'There is more whitespace': Parachute founder Ariel Kaye on filling the Bed Bath & Beyond void

0:06Hello, everyone, and welcome to the Modern Retail Podcast.

0:30an intimate event at the new flagship store of Parachute, the home goods brand in the Flatiron District of Manhattan. I sat with founder and CEO Ariel Kay of Parachute to talk about the company's event strategy and also its brick and mortar retail strategy. We had a really fun conversation and a really active, interested audience in front of us. And that was this week's program. What follows is our conversation. Thank you so much for listening and enjoy. This week, we have a live podcast. I'm really excited. I'm currently sitting on the most comfy couch in Parachute at their new Flatiron office.

1:05And I'm with founder and CEO Arielle Kay. Arielle, how are you? I'm good. Thanks for having me. Absolutely. So I want to talk about a lot of things, you know, Parachute as a whole, the business. You guys have some cool initiatives this year and also the fact that we're sitting in a store having an event. I want to talk about that strategy, but can you just give a little bit of background about Parachute for listeners who might not know a lot about it? Sure. So Parachute is a modern home lifestyle brand. I started Parachute in 2014 with a small assortment of bedding and bedding products in two fabrics, three colors, and almost 10 years later, we have products that touch just about every room in the home.

1:45And we really believe in quality and comfort. And so everything that we make and we think about and we talk about is really rooted in those two key ideas that we should all be living a more comfortable life. What was your background before Parachute? I worked in advertising for many years in New York, actually not far from where we're sitting today. I worked on Park Ave at a big ad agency. And that was fun. I enjoyed that. I got to use both sides of my brain. I was doing a lot of consumer behavior research and also just really thinking about how to connect with customers. But I also had this passion for home and design.

2:23I had an interior design blog. I was helping friends decorate their apartments. And that experience was really inspiring for me, but also made me into super consumers. So for many years, I couldn't believe that there was not a single brand of sheets that were on your bed. And as a marketer, advertiser, I saw this massive opportunity to create a brand in a category where really there was no brand loyalty. And just how rare that is in our world to find a category with such a big opportunity to build a real brand that people care about. I wanted to ask you that. So you would say that the product came before the marketing strategy or the business model?

3:05Well, there were a lot of things that I saw as areas to improve. for lack of a better phrase. You know, 10 years ago, if you wanted to buy sheets, you were going to a retail store. You weren't really thinking about the brand and the product and the shopping experience was all the same, you know, floor to ceiling stacked products and plastic wrap. And there were these concepts like thread count that were supposed to guide you to a more quality product when really that was a marketing gimmick. And, you know, there was nothing about sleep happening in the bedding world. You know, no one was talking about how to improve your sleep or, um, how to make your home more beautiful.

3:47Like these are aesthetic products that can completely transform a space. And they were completely, they were upsell opportunities. They weren't actual products that any brand was focusing on. And so we really were the first to market to, you know, as a brand that was focusing on textiles instead of furniture, Like all of the, like most of the, besides Bed Bath & Beyond, you know, everyone was a furniture first company. And so it just was so obvious to me that there was a better way to do it, a better way to shop and better products certainly to, for people to use. Were stores part of the calculation when you initially launched?

4:27Yeah. So I, I love retail. I always have. I really just like the experience of going into a place and seeing products and touching them. I also love shopping online, but I do see just the power of what it feels like to be in a beautiful space shopping for beautiful products. I also knew that specifically in home because home is much later to move online than some of the other categories that 90 % of products 10 years ago were being purchased offline. offline. So, you know, not only were we trying to introduce a new brand to the world and get people to trust us, we were also getting trying to convince people to shop in a way they've never shopped before.

5:07Both are two significant, you know, they're challenging things to do. And so I just knew that we so many of our products and, you know, please touch everything if you're in the space, you know, they're really tactic. Like they feel good. You know, we want to encourage that experience. And from the moment we started doing pop-ups and then opening our own stores, we just saw the way people lit up when they got to see the products. All of a sudden they were shopping for sheets, but they wanted towels. You know, it's just like you could see the whole parachute experience so much more clearly and really build that relationship with the customer in a way that then would give you confidence to shop online or confidence to tell your friends.

5:47And it just made sense. Can you give just a brief history of the store fleet and the pop-ups to the stores and how that's all played out over the last few years? Yeah, sure. So we opened our first store in Venice in 2016. It was a teeny tiny little store and it was attached to our office. I intentionally selected a commercial space for our office that was retail, you know, just so that we could fit it all together. It was a really cool opportunity to have our entire team at the time sitting in a retail store all day long behind a pony wall that most customers didn't even realize. You know, you could hear everything.

6:25So we'd listen to customers all day long. It's like a one-way mirror. It basically was, you know. And occasionally someone would say, can I use the restroom? And they'd open the door and there would be 40 people on their laptops. And they'd be like, what is going on? But so we opened a few. We did a few pop-ups with other brands. in Venice where our office was. Some were like for a weekend. We then rented a space for a month and it just became clear that this was going to be an exciting part of our strategy. Our first door, because it was our office, there was a little bit of lower stakes. If it didn't work, we still needed a place to work.

7:01But it did really well. And so we had the opportunity the following year to open up a space in Portland that was owned by the same landlord, which was just a very easy way to kind of test the waters. And we also, you know, I figured if we could open a store in another state, like that was another good test just because it was more complicated than doing it down the block. But, you know, it was a slow and steady strategy early on. We opened one store one year, then we opened another store, then we opened two stores. We were really focusing on where our customers were. So we wanted to be, you know, in places where we had this dense amount of people who already knew about the brand and the products.

7:41We came to New York. And then, you know, we started to move across the country into key markets where, again, we knew we had our customers. In the last two years, we've taken a slightly different approach, not only being where our customers are, but also being in places where we see a lot of potential for our customers to be. That strategy is more challenging. I will say that, you know, it just takes a longer ramp period for the store to get to its potential because you are doing two things at once. You're like trying to drive awareness and you're also operating a new store in a new market. But both are successful and I'm happy to chat more about the pros and cons of both.

8:25But yeah, I mean, I think, you know, we last year we doubled our store footprint. We went from 12 stores to 24 stores. This is our 27th that opened last week. And, you know, we just see retail as like this is the eyes and ears for the customer. And this is where we're building relationships. We learn so much about our customer, what they want, what they don't want, what they want to see more of. That information goes directly to our product team, goes directly to our site development team. We try to, you know, build better experiences online based on the experiences that you get in store. it's just like it's just so fun to interact with people you know from behind the screen there's only so much you can get which is great there's so much data and that's super helpful but when you like talk to people and build relationships it's just takes it to a whole another level can you go more into what you're talking about with the different types of stores and how you ramp up for for their potentiality I guess you could say so do you do you view them in different buckets?

9:26Are some of them more showrooms or more about brand awareness? Do they all have to reach a certain level of profitability? How do you make it work when they're in different types of markets where there might not be as much brand awareness? Yeah. So, I mean, we definitely look at every store as its own store. So our goals and our KPIs around growth and what that looks like is unique. And we take into a ton of consideration. There are certain stores and markets where we're We're replacing our stores in centers because we know there's built-in foot traffic, and that helps with awareness. And so we take that into consideration.

10:03Events are one way that we really try to ramp up a store, especially now in these new markets, because we want to partner with other brands and other people and influencers and people that have communities that can help us tap into their communities. but you know we we there's some localized marketing initiatives that a lot of our store teams take take ownership of and you know they're usually I mean they know the neighborhoods better than any of us often and so they come up with creative ideas you know our marketing team and our HQ are also always thinking about you know how we can leverage our brand whether it's through our own social channels or email or pop-ups on the site, you know, that are localized or mailers and things like that, that can just help let people know that we're there.

10:51But that's, that's always the biggest challenge. And it's the same challenge you see online. It's like, you just need people to know that you exist, you know? I mean, that's acquisition in general. And so, you know, it's always surprising when we hear from customers who spend a ton of time in a center or neighborhood and they're like, we had no idea you're here. And we're like, how, you know, how do we bridge that gap? I don't think anyone's like fully cracked that code yet, but we're just trying to be creative. And I think, you know, the in-person events and is a really big part of that strategy just because we want people to come in for reasons other than just shopping.

11:27Like we don't want people to feel like every time they walk into the store, they're being pressured to buy something they don't need. Or, you know, we want people to feel like there's value here beyond just what's on the shelves and knowing that when people do need to shop, then they'll think about us and we'll be top of mind. But the approach has always been that retail should be about relationship first, transaction second. And that's something that I think is, you know, somewhat unique, maybe is becoming more popular as a concept. But that's always how we've, you know, talked about our environments with our team.

12:03And, you know, it's like, how do we just get to know people? We're going to take a quick break and we'll be right back. Can you talk a little bit more about like, or give some examples of the events that you've done, like acting like we're not here right now? Oh, sure. Like what are other events that you've done? Events just like this. So we, I would say that there's, we've got like national events that we now do. So we, um, things like on national dog day, we invite everyone to bring their dogs and have like a dog photographer that's taking pictures and treats. And it's like all about the dogs.

12:41It's one of our most well-attended events. Um, there's usually like, you're not scared that a dog's going to like, you know, there are worse things in the world. Um, it's all in the name of cute fun. But so that's that's an example of one thing that we do, like, you know, during a weekend across the entire fleet. And that's something that's, you know, we're doing these national events. It's so much easier to promote on our broader channels because, you know, it's relevant for everyone that lives near a store. We also do things on the national scale, like monogramming events. We know that everyone loves monogramming.

13:19It's not something we've been able to roll out successfully on our e-coms. So we bring people to do monogramming in the store and everyone loves that. It's free with purchase and, you know, people love gifting things with words and initials and it's always surprising what people come up with. And then we do other things like, you know, if in one market, if we're next to a flower shop, maybe we'll do a flower arranging workshop or we'll do panels. And we hosted a book tour for an influencer a few months ago in Venice, which was super fun and really well attended. It's really, I mean, we really do get a lot of creative freedom to our store teams because like I said, they know what's happening.

14:07And, you know, we have different goals. So like in some markets where we're newer, you know, If just getting people traffic in the space, we try to make sure that we're aligning our events around that. We also like to do just surprise and delight things for customers that are just little fun perks or bouquet of flowers people take. I've now given flowers as an example twice. Or just like cookies and champagne while you're shopping and things like that that just make people smile. but really I mean if anyone ever has any events just send them our way we we're we really like to do a full range of things like nothing is off the table and we do pop-ins with other brands skincare company will come and do little mini facials for customers things like that yeah it's it's kind of whatever at this point you know we're happy to do it do you think Like, do you try to do events at scale in the sense that you have a playbook that every store follows?

15:11Or is everything individualized? Because you were talking about these national events. Are they all, do you have like a list of things they have to do and you're able to routinize that? Yeah, to an extent. I mean, the national events, you know, we, I think, you know, the teams get more support from HQ. Like they're helping to book these photographers in different markets. And, you know, in general, I do think we've gotten to a place now where the store teams are also communicating so much together, not just about events, but like merchandising. Like we have a whole platform where, you know, someone could say, OK, this is how we set up our event and take a picture of it and share it with the rest of the store team so that they have that on hand when they're setting up, which is super helpful, especially for new stores that are just kind of getting into the swing of things.

15:57But we do the same with merchandising. You know, if someone is messing around with a bed and loves the way it looks, they take a picture and post it on our on our retail platform. And so everyone can see and, you know, they can test that in other markets, too. So there's definitely a lot of information sharing and knowledge sharing. And, you know, we we hold ourselves to a high standard, but we also want every store to feel special in its own way. And I think the retail teams do a great job at making things feel individualized while also, you know, not creating more work than it needs to be. How did, like, on a budget level, how does that work?

16:37Does every retail team have a certain amount of money that goes towards events? Does this fit into the overall marketing budget that is for the entire company and there's no differential between digital marketing and in-store event marketing? How does that work? We have a budget that the teams have. And, you know, like most things with budgets, they're kind of always up for discussion. So, you know, if the team says we really want to do this event, it's going to cost, you know, X amount more or like we found this partner to partner. I mean, you know, we like, you know, rules are meant to be broken.

17:09But yeah, we do make sure that the teams have budgets that they are able to think about and think about how to make it most effective. I mean, the thing about events is that there's so much you can do with a little too. You know, it's very easy to pack, to do high impact things without a ton of money. And so, you know, we urge the team to get creative. We find that, you know, and as someone that hosts, you know, someone like there'll be brands that want to donate little spritzers or whatever. And, you know, people are looking to co-market and to collaborate together. And, um, but yeah, we, we get creative with our budgets and, um, but yeah, we like to make sure that the teams have their own budget, that they can think about how they want to put that to work and how they can make that most effective and, um, you know, share and across, you know, the team.

18:01But yeah, we've got, we've got different budget lines for all the different people like to spend money. How much, like you sort of mentioned this earlier, but like is it, how important is conversion, especially for retail stores, but also for retail store events? Or is it just that you want people in here and floating and knowing about you? I mean, look, we all want conversion, you know, like it would be silly to say that that's not a goal. But we also know that people that shop in store first are our best performing customers. And so whether that's the first time they walk in the door or the third, you know, we want people to enjoy themselves.

18:38We genuinely do. and I think if you've shopped in a parachute store, at least I hope you've had an experience that has not felt like there's someone, you know, breathing down, you know, and like making you feel like you have to buy something in that moment. You know, we really do want to just educate people and get people excited about the product. Every store has, you know, goals and we try to make sure stores get profitable and ramped up as quickly as possible. We do just see, I mean, part of the benefit of having an event is that we see an increase in sales. So people are shopping during events and, you know, we see an increase in traffic of, you know, almost 40%.

19:15I think we see about 20 % increase in revenue during events. So they definitely pay off in that way. But I think probably in part because that's just, you know, a byproduct of what's happening. It's not the goal necessarily, but people are in here and they're in a good mood and they're happy. And you know what happens when you shop in a good mood? It's, I mean, also when you shop in a bad mood, but you know, um, but yeah, you know, it's like, you're having fun and you're seeing something and all of a sudden you're like, Oh, splurge or treat myself or someone else is buying something. And you're like, you know, I want that too.

19:50And I'm already here. Um, so, you know, there's, it definitely works in our favor, but typically, especially like an event that's, you know, later in the evening or before the stores open. Like, you know, it's not like we're walking around with our, you know, POS system at all times. So, but yeah, people like to shop during events. So we make sure that we're available. Have you, has the format of the store evolved, either as you've done more events or as you've seen different things? Like, how is this brand new store different from one that opened a few years ago? So we have always prioritized being flexible in our spaces.

20:32I mean, we've hosted everything from opening parties to, you know, sit down dinners with 60 people and a long table down the middle of our store. And we can only do that because everything can really be moved. And so when we think about materials and fixtures, apart from the ones that are mounted to the wall, everything is pretty much able to come and go as needed. So that's definitely intentional because we also want to test new things, you know, like this beautiful yellow pedestal, you know, might work better in the front at a different, you know, we don't want to get stuck and have to spend all this money to refigure the store and create new fixtures.

21:12But yeah, I would say our stores have evolved. One of the things I would say like V2 of our stores as they got bigger and we started to really buy fixtures for a larger fleet, which allowed us to use better materials and get better price savings. We really wanted it to feel more like a home than a home store. We wanted to have a bedroom and a living room and a bath and with a sink where you could test the absorbency of the towels and wash your hands. And some of our stores even have a bathtub and other kind of fixtures that really make it feel like you're at home and you can envision the products as you would in your own space, which is the idea.

21:51But yeah, I mean, we've tested different things. We have stores that have like more dividing walls. So it really feels like you're kind of meandering through a house. And that's great. And it serves its own purpose. It also makes it so our associates can't see throughout the whole store, which is more challenging when you're trying to create, you know, a specific type of service experience. This store is one of one in terms of materials. We've never used tile like this before. And, you know, we felt like we're on Fifth Avenue now. We got to have your tile. We got to step it up. And this was a very easy way to stay within our budget, but still pack a punch and create a beautiful space that felt special for Fifth Ave and more elevated.

22:37And we're very excited with how it came out. But, you know, I think we look to the neighborhood as a design cue. Originally, we wanted, you know, I had this like big dream of having every store feel completely different, which just wasn't as scalable as one might think. but you know we always look to local artists like we there's a photographer who's featured in the front it's a beautiful photograph of New York you know and most of our stores I would say we have local artists who have either we've purchased or they've created pieces for us so that's like a nice way to just you know show some love for the city and for the makers within that city.

23:19And so that's been fun. But yeah, I mean, we we try to keep things fresh. You know, we also see people liking our style and wanting to copy it in their stores, too. So you got to stay ahead of the curve, you know? Yeah. So how do you like do you take that just as a compliment? Yeah, I think you have to. I mean, we've never been that. If we if anyone spent all their time obsessing over, you know, who's doing what and what looks like, you know, I mean, you could it's crazy making. But yeah, I think we take it as a compliment. We also, you know, like anything with our brand or with our, you know, creative, like we're always pushing ourselves to evolve.

23:58I mean, I think, you know, you want to have a clear point of view so that because I think that really builds trust. But you can do that and evolve and grow with your customer and get feedback and learn and push yourself to new places and see how that fits and learn and grow. And it's definitely, I think, one of our superpowers is just never getting complacent and always pushing ourselves to see what the next version of whatever we're doing looks like. Got it. I wanted to ask something. You mentioned something at the very top that I thought was interesting, but she said, with the exception of Bed Bath & Beyond, there was never a, you know, a sort of fabric forward home goods store.

24:41How, like now that Bed Bath & Beyond is kaput, how does that change? Do you think it's, there's more white space now? Do you think anything has changed or is this just an anomaly that doesn't impact you as an executive? I would love for all Bed Bath & Beyond customers to come be parachutists. If someone could figure out how to funnel everyone right, you know, this way, I would be thrilled. I mean, I think that, yeah, I think there is more white space. I, you know, I spent a lot of time and money shopping at Bed Bath & Beyond over the years. I think probably most of us did. But yeah, I think, you know, it's changing of the guards, you know, this happens in almost every category and industry and, you know, people, it's part of the reason why it's so important to continue evolving and growing with your customer and keeping your kind of eye on what the next version of what you're building looks like, you know, and, um, but nothing but respect.

25:40Yeah, no, it's kind of, it's kind of iconic that you're on Fifth Avenue, given that you're like a block away from that one over there. Yeah, that was, that was where I bought all of my bedding when I first moved to New York City. Same, and that was where that Broad City episode happened. I don't know if you've ever seen that. That's like one of the most important episodes of Broad City. Right. We're almost running out of time, but I wanted to get into just sort of what you're thinking about this year because I know that you're opening, you have this store fleet. Are there a few other stores that you're opening soon?

26:06This is our last for the year, which is bittersweet. But we've got 27 stores that we're going to be spending our time. We're spending a lot of time this year focusing on the core. We've been in growth mode for so long, which has been really fun. New categories, new stores. There's just been so much growth happening, which was a really great experience. But right now we're focused, I think like many brands are, on just the core business and making sure we're as profitable as possible and that everything is working to the best of its ability and that we can leverage all the assets that we have and make them even stronger.

26:49So a little bit less focused on new, new, new and more like how do we just like look at all that we've built and all that we can do with what we have. I actually want to ask a follow up with that. Do you think, you know, this is an interesting time to be a growing business just for a multitude of reasons, you know, cooling venture capital, all that different things. But home goods also saw like a spike and then kind of a flattening. And so how has that manifested for you specifically at parachute. Yeah. I mean, the home market has been hit probably the hardest of any category. And so we're feeling it, you know, the housing market, mortgage rate, I mean, it all affects our business.