Branch is betting on San Francisco for its first flagship location
Furniture company Branch opened its first flagship store in San Francisco this week, betting on a resurgence of the city thanks to more office space, foot traffic and business-to-business clientele.
The 1,500-square-foot store in Jackson Square opens as Branch, which specializes in office furniture, embarks on what co-founder and CEO Greg Hayes hopes will be an expansion across major U.S. metros. But San Francisco, in particular, has been one of the fast-growing markets for the brand, and Hayes sees potential for a halo effect from a Branch brick-and-mortar store.
“We got the sense that furniture is a category where a retail presence is really important because it’s a high price point, because it’s often a high consideration product,” he said. “People want to go and sit in the product, and understand the quality.”
The furniture industry has seen a slowdown brought on by a challenged housing market. The sector reached record highs in 2021 and 2022, peaking at $12.7 billion. But in 2023, sales began to decline as pandemic-driven demand cooled and the housing market lost momentum. But one notable highlight is office furniture, which has benefited both from people upgrading home office setups and return-to-work mandates. MillerKnoll late last year opened new hubs in London and New York, while rental companies are also seeing boosts from commercial clients.
Branch, which raised a $10 million Series A in 2022, has done about a quarter billion in revenue since its founding in 2018. It’s on track to hit high eight figures in revenue this year, Hayes said, and has grown this quarter even as tariff policy changes have caused some disruption. He said that may be because businesses and individual shoppers who once considered buying higher-end brands like Herman Miller or Steelcase are trading down.
“If people are getting a little bit nervous about spending $1,500 on a chair, maybe they’re more comfortable spending $500 or $600 on a chair,” he said.
Hayes told Modern Retail that Branch knew it was time to look into getting its own flagship because individual customers had discovered its B-to-B showrooms in New York and Toronto. They were set up to service businesses that wanted to place bulk orders for office furniture. But both showrooms are located in office buildings and, while they don’t have retail inventory, people would still come by and check out the pieces. “They’d look at the furniture, and the conversion rate was extraordinary,” he said. “Everyone was walking in, testing the furniture, and then going home and ordering.”
But the company did want to proceed with caution while entering retail. Hayes said the company didn’t want to tie up too much money in a pricey lease. The company originally was considering New York, he said, but rents were five or even six times as high. But San Francisco quickly became a place that made more sense because Branch was already looking for its own new office space there. Branch’s design team is based out of San Francisco with plans to expand its sales staff, and Hayes also recently relocated to the area.
San Francisco also is one of the fastest-growing B-to-B markets at the company, Hayes said. Mayor Daniel Lurie is pushing a return to work for city employees, while private companies like Lending Club and Steph Curry’s Thirty Ink are building out hubs in the city.
Ultimately, the team settled on a Jackson Square space that has room for its flagship, and upstairs office space for its design and sales teams. The neighborhood sees ample foot traffic, thanks to a strip of boutiques and shopping. Other retail neighbors include Filson, Fjallraven, Paul Smith and a Ralph Lauren that just opened up in March. The neighborhood is also adjacent to the touristy hub of the Ferry Building and abuts the Financial District, which houses many offices and has seen a rebound as more offices bring people back to work.
Hayes predicts higher leases and more new neighbors in the quarters to come.
“It’s just a very walkable part of the city and there’s a lot of foot traffic, and this perfect blend of consumer shopping at the boutiques and our business clients basically right next door in the financial district,” Hayes said. “We probably got into that market right before things really started to accelerate.”
Inside, the space is tightly merchandised, with mock office setups to showcase Branch’s designs of chairs, standing desks and a small assortment of desk accessories from other brands. There’s also an area for sitting and rolling around in different models, plus a wall of color samples. The back of the store has an area showcasing Branch’s lounge pieces, typically purchased by B-to-B clients for office spaces. Branch’s best-selling inventory is held in an on-site storage space, though online ordering is available for anything not in stock or for easier delivery.
Rebecca Fitts, retail real estate consultant, said Branch’s “hub and spoke model” makes sense, as the design and sales teams in the upstairs office will be able to pay close attention to how products resonate and perform. “They’re able to go in every day and take all the feedback they’re getting from people on the sales floor,” she said. “The whole point of having a physical store is that you can let your customer discover you, touch and feel the product, and get a great customer experience.”
As far as location goes, Fitts said San Francisco can be an opportunity for retailers to open up, noting the renewed buzziness of places like Union Square and Fillmore Street. The pandemic saw offices shut down and a wave of small business closures. This led to an exodus of retailers that has continued with companies like Bloomingdale‘s pulling out of the city, and much office space is going at loss. But some of that has started to reverse, and there is a potential upside for companies looking for an affordable lease. Beyond Ralph Lauren, other new retail stores in San Francisco that have opened this year include Nintendo’s second U.S. location, plus a Ross and Shoe Palace in other locations. And from a shopper perspective, the local tourism board is also projecting a slight bump in visitors and associated spending this year, going from $9.26 billion in 2024 to $9.41 billion this year.
Fitts said that for a company like Branch, starting with a smaller footprint makes sense, especially in an environment where leasing trends could change. There’s a window for companies to lock into a deal that makes sense based on current forecasts, ahead of any potential recession or slowdown in consumer spending. “You can be opportunistic,” she said. “People are [soon] going to pause on deals, and you might be able to get into a really saturated market up until that point.”
Looking ahead at a broader retail expansion, Hayes said Branch will look for smaller footprints — staying under 3,000 square feet — in strong markets and sub-markets with affordable rents. The goal is for each store to be profitable, rather than land somewhere expensive, he said.
“We haven’t totally blown the budget out on this, and I think it’s just a far more sustainable way to go about this process,” he said. “Had we spent a million dollars on buildout, the payback on that would take quite a while, and we’d probably be far less likely to want to scale a retail program than we will be with the current setup.”