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Parachute CEO feels 'very bullish on retail' amid opening brick-and-mortar locations

Parachute Founder and CEO Ariel Kaye joins Yahoo Finance Live to talk about the home decor company's latest living room furniture line, pivots to brick-and-mortar channels, and customer retention.

Video transcript

DAVE BRIGGS: The housing market is struggling, but that's not the case for the home furniture industry. Venture funded Parachute launching its line of living room furniture today. Here to tell us about it is Parachute CEO Ariel Kaye. Ariel, nice to see you. Until the Fed pauses, the housing market is essentially, well, paused on both ends. How is that impacting your business?

ARIEL KAYE: We see the home shifts and consumer spend definitely impacting, but what we're seeing with our customer base, which is millennials and millennial shoppers, there are 70 million millennial shoppers that are moving into their prime earning years. They're in the midst of household formation. And they are still looking to shop for home and will continue to be shopping and really spending a lot of time in their spaces.

SEANA SMITH: Ariel, have you seen any sort of shift just in terms of consumer spending or how much people are spending or what they're willing to spend on?

ARIEL KAYE: Yeah, I mean, we're seeing the impact of inflation. And we've been certainly impacted by that as well. But we have seen the business continue to grow year over year. And we expect to have a good holiday season as people are preparing to host and really spend more time at home.

DAVE BRIGGS: And Ariel, with that tightening economy, yet still you're on track to essentially double your store count in a 12-month period, how are you really bucking the national trend?

ARIEL KAYE: We see our customers really wanting to buy beautiful products and beautiful spaces. We have 21 stores open today. That's up from 12 at the beginning of this year. So we have nearly doubled. And we'll have 25 by the end of the year. We just-- we see it as a relationship build. We see an impact on our e-comm business when we open a store in a given market. And we see those customers wanting to spend more.

It's also been a really important part of our growing trade business, working with interior designers. That's a very localized business. People like to come in they like to touch and feel the products and bring their clients in. So we feel really bullish on retail. Our stores are small. They're intimate. They have pretty low operating costs. And so we're able to really build that part of our business profitably.

SEANA SMITH: Supply chain issues has certainly been a challenge here for a number of larger players within your space. You're expanding at a time when so many other companies just can't keep up with the demand that they have had. How are you doing this? And I guess, how are you not feeling some of those challenges?

ARIEL KAYE: So we've been really fortunate. Most of our products are made in Europe or the US. And everything is shipped into New Jersey, where we have our centralized distribution center. So we have been able to avoid a lot of the congestion in various ports on the West Coast, as well as delays and disruption in Asia. We've been really lucky that we've been able to work closely with our manufacturers.

We have a really strong technology platform that allows us to gauge demand and really be thoughtful in how we are ordering and working alongside our manufacturers, who have become partners over the past 8 and 1/2 years.

DAVE BRIGGS: And you mentioned millennials earlier, more than 70% of your customer base. Why is that age group, in particular, drawn to the brand? And just to give people a sense of it, trying to figure out your price point in comparison to, say, Crate & Barrel or Restoration Hardware. So you're doing a nice job of showing the showroom. For example, how much is that lovely chair you're sitting in?

ARIEL KAYE: This chair is $1,700. This chair came out today. It has a beautiful swivel and is available in a number of different fabrics. So we look at costing across the competitor as we try to make sure that we're priced with a value centered, really, proposition. Our products are premium. They're super high quality, and we design them all in-house, which is definitely a differentiator for the brand.

But really, the customer segment that we're going after, millennials, are really shopping with their values. We are known as the most sustainable brand in the space. And we really speak to the customer in a new way. These are folks that shop online. And they want to be inspired. And we do that through our social channels.

And we've really reimagined the way that these products are merchandised and manufactured. You can see behind, our store looks like a home. It's really quite beautiful and a very different experience than when you go into a much larger shopping experience.

SEANA SMITH: Ariel, another thing that you're doing to expand that customer base, you've had a couple of collaborations, one of those being with Nordstrom. They are among your partnerships. I guess, what has this done for your business? And are there more of those types of partnerships in the pipeline?

ARIEL KAYE: Yeah, we love our partnership with Nordstrom. We are in a number of their stores. And we really see this as an awareness play. They have such a strong and loyal customer base. And we really want to tap into that customer and really bring our products to life.

When we leverage partnerships like that, we typically do an exclusive colorway or an exclusive product to really make it feel special and really give purpose to that partnership. But we're in the early months of that partnership and are excited to see that partnership continue to grow in the coming year.

SEANA SMITH: Ariel Kaye, we wish you all the best. Thanks so much for hopping on and joining us today.