The Thursday Show: Why Williams-Sonoma is suing Quince. Plus: 1stDibs revises a controversial pricing tool

0:07This is Business of Home. I'm Dennis Scully and welcome to the Thursday show. Today we'll be catching up on the biggest news in the design industry, including Stark's latest acquisition, why Williams-Sonoma is suing Quince, and whether tariffs will have an impact on style. To do all that, I'm joined by Business of Homes executive editor, Fred Nikolaos. Hi, Fred. Hi, Dennis. How's it going? Great. How you doing? I'm good, though. Why did we agree to this? How did we get roped into? It seemed like a good idea, recording a show right before Thanksgiving, and then the day rolls around. Yes. So to the 15 people who are listening to this as you do your turkey trot or as you baste your butterball, we are I'm very grateful to have have our listeners.

0:53I don't know about you, Dennis, but I feel the same way, Fred. Grateful and perhaps perhaps we're spending Thanksgiving morning with them, which nothing could be nicer. Exactly. From our perspective, anyway. Anyway, I'm also grateful for our Monday guest, Dan Cahoon of the showroom Jerry Pair, a venerable Southern institution. Really fun to hear sort of war stories about how it used to be down in Atlanta in the design industry. What do you make of the conversation, Dennis? Well, you know, many people love to say, oh, I grew up in the industry, but I feel like Dan Cahoon can really say, yeah, yeah, I really did.

1:27I really did grow up around the industry. His mom was running the Jerry Pair showroom while Jerry Pair and all the outside salespeople were caravaning around the country in the 1970s, which I would love to know so much more about what that was like. Let's make a movie, a road trip movie about that. Yes. Staying in people's homes and who knows what these design firms were that they were calling on. But a business that therefore has been around for 50 years and Dan eventually takes ownership of it over the years and also very gently and gracefully allows Jerry Pear to stay on in the business. He didn't really go into this in great detail, but you can put the math together.

2:13Jerry Pear stuck around for quite a long time after he said, sure, you can buy my business, but also I'll be here for a while. That tends to be the way, you know, a graceful, slow exit, I think, is often the situation in these in these cases. Yeah, I thought it was just a fun conversation. I loved all those old history tales. I also just loved, you know, there's kind of a weird duality to the design industry where on the one hand, you know, Dan was talking about like, well, the Internet changed everything. Atlanta is totally different. And the way you talk to designers is totally different. And you got to figure out AI.

2:45But on the other hand, he was like, you know, nothing really changes, does it? And it feels like that, you know, it's like so many of the surface level things change, but then there is also this continuity to it, which kind of makes it a fun and reassuring place to be in equal measures. Do you feel the same, Dennis? I do. I mean, I think it is an industry that feels like so much is the same. But interestingly, in the conversation, what's clearly not the same, pricing obviously got a lot more discipline and rigor around it. Right, that's the thing. It's like it feels like everything's the same, but everything's different.

3:18It's one of those paradoxes. We're going to figure it out one of these days. Dan said at one point that invoicing and actually having paperwork for things wasn't a priority. So, yeah, it's a great history and fun to see that Dan now has a cloud-based computing software program for the industry, right? So some things have changed quite a bit. Exactly. Not too many cloud-based computing systems in the 1970s on those road rep road trips. But anyway, fun chat. Absolutely. I hope that people will enjoy it. We're going to take a quick break and then we'll get into the news.

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5:21And we're back. First up, Fred, the dupe wars continue. The empire strikes back. This one was bound to happen. Last Friday, Williams-Sonoma sued Quince, alleging false advertising and unfair business practices. Now, did we call this? I kind of forget. I've already mentally checked out for Thanksgiving. I don't remember if we said this was going to happen. I'm pretty sure at the end of the conversation last week about dupe.com, we suggested, could Quince be far behind? And clearly the answer is no. So let's get into what the lawsuit's all about, shall we? Let's do it. And no one checked the tape.

5:59Let's just assume we were right. So I guess we should start by just saying, what is Quinz? So Quinz, of course, is the direct-to-consumer company. Founded only a few years ago, already is apparently a billion dollars in annual revenue, so that's pretty impressive. What they do is produce very cheap goods and sell them online, often kind of targeting bestsellers by other brands. So they'll identify like a real hit for another company. They'll find a way to do a very similar product for less, and they'll sell it for less, and they'll blast the internet with their ads. So they've been getting a lot more into furniture recently, which we talked about a few weeks ago on the show.

6:33And sort of key to their whole marketing approach is they'll put their own product and they'll say, this is like Pottery Barn, but$100 less. Or this is restoration hardware quality for half the price. So sort of their entire like go to market strategy is we're like those brands, but affordable. And, you know, I think that probably creates no small amount of animosity in the marketplace. And apparently they one of those people who was upset was William Sonoma. And now we have this lawsuit that's focused on these these ads that Quince has been running. They're poking the bear. Right. I feel like I feel like they're asking practically, hey, come come get us, because they aren't shying away from calling out the names of different brands.

7:14And I wonder if this is just the kind of attention that they want in this lawsuit. It's sort of curious. It's possible. You know, the lawsuit talks about how there was sort of back channel communication between William Sonoma and Quince. William Sonoma comes across as very much like in this lawsuit, they paint themselves as sort of the upstanding citizen. You know, there's a there's an element of like we knew that Quince must be just simply mistaken. They're claiming they have the same quality at a lower price. So we reached out to clear up that confusion. And, you know, William Sonoma says that in communication with Quince, Quince said, we welcome a fight over this.

7:47So, yeah, potentially this is maybe they welcome this fight. Maybe they welcome the marketing attention that comes from it. There have been other lawsuits against Quince. The makers of Ugg Boots sued Quince as well as the people who make the Yeti coolers and tumblers also sued Quince. So, you know, maybe this is all kind of part of a bigger strategy on Quince's part. But, you know, William Sonoma was in no mood to William Sonoma was in a mood to find out. And it's interesting, of course, because this comes hot on the heels of this lawsuit against dupe.com, which was, you know, argued on very similar grounds.

8:18It's not that William Sonoma is claiming that Quince is knocking off their products. They're claiming false advertising. They're saying, Quince is saying, like, we have the exact same quality at a lower price. And William Sonoma is saying, no, you don't. And that's basically the crux of the lawsuit. And interestingly, William Sonoma is, in the context of these lawsuits, continuing to lean very heavily into, listen, we design 90 % plus of our product internally. This is our own proprietary product. And that's a very important part of their branding message. They're all about we're a design-led, digital-first company, which is always so funny to me since it's primarily a retail store company.

9:00And so it's funny that they've worked so hard to try and rebrand themselves as digital first and design led. But clearly, William Sonoma feels like they cannot sacrifice any margin or any territory to whether it's dupe.com or Quince. They just can't afford to lose any sales to anybody who's saying they've got it for cheaper and it's the same product is how it comes across, certainly. Yeah, I mean, I do wonder around what the motivation is with William Sonoma here, because, you know, as you said, I think maybe this could be tied into this idea that William Sonoma really wants to define itself as like a high end retailer and any association with these sort of tawdry dupe merchants is bad for their brand.

9:44And so maybe they're trying to climb the luxury mountain, as it seems like everybody is these days. That could be one thing. It's also possibly just sort of like a company culture thing. I think Williams-Sonoma just does not like this. And clearly their executives are sort of disgusted by this whole thing. And maybe this is kind of about making, you know, trying to prove a point in the marketplace. You know, I have to suspect that, you know, they settled with dupe.com out of court. We don't know exactly what the arrangement was made. I did look at dupe.com's Instagram page recently, and there was nary a reference to William Sonoma brands on their Instagram feed.

10:16So maybe my guess is maybe they worked out some arrangement where, you know, dupe.com is not going to they're going to keep doing their thing, but they're not going to talk about William Sonoma brands. And, you know, maybe they're hoping the same thing happens here with Quinns is that Quinns is free to make its dupes. Just don't do dupes of us. You know what I mean? I don't know. It's a complicated sort of game happening on many different levels here. But as we talked about last week, I just think it's sort of like all these brands, it feels a little bit like fighting a losing game against dupes.

10:42And I don't I don't you know, this lawsuit, they may settle, they may win, they may lose. It doesn't feel like it will stem the tide of the general consumer's desire to have the look for less. That just feels like such a dominant thing in culture right now. And I think brands have to position themselves against that, not think that a lawsuit or something is going to make it go away. You know what I mean? I do. And I feel to your point, the horses left the barn. And what I find so interesting is when I talk to designers and others about all of this, there's the clear recognition that whether you're buying something through dupe.com or you're buying something on Quince, and I discovered that many a designer has a cashmere sweater from Quince.

11:23And and but they went into the purchase knowing full well that they were likely going to be getting a far less superior product than if they had spent several hundred dollars more. But it was worth it to them, A, just to see what it was like and B, to have a hundred dollar cashmere sweater and why not and get them in every color and sure. And so I think the point was they don't think they're getting the same quality product. And I think more and more we're seeing people willing to settle for less. And I think that's the big concern that all of these higher end companies have is just, again, that chipping away.

12:00How many people will say, oh, you're right. I don't need a$5 ,000 sofa. I'm perfectly happy with a$1 ,000 one. Yeah, I think that's the big challenge of this time is to sort of create a proposition that cuts through the dupe noise and demonstrates to people this is why you should spend the$5 ,000 or the$10 ,000. I just think it's tough because I think, you know, complaining to consumers that this is unfair, this is IP theft. I think just doesn't resonate the way maybe it used to. I don't think there's as much of a stigma around knockoffs as there once was. That doesn't seem to work. So I really do think high-end brands have their work cut out for them.

12:35You know, I think there always is going to be a market at the very top end. But I think getting beyond that is a real challenge right now. And if I had the solution for it, I would not be a podcaster. I'd be a consultant making millions. But I know that that is a challenge, and I hope someone will solve it. Well, and I think we talked about this last time. we talked about dupe.com, I think the challenge on all these brands is continuing to be innovative in their design. And whether that's great collaborations like what Pearson Ward did with West Elm or bringing other people on to just make the product even more special.

13:08Because I think what William Sonoma is seeing is that people are willing to settle for less. So you better have a really exciting product to offer to keep them there. And I think that's the challenge for the for the industry as a whole. Moving on, we're going to talk about Stark, who may also be trying to climb the luxury mountain here. Fred, the floor covering brand has gone shopping, acquiring ultra high end atelier Fort Street Studio, company that we had on the show a few years back with the original founders. Great, great artists and high end rug merchants. What do you think, Fred? I think BOH podcast alumni are doing great things, including, you know, Stark CEO, Chad Stark, who we've had on the show at least once.

13:50Yeah, this was an interesting deal. I guess we should maybe define exactly what Fort Street Studio is. You know, as you mentioned in the intro, it's a very, very high-end sort of small rug studio founded by these two artists in the 90s. And they specialized, or their claim to fame early on was this very luxurious silk rug, you know, made in China with this wild silk, very hard to get, extremely luxurious. You're talking about rugs that range into the tens and hundreds of thousands of dollars, sometimes even cracking just above that for certain rugs. That's the rumor anyway. So this is a company at the very, very tippy top of the industry.

14:29And I think that's kind of why Stark wanted to buy it. I think there was this element of, you know, Stark is certainly a high-end company. And I think that in some markets, Chad told me that, you know, they are the kind of highest end option. But, you know, you get into New York and LA where there's a real range, you know, ranging from very affordable options all the way up to these very tippy top ateliers and boutiques. And I think Stark is a little bit below that. So I think Chad was hoping that this acquisition would help clarify what Stark can offer to the very, very thin slice at the very, very tip top of the market.

14:59That was my impression anyway. Yeah, that certainly is my impression as well. And I think that this was also very much an artist driven brand. In the early days, this was taking Janice's art and saying, how can we work with craftspeople and artisans to create this artwork in silk and make it a rug? And so it's a really special heritage brand that won a lot of adoration from high-end designers. And I think it's a little jewel for Stark. So I think it'll be interesting to see how they manage the legacy brand and incorporate it into what they do. Yeah, I mean, that's really the challenge, right? It's like you have a really big company that operates in various ways across different sectors of the market.

15:51They buy this little jewel, you know, what do they do with it? And how do they sort of maintain what made it special while also taking advantage of, you know, what it does for the rest of their business? You know, I know they want to open a new showroom kind of focused around Fort Street Studio. I'm not at liberty to say exactly where that showroom will be, but I think listeners could probably put two and two together. I can get an idea. But anyway, so that's another reason I think they wanted to buy the company was to have another presence in New York. I think they're going to sort of roll it out slowly.

16:20Chad in our interview was saying it'll take at least six months to a year to really roll out Ford Street to their sales reps, and I'm sure they want to keep developing new product. And so it'll take time to see what they do with it. But, you know, it's it's it's worked before. And I think kind of like maybe something like Clarence Ounson Fabricut, you have a much bigger company sort of buying something that's really known to very high end designers. And you have to see how the pieces fit together. You know, one one sort of question I had looking at this was, you know, why did Fort Street want to sell?

16:50You know, it was originally started by, you know, Brad Davis and Janice Provisor. We had them on the show that they sold to their VP, Paul Mello, who is the one who's now selling the company to Stark. And, you know, I'm sure the tariffs have been really annoying over the past few years to deal with. You know, we should probably talk about this directly with Paul. But I have to imagine, even if you're operating at the very high end of the market, all those challenges of moving your, you know, production and dealing with this complicated geopolitical situation are probably a real drag. And, you know, maybe when someone comes along with the right offer, it's just tempting to, you know, get out of the rug production shifting rat race and make a deal.

17:28I don't know. As you say, we should talk to Paul at some point, but I am sure, don't want to speak for Paul, but I'm guessing if he was here now, he'd be high-fiving, start taking over some of the headaches. Exactly. And I think this actually ties into our first story, just talking about like, it's all about that luxury mountain right now. It really is about, you know, I think people perceive that, you know, the middle of the market has softened a great deal. You know, the housing is frozen, all the things we always talk about on this show. But the very top is still spending money. That's where the, you know, the dry ground is right now.

18:02And everyone is rushing up that hill to try and, you know, to try and find that sweet spot. And I think Stark, you know, is a big, healthy, strong company. But they want to operate up there, too, because they know that there's a lot of, you know, a lot of strength up there. And I think about this for designers, too. too. You know, it's hard. It's difficult. You know, it's it's it's no easy feat just to level up your clients with a snap of a finger. So I don't know. It's a long term journey. It takes time. But I think that designers would do well to think about how they can make that change in their own business, because, you know, you see these brands making moves and that's that's what's behind it.

18:33That is a constant message. We are driving home on the show. Hey, speaking of high end, should we talk about first dibs, Fred? Let's talk about first dibs. The platform has revised a controversial AI powered pricing tool after vendors revolted. But did they change it because of that or because we talked about it on the show? I tried in all sincerity. It was not because we talked about it on the show, but we did bring this up a few weeks ago and almost immediately, it seems like First Dibs has rolled back this thing that was getting their vendors tied up in a knot. What do you make of this? Well, I once again, I feel that First Dibs, Every move they make, they face vendor pushback.

19:15So I think it's very hard for them to implement changes. But we should explain what this tool was and why people did get upset about it. Let's explain it. So last year, First Dibs ruled out a tool called their First Dibs Price Estimate. The way it would work is you'd see like an Eames lounge chair, for example, and the dealer would give their price and First Dibs would have, you know, right underneath it, there There would be a little range of prices. So let's say the dealer said this is$4 ,000. First dibs might have an estimate saying similar pieces have sold between$3 ,000 and$8 ,000. They'd look at their past sales data and use machine learning and come up with a range for what they felt was a reasonable price for what this was actually worth.

20:00And as you can imagine, that got some people upset because, of course, dealers are thinking, well, my price is my price. Why is the platform that I'm selling on giving customers other information? That seems weird. And it occasionally led to weird errors. Like I think when they first rolled it out, sometimes it undercut the price by like 20 grand because it didn't totally understand what the product was. They fixed a lot of those problems that they've been rolling out over the course of the past year. But I think while it maybe made some vintage and antique dealers a little bit annoyed or at least gave them pause, I think for sellers of new stuff, it really raised a red flag because you think I'm the maker of, let's say, Windsor chairs.

20:41I have my price. It's$5 ,000 for this chair. Why is the platform I'm selling on giving a different price for a new good that I designed that I priced out? It's like if you walked into Walgreens and it was like, Crest thinks this toothpaste is worth$6, but Walgreens says five to eight. So if you want to make a deal, it created kind of a little bit of an absurd moment for a lot of the sellers. And that's what caused this anger. And now First Dibs is rolling back this estimated tool for the seller of new goods. It's still up there for antiques and vintage, but they're pulling it back for new stuff.

21:14So does this speak to, first of all, the challenge of these AI-driven tools? Because I am skeptical at the moment, having used several different similar tools to this and found lots of flaws with them. I'm skeptical about where we are or how ready these are for primetime. So is part of the issue here that it's just an AI-driven tool and, yes, it's made some mistakes and still needs some work, but is it also about the fact that they are trying to provide more helpful information and that's a good thing? I mean, how should we be looking at this? Yeah, I mean, I think both those takes are right. I mean, to give First Dibs some credit, I mean, I think what they're trying to do is solve a real problem when it comes to selling high-end home goods online.

22:03And this is the problem that everybody has to deal with. This is true of First Dibs. This is true of Paragold. This is true of RH. It's that like a$20 ,000 table doesn't look any better than a$2 ,000 table online. It's very difficult to convey the value of a very highly priced home good on the internet. And I think what First Dibs thought is if we give people a price range that puts them in the ballpark, we kind of anchor the consumer's expectation around what this is really worth. So it almost, I'm sure when they were conceiving of it, they were thinking of we're validating the dealer price. We're not trying to undercut it.

22:37We're giving the customer a sense that, yes, according to our internal data, this is a reasonable price. Even if it's high, this is reasonable. And interestingly enough, Caroline, who wrote the article about this for Business of Home, spoke to their chief product officer. and he was saying that this tool actually is effective. I think it was 42 % more likely to lead to a sell-through was the number that they had. So clearly this was a tool done for the benefit of the consumer. They thought it would benefit dealers and there was some knock-on effect that was positive, but I think it just leads to these absurdities where people feel almost disrespected by the platform.

23:11So I think that's kind of where the rubber meets the road. I don't think that it was the AI is so broken. I think it's just, it almost just rubs people the wrong way, but maybe that's too simplistic. What do you think? It doesn't take much to rub people the wrong way in terms of the vendors on first dibs. And I think that they have for a long time felt under fire, under pressure, and I get it. And ever since they made that transition to be e-commerce, I think it's always been that way. I think interestingly, and I was talking to several people in the real estate world recently, this seemed so similar to me, like the comp sale discussion that you always have in real estate.

23:46Realtors will tell you, yeah, well, forget about the Zestimate. They say, look around your neighborhood, see what prices have sold for. And that gives you a pretty good idea of what's a reasonable starting point for your home price. And that seemed to be what this tool was somehow trying to do, was trying to give you some comparable sales data. Things like this have sold for X. But I think to the point of vendors getting upset and and justin nelson from from fernway who was one of the people who took to social media and sort of expressed his displeasure most most clearly and vocally uh and said he was leaving the site all all together he felt like well this is a brand new piece what do you mean you haven't told anything like this because i mean i just made this like what are you talking about and that's that's what upset him so much and and so i i get it and that's why again is it that they were just applying the tool to the wrong kind of merchandise on the site?

24:41Or was the AI just miscalculating or misunderstanding? And that's why it seems smart that they dialed it back to work out whatever the kinks or at least the perception challenges are. Yeah. I mean, I think that's all really well taken. And I understand what First Dibs was trying to do. And I understand why it made people angry. I don't know. Justin was mentioning on his Instagram that he had a direct conversation with FirstSibs as CMO and the guy heard him out. And maybe this is the beginning of a new day in terms of their communication with vendors. But it is this kind of fascinating example of FirstSibs also spends untold millions on marketing.