PIRCH Compared to Apple and Tiffany in Forbes Magazine

$48,000 Ovens? Meet The Luxury Retailer Selling Appliances Like Apple, Tiffany

Fast-growing retailer Pirch leverages in-store showers, gourmet chefs and secret entrances to sell high-end appliances.

(Read Full Article on Forbes here.)

At the Westfield Garden State Plaza mall in northern New Jersey only one storefront features a bathtub. Standing next to the earth-colored freestanding stone tub, where water flows in a gentle cascade, Jeffery Sears, the 59-year-old CEO of Pirch, thinks the location couldn’t be a more natural fit. “As you walk toward our store, you hit Neiman Marcus on the right, and you look down and see Gucci and Tiffany, too,” he says.

Those neighbors matter to Pirch, which wants to make appliance retail more of an experience. Customers can walk inside and enjoy a complimentary latte or lemon-ginger water at Pirch’s Bliss Café. They walk past the Kitchen, where chefs are spit-roasting chicken, before arriving at the pristine Sanctuary, a luxury bathroom filled with showerheads, saunas and tubs. Sears presses a button on an iPad, and water flows softly from a bowling-pin-shaped showerhead. “If you’re late for work, and you’re trying to get the shampoo out of your hair, you’ll want to kick it,” he laughs, pointing to the wall featuring two dozen shapes and spray patterns. “The concept for us is, If I’m going to pick a showerhead, I want to know how the water comes out.”

Customers can schedule a time to come in and test the showers themselves (bathrobes provided). Though fewer than five customers a month do so, it’s part of a strategy that makes the upstart chain one of the most innovative retail concepts around. In an era of online shopping and sparsely staffed warehouses, Pirch is doubling down on service and luxury. In 2014, after five years in business, it hit $113 million in annual revenue with seven locations.

Pirch declines to comment on whether the company (or any of its locations) is operating profitably–a surefire sign it is not.

But the Costa Mesa, Calif. store, which opened in 2011 and became the prototype for the chain, is projecting same-store sales growth this year of a staggering 50%, with sales per square foot of more than $2,500, a figure higher than all but three U.S. chains (behind the likes of Apple AAPL -0.95% and Tiffany). “The industry has been dominated by big-box retailing,” says retail analyst Dana Telsey of Telsey Advisory Group. “The products featured at Pirch start where Home Depot HD +0.65% and Lowe’s end.”

The inspiration for Pirch was frustration. When Sears met his cofounder, Jim Stuart, now chairman of Pirch, they bonded over their unpleasant experiences buying appliances. The 48-year-old Stuart, an entrepreneur who had just sold his stake in a real estate development firm, had been eager to build a new home–until he visited an appliance store on a Saturday morning without an appointment. He was met with indifference and a sales associate who demanded to know his budget and the exact items he was looking for and then led him to products stacked in a dimly lit warehouse environment.

Big-name suppliers like Miele and GE were skeptical. “It sounded very ambitious,” says Nick Ord, president of Miele USA, who says he came to believe that the experience-driven retailing concept improves sales. “It wasn’t just about pretty stores. When people have that ‘Aha!’ moment, then the question is not ‘If we’re going to buy’ but ‘What are we going to buy?’ ”

The concept is not completely new–some of Pirch’s competitors, like Abt, a single high-end store in suburban Chicago, offer cooking demos as well–but no one has taken the performance as far as Pirch, which has hired chefs away from high-end restaurants to work full-time, hosting cooking lessons and daily demonstrations to show off appliances, such as the $7,999 Gaggenau steam oven and the $16,900 Wood Stone hearth pizza oven. And while homeowners sit in “
Dream Rooms” to discuss plans with sales associates–Pirch calls them “lifestyle experience advisors”–they’re plied with free gourmet meals. On average, the chain says, shoppers spend more than two hours in its stores. Sears obsesses over Yelp reviews (three of the eight Pirch stores rate a perfect five stars), personally responding to negative comments within hours. And his phone number is posted prominently in most stores.

The cost of such service adds up, but Pirch, which does not display price tags prominently either online or in stores, sells $25,000 bathtubs and $7,000 wine refrigerators. With so many big-ticket items, the average transaction is more than $7,000, and an on-demand ordering model keeps inventory low. That said, Pirch says it sells its goods at the contractually mandated minimum prices set by appliance manufacturers, which means other retailers can’t undercut Pirch and steal window-shopping customers. Pirch, says an analyst who follows the company, is banking on tremendous sales volume from high-end customers to pay for the full-time chefs and other services.

The company’s headquarters in San Diego looks almost like a store, with its indoor kitchen, its pristine bathrooms and an outdoor garden with brand-name grills. To instill a customer-focused culture among employees, Pirch flies all new hires–from executives to custodians–to San Diego for a one-week training session that includes conversations about what “joy” means to them. Sears greets each new employee personally at the airport.

In its efforts to become a one-stop shop for homeowners and builders, Pirch has attempted to improve the entire shopping experience all the way through installation. “That Miele oven you buy is of no use to you until it’s working,” says Sears. Thus, he staffs a delivery and installation team at every location months before a new store opens–to ensure the same level of customer service around the country. “If it was just a pretty showroom without the service, it would be a lot less attractive,” says Michael Reeves, a luxury home builder in southern California who says he had to go to multiple suppliers and installation companies before Pirch.

Last year Pirch raised $62.8 million–bringing its total funding to $127 million–from Catterton, known for its successful bet on Restoration Hardware. With its war chest Pirch plans to open stores next year in New York City and Austin, Tex. The three-story 32,000-square-foot store set to open next spring in a landmark building in New York’s SoHo neighborhood will feature 22 fully operational kitchens and a private entrance for high-profile clients who want to meet with designers without attracting attention.

Such massive expansion costs represent a big bet for a company that is all-but-surely not profitable. Sears likes to call Pirch “a place to dream” when he’s showing off $47,500 turquoise-blue French handmade La Cornue ovens. That’s quite an expensive dream for his customers–and for his investors, too.

Sears had sold his previous company, a flooring-design center for home builders, to Home Depot, but with little knowledge of appliances or plumbing the pair set out in 2010 to reimagine the appliance retail experience from supply chain to delivery. Stuart’s hypothesis was that they could create an environment where people would be eager to come in “to dream, play and choose.” To test the hypothesis, they built a store in a suburban San Diego industrial park. Auto body shops surrounded the store, but inside it had all the luxury elements they had imagined.

As the store gained traction in 2010, Sears and Stuart spent $8 million of their own money to build another store for the chain–then called Fixture Livings–at SoCo Collection, a high-end interior design center in Orange County. “If you want to do something cool and innovative, then put it where the people are,” says Stuart. “That’s the Apple and Tesla store model.” The partners worked for four months with London-based architectural firm Fitch to design the location, but the behavior of actual customers continued to shape the early stores. For example, after seeing how shoppers loved to fiddle with water faucets, Pirch created a large circular sink where they could play with dozens of faucets at once.