Chiasso Inc.

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Chiasso Inc.

1500 West Cortland Street
Chicago, Illinois 60622
U.S.A.
Telephone: (773) 342-7900
Fax: (773) 342-5490
Web site: http://www.chiasso.com

Private Company
Incorporated: 1985
Employees: 200
Sales: $20 million (2001 est.)
NAIC: 442110 Furniture Stores; 442299 All Other Home Furnishing Stores

Chiasso Inc. is a Chicago-based leading retailer of specialty housewares, toys, barware, bath, kitchen, and office accessories, lighting, and furniture with stores across the United States. Operating through a multichannel approach, the company has stores in upscale malls, as well as sales through catalog and Web site marketing. Chiasso distinguishes itself by offering an eclectic mix of avant-garde products that are often designed by well-known modern artists and architects. From its inception, Chiasso, which is an Italian slang expression that loosely translates as “to cause an uproar or sensation,” has based its retail philosophy on creating a fun, amusing, and innovative shopping experience. A spirited twist on renowned Chicago architect Louis Sullivan’s maxim that “form follows function,” the company’s motto “formfunctionfun” drives Chiasso’s efforts to continue to offer its customers modern, design driven merchandise for the home and office.

Mid-1980s: Quirky Merchandising Sparks Success

Inspired by the gift store at the Museum of Modern Art in New York City, Keven Wilder and her husband Nicholas Wilder decided to go into business on their own. A former lawyer who worked in the cable TV and public television industries, Keven utilized her interest in art to set the tone for the innovative design of their first retail shop, while Nicholas added expertise as a designer and real estate developer. In 1985, the couple opened Chiasso, an upscale boutique on Chestnut Street in Chicago’s trendy Gold Coast neighborhood with a start-up cost of $500,000. The concept of their store was built on the notion of marketing home and office accessories that were both functional and highly appealing aesthetically.

The name Chiasso provided a touchstone for the company philosophy as well. According to the company’s Web site, Chiasso, pronounced key-ah-so, is a town on the Italian/Swiss border where famed Italian designer Ettore Sottsass’ Memphis Design Group first gathered. It also means “to cause an uproar or sensation” in Italian. Many commentators have noted that the name well suits the whimsical quality of the store design as well as the playful mix of merchandise that included and continues to carry products from leading architects and industrial designers such as Michael Graves and Aldo Rossi.

The first Chiasso store was designed by Paul Florian and Stephen Wierzbowski, who played off the company name to create a sense of disorder amid deceptively ordered design concepts. Described by Jerry Cooper in Interior Design in 1986, the 1,400-square-foot basement space was “a three-dimensional metaphor that merrily juxtaposes formal and hip, geometric and organic, serious and—well, just plain daffy. Despite all that, however, the scheme also adheres to time-tested principles considered essential to retail design.” The store also distinguished itself in design with fixtures created by Ettore Sottsass. The playful aspect of the store soon caught on because customers were treated to the high-quality merchandise of design shops without the stuffy high-art feel. The store displays utilized a successful merchandising approach that encouraged customers to touch the product.

Growing the Business

Wilder also launched a catalog in the mid-1980s. As with the retail shop, Chiasso catalog invited the customer to have fun. Keven emphasized the importance of play, even for adults, and the need to supply an adult toy that, while it may be functional, nevertheless encouraged play and inspired creative energy. Chiasso began to open new, high-design concept stores in malls. Keven’s eye for design, eclectic buying savvy, and fresh approach to merchandising helped generate record mall sales per square foot, as well as several awards. The company also grabbed national media focus when Chiasso was featured on television’s “Oprah Winfrey Show.”

In 1996, Chiasso moved its flagship store to Chicago’s Magnificent Mile in the Water Tower Place, closing its Gold Coast store. Chiasso achieved remarkable success in its new location, topping $1 million in sales in its first year and accounted for almost 8 percent of Water Tower store revenues. With an affordable price point ranging from $15 to $138, the company managed to meet $700 in sales per square foot, as compared to the industry average of $278. The challenge at this stage in the company’s development was to continue to grow and still maintain its unique identity.

David Marshall joined Chiasso in 1996 as chief executive officer, working with Keven to expand into more markets and bolster its staff to include more managers and buyers. In 1997, Marshall and a group of investors from Holden Capital Advisors LLC purchased Chiasso from founder Keven Wilder. Initially, Marshall worked to close the existing stores in high-rent locations and open new stores in upscale malls. New store locations were chosen based on catalog sales. However, with the increasing success of Chiasso stores, the company was being wooed by several large mall developers. Marshall was cautious of accepting any offer and expanding too quickly, though he had managed to raise $3.6 million in venture capital.

On the verge of a national rollout, Chiasso revamped the prototype for their retail store. The Chicago firm of Bailey Edward Design was contracted to “value engineer” a new prototype to open in Troy, Michigan, in 1997. While still maintaining the playful, high-style design of the original, Bailey Edward brought down construction costs by 31 percent by using more cost-effective goods and reengineering construction details in lighting and fixtures. By the end of 1997, Chiasso had stores in Chicago, Boston, Detroit, and New York regions, as well as plans to open stores in Palo Alto and Dallas. The new prototype became the standard for stores opening in the late 1990s.

Late 1990s: Multichannel Sales

With sales at $5.5 million in 1998, the national expansion plan included 11 store locations in 1999 with plans to open four to eight more in 2000. By 1999, the company was ready to expand its catalog business as well. In 1998, Chiasso had mailed its catalog to 100,000 established customers, but the company bought prospective customer lists in 1999 and mailed 750,000 catalogs. The catalog was redesigned by the consultancy firm of Muldoon & Baer to go from a seven- by seven-inch format to a nine- by nine-and-a-half-inch format. The larger catalog size allowed for more photos and also increased the selection of goods. In 2000, Chiasso mailed one million catalogs, and in 2001, the company distributed 3.6 million. By 2001 the changes and expansion to the catalog were expected to achieve catalog sales of more than $5.5 million. Additionally, Chiasso also began to seek Internet sales when it launched its Web site in September 1999 after a $700,000 investment. Internet and catalog sales were 30 percent of total company sales in 2000, with projected Internet and catalog sales set at 40 percent to 50 percent in 2001. In 2000, combined catalog and Internet sales reached $3.7 million. By 2001, sales from the Internet alone were expected to reach $1.8 million.

When discount stores like Target began selling less expensive goods with the same Chiasso flair, the company continued to focus on staying ahead of trends. Another important aspect of the company’s plan centered on continuing to achieve growth in all three of its sales distribution categories. With combined distribution in store, catalog, and Internet, projected sales for 1999 were expected to be just below $10 million.

In 2000, Chiasso had 14 stores in malls across the United States. The company had raised $3 million through Holden Capital to finance further expansion of its catalog and Internet operations. It also planned to open a new prototype store in the fall. This new model would be bigger than the existing 1,200-square-foot store. While the company had always done well— even exceeded expectations—in its small stores, space was extremely limited to hold between 650 and 800 SKUs. The expanded prototype utilized 2,500 square feet of floor space. With a larger amount of selling space, the company also turned to offering furniture and dinnerware that maintained the same whimsical and modern style of its home and office accessory selection. Following the addition of furniture, Marshall noted in HFN, “Tread where Gordon Segal once said that when Crate & Barrel added furniture, accessory sales went up, and we’re finding that to be true.” Another added outlet for sales were kiosks in every store and the launch of a bridal registry.

Company Perspectives:

Over the years, “What are you?” has been the question we’ve been asked the most. It’s a simple question, but we’ve yet to come up with a simple short answer. We can tell you this much however, the thread, or essence, that weaves its way through Chiasso is “inspired design for the home.” We sell products that look great (design), work well (quality), and lift the spirit (fun). This blend of quality, design and fun combined with a dash of sophistication creates the uniqueness that is Chiasso.

Key Dates:

1985:: Keven Wilder and husband Nicholas Wilder open first Chiasso store in Chicago’s Gold Coast district.
1996:: Company moves flagship store to Water Tower Place on Michigan Avenue; David Marshall joins company as chief executive officer.
1997:: Keven sells company to Marshall and investors at Holden Capital Advisors LLC.
1998:: Chiasso revamps prototype for store units, maintaining playful style at “value engineering” costs.
1999:: Catalog is redesigned with much greater circulation; company introduces Internet sales with its own Web site.
2000:: Chiasso increases store floor space and adds furniture and dinnerware to merchandise offerings.

Within Marshall’s first five years at the helm, Chiasso had increased sales from $1.4 million to $21 million in 2001. Although this represented impressive growth, Chiasso had yet to show strong profitability. Marshall initiated cost-cutting measures to bring down salary, rent, and travel expenses as a means toward higher profitability in 2002.

At the beginning of the 21st century, long range plans for the company included expanding their brick and mortar operations to 75 units through a conservative rollout of stores in premier malls on a yearly basis. Still placing importance on their stores, Marshall noted in HFN, “The Web and our catalog are our biggest areas of growth. We exist to be multichannel.”