CHAPEL HILL — When you walk into Southern Season, Chapel Hill’s destination gourmet grocery and kitchenwares store, you are struck by the old and the new within the first 30 seconds.
When the automatic doors open, your nose will be hit by the usual aromatic cacophony of flavored coffees. Canisters holding dozens of varieties of coffees still line a 30-foot counter and a wall on the right. But up ahead on the left is a new coffee bar to order an espresso or latte to enjoy at one of the nearby cafe tables. And once you pass the coffee bar and look into main part of the 60,000-square-foot store, you may be astonished at the sight.
Gone are the 7-foot-high shelves that obstructed the view and made the store feel like a maze, and shopping like a treasure hunt that longtime fans loved.
Now you can see from the deli to the stairs leading up to the cooking school in the back of the store. Bright red signs hang from the ceiling declaring each section: Bakery, Cheese, Kitchen Accessories, Chocolate, Checkout. As you head farther into the store, you will notice other changes: an ice cream parlor, a selection of toys, a wine bar, a tasting station in the grocery area.
They also have expanded their hours, opening earlier and closing later.
All these changes are part of the new owners’ master plan to make a trip to Southern Season not just shopping but entertainment. It’s no longer just a store to buy a hard-to-find ingredient or kitchen implement, but a place to while away a couple of hours, sipping, sampling and spending money.
“Those were all designed to make the shopping experience easier and more entertaining,” company president Larry Shaw said.
The changes also set up the company for the next step: expanding Southern Season throughout the Southeast. Earlier this month, company officials announced they had signed a lease for a 44,000-square-foot store in Charleston, S.C., that is slated to open by September. Next on the horizon are a 55,000-square-foot store in Richmond and a yet-to-be-found location in Charlotte. Birmingham, Atlanta, Nashville, northern Virginia, and Palm Beach and Naples, Fla., are also on the list of possible future locations.
“The reason we wanted to buy it was because we wanted to replicate the store,” said Clay Hamner, the Chapel Hill entrepreneur and managing partner of TC Capital Fund, which bought Southern Season in August 2011.
The Chapel Hill company is positioning itself in a competitive but growing market that includes Bed Bath & Beyond, Sur la Table and Williams-Sonoma. In 2011, IBISWorld, a market research firm, predicted the kitchen and cookware stores market would see about 3 percent increases in annual revenue to reach $11.1 billion by 2016.
It should be noted that Southern Season is a hybrid of many of these stores. It doesn’t just sell housewares or kitchen equipment. It doesn’t just sell gourmet and specialty foods. It is part grocery, part specialty store, part kitchenwares outlet, plus a restaurant and a cooking school. The store’s size falls between Bed Bath & Beyond, which has almost 30 percent of the market share, and Williams-Sonoma, with 10 percent market share.
Those two publicly traded competitors have been on divergent paths of late, and their performance is a reminder that specialty retailers today face pressure to offer a unique in-store experience that complements their online presence.
Bed Bath & Beyond’s stock is down about 9 percent over the past year. The company’s same-store sales growth slowed in the third quarter, and investors have been disappointed with its ability to expand its online sales.
Williams-Sonoma, meanwhile, has seen its stock jump 29 percent over the same period. The company’s same-store sales accelerated in the third quarter, and its online sales increased 17 percent. Williams-Sonoma also is aggressively adding new brands, including a line of cookware and cooking tools last fall.
The economic downturn
Hamner said he had been asking owner Michael Barefoot to let him invest in the business for three year before the purchase.
Barefoot, who is still a consultant in the business, started the company in 1975 as an 800-square-foot specialty food store. During the next 36 years, Barefoot built up the business to its current anchor location in University Mall and its mail-order business into a combined $30 million operation. But the economic downturn in 2008 led Barefoot to lay off two dozen employees and institute a 10 percent pay cut for the rest.
The company didn’t bounce back as quickly as he had hoped, and Barefoot, who is nearing retirement age, finally took up Hamner on his offer.
Hamner said the company invested $3 million in capital improvements, $1.5 million to hire a new management team, and about $15 million on expansion plans. They redid the website. They increased the store’s offerings from 50,000 items to 80,000. Hamner said they raised salaries 10 percent, instituted retirement and vacation plans for salaried and hourly employees, and began offering health care coverage.
And business has been good. Sales have been up the last two years, Hamner said. In fact, mail-order sales were so good this last holiday season that Hamner said, “We ran out of gift baskets.”
Not everyone was a fan of the store’s changes. Hamner said he heard plenty of complaints from loyal customers at his bridge games. But he says, “They’re all back now. I think they like it.”
On a recent Thursday morning, regular shopper Karen Powers, 58, of Chapel Hill had come to the store to buy four-ounce soufflé cups. She liked the changes. “I actually think it’s easier to get around. The flow is better,” Powers said. “It seems like there’s less stuff, but I’ve never not been able to find anything.”
And the store worked its charms on occasional shopper Hannah Edens, 30, of Cedar Grove, who came on that Thursday morning to buy a baking stone on sale, and left with another bag full of cooking tools.
Staff writer David Bracken contributed.