by Thirty One – Twenty One President Adam Tilley, Magnussen CEO Nathan Cressman address the market for ‘Affordable Luxury’
HIGH POINT – Recently, case goods resource Magnussen Home announced the formation of a brand it has been working on for over the past year or so as part of a strategy to capture a segment of the market seeking upper-end quality case goods.
Thirty One – Twenty One Home aims to accomplish that by providing what the company calls “affordable luxury” in the wood furniture segment. It will start with short focused bedroom groups, but will soon expand to other categories including dining, occasional home entertainment and home office.
The goal is to offer product priced 20% to 30% higher than typical Magnussen furniture, which currently offers four-piece bedrooms retailing from $1,999 to $2,499 with some as high as $2,999.
Just before the announcement last week, Magnussen CEO Nathan Cressman and Adam Tilley, president of Thirty One – Twenty One Home, met with Home News Now to talk about the idea behind the brand, the company’s vision for the project and what customers can expect moving forward.
One thing was immediately clear in that conversation: Tilley’s design and merchandising expertise will be the guiding force for a line that helps fill the void for affordable luxury in the marketplace. But Magnussen will be the engine that guides the vehicle in the months – and years – ahead thanks to its expertise in logistics and flow of goods along with its team of seasoned professionals with years of experience in sales and customer service.
It’s these elements – the car – and the engine – that the company believes has been missing from the mix in the upper end segment, particularly as some companies that once excelled in the category have fallen by the wayside for various reasons. At Magnussen, Thirty One – Twenty One Home plans to pick up where they left off and fill the perceived void in the market.
Below is an edited version of the conversation with Tilley and Cressman.
Home News Now: Tell us how the idea of this new brand came about?
Tilley: We certainly understood what the products needed to be and what the price points needed to be. And one of the things I saw with Nathan and had admired from Magnussen for a number of years now is that they can flow goods and they can get product out the door. So we just said if we can take the front end that we were sort of envisioning as this gateway to the upper end and bolt it to the back end of a company like Magnussen, which has built this tremendous proven engine, then you can really do something pretty cool. So that is sort of where the idea started.”
Can you tell us a little about how the line will be priced?
Tilley: We wanted to position ourselves in around 20-30% above where Magnussen sits so someone who is doing business with Magnussen could reach up and buy the Thirty One – Twenty One Home product. It will require a little bit of an expansion of price points on their part, but it’s not some dramatic jump where you have one set that is three times the price of everything else that is on the retail floor. We want to be within striking distance of the Magnussen core customer base right now. But we also think this could be a great opportunity for folks that typically trade in higher end goods that are looking for an opportunity to come down and take some Magnussen product on. So it’s an opportunity to sort of bridge those worlds a little bit.
And what will the mix look like?
Tilley: We will ultimately have bedroom, dining room and living room, but we are going to start with bedroom this market because I wanted to focus on getting enough of a style spread out there. And knowing everything else that is going on the world you can’t just bring out 500 SKUs and expect everything to ship perfectly and on time. We want to limit our assortment to a nice tailored amount to start with and bedroom was the thing that we repeatedly heard was the easiest to get momentum on. Next market we will expand to dining room and then to living room with occasional, home office and home entertainment.
You mention SKU management – can you elaborate on that a little?
Tilley: We will have nine bedroom collections at market. From a merchandising standpoint – again with Magnussen being a great supplier and being laser-focused on who our core customer is and what they need and what they don’t need – we have sort of tailored our introductions to be pretty tight. So it’s a bedroom that is fairly suited and also has little bit of sizzle to it from an accent standpoint. But it is pretty concentrated from a SKU count standpoint because that’s what flows through the factories the fastest and most efficiently. And the more we can streamline and take out the variables, the more consistent the quality of the product is going to be…I love 150-piece collections. But I have been told 100 times from customers, ‘this is fabulous, but I have no idea how to buy it’…And what happens on the manufacturing side is you end up cutting everything and then your inventory balloons.
How large are the Thirty One – Twenty One groups?
Tilly: A typical bedroom will have 11 pieces – there will be a couple of nightstand options and a couple of bed options, but the case assortment is fairly limited and in one finish. Our focus is – and this is something Nathan is really good at – and this is another thing I have learned the hard way over time is there are certain things you get paid for on a retail floor and there are certain things you don’t get paid for. So we spent a lot of time and energy not overbuilding the product. The quality is great – it is a higher quality standard than Magnussen product is – but we didn’t go out and say this is a high-end brand so we are going to go source the most expensive drawer guide system that money can buy just so we can say we have the most expensive drawer guide system that money can buy – that is not where we wanted to spend our money.
Where will customers see the most value?
Tilley: We focused a lot on finish and hardware specifically…A bunch of the cost of the goods will be in beautiful hand-carved bespoke hardware that we have custom designed literally from the ground up. And that will be a real differentiator. The finishes also are great and are finishes that take time to run down the line. There also are great materials that are really carefully selected – that’s where we are putting a lot of energy. Sure, we have dust protection – maybe it’s not made out of Carpathian elm bur – but that is not really what the customer is asking about. We want a lot of really great face and quality and construction standards that meet reasonable expectations.
Any thoughts on styling?
Tilley: We don’t want to be pigeon-holed into one specific style preference so this market we have everything from smaller scale contemporary and very sporty understated elegant contemporary to big romantic European traditional, and we have everything in between. We will look at contemporary, transitional and traditional being our core categories. We also will have a good-better-best strategy as far as pricing is concerned and we will have products coming out in all of those pricing categories.
So who would be the core customer for Thirty One – Twenty One?
I would say those customers that do a lot of business with Magnussen and we know who they are – they are on the 125 List – and are getting customers into their stores that have household incomes of $150,000 to $200,000 per year. And a lot of them have said to us before we started this venture that they haven’t really had a great resource they can work with that can deliver goods for those types of customers. They know those goods are out there, but the way Magnussen does business is very appealing to these bigger retailers, and some of the higher end stuff is frankly hard to buy.
How would you describe the competition that exists in the marketplace for this type of affordable luxury?
Tilley: There are good people in this category and there is still strong competition there, but it is not like the starting price points where there are hundreds and hundreds of brands that compete for consumer dollars.
Nathan what are your thoughts on the new brand?
Cressman: “I am excited about it…I wish we would have done it sooner, but sometimes timing is everything in life. So I think that is one of the blessings of Covid it has opened up opportunities even during difficult times.
Adam has really championed this thing and championed the product He is really respected and is super talented and super bright…He has always had a really great car. It’s just never had a really good engine. We just want to help with the engine.”
You just mentioned opportunity. What do you see as the big opportunity here?
Cressman: It’s just recognizing where the customer is. Customers have totally been segmented to some degree…You have a bunch of companies that used to service this market that have gone really much more designer oriented. And you have got some that have been purchased by whatever entity and they no longer exist…We just saw a real need for the bricks and mortar and the clicks and mortar market we serve and we don’t really deviate. We have not to date really deviated from that core competency to serve that segment of the market, so this is just an extension of that.
What do you think Magnussen add to the equation?
Cressman: We have people that have come from that background of a little bit more tailored and better end goods, but there is no difference when it comes to logistics, containers, supply and demand management and inventory and quality control procedures. So all of those things which I think that Magnussen has had a good reputation for are just parlayed into this…So there is a little bit of still a separation of church and state on the creative side, but there is not a whole bunch of separation of church and state in that we are going to flow it into California and it is going to come from California, and if you want to buy this, then this is the traffic lane. So I think that is where the opportunity is. So you can leverage what Magnussen is and get velocity… and we can deliver in the lanes.
Adam, what are your thoughts on the opportunities with this new brand?
Tilley: I think there is a bit of an old school spirit in what we are trying to do – sort of a return to the old school in the sense of prioritizing relationships, respecting the vendor-customer sort of relationship – and not try to reinvent the wheel. Let’s not forget what has worked for quite some time. If we can sort of stand on the shoulders of those folks who came before us and improve on some of their ideas, but not throw a lot of those ideas out, then I think there is a lot of business to be done. And that’s certainly the way I grew up and I know that is something that Nathan has been really good at – listen to your customers, treat them fairly, let’s try to not get too far out over our SKUs and good things are going to happen.
We are not taking a “lower end” company high end – that has never been a consideration. The price points Magnussen targets are lower than where we are targeting, but the disciplines and processes that are in place will work with everything. Frankly it is a lot of what the high end has been missing. And a lot of the folks on the team here have high end back grounds. So it really feels like an absolute blessing that this thing has come together at this time – It just feels like the best of both worlds.
