Housewarmings' Dream House manifests into a real success

For the third year in a row, one night this month Housewarmings will clear out all of the furniture, accessories and artwork on display in its 4,500-sq.-ft showroom and transform the hearth and patio specialty store into an intimate dining experience, complete with gourmet chefs and exquisite wines.

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Lexington, Ky., retailer hosts the annual Heart-to-Heart Valentine's Dinner to benefit the local food bank for altruistic reasons. But the annual dinner is also part of its proven event-based marketing strategy. “We would rather do events than put money into advertising,” said Ajay Gupta, president. “Ads touch a lot of people, but those people can't experience the whole of Housewarmings.”

The whole of Housewarmings equates to the soul of Housewarmings.

“This is a live space,” Gupta said. “When you walk into it, you feel as though it has a soul of its own.”

Gupta and his team market the showroom as the Dream House. Divided into the living areas of a home with living room, kitchen, den, keeping room, bedroom, bathroom and outdoor deck, the Dream House seduces customers by making it easy to imagine how the hearth and outdoor products would add warmth and comfort to their own homes.

Every detail is considered. Because a cleaning crew comes in each morning to ensure that the space is spotless, floors always shine and surfaces gleam. Ceiling lights are enhanced with spotlights and table lights. Soft music plays in the background, while the tantalizing aromas of freshly baked cookies and brewed Starbucks coffee waft out from the kitchen.

“We've had a lot of [retailers] come in and take photographs of our place,” Gupta said. “We don't mind, although one asked me for a blueprint. We said no way! But we let people take photos because our strategy is to keep changing. Six months down the road, our showroom will have changed.”

An outdoor evolution

Housewarmings was launched in December 2004 as a fireplace specialty store. Having founded Everburn Manufacturing in 1992, Gupta had grown frustrated by what he was seeing when attending trade shows to market the company's gas logs.

“As we watched the fireplaces evolve, things were becoming more and more beautiful,” he said. “We would come back to Lexington a little dejected that no one was selling these products here.”

Gupta eventually realized each of the local hearth retailers had a particular niche, and that there was room in the market for a different type of specialty store. He readily admits that until he tried it for himself, he hadn't realized just how hard retailing is.

“Now we understand why some people don't make it,” he said.

Setting the goal of becoming “the best place in the country for fireplaces,” Gupta and his team took a holistic approach to retailing. The burning units, currently around 70 from 16 different vendors, are displayed in full vignettes, with surrounds, mantels, furniture, lamps, rugs, tools, anvils, artwork and other accessories. If something doesn't fit the theme of a vignette, it isn't displayed.

Outdoor products are displayed on the 5,000-sq.-ft. deck with the same philosophy of offering the complete environment. But this is where Housewarmings differs from almost all specialty retailers. Its customers can purchase an entire customized outdoor room; the products making up the room's infrastructure, if you will, are manufactured by Gupta's third company, Housewarmings Outdoor.

The birth of the outdoor business was an evolution of sorts. Housewarmings' first venture into outdoor products was outdoor fireplaces and fire pits. That led to outdoor grill islands, which led to carrying pergolas to define the outdoor room. Along the way, outdoor furniture and accessories were added.

In the meantime, Gupta and his team became dissatisfied with the quality of the grill islands and availability of the pergolas they had selected. Given the manufacturing expertise gained via Everburn, it was a natural transition into manufacturing the outdoor room components. The wild success Housewarmings experienced in selling the customized outdoor rooms led to the spin-off of Housewarmings Outdoor as a standalone company that customizes pergolas, outdoor kitchens, fireplaces and fire pits.

Customers not ready to purchase an entire outdoor room can purchase customized components or even one of a few standard grill islands manufactured by Housewarmings Outdoor. These still offer the customer some options. For example, a recent customer purchased a small grill island for $4,500 and was able to select a custom color for the custom-fit cover that came with it. She chose bright pink.

The success of Housewarmings Outdoor as a separate company and as a supplier to Housewarmings convinced Gupta to put aside his earlier plans for opening other retail locations. Housewarmings will remain his single store while he invests in the rapid growth of Housewarmings Outdoor, including setting up a dealer network (see accompanying article, previous page).

A series of fortunate events

With the success of the outdoor rooms, which can result in sales from $5,000 to $150,000 or more, Housewarmings' revenues are now pretty well split between its hearth and outdoor lines.

Outdoor furniture sales are often part of the entire outdoor room purchase, but increasing numbers of customers come in for just the furniture and Gupta expects that to increase as he continues to expand the range of his outdoor mix. Cast aluminum and outdoor wicker are the largest categories, followed by extruded aluminum. Wood remains more of a niche category.

Housewarmings doesn't buy deep in anything with the exception of horses. Given that Lexington calls itself “the horse capital of the world,” horses are plentiful among the artwork and accessories in the Dream House.

“You'll find at least 100 horses or more on display,” Gupta said. “One customer bought over $1,000 worth of them at Christmas time. These are very nice horses from Ireland, very intricate beautiful bronzes.”

The lack of deep inventory allows Housewarmings to push special orders as well as continually change its displays. That constant transition prompts many customers to visit every few weeks.

The frequent events Housewarmings participates in also keeps people coming back. The local Chamber and other organizations occasionally hold meetings and fund-raisers at the store, while others ask the specialty dealer to sponsor major events. For example, last summer the entire parking lot was turned into an outdoor dinner theater for a Kidney Foundation benefit. About 150 people bought tickets to eat under the stars and enjoy live music.

Housewarmings also sponsors Home Builder Association events. As the primary sponsor of the 2007 Grand Tour of Homes, Housewarmings was deemed the “luxury idea stop.” Tour participants who stopped at the store to pick up their tour books also spent time browsing the Dream House.

The annual home and garden show is another big event for Gupta and his team.

“We get a lot of leads from this show,” Gupta said. “We have 6,000 square feet and do a phenomenal presentation with our outdoor rooms. People see us there and fall in love instantly.”

Overall, Housewarmings participates in or hosts an event nearly every month, including education classes for consumers such as How to Select a Fireplace or How to Design an Outdoor Room.

A different point of view

Because Housewarmings does its own fireplace installation, it typically has about 16 full-time employees and three part-time employees. Turnover is unheard of, in large part because of Gupta's personal philosophy of putting people before profits.

“We are more concerned with how things are done,” he said. “Is the team improving? What new ideas are there? What are we doing for our customers, and what new benefits can we add for our employees? So our measurements are different. Even in a bad year, layoffs are the last option.”

Having spent countless hours in planning every detail of the Dream House to appeal to their customers' senses, Gupta is delighted that Housewarmings takes people out of their hurried lives and surrounds them with beauty. He believes that soulful experience can only improve his business.

“We think that this is going to be a very big year for us,” he said.