KENNETT SQUARE, PA — After ten years on the sidelines, Bert Kerstetter 66, chairman and cheer leader has once again taken the management reins of Calico (formerly Calico Corners) together with Julie Morris, the newly named vice president of merchandising, to rebuild the 65 year old fabric Goliath’s custom products with a new generation of 30 something buyers in 37 States.  

It couldn’t come at a better time because U.S. consumers will unleash their pent-up demand for fabrics and produce double digit gains for Calico in 2013, Kerstetter says. “They’re tired of doing nothing even if they haven’t moved to a new house. They might now be spending $25,000 on decorating and not $75,000 as before” and he believes Calico will sell more fabrics at $45 a yard in the future instead of $90. With 750 highly trained sales people, Kerstetter wants to make it easier than ever for the consumer to buy fabrics and custom products from Calico. “Less than one percent of what is bought is ever returned,” he says, as a tribute to its high quality control.  

Calico was started up in 1948 in Mt. Kisco, N.Y. by two men, Funstan and Woodruff. Kerstetter is rebuilding this business with a new team of managers formed around Morris, now with the company for 16 years and Lori Briggs, the fabric buyer, with Calico for 12 years, following the departure of Roy Simpson Jr., former CEO and some other top executives. Calico has 82 stores currently, with the strongest business in California but is roaring back from the 2008 downturn which saw the U.S. retail fabric business drop 40 percent overall. Calico saw the downturn as an opportunity to close marginal stores and produce a better bottom line. “We’re as healthy a business as we have ever been,” he says. Kerstetter expects that 2013 will be ahead of 2007 sales with three or more stores planned every year for the next decade, although smaller in size by a third than previous outlets. Average store size going forward will be 3,600 square feet. The last franchised store was created in 1978. “We don’t need the energy of the new franchisee or capital going forward. All stores will be company owned in the future,” he states.

An important part of the Calico rebound  will be the showcasing of Nate Berkus’ first fabric collection on an exclusive basis that is starting in January, 2013. The exciting young author and interior designer will be doing in store promotions in major markets for Calico. “Calico has a legacy of delivering designer product, positive home decorating experiences and quality to our customers,” Kerstetter says. “What is special about this partnership is that Nate’s brand philosophy is in perfect harmony with our own overarching brand concept – we empower people to make their homes unique to them with all of their own passions embedded in the details,” he emphasizes. “With Nate’s vision and the quality that Swavelle/Mill Creek (the Nate Berkus licensor) delivers, we have a winning team to inspire our Calico customers in 2013.”  This affinity for Berkus’ work is also married to the fact Calico is also ramping up its marketing efforts and makes this launch significant in relation to other designer partnerships of the past.

“The truth is that Calico is putting a bit more emphasis on the Berkus launch since his brand ethos does align so perfectly with Calico’s own,” said Margaux Caniato, Principal VP+C, Calico’s recently hired public relations agency. VP+C has a stable of clients from Benjamin Moore to InterfaceFLOR and JCP Home. “We also do strategy work for folks like Target – we helped craft “the shops strategy” that is now in stores and my own background has a lot of history building up heritage brands and managing design partnerships,” she says.  

The official launch date of Nate’s collection is January 15 when Calico will present a special editor preview in New York City. Nate’s collection is to be sold exclusively at Calico for an undisclosed period of time. Interior designers will only be able to get this line at Calico alongside consumers and DIY designers. “The price points will start at $14.00 which is a very big part of the story – for a designer fabric line of this quality to start at such a valuable price point is major news,” Caniato adds.

Over a 64 year period Calico has produced $3.3 billion in fabric sales,” Kerstetter says. “Our repeat business is staggering. We carry a wide range that is affordable. Calico’s catalog is revamped twice a year featuring the products of up to 300 vendors and each catalog is shipped to nearly one million consumers. There are plenty of goods to choose from and we are relatively well known but we want to encourage all vendors including their agents to visit Calico and show their lines. We do a lot of business with weaving mills worldwide through third parties in the USA. We do no direct import from China and we don’t want that nightmare,” he says. ”The prints we buy through American converters have always been important to us. When price points plummeted for wovens, it affected the sale of prints but we never experienced the decline in prints felt by others. Prints have a solid and attractive future at retail at $14.99 but ten years ago, the price point was $9.99 for prints.” 

Calico views fabrics as a component to the finished custom product which is the core of its business since 2001, Morris explains. “We personalize the process that a customer goes through in decorating her home. We’re here to give her what she wants,” the former manager of the Natick, Massachusetts store explains. “We start with the fabric and give the customer a beautiful room.” Morris has attended Proposte and Maison Objet but she does not have a regular schedule of foreign shopping trips. She grew up in the small Cape Cod town of Falmouth, Massachusetts while Kerstetter hails from Beaver Falls, PA., another small town.

Designer lines have played an important role at Calico for the past 30 years, Kerstetter points out but over the years, brands like Ralph Lauren introduced in 1989 plus Waverly, Martha Stewart and Laura Ashley have become traditional lines for older customers. As the customer matured, so did those brands, he says.  “The perpetual 35 year old customer is now interested in something else,” Kerstetter says. Iman Home (by P. Kaufmann,) Thomas Paul, Thom Felicia, Dwell Studio for Robert Allen and Charlotte Moss have added excitement and especially Nate Berkus is geared to the 35 year old plus customer we want to attract,” he explains. “The customer is tired of gray and beige,” Morris says. Julie Morris and Bert Kerstetter

In addition, fabric inventory, including the Nate Berkus collection will be focused in the 120,000 square foot Kennett Square warehouse in favor of not having any inventory in individual stores. The new model emphasizes two yard samples instead of 50 yard bolts in store--which the customer can order for quick delivery. “Nearly 94 percent of the orders are delivered within 48 hours,” Kerstetter says. “We have the fastest shipping and the highest order fill rate of anyone in this business,” he maintains. The finished product from a certified workroom is then sent to an outside installer after in-store inspection. 

Closeouts, always a hallmark of Calico will now be restricted to upmarket brands at value prices. If you sell fabric, you should not miss seeing Calico buyer Briggs. This retailer sells a wide range of product with strength in prints as well as wovens. “Our average customer comes back to the store six times before making a decision. Our average sale is $2,500.00,” he says. “Fabric price points at retail start at $14.00 a yard but run the gamut to the high end at $159.00, “each an outstanding value,” he says. “Our business is all about our relationship with the customer,” Kerstetter explains. “The customer looks forward to her visits to Calico with and without her decorator. We want to give her exactly what she wants in fabric and produce a beautiful room. Our strength is producing the finished item from fabric; fabric is a component to the finished item,” Kerstetter explains.

“The customer spends a lot of energy looking at fabrics so we will do a better editing job than ever in what we show them. The esthetic drives the customer to our stores in terms of pattern and color.” Kerstetter does not feel that web sales of fabrics will ever amount to anything because the customer wants to touch the fabric in her hands. “You can’t do this on the web,” he maintains. “There are 7,000 sku’s in the Calico line up with more attention than ever paid to diversity with a substantial portion in stock from cotton prints to Mohair velvet.” Nevertheless, Kerstetter sees the value of social media to the customers’ use of the web as a research tool and plans to mightily embrace all the web has to offer starting in 2013. El Convento Mesa by Nate Berkus for Calico

When asked about jobber efforts to produce more mass market brands at lower price points, Kerstetter says “they just make us look that much better because we are the leaders in value for dollar when it comes to fabrics,” Stating the obvious, Calico is a retailer—not a jobber so it doesn’t see any competition from the jobber channel when it comes to offering value to the consumer. Although interior designers are not Calico’s target, they too have heard about the Calico value proposition and often shop the stores with and without their clients, he says. “We buy it better than anyone else and still have the designer look in what we offer.”