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The San Francisco Design Center hangs on during tough times
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It’s not curtains for the San Francisco Design Center but recession-shocked showrooms are struggling to stay afloat by dropping price quotes and cutting way back on staff and hours. In the extreme case, newer and smaller occupants of the Showplace Square and Galleria buildings have folded, leaving behind vibrant, vacant spaces that can be tough to fill.
Call it a home industry trickle-down effect. It begins when personal portfolios take a dive or an executive is layed-off. Clients inform their designers and contractors that they cannot spend another dime. Projects are put on hold keeping designers away from wholesale venders who rep manufacturing houses that make furniture, fabrics, wallpapers, cabinetry, and surfaces for countertops and flooring. Many of these venders are located in the Design Center buildings on Henry Adams, as well as smaller commercial spaces in the surrounding South of Market district.
“We saw the traffic begin to decline as early as October of 2007, but it absolutely hit bottom in February of 2009 and is just starting to pick up a little bit now that it's spring,” observes Ed Minto, owner of The Roman Shade Company, which customizes top quality window treatments throughout the Bay Area. “The showrooms owned by corporations with deep pockets have remained but a number of smaller, individually-owned ones have left because they are the ones taking the heat.”
It got so hot-- Minto cut his prices 20% across the board to attract clients who are budget conscience but appreciate the difference between his products and ones sold in catalogues. “We would rather take a shorter profit margin and have the sale than not have the sale at all,” shares Minto, who has watched whole portions of his business evaporate in areas like the East Bay. “That was ground zero for the housing market implosion and those people have seen a large part of their equity disappear,” he says. “They don’t have the money to buy high end home furnishings.”
Joe Girimonte of RJ Collections agrees that the biggest slow down has emanated from the client base with a mid- range income level ($150,000 to $250,000) while designers and showrooms serving the most affluent San Francisco clients continue to thrive. “There are designers in the upper level that have complete control of the client,” Girimonte says.
He also finds the destination showrooms seem to be weathering the storm quite well, ones like the ultra chic and modern De Sousa Hughes, which sells extraordinary textiles you cannot find anywhere else in the City. Geoffrey De Sousa tells me fabric sales are up, which is reassuring news because designers depend on these sources to perform their artistry. Girimonte says De Sousa isn’t the only neighbor moving merchandise.
“Ann Saks Tile & Stone, which is owned by Kohler, has become much stronger but some smaller showrooms like Paris Ceramics got caught in the bad timing and had to close,” says Girimonte. He admits his own family-owned furniture business, which he has operated with his wife, Rose, for 20 years, is running behind, but the design center veteran is not worried. “We’re going to stick around and hold out for things to turn around,” he promises.
Meantime, Randolph and Hein chose not to stick around and closed its posh showrooms in both the San Francisco Design Center and the Pacific Design Center in Los Angeles, opting instead to have its goods represented by two other showrooms, Kneedler- Fauchere and Profiles. Its principal, Randy Arczynski, argues a variety of factors have altered the showroom environment for the worse.
“The availability of decent design product in the retail level and on the internet has had a big negative impact on showroom sales,” Arczynski finds. “There has also been trend towards the emergence of the bigger showrooms that can bare the enormous cost of marketing that is necessary to have a successful operation.”
Arczynski argues most showrooms can’t afford outside sales and marketing, especially when leases go up as they did at the SF Design Center when it was purchased by a new owner several years ago. While management has cut parking fees and staged Market Week events to heighten its image, the lease pricing---an average $3.50 per sq. foot--- may need to be adjusted as well until sales pick up.
“In these murky economic times we have been in, it is increasingly difficult to survive,” notices Arczynski, who admits he prefers his designer hat to that of showroom administrator. “We see design studios putting projects on hold, projects are reduced, work days are cut, hospitality programs are put on hold for financing reasons and real estate sales are down. The trickle-down effect has definitely hurt our industry because so much is discretionary.”
One angry showroom owner, Chuck Mills of CEM Associates, blames it all on the media and its negative spin on the recession, claiming it has put the public in a false state of panic. “Nobody is showing up and people aren’t buying anything because they heard their country is in the toilet,” he gripes. “We need to be realistic and if you are not poor and you still stop buying, the country will shut down.”
Girimonte also finds current news headlines take the glass is half- empty approach because negative news sells. But he wants San Francisco to know that despite all of the so-called hype, the Design Center will endure. In other words, it will outwit, outplay and outlast the recession survivor game.
“Kneedler has been around forever because when you walk into their showroom you are walking into a place of excitement where you see things you don’t see anywhere else,” he gushes. “It will pick up. When, I’m not sure.”
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