After bankruptcy, Z Gallerie is back with new products, more stores and a refreshed website
Sixteen months after declaring bankruptcy and 13 months after being acquired by Karat Home, furniture retailer Z Gallerie is preparing for a major relaunch.
This month, Z Gallerie is adding its first seasonal collection in two years to its newly-revamped website. The assortment includes 250 new SKUs, including coffee tables, couches and lamps. Later this year, Z Gallerie will open a pop-up store in Texas and an outlet warehouse in California, marking its return to physical retail after shuttering its 21 U.S. locations in 2023. Z Gallerie is also creating a loyalty program to launch later in 2025, as well as a wedding registry service. And it will soon offer buy-now, pay-later capabilities. Z Gallerie launched in 1979 as a family poster business before its founders expanded it into a chain for home furnishings, art and accessories.
Z Gallerie’s refresh comes after a turbulent year and a half for the company, which declared bankruptcy for the third time in October 2023, citing “severe liquidity constraints” resulting from “underperforming retail stores, adverse macroeconomic trends and industry-specific headwinds.” At the time, it owed between $50 million and $100 million to hundreds of creditors. Z Gallerie underwent liquidation in the following weeks, but by January 2024, it got a lifeline through a new owner, Karat Home, an e-commerce furniture retailer founded in 2015. Karat Home paid $7.2 million to acquire Z Gallerie’s intellectual property, assets and workforce.
Under new ownership, Z Gallerie needed to play catch up, and quickly. At the time of its bankruptcy, Z Gallerie had issues with cash flow, as well as a large number of outstanding orders. “We inherited a lot of mistrust and customer satisfaction issues, and we were dedicated to rebuilding that trust,” David Pinedo, marketing manager at Z Gallerie, told Modern Retail. Z Gallerie set about filling orders, paying back its debts and repairing its relationships with vendors. It also spent six months redoing its website and transferring it to a cloud-based server.
The past year has been a learning period for Z Gallerie, said Jie Melchiors, GM of the company. During its first year of ownership under Karat Home, “we actually were building from minus one to zero, and now this year is for us to build from zero to one,” Melchiors said.
Part of this plan involves rebuilding Z Gallerie’s physical footprint. Z Gallerie is converting its warehouse in Gardena, California, into an outlet in late March. In September, it will open a pop-up store in Texas, where Karat Home is headquartered, most likely in Dallas or Houston. Some of Z Gallerie’s products are listed as being made in the U.S., while others are imported. Karat Home’s parent company is J&S Yard, a China-based textile and furniture manufacturer and retailer.
Texas is a major market for Z Gallerie and, therefore, a top choice for a store. “We want to start in the places where we performed the best and not make the same mistakes that the old Z Gallerie made in having too many stores and having to close them down,” Pinedo said. Melchiors agreed, saying the company wants to be strategic in its store expansion plans. “You definitely need a store in order to be compatible and also competitive with the furniture market,” she explained. “But we have to grow mindfully.”
While Z Gallerie is focusing more on stores, it isn’t abandoning its online business. The company has revamped its website to be more user-friendly. New tools include recommendations for items that are frequently bought together and a meter measuring how close a customer is to receiving free shipping. To further woo shoppers, Z Gallerie plans to launch an updated loyalty program in the second or third quarter of this year. It will offer perks such as extra discounts and free gifts.
Online, Z Gallerie is tweaking its messaging to stress the brand’s shift toward “luxury premium exclusiveness,” Pinedo said. Z Gallerie is now featuring more limited-edition products and collections, which it hopes will position itself well in the high-end furniture market. Z Gallerie’s website copy stresses “exciting new and exclusive arrivals” such as a $3,999 reclining sectional couch, a $1,799 dining room table, an $899 barstool and a $399 desk chair.
Sudip Mazumder, retail industry lead at Publicis Sapient, told Modern Retail that Z Gallerie is re-entering the furniture industry at “a period of change and adaptation.” Furniture customers today increasingly desire customization and sustainability, he said, and many prefer to buy their furniture online. The industry is also grappling with supply chain issues and longer lead times, as well as increased competition from global players. In this environment, some furniture companies have struggled. Mitchell Gold + Bob Williams and Noble House Home Furnishings both filed for bankruptcy in 2023.
Mazumder believes Z Gallerie’s relaunch via new stores, a new website and a new loyalty program is “a step in the right direction.” “They’re trying to create a more omnichannel strategy, … but execution is going to be critical for them,” he said. “I cannot stress that enough. It’s going to be still very competitive, and they will have to go against established brands. They will also have to keep evolving their offerings, which was one of their undoings last time around.”
Ultimately, Mazumder said, Z Gallerie needs to “come up with an angle” of why people should choose it over other furniture players. “Just having great product is not key,” he said. “It’s also how you treat your customers, how you give them that feeling of luxury. They’re going to make a big dollar purchase, so that means they’re expecting a premium level of service, which is where I think Z Gallerie has some work to do.”
Z Gallerie’s Melchiors is optimistic this can be done with time. “Our commitment is to grow the brand and build trust with our customers,” she said. “Revenue and profitability will follow if we do the right things.”