Personal Touch

While most retail executives depend on sales research, merchandise experts and outside consultants, Stephen Gordon--founder and president of Restoration Hardware--relies on personal tastes, nostalgia and whims.

It’s not the usual retail formula, but it’s working. Fueled by demand for upscale home furnishings, the Corte Madera-based Restoration expects to report an increase in sales to $100 million in 1997, up from $39 million in 1996.

Holiday sales on a same-store basis--revenue from stores that have operated for at least a year--jumped 32% over 1996, compared with sluggish gains of 2% to 3% for the retail industry overall. Restoration’s same-store sales for the year are up about 16% from 1996.

“That sales record is phenomenal,” said Alan Rifkin, a retail analyst at Piper Jaffray in Minneapolis. “Restoration is succeeding because the stores have a format that consumers have not seen before. The company has a niche and a product offering with appeal that spans genders and generations.”

Restoration sells an eclectic mix that appeals to affluent baby boomers who want to dress up their homes with unusual knickknacks and furnishings. There is furniture, such as an 18th century-style “Monica sofa” ($1,095); stainless-steel “miner’s” lunch boxes ($23 to $29); and a Scandinavian winter drink called glogg ($2.99). Shoppers also can find lamps, blankets, garden books and rubber Birkenstock garden shoes ($59).

And yes, there are hammers in this “hardware” store--but some have compartments in the handle that store screwdrivers ($7.50). “We’re not fish or fowl, because we’re not a typical hardware store and we’re not a typical home furnishings store,” Gordon explained.

“The store has evolved into a home-furnishings store with a hardware soul--or at least a hardware genesis,” he added.

Restoration evolved from Gordon’s attempts to establish a bed-and-breakfast in Eureka at a Victorian home he purchased in 1979. He planned to renovate, but found it difficult to find suitable fixtures in stores. When he found suppliers who could provide such items as old-style doorknobs, towel bars and lamps, he decided to sell them from his home to generate extra income.

Gordon opened his first store in Eureka in 1980, operating as a retailer by day and moonlighting as a bartender by night. The first major expansion was in 1995, when--with funds from private investors--he opened five new stores, doubling the size of the chain. Since then, the company has doubled in size each year and now has 41 stores in 18 states--including 14 in California. It opened 10 stores in November--just in time for the Christmas sales season.

Gordon, 46, never opened the bed-and-breakfast. But his stores evoke the feel of home. Much of the merchandise at Restoration rests on the kind of wooden shelving found in dens, for example. Lamps for sale are not clustered on racks; they rest individually on fashionable tables and are surrounded by decorative items and furniture for sale in a living-room setting.

He selects all the merchandise--unlike other retail chains, where chief executives rely on professional buyers to track trends and choose merchandise with help from hired consultants.

His control of inventory is both the strength and potential long-term Achilles’ heel of Restoration, because the business relies so heavily on his judgment. Gordon said he established a three-member buying team several years ago. However, Gordon has the last word on purchases.

Much of the merchandise reflects Gordon’s penchant for the playful. There is an Acme Dog Biscuit Mix, complete with a bone-shaped cutter. And there is a battery-less “Forever” flashlight, with generators that respond to the squeeze of a hand ($10). Gordon said the flashlights were created in 1956 for the Soviet Red Army.

Nostalgia and novelty abound. There is, for example, a wind-up toy called Atomic Robot Man. Restoration also stocks napkins with buttonholes--adult bibs that were offered to airline passengers in the 1950s.

Gordon’s merchandise selections are sometimes based on hunches, such as his decision to offer a book on mealtime graces--a move he made because he once watched his sister fumble such an effort at a dinner table.

To explain his inventory to customers and provide some history or selling points, Gordon develops descriptive placards that are placed near the goods.

“I started writing signage as a justification for having certain items in the store,” Gordon said. A placard touting a hammer bearing the signature of Tim Allen says the “Home Improvement” star “is a most serious collector of fine tools. Built to be employed by amateur and professional alike, the tool features an American hickory ax-style handle and highly polished heat-treated drop-forged head.”

“Everything is designed simply and [is] well-made--that’s why I shop here,” said Joe Dominici, a Los Angeles resident attending an after-Christmas clearance sale at Restoration’s store in Century City Shopping Center--one of the chain’s top locations.

Restoration was one of the bright spots on a disappointing holiday shopping scene. Although other retailers did well--Dayton Hudson Corp. is expected to record a 5% gain--an LJR Redbook Research report said industrywide same-store sales rose a modest 3.9% for the four-week period ended Dec. 27.

Restoration is benefiting from a surge in demand for home furnishings, said Richard Giss, a Los Angeles-based retail services partner at Deloitte & Touche.

“Fashion changes, but items for the home are appreciated for years,” said Giss. “It can be a practical gift with long-term value. Restoration is a gift store for the home.”

Industry analysts have been tracking Restoration’s growth, because it’s on track to eventually become a public company. Gordon said Restoration may go public in a year to raise funds for a more rapid expansion.

As a private company, Restoration already plans to open 20 to 30 more stores this year. Investors such as Weston Presidio Capital in San Francisco, Chase Capital in New York and Dallas-based Cardinal Investment Co. have helped make expansion possible. In all, Gordon said, outsiders have invested about $25 million in the company.

Gordon said he has not had to vary his merchandise mix as he has expanded to Philadelphia, Washington, Detroit, Dallas and other U.S. cities.

“At times, we’ve added items just to be playful,” said Gordon. “I’m not sure we even have a formula, but we have a point of view.”