Each month, LuxeSF profiles a member of The Luxury Marketing Council. This month we talked with Tim Treadway, CEO of the San Francisco Design Center, the focus of the interior design community in the Bay Area, and home to over 100 industry showrooms featuring the finest, and in many cases, the most luxurious, in home décor, furnishings and accessories.
LUXESF: What is the San Francisco Design Center?
TREADWAY: The San Francisco Design Center is comprised of two buildings, and it houses high-end home furnishings, which include fabrics, case goods, accessories, art and a variety of “other” furniture for the high-end consumer.
LUXESF: Is it restricted to what goes inside the home?
TREADWAY: No. It consists of both inside and out. We have a number of showrooms which deal with outdoor furniture. The SFDC deals primarily with the residential customer, although there are a number of showrooms that do contract business, meaning that they deal primarily with the hospitality sector.
LUXESF: Who are the clients and customers of SFDC?
TREADWAY: The buyer in general is the interior designer. The designer, who holds a resale license, buys the merchandise (fabric, case goods, etc.) and then resells to their client, the homeowner. That is the traditional model of how most design centers work – not just the SFDC. There are some showrooms which will sell directly to the consumer on a limited basis, but in general it is the interior designer who is the “customer”.
LUXESF: And presumably that interior designer is buying at a discounted price in order to then mark it up for sale to the client?
TREADWAY: Correct. In general, there is a mark-up.
LUXESF: If I’m a retail customer coming in off the street, can I walk into SFDC and buy?
TREADWAY: If you were to walk in and simply walk around the buildings and visit the showrooms, the answer would be “no”, although there are a few showrooms that will “accommodate” a retail customer. But in general the answer is no. However, we have a number of buying services in the Design Center that will help facilitate a retail sale. If a retail customer comes into the building and wants to buy a specific item, that customer can be referred by the showroom to one of the buying services, and the buying service will then process the sale.
We also host a design studio program, through which individuals or groups can arrange to be given guided tours in order to better understand how the Design Center works and how they can work with an interior designer. The goal is to educate inexperienced customers to the fact that a lot of what goes on at the Design Center is not just buying a piece of furniture; it’s really buying custom furniture, meaning that you would buy a piece of furniture at one showroom, buy fabric from another, and create your own custom piece. Some people think that they can just come into the Design Center and expect to buy things off the floor. It really isn’t designed for that. It’s for the custom buyer who is trying to create a unique experience in their home.
LUXESF: If I’m reading you correctly, the mission of the Design Center is to offer the interior designer the best that’s out there in terms of product?
TREADWAY: That’s correct.
LUXESF: What are the primary responsibilities of your management group? Obviously, you have to recruit new tenants and keep existing tenants happy. But above and beyond that, what are you doing to help their business?
TREADWAY: We have a marketing department that promotes the value of the SFDC to both designers and high-end consumers. We produce Winter Market, a three-day event every January, which we promote very extensively, and to which we invite thousands of designers to come to the Design Center to hear industry experts as part of a coordinated learning and information-sharing program. This is accompanied by a heavy round of social activities
Throughout the year we have an ongoing designer program, featuring showroom seminars. We produce SFDC News, an informative publication about the Center, its tenants and activities. We have partnerships with the ASID (American Society of Interior Designers) and local design schools. We’ve been talking with the Luxury Marketing Council about how we can increase networking opportunities between designers and high-end consumers.
We’re always investigating new ideas to bring in the high-end consumer. You asked me earlier, “Who are our customers?” Our primary buying customer is the high-end designer, but in fact the ultimate buyer is the high-end consumer, so we’re always looking at conducting or sponsoring events that will raise awareness of the SFDC among those prospective high-end consumers. We’re always trying to enhance our awareness so that when it’s time for these consumers to make a purchase they will come to the San Francisco Design Center .
LUXESF: Your management structure is relatively nimble, is it not?
TREADWAY: Correct. We have a four-person marketing department, headed by our new Marketing Director, Rhonda Hirata. We also have a property management group which physically runs the property.
LUXESF: Where do you see the opportunity in this business?
TREADWAY: The opportunity is that we live in an area where there is an enormous sophistication because of the region’s psychographic profile. The Bay Area is heavy with wealthy and sophisticated people who possess a keen design sense and the means to purchase. And that sector will continue to grow. The San Francisco Design Center , I would argue, is one of the best-kept secrets, meaning that we have this population of affluent, sophisticated buyers who are not fully aware that the Design Center exists, or that we offer the design services of an interior designer who can help them create their home. The reason that we remain a secret (as do most design centers in general) is that most of the marketing is done through the interior design profession, not through the larger consumer population.
LUXESF: But that then begs the question, “If the interior designer is the one who does the purchasing, why do you care about the end-user?”
TREADWAY: Because in the case of interior designers, as a group, their primary focus and strength is in their design expertise and creativity, not marketing. There are some larger, well-established, professional interior design firms that are actively involved in bringing in new customers as well as servicing them. But there are many more interior designers operating as small shops.
LUXESF: It seems as if you want to employ a classic push-pull strategy?
TREADWAY: That has been our challenge, because we’re always saying, “Who is our customer?” There are actually three customers. To begin with, our customers are the tenants who pay us rent. Their customers are the interior designers. And the third customer is the end-user or consumer. So, like a shopping center, we have to market to a number of constituencies. Of late, we’ve been attempting to increase the general awareness of the Design Center so that it will attract more consumers who will seek the design services of the interior designers. We believe that there will be more ways in which we can work with our showrooms to accommodate those new consumers when they come into the building unaccompanied by an interior designer. We have to work together to accommodate every person who walks into the Design Center wanting to buy home furnishings.
LUXESF: What are the defining characteristics of a good designer in the Bay Area?
TREADWAY: Well, the profession is becoming more professional. In the past, the designer would purchase the merchandise from the showroom, mark it up and resell it. As access is becoming less of an issue, meaning that we don’t restrict anyone from coming into the buildings, and being paid for access is becoming less important to the designer, what we’re seeing now is a growing number of designers charging on an hourly basis, usually some combination of an hourly fee plus markup. There are still some traditional designers who don’t charge hourly fees, but the future direction is that of a designer being compensated for design expertise. So the whole industry is becoming much more transparent in terms of who the players are and how various people get paid in the process of buying home furnishings
LUXESF: So you see an elevation in terms of the caliber and the skill level?
TREADWAY: Absolutely, because the transparency requirements that we have in place today are such that our consumers and the buyers of design services are much more sophisticated and much more demanding, and because of that the better designers are coming to the fore and are being rewarded accordingly. The top designers have more work than they know what to do with.
LUXESF: In terms of the interior design community, where are the natural linkages? For example, I tell designers that the real estate community is a community they should get to know because of the referral potential.
TREADWAY: I think you touched on it right there. Anyone who purchases a home in an upscale zip code, should, by the very nature of that purchase, be a candidate to come to the San Francisco Design Center to furnish their home. But it has to do with all luxury goods. Every consumer who purchases high-end consumer goods, a Mercedes Benz for example is a prospective customer of the Design Center and our marketing partnerships, particularly co-sponsored events, should involve them whenever possible. The Decorator Showcase is a good example, as is our association with The Luxury Marketing Council.
LUXESF: How do you actually define the design district? Where is the perimeter?
TREADWAY: We are the epicenter of that which extends from the north at Brannan, to the east at Seventh Street , to the west at Potrero, to the south at 16 th Street .
LUXESF: Do you feel the community knows the existence of that “district,” or do you think it’s somewhat fuzzy?
TREADWAY: I think it does. Most people who are interested in design certainly know where the district is. Could we do a better job in terms of promoting it, in terms of creating amenities, to create a sense of place and a destination? There is no question that more needs to be done.
LUXESF: To turn it into a vibrant, pulsating district, what does it need in terms of infrastructure or amenities?
TREADWAY: We are looking to build condominiums with retail stores, additional showrooms, restaurants, etc at street level, with condominium and/or rental housing above. This has worked very well in other “design districts” across the country. Our long-term vision for the area is to create a mixed use district with more activity at night so that there are things to do here after 5:00 PM . That has been happening slowly as more restaurants have moved into the area. But our vision is to bring more housing to the district and attract amenities that will service the people who move into that housing, thereby creating a 24-hour community
LUXESF: How are you defining the luxury customer from the viewpoint of the SFDC, and how important is that customer to your community of showrooms and designers?
TREADWAY: We view the luxury customer through a prism that takes into account a combination of household income, net worth and sophistication in terms of the willingness to spend money on buying home furnishings.
LUXESF: These are not people who are buying from Rooms-To-Go?
TREADWAY: In general, no. Our #1 strength is that we offer in our showrooms what you cannot find anywhere else in the region. And we can complete the dream by customizing whatever it is that someone wants.
LUXESF: Is it fair to say that of the 100 or more showrooms in your two buildings, the majority are selling a higher end product?
TREADWAY: Without question.
LUXESF: What does the future look like for the interior design industry? Any major shifts or trends? Allied with that, where is SFDC headed? What are your future plans, if you can reveal them?
TREADWAY: We think there is a tremendous opportunity for the reasons I mentioned earlier. To begin with, the San Francisco Design Center is one of the best-kept secrets in the Bay Area. On top of that, we have a very affluent and sophisticated population which represents a highly opportunistic base of prospective customers. That leads to a strategy of how we must collaborate with our showrooms to accommodate those high-end consumers when they come into the building without a designer in tow. With so many people interested in buying home furnishings, how do we evolve the business model of both the showroom and the Design Center to accommodate this new emerging consumer group? I think that’s an enormous opportunity, but it’s going to involve change because it cannot be “business as usual.” The old business model of just selling to interior designers and keeping the general public out is not going to work in the future.
Visit the San Francisco Design Center online