With 57 stores — and two more due before the end of the year — Z Gallerie still has a lot of potential for growth, especially in the Northeast. With this expansion, Z Gallerie is investing in new technologies to improve its supply chain and is exploring an East Coast distribution facility to support new stores. "In the next five years we plan to hit the 100-store mark or greater," says Vice President of Operations Victor Navarrette.
Siblings Joe Zeiden, Carole Malfatti and Mike Zeiden opened the first Z Gallerie in 1979 in Sherman Oaks, Calif. The store started as a poster shop, but more merchandise was added and it soon became a place where customers could furnish their home. Although the store has evolved in the past 36 years, it has kept its roots. About half of the art sold in Z Gallerie locations is still made in-house, according to Navarrette.
Z Gallerie customers have come to know the store for its range of contemporary and traditional items, colors, textures and use of mixed materials in furniture. "If you shop Z Gallerie on a regular basis we're always offering something new," Navarrette says. Popular current items include an Enzo canopy bed and a full leather Cloud Modular Sectional.
Developing a Strategy
Having already cultivated a loyal customer base, Z Gallerie is planning to expand its presence throughout the country. Its primary markets are California, Texas and Florida, but the company sees additional growth through new stores and increased website traffic. It is even going back to more traditional media to reach more customers. In a time when many companies are abandoning print for digital, Z Gallerie launched a print catalog in October 2014. The catalog has done well in its first year, he adds, and has created more interest around Z Gallerie's products.
The company has gone through periods of expansion before. It used to have a second distribution center located in Atlanta but downsized the facility during the Great Recession. The loss of an East Coast distribution point impacted Z Gallerie's ability to expand toward the Atlantic, and the company has been developing a strategy to resume its growth.
Z Gallerie hired Tompkins International, a supply chain consulting firm, to help design a solution to enable the company's goals for expansion through 2019. The study verified that Z Gallerie should open another distribution center that could support new and existing locations east of the Mississippi.
Navarrette says the goal is to have a second distribution center operational by the first quarter of 2017. Z Gallerie is actively exploring sites in the North Carolina, Tennessee and Georgia markets. The ideal facility would be a Class A leased industrial building with 200,000 square feet of space, at least 32 feet of clearance and an EFSR fire system.
But Z Gallerie's needs are not limited to the physical structure. The company wants to ensure that its new facility will have access to the large labor force needed to operate the distribution center. Navarrette explains that Z Gallerie is cautious about avoiding labor-constrained markets such as the Carolinas where a new Amazon facility is expected to absorb about 500 members of the local workforce.
Improving the Network
Supporting growth takes more than a new distribution facility; it requires strong relationships with the carriers that move the product from the supplier to store shelves. As a national home furnishing retailer, Z Gallerie relies on a number of large and regional carriers such as Landstar and C.H. Robinson to keep its stores stocked. "For us, it's just continual communication," Navarrette says. "What's worked well for us is building a strong relationship with a particular carrier."
That communication and coordination has only become more important as the trucking industry faces a prolonged driver shortage that has heightened competition among retailers to secure shipments. "We have close partnerships with our trucking companies to ensure there's enough equipment and drivers so when we move into an area it makes sense," Navarrette adds.
Z Gallerie has leaned on those carrier relationships to improve efficiency in its supply chain. By utilizing line haul trucking, 95 percent of everything it ships is full truckload to stores. In 2014, the company had fewer than 1,000 less-than-truckload movements for the entire year. "We find ways to maximize our movement of goods through full truckload," Navarrette says.
The company's approach to distribution is also seeing results on the consumer side. Z Gallerie recently launched an in-store pickup service for customers who buy products online. Customers choose in-store pickup because it is often the most convenient way to buy. Meeting that expectation required Z Gallerie to more closely monitor its inventory levels and maintain more stock in stores. If someone is buying dinnerware, Z Gallerie wants to make sure it has the whole set available for purchase so it won't risk losing the sale.
To better manage inventory and orders, Z Gallerie is implementing a new ERP system from Aptos Technology. The system will improve merchandise planning, warehouse management, POS and digital commerce, allowing for better visibility of an order and inventory. Other systems like UPS Order Watch, will give Z Gallerie the ability to see the progress of an order once it's been placed with a vendor. If a purchase order misses a date, the system will notify Z Gallerie, alerting it to communicate with the vendor and get ahead of inventory issues. "Without that type of visibility, there's a lot of work to follow up with the vendor," Navarrette says.
Z Gallerie's investments in technology and distribution are only one component of its overall potential. In October 2014, the company found a partner in Brentwood Associates, a private equity investment firm that specializes in consumer-focused brands. Navarrette says Brentwood has helped Z Gallerie develop its strategy and provide resources that will help the company reach its next stage of growth. With a plan in place and strong vendor and investment partnerships, Z Gallerie is primed to execute on its vision for 100 stores nationwide.