How an 85-Year-Old Company Expanded into DTC

0:00Now, that is not a policy that a retail company can scale, but that's how we try to differentiate. Hello, welcome to Shopify Masters, your companion for starting and building a business. I'm Shuang Esther Shan. Our guests today are fairly new to the direct consumer world, but their business has been around for more than 80 years. Ashley and Chad Stark are cousins and the third generation running their family business, Stark, which is known for luxury, well-made carpets and rugs. The company's carpets have even grazed the floors of the Oval Office in the White House. The duo has grown the company significantly in the last few years, including acquiring House Scalamandre and launching Ashley Stark Home, a line of home goods and, yes, rugs.

0:50Ashley and Chad are going to share what they've learned so far in their e-commerce journey and how they're bringing their family business online. Thank you so much for being here, Ashley and Chad. Thank you for having us. Thanks for having us. Excited to be here. Why don't we start with Chad? You've been with Stark ever since you were an intern, and you actually grew to the role of CEO in 2020. Can you share some philosophies on preserving that family legacy, as well as moving the company forward into the future? When I joined the business, Ashley had already been working for a few years, and everyone knew Ashley Stark, but no one knew Chad Stark.

1:31And before I was with the company full-time, I did a startup stint and tried to start a tech company and failed like many of us do. And had some really valuable lessons that I learned there that I brought into the business. The key one being this idea of customer discovery, which is a methodology where you hypothesize about customer problems. You test those hypotheses. You learn from your clients about how accurate were those hypotheses or not? Are they real problems? How's your solution? And then it's this iterative process going back and forth between hypothesis and solution until you're actually solving a real customer pain point.

2:13And having picked that up in the startup world, that's kind of one of the main things that I did when I first joined the business. You know, everyone knew Ashley. And I said, all right, well, how can I introduce myself to the design community? I'm not going to do it in the same way Ashley has because she is, you know, a creative genius. Whereas I don't try to be that. I know I'm not that. You know, shapes and colors is not for me. But being one who prioritizes the experience of our clients and our team members, for that matter, has really been my focus. And so using this customer discovery methodology, having this mindset of innovation, which requires humility and curiosity, I'd say are the key things that I did to learn about what do our clients think of us?

2:55How do they see the world evolving and how can we maintain our heritage while thinking towards the future? And so a lot of it has come from them. We've had some great programs on a product standpoint that have come directly from feedback, like our quick ship handmade hand tufted program called Allegro, which came directly from client feedback. And so that's been a big part of my journey to learn about how we should evolve our business while maintaining our heritage. Sounds like it was very important to build up this feedback loop and actually have customers input into how business decisions are made.

3:29for ashley chad has mentioned you've been with the company since 2004 and you're now the creative director we would love to know your philosophies on design and how it's evolved over the years design is an ever-evolving thing and i often look towards fashion to gear me and i always say that home follows and lags six months to a year behind. So fashion is one of my first loves. And I try to keep my pulse on that and incorporate what I'm seeing, whether it's color, patterns, texture, and incorporate that into like my current designs. And it takes us to develop products six months to a year anyway.

4:13So we sort of incorporate that and spring to the future. And I just try to keep everything really current and work with what I see around. I love to draw inspiration from traveling and seeing what's happening in other parts of the world. So that to me has been something I've used in my career and still continue to follow through with that every day. I love that drawing inspiration from the fashion industry, also your personal travels. Can you also speak to a little bit about how the interior design space might be different from those industries and how you're injecting this different perspective, maybe bringing in more brighter colors and that feminine touch that might be sometimes lacking in the industry?

4:59I think the biggest difference and something that everybody has to realize, you know, is fashion is a piece that you can wear this season and then not wear it next season. A home is not thought of that way. You know, when people are designing their homes, most people are designing for, you know, the rest of their lives or for a very long time. So I don't tend to be too trendy. I've been called a rebel traditionalist because I like to think of things that are going to last. You don't want to spend so much money on, let's say, a rug and then in five years be like, what was I thinking? How can I change this?

5:32Because that's not what Stark is about. We're about heritage and how well our product is made and how well it's maintained. I mean, people come up to me telling me that they have a rug from their grandmother that was passed down. So I often keep that in mind when I'm designing. I don't like to be too far in any direction. So when people come to me for kind of a home styling advice, you start with the piece that's going to anchor the room, the rug that's going to be there for the long haul. And you can be crazy and lean into the trends in some of the less expensive accessories, let's say for pillows or a throw blanket or some of the accent pieces.

6:07But when I'm thinking about rug designing and our products, I want things that people are really going to say, oh, this is timeless. This is built to last. This will be in my home for the next, you know, 20 to 30 years. So I try to incorporate the trends, but in a way that's manageable and in a way that people won't get sick of. And like you said, you know, I entered this workspace with two men who had run the company together for 20 plus years. and there was this femininity that was missing that I think most designers and homeowners can attest to that there's a feminine touch to the home. And I think that was what I really strived to bring to our company and what you can feel overarching, you know, and part of what makes art so amazing is we really rely on this amazing heritage.

6:54So I looked to some of the things that my grandmother brought in that, you know, that were very popular in her time. And then I just translate it to be current and of the moment, but again, keeping it timeless and not too trendy. Yeah. I think that's a great approach for any business to understand things that are classic, building that foundation, that anchor, and then experiment and injecting your perspective into those other pieces. Chad, for you, I think the question here is there has been very successful traditional channels that have been established by Stark. And then you decided to take the company and enter into the direct-to-consumer space.

7:35So talk to us about entering that new channel, the challenges, because I imagine selling heavy carpets and big pieces of design, it's very tough in this space when you're shipping directly to a customer. The world has changed so much since our company's origins. And it's always a fun conversation in our industry talking about trade only versus direct to consumer, because America is the only country that has a trade only industry. You look in Europe, you look around the world, trade only doesn't exist. Some smart entrepreneurs built this exclusive and secretive industry in America, which from post-World War II through the 90s, early 2000s, made a lot of sense.

8:21But as information became more transparent, as transportation became easier and sourcing became easier. You know, what was once a product driven industry, supply driven industry has morphed to be more of a demand driven industry now, whereas there's a lot of similar products around the country, around the world, and you can't just win on product alone. And there's a lot of free educational resources out there, right? The DIY movement is a real thing. Oh, there's over 25 ,000 registered interior designers in the USA and only one in five homeowners with a household income of over$250 ,000 a year, hire a designer.

9:00And so it's been an eventuality of when our industry is going to evolve to be more welcoming of consumers. You know, my grandmother used to not let people into our showroom with a camera, let alone a consumer coming in. So the world has just changed so much. And there's definitely a place for trade only in our industry at the boutique at the high end. And it all boils down to what company goals are. Our BHAG, we call it, our big, hairy, audacious goal is to be used in one area of every high-end design project globally. And if only one in five homes are hiring a designer, the only way to achieve that is expand distribution and come up with creative ways that cater to the trade, but are welcoming to the homeowners.

9:44We've done that with brands. We've done that with different products. We've done that with different services. We call our model trade preferred. You know, we have a few different brands. We have a textile brand, Scalmandre. We have Stark as our core brand. And then we have our newest brand, Ashley Stark Home, which is digital first direct to consumer from the onset. And it's just always a fun conversation in our industry because not many of these heritage brands are ready to openly admit we're evolving past trade only. But we are. And we're hoping that many others in our industry follow our lead because in order to provide a world-class experience, which is our mission, provide world-class experiences, we don't distinguish between a homeowner or a designer.

10:27Design buildings used to make a homeowner feel bad if they would walk in without a designer, like they're not worthy of the products in the building. Now that's changed. And there's some great companies in all industries that have shown the value of experiences and of making everyone feel worthy. and that's kind of how we've approached the carefulness of the evolution because since our business has been built onto the trade, we absolutely are still focused on the trade, but you can focus on the trade and sell to anybody. And that's what we're trying to work through with creative models and creative programs.

11:06Like one, for example, is called commission production, where if an interior designer specifies a product from us, gets a quote from us and the homeowner that they're working with buys any product for that room from our company, if the designer got cut out and they message us, we give them 25 % of whatever the homeowner spent. Now, that is not a policy that a retail company can scale, but that's how we try to differentiate. And so that's been kind of step one is how do we build programs that show the interior design community that we're not abandoning them because we're not. And we just need to show that put money where our mouth is, where I can assure you any designer we've sent a 25 % commission check to when their homeowner went around them, now they're a client for life.

11:51So that was challenge one. Challenge two is we've been very lucky, I guess you could say, that we work with interior designers because they're an educated client, they are a repeat client, and the marketing costs is a lot less to acquire and to maintain, especially when you have a brand that's 85 years old that's been in the industry for a long time, we're really, really well known by really few people. So as we evolve to be more direct to consumer, as you can see with some of our more recent marketing messaging and creative that obviously Ashley is a driving force for, we're trying to become more well known and more recognizable as a brand.

12:27But the marketing costs of being direct to consumer, the churn of direct to consumer, the return rate of direct to consumer, the educational component of direct to consumer, the average order value of direct to consumer, everything is different about the the business. And I think we underestimated a little bit some of the challenges when we launched Ashley Stark Home, mostly around price point. You know, we have a great audience, but the Stark average order value is over$7 ,000. If you look in the world of direct-to-consumer online rugs, it's much, much lower than that, if not more than 50 % lower, you know,$2 ,000,$1 ,500,$2 ,500, something in that range.

13:03And so our Ashley Stark Home product line, and again, prices vary by size, is a lower price point assortment for our showrooms, but it's still at the top of the market as it relates to direct-to-consumer. And helping educate consumers around the value of that product and acquiring them through digital media has been, I think, the biggest learning for us. How do we do that better? And I'd say it's been really valuable more than just for how do we grow the direct-to-consumer business, is as we become more digitally savvy, better understand how to segment our clients and build automation to nurture them, that's absolutely helping our core business by reaching a larger audience of interior designers.

13:43It sounds like the team is really balancing, leveraging those traditional channels, but also entering direct to consumer. Would love to dig in deeper on Ashley Stark Home. I understand, Ashley, this is something that really grew from your Instagram following. Tell us more about launching your own brand. So I have the unique ability to talk directly to the consumer because of my Instagram. So, you know, I had been working before opening Ashley Stark Home with a lot of different brands and doing a lot of different partnerships. And people were coming to me and saying like, why don't you start your own line here?

14:21Why don't you do this? And why don't you do that? Will you do this for me? Will you do a wallpaper line for me? And I'm thinking to myself, I'm like, everybody was asking me to do this, but why, why would I do it with that? And why shouldn't I do it for myself. Then the second thing that happened is COVID happened and everybody kind of isolated. The world changed. Everything went online. You know, we're conducting our business. And I just felt like there was a different way to hit consumers. I mean, I had this idea and I said, you know, I went to chat and I'm like, will you be my business partner?

14:52Will you help me do this? Everybody keeps asking me to do this for their company. Like, let's do this for us and let's make it accessible to everybody and let's have this great online platform and let's give everybody a piece of who I am and what I have in my home because all day long people are asking me what you know what's your pink color what's the rug you have here what's the frame you're doing how are you setting your table let's give them a vehicle so that I can point them to us instead of pointing them to these other companies and I think that was a big realization and then in building you know with my townhouse and I had this great experience where I was able to reach everybody.

15:27And I took them through the whole process of it. And it was step-by-step. People knew when the kitchen cabinets went in. So I feel like there was this way I wanted to be able to show myself to my client base. So even still now, when we do an Ashley Stark home photo shoot, it takes place in my house. And when I put things down, I'm like, what would I do in my living room? If I was redoing it now, which rug would I put down? And that's sort of what ends up in my house and in these photo shoots and it's all available on our website. And that to me was so important. Like I believe in these products because that's a lot of the things that are on there are actually things from my own home and actually things that I wanted to use.

16:08And I think that was really important to me. And it was really nice for once to be able to sway my audience to somewhere and somewhere that was me and my company. I fought for a lower price point. I fought for some funkier rugs that my father who couldn't necessarily understand, didn't necessarily wanted to invest the money in. And then now he trusts me and sees how much it sells. And this gave me so much more freedom to be able to do a different look and, you know, a whole other price point and a whole other piece. So it's been a lot of fun. And I really love sharing that part of me. I think the thing about renovations or renovation content on social media is that it's a series of content that people love to follow and they love to see that completion.

16:57So I totally understand that your fans would love to actually get a piece of the different products that you're actually incorporating into your home. Maybe tell us a little bit about the process of product expansion and figuring out the right designs for the new product lines that actually can be complementary to the existing lines and the process that goes into that. So, you know, a lot of this really was just a natural evolution. So, you know, one of our more successful lines is the Diane James collaboration of faux flowers. And that, again, was just completely organic. I never was really into faux flowers whatsoever.

17:39I reached out when I was doing my home because I really wanted branches. I have very tall ceilings in my living room that you don't necessarily can get on camera, but they're very tall. And I felt like I needed some sort of height. So I reached out to Diane James on Instagram. I was like, Hey, I'm a big fan. I always have cherry blossoms in my house. It's getting so expensive. Like every month I have to replace them. If I sent you some ideas, could you make me a set for my living room. And she's like, you know, we did it. She sent it to me. And I think it was like almost maybe two years later that this line came about.

18:16But when we were talking about who I would want to collaborate with, I was like, we have to do this. Like people come into my house and are like, oh my God, these branches are amazing. And I'm like, I did them with Diane James years before I even came up with this line. So again, like this is something that I developed and I have all over my house because I love it. And it's something that I was, you know, when I'm designing it, I designed for, okay, I have, you know, a breakfast room, what would be great in the breakfast room? And then that's the piece that is arranged or, you know, what, what do I see for fall?

18:54Like what am I loving? Magnolia. So that's where sort of where it comes out. And, And again, that's like an extension of me, totally organic, part of the company that kind of just fell into my lap and coordinates so well with everything else that we have on the website because it works to make your house a home. Everyone loves a collaboration. So that sounds so interesting. I would love to also get into the aspect of Stark has been around for decades and it's a premier brand that so many has known and you've been so comfortable in different channels. but entering online is actually something new for the team.

19:30And you're in the same position as many of our listeners trying to build that experience you get in showrooms into the online space. So where were some of the biggest learning curves that you wanna share for our listeners to keep in mind when they're also building their first online store? We're living it, right, Chad? We're living it right now. Yeah, we're living it. I'd say the biggest learning as it relates to like a foundational strategic insight that influences decisions was that the person who's shopping online wants different things and wants to experience product in such a different way than they want to in store.

20:14We try to have an omni-channel experience online and offline. and some people want an online offline experience and we want to cater to them and create an integration between online and offline as best we can, like buy a sample online or request a visit online or schedule a rug showing online and things like that. But what we've found and what we underestimated was how large the group would be of people who want the online only experience and what they want is very different than what you want in store. So for example, we have thousands of product in our showroom and the way our showrooms have always been designed is extremely overwhelming for someone who's not familiar with our brand.

20:55It's not really built to allow people to just browse themselves because there's so much product. You know, it's our sales team are like the doctors. You go to a doctor because you have something wrong, but you don't know what, they give you a solution. Our salespeople are kind of the same is you have a project, you have a certain aesthetic, you have a certain price point, you have a certain timeline and we help you curate and find the right product through a visually appealing search through our product in person. In-store, I think the merchandising was something we underestimated in terms of, I don't know if underestimated is the right word.

21:27It's something that we didn't quite understand because overwhelming with product and having someone assist in the search is so foundational to the way our showrooms work that we've learned is it's too overwhelming online. And no matter how smart you make a search, it's still much easier to overwhelm a homeowner or someone who's not as familiar with our product from the website. And so coming to terms with the fact that what's the different and unique value proposition of our website compared to our showroom, not how do we bring our showroom online? I think that was a really valuable insight for us on the Stark side.

22:09And on the Ashley Stark Home side, that's definitely a little different because it's a digital first brand. You know, the Ashley Stark Home rug collection is the most successful collection that Stark's ever had through the showrooms. It's been much more successful, honestly, through the showrooms than it has been online. Not to say that there hasn't been success online. It's just been an insane success through our showrooms because we brought in this new price point. And so realizing the product preference differences, the average order value differences, and really, in many ways, it's a completely new customer.

22:41And we have to think of it like a completely new business. I like the way you mentioned that it is a different mindset and also a different environment you're creating because now you're reaching a bigger audience that might have not known about Stark in the past. Because we're in this new playing field, how do you inject all that history and story into marketing and into the different pieces of storytelling to actually have that legacy while you're still reaching that new audience and make that easy to digest when they're shopping as well? I'd say, I mean, we're definitely leveraging video and Ashley can talk a little more about the storytelling that we're doing with video with some of the Ashley Stark home stuff.

23:22It's a challenge because we walk into our stores, our showrooms, and it's clear we're not just this startup that is flashy. Online, the playing field is leveled. You could, you know, with not that much money and some great photography, launch a new brand online that can appear as heritage, so to speak, as a company like ours. So it's definitely a challenge to differentiate for the online only customer when compared to the digital first brands. We're really focused on showcasing the extent of our inventory because you can launch a brand, but you can't buy$50 million of inventory easily. And also really encouraging the online shopper and making it as easy as possible for the online shopper to come in store.

24:12Because, you know, just from a sheer business standpoint, our conversion of interest to order is exponentially higher in our store than it is online. And so really the focus of our starkcarpet.com website, and in some ways, many of the flows we built on the Ashley Stark home site is get someone in store. You know, whether it's every product detail page allowing you to visualize in your room and schedule a meeting or the marketing flows and the client engagement team that we have following up after sample orders. We're really trying to highlight our showroom network and how you see this product in person.

24:47Because even when you order or buy a sample, it doesn't look as good as a big piece. Carpets and rugs specifically, or even wall covering for that matter, and textiles, it always looks better in a big piece. And we're never sampling big pieces. We're sampling quality and color references. But like our animals, for example, if you want to talk about heritage and timeless design, I picture luxury homes in the year 2200 are going to have antelope on their stairs. But seeing our antelope pattern in a sample is nothing compared to seeing it with a full repeat. And I think the full repeat is like two and a half feet.

25:23And so really doubling down on we have this network of showrooms. We have 150 of the best and most knowledgeable sales team members in the entire industry. Like, get in touch and let us help you. It's not an interior design service, but it's really like flooring consulting. And as much as we can play that up in our messaging, our design of the website and those marketing automation flows, I think that's one area we've been focused on differentiating other than the creative. Sounds great. really creating the passing of the baton from online to bring customers into that in-store showroom experience.

26:00Ashley, what about you? Your takes on sharing that legacy story online through marketing and other content efforts? I mean, I think, first of all, Chad touched on most of it, but the biggest thing that I could say, and then I'm always pushing for is content creation. Honestly, it's like, it's just never, it's never ending. You know, everybody's like what's next what's next what's next and because of like you know instagram and tiktok and whatever it is it's information and it is it's building a story and showing it and that's really the form of marketing these days it's not necessarily like you know you go to my dad and he thinks okay photo shoot add an architectural digest but that's not really what online is about and that's not really where the world kind of is it's you know it's it's storing everyday products and seeing how I'm using it in my home or how other people are having it in their home.