By Meghan Hall
The commercial real estate industry has seen a lot of innovation over the past several years, but there is one sector within commercial real estate that has lagged far behind the others: the commercial furniture industry. Companies only require furniture if they are moving or revitalizing their offices, which has meant that technologies geared towards improving processes by which corporate furniture is acquired or disposed of has been slow to emerge. However, the emergence of flexible workspaces and short-term leases has also dramatically altered the furniture industry, according to Greg Hayes, co-founder and CEO of Branch, an e-commerce furniture platform looking to tackle the changing market.
Traditionally, how has the corporate office furniture business worked? How did office tenants acquire, distribute and get rid of furniture?
For the past 100 years or so, any business in search of high-quality office furniture had to plod through a nightmarish journey in order to procure it. The big players in the industry (think Herman Miller, Steelcase, Knoll, etc.) sell their furniture exclusively through middleman furniture dealers, who in turn typically contract with external delivery, assembly and maintenance services. This produces a long line of profit centers, compounding costs and complications for the end-user.
At Branch, we’ve taken a different approach to the industry. We produce high-end, built-to-last furniture just like the big players, but selling it directly to our clients (and handling the delivery, assembly and maintenance ourselves) which allows us to charge a fraction of their prices. The result is an affordable, end-to-end office furniture solution for companies looking to create great physical workspaces. We make it easy, fast and affordable for businesses of all sizes to furnish their offices with premium furniture, always inclusive of free delivery, white-glove assembly and extended warranties.
The commercial real estate industry has seen a lot of technological innovation over the past decade, but much of that innovation has revolved around construction, build-out, or the beginning phases of design. What prompted you to found Branch, a digital-first office company?
There was an enormous opportunity to improve the office furniture experience. We saw a non-centralized market with a bifurcated approach to sales and operations, with most of the large incumbents having been founded before the internet age. The industry hadn’t changed in nearly a century, and next to no technology had been built around the existing products. There were too many opportunities for improvement to ignore.
How does the platform operate, and what are some of the benefits to its use?
The platform has a few components. The first is our e-commerce experience, which sounds basic, but is a rarity in the world of high-quality office furniture. This allows an office manager to literally click a button and set up and entire office. In order for that to happen seamlessly, we’re building integrated back-end operations technology that allows our e-commerce site, warehouse and last-mile operators to communicate in real time. Finally, we’re building tools that allow a company to easily manage all aspects of their furniture, from inventory tracking, to space planning, to service requests. The ecosystem we’re creating removes nearly all of the stress from the furniture procurement and management experience.
In your opinion, why do you think furniture is one of the biggest pain points for office managers?
Aside from price, complexity is the biggest pain. The number of steps involved in furnishing an office is shocking. It’s the furthest thing from a streamlined process, with dozens of potential inputs, including finding a space planner, choosing a furniture brand, selecting a dealer partner, managing delivery and assembly services and dealing with landlord requirements. Budget constraints from management complicate things further. Until now it’s incredibly difficult to furnish an office with high quality furniture at an affordable price point.
Why do you think few have attempted to find a tech-oriented solution previously?
Early on, we spent a lot of time scratching our heads on this question. Ultimately, we’ve concluded that there are three reasons that not many have tried to tackle the office furniture industry. First, it’s not obvious that there’s a problem. Typically, a company deals with office furniture once or twice every 5 to 7 years, but otherwise no one is really thinking about it. The problems stay below the radar 99 percent of the time. Second, from the outside, office furniture sounds incredibly boring. It’s not the type of industry a typical young entrepreneur would go after. Third, when new office furniture companies do launch, they are typically launched by industry veterans, who simply take the same approach as the traditional players. There’s a formula, and they’re not going to stray from it. Those factors have combined to slow innovation.
In your opinion, how has the introduction of flexible work space solutions and coworking impacted the office market and its furniture usage?
The emergence of flexible workspaces has generally been positive for the office market. Coworking and flex office companies have gobbled up huge amounts of vacant space, so landlords are happy, and in some cases have even been inspired to create their own, self-managed flexible portfolios. The beautiful, open spaces that flex providers are creating are also having an impact on furniture companies. They’ve inspired clients to move away from traditional cubicles and offices, and toward a more modern, open approach to furnishing. The traditional furniture players have had to adapt, and the modern players have thrived.
What types of furniture are you seeing firms gravitate towards? How are tenant preferences different from what they were perhaps a decade ago?
We’ve seen a distinct move toward open offices, the promotion of access to natural light for all employees, and the creation of “zones” within the office. We very rarely have requests to furnish private offices. Where offices physically exist, they’re often being turned into breakout rooms with four or six-person meeting tables. The shift toward building offices out in zones has been especially interesting. A 5,000 square foot office will typically feature desks for 30 to 40 employees, but can also include lounge/quiet zones, collaboration zones, traditional meeting rooms, and pantry/kitchen areas. This transition from single-use to multi-zone offices has largely been driven by thought leadership from architecture firms like Gensler and HOK, and furniture companies have had to adapt: specializing in just cubicles or ergonomic chairs won’t allow you to service a modern company’s furniture requirements.
In November, Branch announced $2.4 million in seed funding; how will Branch use this funding to move its business forward?
This funding is mostly going toward hiring, expansion into new markets, and new product design. We’ve hired ten new employees over the past few months and recently announced our expansion into the Canadian market and the addition of a showroom in Toronto. Next up will be the West Coast, where we’ve got our eyes on showrooms in San Francisco and Los Angeles. On the furniture design side, we’re deep in R&D with some of the most talented furniture designers in the United States and will be launching new lines throughout 2020.