Castlery builds a furniture empire

COME the third quarter of 2022, homegrown furniture retailer Castlery will open its flagship store in one of Orchard Road’s most iconic buildings: Liat Towers.

The choice of location, which will place the showroom among luxury international brands from Hermès to Audemars Piguet, is anything but incidental. In fact, it is meant to send a strong message that Castlery is a “serious global brand”, said co-founder Declan Ee.

“Obviously, everyone had reservations. Why would a furniture company want to take prime frontage on Orchard Road, when most furniture companies in Singapore are located out of the main area?” he said.

“But we reiterated our commitment to build a global brand, more than just a company selling pieces of furniture. We wanted a good space for consumers.”

Castlery will be the first local furniture brand with an Orchard Road frontage. The Liat Towers store will be the brand’s largest ever, spanning 24,000 square feet (sq ft) across 2 floors. Negotiations with the landlord took about 6 months, Ee added.

Establishing a flagship store is a natural step forward for Castlery, given its increased recognition among Singapore consumers today, he noted. This will enable the brand – which celebrates its 10th anniversary next year – to better cater to the needs of its customers, who want to see “more spaces and more variety”.

Said Ee: “We’re 9 years in, so the key is not to push more online discoverability – which is still relevant, but is a smaller percentage. It’s more about how we can create a great offline experience for customers to have a more integrated flow.”

Global growth during the pandemic

The business’s strong overseas growth in the last 2 years, despite pandemic headwinds, was what gave Ee the confidence to take on such a prime space. Since participating in Enterprise Singapore’s Scale-up SG programme in November 2019, Castlery has reported a 6-fold increase in revenue.

In this time, the brand grew its operations in Australia and now distributes to 50 metropolitan areas in the United States. It entered these markets in 2017 and 2019 respectively.

“When Covid-19 first started, we thought it was the end of the world,” said Ee. “But it drove 2 big trends: home furnishing buying, and a big shift to online buying. We were riding on both.”

Castlery’s digital-only retail model in the US and Australia has worked in those markets due to their large size and higher online penetration rates, he said. The brand also developed a strong understanding of big selling seasons in the US, when e-commerce sales spike.

“You’ve got to prepare for them. Big seasons like the 4th of July or Black Friday can make or break your business every year. And for furniture, there’s a very long planning cycle,” said Ee.

The US remains Castlery’s largest market, comprising 65 per cent of overall sales. This is followed by Singapore at 20 per cent, with the rest from Australia.

Planning for the long haul

Yet Ee is not ruling out the possibility of opening physical stores in both overseas markets. In the second half of 2021, the brand set up a small pop-up store – spanning 1,500 sq ft – in Sydney, which he says has been “pretty successful” in getting customer feedback on the concept.

“It’s to validate whether an offline space would make sense (for Australia), where to open it, what should be the size,” Ee said. The pop-up, which was originally meant to run for a year, has been extended for 6 more months.

As to whether Castlery has plans to venture into the region, Ee says he has his hands full for now. The brand will instead focus on optimising its operations in the US and preparing for the opening of its Liat Towers store.

“There’s a lot to do in the US market still, easily for the next 5 years,” he said. “It will dilute our resources if we were to go into any of the neighbouring countries for a market size that’s not that big.”

Now that the brand has achieved economies of scale in the US, it will open 2 more warehouses in Seattle and Georgia, bringing its total to 4 and increasing its warehouse space in the country by 5 times.

These are all part of Castlery’s efforts to undertake more long-term planning, in order to better cope with today’s global logistics and supply chain disruptions, said Ee. Last year, Castlery distributed 250,000 furniture pieces across the world; this year, he estimates that the brand will double this amount, with the US making up 70 per cent of its sales.

“Previously our planning was more ad hoc and trying to get space as and when seasonal, but this wasn't reliable,” he said. The brand is signing more long-term contracts with logistics providers to get freight capacity, and improving its forecasting accuracy.

As part of its global growth plans, Castlery plans to hire 100 more staff by mid-2023 for roles in supply chain, marketing, visual merchandising and more. It currently has 250 staff worldwide, with over 70 per cent in Singapore.

For the immediate 9 months, however, the business will be adopting a more “conservative” approach, especially in its US expansion plans, said Ee.

“There's a big degree of uncertainty. You have inflation rising, and it's very hard to predict how consumer spending and confidence will be. So we've decided to be more mindful of the next 6 to 9 months, and will navigate them more cautiously.”