'Homescaping' Times Two

Brothers Thompson Lange and Beau Finklang opened their first "home environments" store, The Grove Homescapes, in Pacific Grove, California in 1996. The Grove was housed in a stylishly renovated, 9,000-square-foot former laundry, and offered plants, flowers, gifts, art, and furniture from around the world. Lange, who had previously worked as a television set designer, arranged merchandise in domestic vignettes that helped customers envision what The Grove's products would look like in their own homes. The individual vignettes, spaced some six feet apart, soon became the store's trademark style.

The merchandising strategy worked famously. The Grove posted sales of more than $1 million in each of its first three years in business, with 1999's take coming in at $1.25 million. In the fall of that year, Lange and Finklang branched out, opening a second store, Homescapes Carmel, in their hometown of Carmel, California, ten miles south of Pacific Grove.

Lange and his brother had wanted to open a store in Carmel, but according to Lange there were few retail spaces in the community with enough square footage to accommodate their visual merchandising techniques. "Carmel has hundreds of shops, but they're all about 1,000 square feet," he said. One of the few exceptions was the Great Western Bank on Dolores Avenue, a 5,000-square-foot building with 35-foot ceilings and a cantilevered roof. "That was one of the only places we figured we could put a store like ours in Carmel," said Lange.

The bank closed in 1998. "For a while, it became a kind of a white elephant for the owners," said Lange. "They couldn't find anyone who could fill all that space. In the end, they came to us with a really good lease offer."

When Homescapes Carmel opened in October 1999, it presented a number of challenges and opportunities unique to its locale, the building's architecture, and the distinct clientele it attracted. For instance, Lange soon realized that gift items sold more quickly in the new store. The brothers regularly had to transfer giftware from the Pacific Grove store to replace inventory that was flying off the shelves in Carmel. As a result, Lange altered his ordering practices for the new store. "I began to order more, and to order differently," he said. Before long, Homescapes Carmel had added personal care products, personal accessories, art glass items, and colorful textiles from India to its product mix, and to its display vignettes.

In addition, the high ceilings at Homescapes Carmel offered Lange and Finklang the opportunity to sell pieces that would have been too cumbersome for the original store. They began stocking large-scale cabinetry and artwork, 16-foot palms, large varieties of ficus, and banana leaf trees to help fill out the store's open floor plan.

However, the two learned that despite 25-foot-high windows on all sides, the natural lighting in the new store wasn't sufficient to sustain the orchids that represented some 7 percent of sales at the Pacific Grove location. Slow sales of orchids also caused a drag on the sale of green plants, and customers continued patronizing the Pacific Grove store for most of their flora needs. As a result, Lange began phasing the orchids and green plants out of his vignette displays at Homescapes Carmel, and concentrated more on the new gift items in his visual merchandising.

Over time, Lange and Finklang realized that the increased emphasis on furnishings and giftware resulted in higher profit margins at the new store. Homescapes Carmel was able to eliminate much of the perishable flora, as well as costly services that had been necessary for the plantscaping component of the first store. And yet the new store maintained the unique style of visual merchandising that had helped make the first location successful.

By the fourth quarter of 2000, Lange and Finklang were able to see a significant difference between the two stores. While the Pacific Grove store still had more gross sales than Homescapes Carmel, the new location posted greater net revenues due to its leaner overhead. So the brothers decided to eliminate the fresh flowers and plantscaping altogether, and concentrate on the business model that had worked so well at the Carmel location. Since the change, profit margins have been up at both stores.

Lately, Lange and Finklang have been scouting retail spaces for a third location to the north, in Silicon Valley. Soon they will be influencing home environments throughout the Golden State with their unique brand of domestic vignettes.