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BATH AND BEYOND

Waterworks offers chic, custom bathrooms to the well-heeled

By Debra Hazel

No one can accuse Waterworks of having an inferiority complex, what with a flagship store on New York City’s East 57th Street, a customer base consisting of the richest 2 percent of the population and some breathtakingly upscale product — such as a $30,000 beaten-copper bathtub, no less.

This 40-store purveyor of very high-end bath fixtures says it plans to roll out just five units a year, taking an expansion approach that is as selective as its private-label product offerings.

“Some things happen by accident, some things happen by design,” said Chairman and CEO A. Peter Sallick, and he makes it very clear that Waterworks falls into the latter category. The company most recently opened a store in Aspen, Colo., and has plans for another in New York City’s SoHo district.

But Waterworks will not touch malls or lifestyle centers. That is what the company says, at any rate, insisting that malls are inconvenient and that lifestyle centers lack co-tenants in its class. And yet Macerich Co. subsidiary Westcor managed to persuade Waterworks to enter its Biltmore Fashion Park open-air center in Phoenix. Further, a home furnishings concept the company is testing could go into malls, says Waterworks’ leasing agent, Steven B. Greenberg.

Waterworks core customers are not everyday shoppers, but rather architects and contractors representing wealthy clients who are increasingly investing in high-end furnishings for the bathroom. Besides that expensive copper bathtub, the stores sell everything a customer needs to create a bathroom from scratch, including tiles, faucets and mirrors — and even towels, soap and robes. The merchandise mix varies from store to store, but the 57th Street store displays towels and soaps near the front, with the remainder of the 7,000-square-foot space dominated by vignettes demonstrating ways the chain’s signature tubs, sinks, fixtures, towel racks and tiles can work together. The walls bear fixtures with different finishes. The back of the store is dedicated to long tables holding sample books and tile pieces where designers can work with sales associates to create a complete bath environment. The chain is also testing a small number of kitchen fixtures, such as double sinks.

“Dream of the bath”
Waterworks’ origins are surprisingly humble, for all its pricey merchandise and demand for exclusive locations. It was founded in the 1920s as a plumbing and supply business in Danbury, Conn. Then in 1978 the Sallick family opened a store to sell specialty fittings. But even as late as 1993, when Peter Sallick joined his parents in the business, the company still had just the two stores. In 1999, though, the family came to believe that a serious expansion of both store count and product offerings was in order. The focus, it decided, would be on the extreme high end of the market.

“The idea was to energize the client to create the dream of the bath, with the complete point of view,” Sallick said.

The dream starts with design, integrity and craftsmanship, according to Sallick. Waterworks’ private-label merchandise allows the company to control quality and offer design elements not available anywhere else. (After all, its extremely affluent patrons do not want to walk into someone else’s bathroom and find the same fixtures.)

Hail, fellow unmet
Interestingly, in many cases store personnel never even meet the actual customer. “The interaction here is a little different [from traditional retailers],” said Joseph Polar, Waterworks’ vice president and creative director.

All product is designed to Waterworks’ specifications, says Polar. And over time, the stores have only gotten increasingly exclusive.

“People have an interest in their homes and design,” Polar said. “What has evolved is the sophistication of the marketplace. We take a step forward and the customer takes a step forward.”

Designers select from a variety of pictures and patterns to create wall and floor tile environments that truly express their personality, which is especially critical in such an intimate space. “This is such a personal thing,” Polar said. The bathroom is, after all, “where you begin and end your day.”

For all the company’s past experience in the plumbing trade, Waterworks does not offer installation services.

Observers say the 57th Street store is not out of place on a thoroughfare that is home to such names as Chanel and Burberry.

“This is not run-of-the-mill [merchandise],” said Faith Hope Consolo, chairman of the retail leasing and sales division at New York City brokerage Prudential Douglas Elliman, and herself a former interior designer. “It does have a different edge, a more advanced technology.”

The company’s real estate strategy has something of a different edge too. Waterworks prefers urban streets, and the stores are generally found near other high-end home furnishing retailers, including kitchen specialists, to make it easier for architects to create an entire home environment all at one location.

Serious customers are not in to grab something quickly, says Sallick. They, or their designers, are putting together an entire room, even down to designing the pattern of the tile on the floors and walls.

“Two things are important to us: We want to feel a part of the community,” which is easier on city streets, Sallick said. But “we are to a large extent a destination — convenient parking and accessibility are important.”

Lifestyle centers, however, while possessing convenient parking, lack the extremely high-end retailers that would make logical co-tenants, Sallick says.

This philosophy makes Waterworks’ presence at Biltmore Fashion Park, its sole shopping center location so far, even more of a coup for Westcor, the center’s owner-manager. The 2,000-square-foot store opened in 2000, and the lease expires in 2010.

“We fought for a long time to bring them here,” said Anita Walker, the marketing manager of Biltmore Fashion Park. “They bring a different customer that adds to our experience.”

High-rise apartment buildings are under construction near the shopping center, and Waterworks helps to draw the residents-to-be.

“It puts us on the map of having something desirable for those who have impeccable taste,” Walker said. “If someone is going to make a large purchase, that’s as important as drawing a lot of customers who don’t all make purchases.”

With major metro areas largely filled — besides New York City, the chain is in Chicago, Los Angeles and Washington, D.C., among other cities — Waterworks is looking to expand to markets where its customers have second, third or even fourth homes, especially in resorts such as Aspen.

“I have a whole research team that studies where BMW and Mercedes owners are concentrated, or where the users of American Express Platinum cards are,” said Steven B. Greenberg, president of The Greenberg Group, the Hewlett, N.Y.-based brokerage firm that has handled Waterworks’ expansion program since 1998.

Mall owners need not despair of getting a piece of the action, though. There is, after all, that home furnishings concept Waterworks is testing out under the Waterworks name on trendy South Robertson Boulevard in Los Angeles. The 2,000-square-foot pilot store, which sells the same soaps, towels and accessories available in the full-size stores, is another way “to present the brand,” says Sallick.

“That could play into elite malls,” said Greenberg. “We believe that is another 50 stores.”

But Sallick notes that Waterworks has no plans at this point to expand the concept, even as it continues to expand the primary business. Nevertheless, “it is something we’re definitely looking at,” he said.

The privately held company will not reveal sales figures. But given its expansion program, things must be going well, and this despite the chain’s high price tags and the fact that shoppers do not buy a new bathroom every season, as they do with apparel.

Look to the auto industry for a good comparison, says Sallick. “It doesn’t take a lot of cars to make a profit,” he said. No, not if one is talking about superluxury autos, at least.

And Waterworks operates in a sector that is largely immune to the ups and downs of the economy, observers say.

“There will always be people at that top percentile who are not affected by the economy,” Consolo said. “And people at that level tend to decorate and redecorate, as well as own more residences — and more bathrooms.”

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