceeds.

12:53And some of their marketing kind of has like a lightly religious tilt to it. But so this is obviously just, it's a very different company than Lawson Fending, which is an LA company that caters mostly to designers, comes in at a much higher price point than a lot of what Standout for Goods companies come in at. Standout for Goods has been getting into the home a little bit recently, but a lot of the stuff that they sell is less expensive than Lawson Fending. So this is just kind of like a puzzler at how these two companies came together to make this deal. Yeah. I mean, as you say, the company seems to want to get into the home industry much more And interestingly, seems to have been hiring quite a few people who have RH on their resume.

13:30And so, I mean, I couldn't help but think of the period of Banana Republic sort of wanting to get more into furniture and some former RH people there as well. So it was interesting to me thinking about them looking at wanting to get more into this space. And do they see Lawson Fenning as a great name and a supplier or sort of what's in this for them? What do you think, Fred? Well, it's interesting because there are very different price points in the market, right? Like the altered state at home brand is, you know, frankly, less expensive than Lawson's Fenning stuff. It seems like a different consumer.

14:07So it didn't seem likely to me that they had made this investment and bought a majority stake in Lawson Fenning to just fold Lawson Fenning into the Standout for Good roster of brands and sell to the same consumer. It seemed more like to me that it was maybe just a little more opportunistic. Maybe the CEO of Standout for Good is just a fan of Lawson Fenning and saw, OK, this company could really grow and I know how to do retail growth. You know, it is it is confusing, though, you know? Yeah. Well, I mean, I'm hoping that we can get Lawson Fennig on the show at some point to talk about all of this.

14:40It's an interesting acquisition, and it certainly took me by surprise, Fred, I will admit. I didn't see this one coming. No, neither did I. And I'm really curious to see how it plays out. I mean, reading between the lines on the press release, it seems like they're going to continue to operate independently. You know, they talked about opening up a new showroom in L.A. focused on vintage and one of a kinds. And I hope that, you know, Glenn and Grant will come on the show to talk about it and we'll hear more. But it's certainly an interesting partnership. One, neither of us saw coming and one will definitely be keeping an eye on in the days and weeks ahead.

15:11Absolutely. Stay tuned for more on that. In the meantime, Fred, sadly, one of the industry's long-running textile printers is shutting down. Yeah, kind of sad news. So the Rhode Island screen printing facility Griswold Textile Print is closing its doors permanently after May 30th. Throughout the company's 88-year history, it was a favorite among brands like Clarence House, Sterling, and Brunschwig & Fee. Not a name that I think a lot of designers necessarily knew, but behind the scenes in fabric world, this was a favorite and sad to see it's going away. I agree. It was interesting. I was having a conversation at the D &D building just the other day with several people talking about the scale and enormity of what Brunschwig and Fee used to be and how large Clarence House used to be.

15:56And I can imagine that over the years, as those businesses scaled back, that perhaps there just wasn't as much demand for this company's services. But it's sad to see this one go away. Yeah, it was a really cool facility in Rhode Island. They had this enormous room where they would spin these big bolts of fabric and they would do like hand screen printing. And it wasn't like block printing, but they would go section by section by section. It was a really beautiful process and produced a lot of really cool fabric for Brunswick and a lot of other people's. I do think they had a relatively successful business actually working directly with designers.

16:33A lot of designers made their collections there and some smaller boutique brands. They didn't have like a very high minimum order. So I think a lot of the business that fell off from Brunswick got picked up by, you know, more boutique brands. But certainly, like, as you said, yeah, like overall market conditions for, you know, textile hand printing facilities in the US are not great. And I don't really know what went on here to be totally candid. I just know that they're closing their doors. So it could be market forces. It could be that they want to retire. It could be something else entirely.

17:01But it's maybe not a surprise. There aren't a lot of facilities like this left. People aren't really starting new ones. So kind of a sad sign of the times. It is. And you referenced Scott Kravitz in your article. And I remember when Scott Kravitz was kindly taking me through the Kravitz archives and he would hold up these old fabrics and pieces of things. And he would say, yeah, no one can do this anymore and no one can do that anymore. And he kept sort of pointing to things that sadly, there just weren't people to produce. produce. And so the industry always loses a little something when an 88-year-old company goes away like this that was just making something very special.

17:39Yeah. And it also presents sort of a dilemma for the brands who are producing fabrics there, which is who are they going to get to make their stuff? And because there aren't a lot of these facilities around anymore, there's not like a ton of options floating around like, oh, let's go over to the textile printing facility next door. You really have to dig somebody up. It's also tough. You know, a lot of fabric people will tell you that going from, you know, one facility to the other often means the pattern changes subtly, the colors change subtly. It's not an easy thing. You don't just email over the file.

18:09So, you know, it'll be a challenge for those companies. You know, Scott told me candidly that, you know, they're going to explore digital printing for some of the Brunswick patterns that they made at Griswold, you know, simply because digital has gotten a lot better. And some of the patterns they produced there were like 25 screens. So you're talking about going out there, getting 25 actual giant metal screens, bringing them to a new facility, working with a new facility to get them to get the colors exactly right. And then you're hoping that, you know, that facility doesn't go out of business.

18:35So, you know, I do think some brands will go digital on this. And I don't think there's anything wrong with that. I think digital printing is really cool. It's just another example of the way that fabric is made. It seems to change every year. Yeah. I mean, as always, it sounds like all roads lead towards digital printing. And that's the silver lining, I guess, in all of this is that perhaps it's good news for 22 and some of the others in that space. But always sad to see a longtime business go away like that. Next up, there's a new designer matchmaker in town. This month, Jackie Polson, the former chief marketing officer of Summer Classics, is launching the Home Design Guild, a new online platform that looks to pair homeowners with designers.

19:20designers i think she said in the conversation that i had with her fred that it was hinge meets house meets pinterest uh yeah it's a good pitch she's got her she got her vc pitch down cold um yeah this is an interesting one so um a lot of designers will relate to this phenomenon of getting a lot of leads but they're no good or they're not going to work out in the long term so you're sifting through your instagram inbox talking to people educating them on your process and then it all kind of goes nowhere. And I think that her site is kind of an effort to solve that problem. And it does it in kind of a unique way.

19:53So one interesting component of it is that homeowners actually pay to browse through portfolios. So homeowners pay$150 to use the service, which is interesting because most sites are free for the prospective client. They also go through this process. It's like a questionnaire. There's a psychology exam. You have to let the designer know what your budget is. And if you like cats and stuff like that, But before you actually look through pictures, which is, of course, normally the way that people hunt for a designer, they start by looking at pictures, then get into talking to the designer. So Jackie framed it as, I want to flip it.

20:27So you start with the relationship so that when you start talking, when the client and the designer come together, you're already on third base as opposed to first base, which is how she put it. I think the question or the big challenge for Jackie is attracting enough homeowners to a site that they have to pay for and that they end up taking a quiz. You really have to convey the value to make it clear to them that it's worth it. There's clearly a need to find a way to better match clients with designers. It's funny. One of the very earliest ones was this woman named Karen Fisher who had a business here in New York called Designer Previews.

20:59You actually met a couple of times, right, Dennis? Yes. And we may have talked about this on the show in the past. But interestingly, Karen Fisher of Designer Previews took a one-third page ad in New York Magazine every week, every issue for years, building this business that she largely ran out of her home in her kitchen. And remarkably, she had some very well-known designers in her stable. And at one point back in the day when Peter Salik had his design investors group and was talking to a lot of different companies that didn't necessarily have an heir to the business. He asked me if I would join for a lunch with Karen Fisher in the hopes that we would get to acquire her business.

21:52And I think the hope was to put me in as the next Karen Fisher to help bring designers and clients together, which was a dream for me. I wanted that job so much. But it didn't happen, sadly. Karen perhaps had a little bit of an inflated sense of what her business was worth at the time, sadly. But she did have a remarkable business, and I will tell you, without naming names, there's a very prominent designer who said that he continued to pay her 10 % of his fees for the rest of his career, basically, for as long as Karen was still around, because he felt so grateful to her for really launching his business and all that she had done for him.

22:33So it was a very personal business. And she, much like what this business is trying to do now, she was very focused on the personalities and who was really the right designer to work with this kind of client. Sliding doors moment there, you know, could have been a very different world here on the Business of Home podcast. Yeah. As you said, I think that's the thing that a lot of sites overlook is the fact that like really what makes a match work is a personality cohesion, you know, chemistry much more so than I like pink, my designer likes pink, let's do business. So I think that's very smart to focus on that.

23:06I think, you know, so many of the other matchmaking sites that have sprung up, you know, since designer previews have, a lot of them are, you know, you know, internet businesses basically. And, you know, they, it's like house, obviously we all, we all know, we all know their strengths and weaknesses. Home Polish was kind of a version of designer matchmaking. More recently, there was the launch of that one tall, you know, they all kind of have their strengths and weaknesses. I think designers all have like a, you know, it's a very compelling idea to want to get leads and to get the right leads.

23:32And so I think designers are right to be interested in, in them. You know, just the challenge I think for Jackie is simply just, it's hard to get homeowners interest. You know, I mean, I remember we're talking to Noah Santos at the time of HomePolish's problems, and they were spending tens and thousands of dollars on Instagram ads, getting people to come to HomePolish. It can be a very expensive proposition. She has a plan for it. I think designers pay$5 ,500 to join for a year, and a lot of that money goes towards marketing campaigns. So that's the challenge really, is getting people in the door and getting them connected with the designers.