Fall 2001 Sailing Through Time

Much of the time, Leonard Xerri (pronounced “sherry”) sounds like a Wall Street veteran, rattling off sales figures in staccato, talking lease rates and market trends with such excitement that you’d think he was a hyper-caffeinated version of Alan Greenspan. He’s passionate about mall retail, he says without apology. And he admits that for the last few years, his personal life has taken a back seat to his three New England Home stores—nautical stores in late-19th-century style—and a thriving wholesale business, Design USA. “My grandfather always used to tell me, ‘Don’t do what you do without passion,’” he says. “‘And have no tolerance for anyone who works without passion.’”

Xerri practically gushes with theories on current and future retail trends—from why consumers are bored with traditional products (“They’ve been everywhere and they’ve seen it all.”) to why some malls are winning new customers while others aren’t (“Good leasing agents go for the mix, not the rent bucks!”). His most fervent statements are directed to would-be entrepreneurs who doubt they can compete with the big players in today’s retail marketplace. To the hopefuls he conveys this message, with feeling: “Local businesses can successfully make it in centers today”—if you have a unique idea.

The lure of yesteryear

Ask Xerri to describe his own idea, and he exudes Emeril-esque enthusiasm… which quickly gives way to a softer, more delicate delivery. His voice slows to a leisurely pace as he describes the stores he designed to “take people back in time.” The statement hangs in the air for a moment before he adds, in a near whisper: “We take our customers back to a time when people cared about each other. When people sat on their front porches and talked with their neighbors.” He pauses. “A time when people knew their butcher’s name was Henry, and when Henry asked, ‘Would you like the same cut you had last week?’” The core of his concept, he says, was to “create a store your great-grandfather would have known and treasured.” If his customers are any indication, Xerri has succeeded. New England Home is that store, that step back in time.

“People who come into our stores are shocked, because they’re not used to walking into an antique, nautical, general-store atmosphere in a major mall,” he says. “A woman [is] shopping with her sister from out of town, and the sister will say, ‘Wow, this is a nice mall. We don’t have malls like this where I live.’ When I tell the developers this, they love it. I’ve always believed that if you put your heart and soul into something, people will notice.” Xerri’s customers aren’t the only ones taking notice. He gets calls from mall leasing managers—not the other way around, which is how it was when he started mall retailing.

The Manila connection

Strange but true, it happened that the route to the mall took Xerri halfway around the world first.

In the early ’90s, a college friend asked him to come to his wedding—in the Philippines. Xerri said yes. Having been laid off from his job as a set designer for Sony Pictures Entertainment in Los Angeles, he sensed an opportunity: he might do a little importing while he was in Manila. He asked his friend what kinds of products were “missing” in the Philippines. The answer? Home furnishings. Xerri then contacted three US furniture manufacturers and offered to rep their lines in Manila. When he got there, manufacturers’ catalogs in hand, he was happily surprised to learn that his college pal was the son of a prominent attorney, one of the wealthiest and best-connected men in the Philippines. Xerri amassed $4 million in wholesale orders within a few months.

But just as he was settling into the furniture-rep life, up came another opportunity. He met a Vermont couple, James and Carolyn Haddon, who came to the Philippines in the early ’50s to work with local artists. The Haddons trained them to carve antique-looking, New England-style boats, ducks, gulls, lighthouses, birdhouses and other items with a nautical, “Cape Cod” feel. The quality of the work was “phenomenal,” says Xerri. “And I knew the nautical theme would sell in my home state of Michigan because people in Michigan love the water.” And he points out that, thanks to the Great Lakes, Michigan has more coastline than California—in fact, more than the entire Eastern Seaboard. So there was no question that Michiganders would respond to the pull of the tide and the snap of the sail that Xerri’s New England Home would evoke.

Xerri himself has loved the water ever since he was a child growing up near Lake St. Clair. “Every summer my parents would rent a cottage for a month on a lake,” he recalls with obvious fondness. “We’d go to a different lake every year because my parents wanted us to experience different communities and different people. We would spend time together helping my mom can organic foods for the winter, shopping in antique shops, being on the water, and bike-riding everywhere. It was wonderful.” Times were just as good when the family wasn’t on vacation. “When I was a kid and I came home from school, there were brownies cooling in the kitchen,” he says with a laugh. “My mom was Mrs. Cleaver and my dad was Mr. Cleaver.”

Perhaps with some yearning for those boyhood days, Xerri plunked down his credit card to buy $3,000 in antique-looking nautical merchandise, and headed back to the US, where he founded Design USA and hit the wholesale trade-show circuit. His products struck a chord with high-end retailers across the country. “We would do $25,000 to $45,000 in a two-day trade show,” he remembers.

Charting a new course

Soon after, a colleague suggested that Xerri consider a mall store for Christmas. Intrigued by the idea of mall retailing, and sensing an opportunity to unload overstock from his wholesale business, Xerri headed to Macomb Mall (Roseville MI) where, to his surprise, an AT&T store had just closed—and where mall management was hungry for “something different” for the 1996 Christmas season.

“I told the mall manager that I had something no one else had,” he says. “No other retailer in the US had the connections I had with the Filipino artists. And there were no stores in the Michigan area or anywhere else with a turn-of-the-century nautical theme… no other stores that had the atmosphere of a store where your great-grandfather would have shopped and stopped to talk with his friends.”

The leasing agent took a chance, and Xerri immediately put his Masters in interior design (from the renowned Pratt Institute) to work and built out the first New England Home store himself. For fixtures and display, he scoured antique shops, hardware and fabric stores, yard sales and flea markets to garner anything that would create a thoroughly antique, nautical look. “The most important thing I know about interior design,” he says, “is you don’t have to spend a lot of money to look good.” Case in point: for his store displays, he draped $15 tables he purchased at a hardware store with yards of inexpensive burlap from a fabric store.

His efforts paid off. The finished store—stocked with exquisitely hand-carved lighthouses, sailboats with tea-stained sails and distressed hulls, antique steamer trunks, sepia-tone photographs, telescopes, and replica boats—looked as if it had been plucked from Cape Cod a century ago and set down in the middle of 20th-century Michigan. “People today are well-educated and well-traveled. They’ve been everywhere and they’ve seen everything. The only way you’re going to get them as customers is to tug at their heartstrings. We give them something that reminds them of when they were a kid at the lake.” The friendly, laid-back, “old-time” store resonated with customers from the day it opened, he says. “We were in Macomb [Mall] for 25 days in December [1996], and we averaged $5,000 to $8,000 per day. That’s what convinced me there was life in retail.”

While continuing to grow the wholesale Design USA business, Xerri planned his next retail location, this time in Laurel Park Place in Livonia. Again, he did the build-out himself and opened for Christmas 1997. Working at night (be-cause mall management complained that his renovation noise was disrupting the mall during normal business hours), he laid a 140-year-old, wide-plank floor, a gift from friends who were renovating their aging farmhouse. “I had blisters on my hands for two months from tearing up tile,” he says, “but the floor added the final touch” to his turn-of-the-century effect. “Merchandising is 125% of what you do,” Xerri says. If you lack an education in design or a gift for it, “spend some money and hire somebody,” he says.

He recalls that the leasing manager thought he was crazy to install an antique floor for a Christmas location, but later told him, “Leonard, I’ve been all over the country, and there are no stores like your stores anywhere.” When his Laurel Park Place store did $126,000 in sales in six weeks, the leasing manager asked New England Home to stay past the holiday. He stayed for three years (and left because a chain retailer scooped up his in-line space).

Since then, Xerri has had several year-round and holiday-only stores in the last few years. Today he has three year-round Michigan locations: Great Lakes Crossing in Auburn Hills (“our flagship store”), Lakeside Mall in Sterling Heights, and Twelve Oaks Mall in Novi. And Design USA, the wholesale business, is thriving. “This year I might do more in wholesale than I do in retail,” he says. Combined sales are roughly $1 million per year.

His success has not gone unnoticed: the Detroit Chapter of the SBA’s Service Corps of Retired Executives (SCORE) named his enterprises “Company of the Year” in 1999. And Xerri has equal praise for SCORE counselors, who he says saved him “$20,000 off the bat” by helping him negotiate his mall leases and giving him sound business advice when he needed it most. “There’s no doubt that I’ve had an extraordinary business because of the advice I’ve received from the people at SCORE.” He still speaks with his SCORE counselor a few times a month.

He also cites “changes in the retail market” as an element in his success. “Ten years ago, developers never would have looked at me because they had The Gap fighting with Banana Republic fighting with Williams-Sonoma for one space,” he says. “Malls are now doing what they need to do to succeed, and that means taking a closer look at locals with unique ideas.” If you’re a retail entrepreneur with a good idea, he says, get as much business advice as you can from as many sources as you can, and pitch your idea to the local mall’s leasing manager. “Some malls, like Mall of America, have programs that have been instrumental in helping entrepreneurs start their businesses.”

On the horizon

What’s next for Leonard Xerri? A lot. For new products, he’s working on three new lines: garden, cottage, and lodge. For current products, he formed a joint venture with a company in Ohio and a manufacturer in China that will cut his cost of goods roughly in half. Anticipating higher profitability, he expects to open several stores in Ohio.

Closer to home, he’s creating an in-store marketing program that will donate a percentage of sales to a local charity, starting this fall. He also plans to pay his employees their regular wages for time they choose to volunteer with the charity. “Why can’t we all get involved in our communities?” he asks. “Today, people don’t know their neighbors, and there’s no sense of community. Everyone’s… trying to keep up with the Joneses, and they’re miserable.”

Not Leonard Xerri, though. He’s busy creating and basking in the simplicity and romance of 19th-century New England, smack-dab in the bustling malls of 21st-century Michigan.