This is a partial transcript from Your World with Neil Cavuto, November 14, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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NEIL CAVUTO, HOST: Gordon Segal has quite a reputation in the retail world. The founder of Crate & Barrel is a champion among employees, and a favorite with customers. He thinks outside the box, that's probably putting it mildly. He rolls out each new project very, very carefully. Like this: a gigantic store in New York City opening today. It measures 41,000 square feet, one of the first commitments to downtown Manhattan after 9/11.
But with spending on home furnishings starting to drop off a bit, is it bad timing? I have the feeling he's going to say, no, it is not. Gordon Segal, the founder and CEO of Crate & Barrel.
Gordon, good to see you again.
GORDON SEGAL, CRATE & BARREL FNDR. & CEO: Nice seeing you.
CAVUTO: It's interesting. You're doing this at a time all of the experts are saying, lousy, lousy environment, certainly for New York, certainly nationally, you are saying, who cares?
SEGAL: Well, first of all, you've got to understand New York is one the great markets of the world, and you can hardly find another place that has the density of population, sophistication, and terrific customer base this city has. So even in bad times it is great. And you don't measure in open stores based on an upturn or a downturn. These are long term, 20-, 30-year projects we build. And so we build them because they are right for the long term.
CAVUTO: Yes. But there you are with Mayor Bloomberg, right? Now here's the guy who says he's going to hike the commuter tax in New York, it's a big deal for New Yorkers because they're going to be looking at higher taxes. Local property taxes could be going up maybe substantially. That's a lot of money that is being taken out of your potential business.
SEGAL: Well, but there is still so many people in New York, both tourism, and the people, the local residents and everything else. When you look at alternative markets you have all across the country, you don't have density like this anywhere else. But more than that, you have sophistication, and we have a great deal of interest in our product in this city. And our Madison Avenue store couldn't cover it.
CAVUTO: Yes, but not far away you have this Madison Avenue store, and I'm just wondering whether you are kind of cannibalizing one over the other; no?
SEGAL: We actually found out that only about 10 percent of our Madison Avenue customer came from below 34th Street. And we heard many, many times people, they say, I like to visit you but it's too hard to get Uptown.
CAVUTO: This is a way to appease them.
SEGAL: And this is a way to appease them and be there and service them.
CAVUTO: People outside the New York City area, bottom line, is he is big in New York. But let me get your read of the Christmas shopping season. I mean, I've a lot of people who pick on me because I think that Christmas shopping season is actually going to be quite strong. A lot of people say, well, Neil, there you go again. But what say you?
SEGAL: Well, truly, I have seen 40 Christmases. This is my 40th one. And I have seen recessions and downturns, and everyone says the same thing heading into it. And quite frankly, come December 7, December 8, all of a sudden the mood overtakes everyone, and people enjoy shopping for Christmas. This year there is great product. It's an exciting time. And people feel generous, quite frankly, no matter how bad the economy is.
CAVUTO: So you hear these crape hangers, you hear the people saying you will be lucky to see gains at all, you don't buy it?
SEGAL: I don't buy it. It won't be as good as last year maybe, but you've got to remember in September and October, November last year, everybody was depressed.
CAVUTO: That is right.
SEGAL: And yet it came to December, and everybody bought like the dickens and we had a great December. A great December. Most home furnishings people did. And I think the same thing will happen this year. People have been hanging back. It's been slower. The first half was terrific, second last three, four months.
CAVUTO: What's the most popular item at your store?
SEGAL: Well, we've got some terrific new basketry that has come out. We've got some terrific new metals that are on the market that, in a sense, we are designing in Europe. And they are just beautiful things that are great for decoration, great for home use, et cetera. And actually, I have never seen such good looking glass that we have been able to find. And I've never been able to.
CAVUTO: Why do you place that glass precariously on a tiny little table like that when I walk by? That's by design, right?
SEGAL: We like to bring it up to customer. We call it our supermarket technique. It's like up in the supermarket. It's right there, you've almost got to buy it.
CAVUTO: Because I walk by something like this and it's like a bad Bluto scene out of Popeye. But you argue that not too many people break the stuff?
SEGAL: Oh, no. So little gets broken it is amazing. And we can have a store mobbed with people and maybe one time every two days or three days something gets knocked over. But it's not a regular event.
CAVUTO: How many of the customers who come into your store end up leaving with stuff?
SEGAL: Oh, we think about 10 or 15 percent probably, at end of the day. But people come back, look, think about the product. Then they come back the next day or next week and whatever, and no retailer expects a total conversion. You expect people to come in, enjoy the atmosphere, look at the product, think about it.
CAVUTO: Because there's a theory out there, as you know probably better than anyone, Gordon, that people wait for sales and that they don't come back until you see that item that they love on sale.
SEGAL: Right. And there is certainly some of that in this environment, you can say this country is overstored by the very nature there's too much square foot of retail for every consumer. On the other hand, great stores are doing very well. You can see the retail numbers are the ones that offer value or quality or style, are still doing very well. Our competitors, the people in the home furnishings field, are all reporting better and better earnings. So I don't necessarily think each part of the market is overstored. And you have really got to offer value in something unique to the consumer. You can't be an ordinary store today. Competition has never been tougher. But the good stores are actually doing better than they have ever done.
CAVUTO: All right. Best of luck to you this holiday season, all right? Gordon Segal, Crate & Barrel founder and CEO, always upbeat, aren't you?
SEGAL: Thank you.
CAVUTO: Always upbeat.
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