Fresh off the acquisition of the artisan home furnishings company The Citizenry in February and custom furniture retailer Interior Define before that, Havenly is bringing the two brands together under one roof in Interior Define’s Cherry Creek, Denver showroom this weekend.
The Citizenry made a big splash when it opened its Soho flagship store in 2020. Prior to that, it was a direct-to-consumer online retailer founded in 2014 by Carly Nancy and Rachel Bentley bringing the rug, bedding and decorative textile craftsmanship of some 3,000 artisans to the U.S. in a socially and environmentally responsible.
Havenly expects The Citizenry to find a welcome home in Denver, which is one of The Citizenry’s top 10 national markets. And by installing it as a shop-in-shop in its Interior Define showroom, it expands the decorative opportunities for local customers in a less capital intensive way than opening a standalone The Citizenry store.
Havenly CEO Lee Mayer has big plans for The Citizenry and Interior Define as she expands the flagship service-centric interior design business into a product-centric retail business, two different business models but that she believes go seamlessly together.
“As one of the largest, if not the largest residential interior design firms, we have so much data around what brands our customers love, what they want and at what price points, so we decided to work backwards to partner more deeply with some of the brands we sell, to help inform them about design, take inventory of what we manufacture and sell it direct to the customer,” she explained. “It gives us a larger platform in the home market.”
Survival Of The Fittest
Havenly was part of a cohort of online interior design services launched about a decade ago. These firms set out to disrupt the traditional, high-end interior design business by introducing next-generation home owners and city-dwelling renters to design services in a digital format native to them and at a price point they could afford.
The pack of online design services got an early lift from enthusiastic venture capital partners that were captivated by the prospects. Hutch, Homepolish and Decorilla came online in 2012, then Havenly, Decorist, Laurel & Wolf in 2014 with Modsy and Stuccco following in 2015. A handful of others have followed since its heyday, like Collov and Spacejoy.
Early venture capital money went to Laurel & Wolf and Homepolish, which according to Architectural Digest were each valued in the $100 million range. Neither made it.
Decorist was acquired by Bed Bath and Beyond in 2017, then closed down when its mothership went under. Modsy, which developed a 3D design platform backed by some $60 million in venture funds, ceased design services in mid-2022; however, its IP was acquired by home developer Lennar for an undisclosed amount.
Of the original cohort, only Havenly, Decorilla and Stuccco are left standing. Decorilla is said by the Business of Home to have flown under the radar by not seeking venture funding and has followed a slow growth trajectory. Stuccco offers both design and staging services, the later for which it is better known.
Havenly remains the hands-down favorite for continued growth in the interior design space, as long as its move into the increasingly fraught world of home furnishings retail doesn’t trip it up.
“As the field of competitors slims, it’s possible that Havenly will be better positioned to corner the market on online interior design – if it can figure out how to avoid the pitfalls that have plagued its peers,” wrote Allie Weiss for Architectural Digest.
Hope Springs Eternal
Despite online interior design’s early promise, the traditional established business has been a tough nut to crack. While the home furnishings market has exploded over the last five years, IBISWorld reports the interior design industry grew a modest 3.7% on average year-over-year between 2018 and 2023 to reach $26.1 billion in revenues last year.
Selling the value of independent interior design services is a challenge. Many consumers do it themselves as a means for creative self expression. Others who want help can turn to the complimentary design services offered by most furniture retailers or to a friend who has a knack for it.
Havenly has been able to survive while other online services failed by keeping a fix on its customers’ needs and being flexible, like adding in-home design consultation to its mix.
“We keep growing and taking market share because of our demographics – people under the age of 45 who are still buying home and open to new service models like ours and looking to the brands we offer as well as the brands we own,” said Mayer. “And never underestimate the power of getting lucky,” she added.
Luck may be on Havenly’s side, but then as Roman philosopher Seneca said, “Luck is what happens when preparation meets opportunity.” Mayer and her co-founding sister Emily Motayed Lancaster were well prepared to meet their lucky opportunities.
Lancaster has an M.B.A. in entrepreneurial studies from Wharton and was named to the Forbes 30 under 30 list in 2017 for her accomplishments at Havenly. She now splits her time with Havenly and a new baby nursery business she founded called Nurture&.
Mayer regrets she was over the age limit to get on the Forbes list, but she brought real-world business experience to their venture along with a Harvard M.B.A. Before Havenly, she did mergers and acquisition work for Canon, strategic consulting with Bain and was vice president and general manager of auto insurance for Bankrate.
Her experience was primarily on the finance and strategy side of business, which is a far better training ground to run a successful business, especially in an industry so heavily dominated by creative right-brain types like interior designers.
Next Steps
With Havenly’s flagship interior design service on solid ground, it’s made three acquisitions to expand its reach and product offerings over the last two years, starting with DTC customizable furniture brand The Inside.
Interior Define was acquired in a fire sale after getting caught up in the supply chain crisis. It brought along its 13 showrooms, giving Havenly places to introduce walk-in customers to its design services.
And now it is testing the cross-over potential for The Citizenry’s decorative goods in Interior Define showrooms too. It plans to expand The Citizenry shop-in-shop concept to two to three more Interior Define locations and is considering another stand alone The Citizenry store.
Mayer sees a runway to open another 13 Interior Define stores in the future because it has its pulse on where its prime customers live and where the opportunity is greatest.
“When people buy a sofa, they want to sit on it; it’s as simple as that,” she said and added, “The retail model is really helpful because we can help customer navigate to exactly the piece they want and help them think about layout, colors and potentially sell them other items for their home.”
To date, Havenly has some $57.8 million in venture capital funding, after a 2019 Series C round raised $32 million from Foundry Group, BN Capital, Kickstart Ventures and Ginger Capital. Mayer relates that unlike some venture capital backers, hers are patient and see the big long-term potential.
“Back in 2022 when we saw a pull back in our topline numbers, I went to the board and told them we may not meet our topline goals, but we’re going to remain profitable. And that’s what has really helped us get ahead of some of the challenges that a lot of my colleagues in the venture-back DTC home space faced over the last 12 to 18 months.
“There’s still a lot of things to learn as we approach the different retail model. But as long as we stay flexible and lookout for warning signs, we will continue to operate a sustainable, profitable business,” she concluded.
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