Reinventing Gracious Home

It’s hard to believe that behind the beautiful window displays, ultra-luxe linens, luminous lights, and premier brands on display, is a struggling storied business. Gracious Home, the beloved luxury home retailer, was not immune to the aftereffects of the 2008 recession. After filing for bankruptcy and closing locations at the end of last year, Gracious Home is now in the midst of a reinvention.

For more than 50 years, Gracious Home graced the corner of Third Avenue and 71st Street, offering a wide array of products from light bulbs to plumbing fixtures and appliances. When Cuban émigrés Natan Wekselbaum and his brother, David, started the business in 1963 — a hardware store at the time — with a firm belief in customer service.

“They stood out because they were literally a hardware store and they made a commitment to their customer — they were nice and they just said, ‘yes,’” said Robert Morrison, CEO of Gracious Home. Morrison, a seasoned retail executive, joined the company in 2014. “Natan made a point of hiring other people like himself. ‘Be nice’ was the company mantra.”

David Wekselbaum eventually parted ways with his brother, and Natan, together with his wife, Nancy, grew the business. The retailer eventually morphed from a traditional hardware store, adding appliances, housewares, plumbing hardware, lighting fixtures, bedding and bath, and decorative accessories. “They were known as a store for carrying everything,” says Morrison.

Expansion led to a neighboring storefront on Third Avenue and 70th Street, a location on the Upper West Side and a store in Chelsea. The Chelsea location appeared doomed from the start due to bad timing when it opened in 2008. “They put the key in the lock the same day Lehman Brothers filed for bankruptcy,” said Morrison.

By August 2010, the family filed for chapter 11 bankruptcy protection, and was subsequently acquired by Americas Retail Flagship Fund LLC in December 2010. However, the acquisition did not solve the company’s woes. “The business hadn’t been invested in since 2007 and you cannot do that with a retailer. Substantive changes were not made and the business didn’t grow,” said Morrison. The expansive Chelsea location eventually shut its doors and moved around the corner, focusing on plumbing and hardware.

Americas Retail Flagship Fund ran the business until 2013 and by 2015, it sold a 51 percent stake to former Wal-Mart executive Dottie Mattison and David Mitchell a real estate executive. The retailer’s struggles continued and by December 2016, Gracious Home filed for chapter 11 protection again. Three of the four stores were closed by 2016.

However, the New Year ushered in a new beginning for the struggling retailer. In January 2017, Gracious Home received a $3 million loan from JMB Capital Partners. The cash influx allowed them to acquire new inventory and time to refocus the business model. Although the company has not yet emerged from chapter 11 bankruptcy, it has moved forward with a clearer picture of where to invest for future growth.

“We are focused on high-end bed, bath, and lighting, which are the businesses that have grown in the last five years,” said Morrison. A digital transformation is key to the new model for growth. According to Morrison, 30 to 35 percent of Gracious Home’s customers visit the site on mobile devices.

“In the past, the website was primarily used as the store’s marketing vehicle,” said Morrison. “We’re evolving our model to be a digital model supported by stores. Sixty-five percent of our web business derives from outside of the New York City metropolitan area. Our customer lives everywhere and they have multiple homes, even overseas. And they need sheets, towels, and table linens. They trust us, know us, and we have the right brands.”

Morrison noted that the current Upper East Side store at 1220 Third Avenue and 70th Street will remain open, and the in-store experience has remained intact. “We’ll begin to be a bit of a showroom with items that people can buy and take away. But, there will be lots of stuff on the website that we are not going to have in-store.”

“Customers shop here because of the things that we’re known for and the brands that we carry. And exceptional service. There’s no sales associate that has been here for less than 10 years,” emphasized Morrison. “They know our customers but they also really know our products. It’s not like people come in and say, ‘I just want a nice white sheet.’ They want, like a really nice white sheet.”

Store manager Henry Tilo has been with the company for 14 years. “Business has been good, we’ve been busy. We have a loyal customer base,” Tilo said. Appealing to a younger customers is also part of the new strategy. “We’re aiming to attract a younger demographic and somewhat educate them,” said Morrison. “For two reasons: one, that customer needs to sleep on better sheets and, two, they need to understand why.”

To that end, the company is partnering with younger bloggers to spread the word, in addition to taking out print ads in local newspapers, and optimizing the site for SEO. “We’re being very judicious on our marketing spend. We’d rather grow at a modest pace then run around like chickens without heads and disappointing our customers,” Morrison added. The current location was relaunched on March 1st, with a soft launch of the redesigned website on April 28. An email blast went out to customers on May 2.