Store of the Future   //   April 12, 2024

How Havenly is expanding from an online design service to a brick-and-mortar retailer after its acquisition spree

After completing three furniture and houseware acquisitions in two years, online interior design service Havenly is focusing on crafting a brick-and-mortar strategy that caters to its millennial clients.

Havenly, founded in 2014, started as an online-only way to provide design services across budgets and regions. Its designers craft floorplans and recommend products from more than 300 partner brands, and also provide in-home design services in major U.S. metros. But its recent acquisitions of furniture brand Interior Define, housewares company The Citizenry and custom builder The Inside has given the company its own product portfolio. And, it now has a national retail footprint of 13 Interior Define stores and a flagship location of The Citizenry to experiment with.

Now, Havenly is experimenting with ways to cross-promote the brands. Most recently, it brought items from The Citizenry into a Denver Interior Define location. The store-in-store concept features The Citizenry’s items, like linens, in a branded corner of the showroom. Its rugs and artwork also accent Interior Define couches. It’s also been experimenting with in-store design services since last quarter and aims to launch a small format store for The Citizenry potentially within the next year.

Havenly co-founder and CEO Lee Mayer told Modern Retail that it is actively scouting new locations for more stores to cater to the millennial customer who navigates between shopping online and in person for big-ticket purchases.

“Our generation, we do some research online and maybe go in and see it. Then, we do more research online. And who knows where we transact, like on our phone while we’re waiting for school pickup. And so we really tried to architect our business like that. There’s a lot of mixing between the two,” she said.

The last several years have been challenging for the furniture sector. Buying a new home or redecorating are two major impetuses for buying furniture. But home sales have slowed as interest rates rose. The most recently available federal data shows that total sales in the furniture and home furnishings sector have dropped 9.2% from the same time last year. Bankruptcies hit longstanding brands Z Gallerie and Mitchell Gold + Bob Williams, while DTC acquisitions are ticking up.

Amid this landscape, Havenly went into growth mode. The company’s expansion strategy began in 2022 with the acquisition of The Inside, a DTC home furnishing company, allowing it to sell made-to-order customized items to its clients. Later that year, it bought Interior Define following the brand’s financial struggles as it teetered on the edge of bankruptcy. Its acquisition of The Citizenry was announced in late February. 

“We were able to, from a position of strength, sort of go to these brands and say, ‘Hey, we love you guys. How about instead of you guys doing it alone, or going out of business, let us come in and bring you into the portfolio and make you a real part of what we’re doing?’” Mayer said.

From a revenue perspective, getting more into product supplants Havenly’s design business. While Havenly doesn’t share revenue and sales stats, Mayer said cart sizes have gone up since the acquisitions as it sells more furniture and home decor to design clients. She also said that the brand sees online sales in regions go up when in-store sales nearby rise as well.

Sonal Gandhi, chief content officer at The Lead, said it makes sense for furniture companies to continue to create physical experiences, even if the customers ultimately transact online. In addition to Havenly, DTC brand Maiden Home opened a flagship store in New York City last fall, while Burrow has expanded its national footprint over the past several years. The benefits are twofold — from the brand perspective, conversions are “way higher,” Gandhi said, while customers get a better sense of the product. It also hedges against returns of a cumbersome item.

“It’s something you’re going to live with a long time,” she said. “Having someplace to show your product to a customer when it’s high consideration has always made sense for that category.”

Gandhi said Havenly’s getting more into physical retail makes sense given that online-only companies will ultimately hit a cap in how many people they can reach. “It’s a good time for these acquisitions,” she said. “You have a limit of the type of customer you can get through digital, and you have to be in another distribution channel.”

Havenly’s Mayer said the decision to acquire The Inside, Interior Define and The Citizenry was informed by data on what styles and items customers were looking for. She said also she aimed to “assemble the best of breed,” across styles and categories. While The Citizenry leans into a neutral boho aesthetic with its products, The Inside’s custom furniture orders are a fit for those looking for bold patterns.

“We have so much data around what our customer wants,” she said. “So we really felt like there was an opportunity to just partner up first. And then we realized there was an opportunity to acquire and bring people into the portfolio,” she said.

Looking ahead, Mayer wouldn’t say what company Havenly might acquire next. But she signaled that Havenly has its eye on future deals.

“A lot of these companies are struggling. And so, it’s a good time to be a bit aggressive to the extent that we can financially,” she said. “We’ve learned our lessons and we see what these other companies have done, so we’re trying to be cautious. But I’m excited about the strategy — I love the brands we’re bringing on. We think there’s some other great ones out there.”