Outdoor furniture brand neighbor plans to bring indoor style to more backyards with new funding
The pandemic has been very good for the furniture industry in general and the outdoor living market in particular. Consumer spending on furniture grew 22% between 2020 and 2021, from $148 billion to $180 billion, according to the Bureau of Economic Analysis.
Information on the size of the outdoor furniture market is sketchy, but there is every reason to believe that outdoor furniture sales have kept pace or even surpassed this pace.
For example, a consumer survey conducted in 2021 by Wakefield Research found that 34% planned to buy an outdoor lounge or lounge chair, 28% dining tables and chairs, and 19% a sofa or sectional.
This represented a huge win for outdoor furniture brands and retailers as consumers invested more in their outdoor living spaces.
You could say Nick Arambula, Mike Fretto and Chris Lee were either prescient or lucky in October 2020 when they walked away from mattress company Tuft and Needle DTC, now owned by Serta Simmons Bedding, to launch the furniture brand outdoor furniture.
In the right place at the right time
Neighbor has turned profitable in record time and just secured its first Series A funding from Strand Equity, a next-generation investment firm co-founded by Seth Rodsky and Ted Schwartz.
Always on the lookout for emerging lifestyle trends, the companies he supports have a strong focus on healthy foods, beauty and lifestyles including Oatly, Happy Family, Hippeas, Real Good Foods, Vital Proteins, Youth to the People and Sweaty Betty.
In Neighbor, Strand sees a cutting-edge brand with a unique difference that has high growth and profit potential in an expanding market. And Strand was drawn to the energy and perspective the company founders bring to the outdoor life.
“Nick, Mike and Chris are industry veterans with complementary skills that will position Neighbor to take advantage of a unique market opportunity. We were impressed with the team’s track record and vision for building an enduring brand,” Strand Equity Partner Kevin Chen said in a statement.
After working together for four years at Tuft and Needle, the Neighbor partners have proven they play well together. “We have complementary skills and have developed a great appreciation for working side-by-side,” says Nick Arambula, who serves as CEO at Neighbor.
At Tuft and Needle, Arambula was responsible for retail strategy, then moved on to COO. Fretto was design director and fills that role at Neighbor and Lee led supply chain and operations, a background that proved invaluable as Neighbor was immediately faced with the supply chain crisis.
“We just decided it was time to do something entrepreneurial together and we wanted to tackle an industry we were passionate about. Additionally, we wanted to expand our design sensibilities where they will show up, not like in the mattresses where the design is hidden under the sheets and duvets,” shares Arambula.
Mattress learning moves outdoors
On the surface, mattresses and outdoor furniture don’t seem to have much in common, but underneath there are many parallels.
“We’re coming out of an industry where shipping large pieces of furniture directly to the consumer was the norm and that’s working well for us,” says Arambula. “And comfort is at the forefront in both categories. That’s what we do at Neighbour.
Both industries are highly fragmented, which lends itself to disrupting DTC brands that bring something new to the shopping experience and product offerings. And both are dumbbell-shaped industries, with the weight of low-cost, low-quality offerings on one side and sky-high prices and high-design on the other.
They saw a white space in the middle. “We wanted to combine the high customer shopping experience, high quality durable materials, premium comfort, durability and design, but at a more acceptable price,” he explains.
Its fabrics are supplied by Sunbrella, the leader in premium outdoor furniture, and it uses Forest Stewardship Council (FSC) certified teak wood and wood from recycled Polywood milk jugs.
The company’s design approach also sets it apart. “We bring an interior design sensibility to the outdoors,” he continues. “We looked closely at the outdoor industry and found that a lot of outdoor furniture looked basically the same over the past 25 years.
“We wanted to do something that would stand out, so our first design was something that would fit right into the family room and have the same level of comfort. This philosophy will continue to permeate everything we do as a brand in the future. »
Part of the new funding will be used to expand its product line. And they just brought in another Tuft and Needle veteran, a classically trained architect, to continue developing functional and beautiful furniture. The company also has a patent pending on a modular design.
Consumers were ready
Consumers immediately appreciated the Neighbor difference. “After launching online in October 2020, we entered 2021 with a budget based on what we expected to sell. Then in January, we hit our budget on the fifth day. We’ve been blown away by the demand we’ve seen over the past year and the feedback we’ve received from customers indicates that they’ve found something really special,” says Arambula.
Its sleek Haven design is the company’s best-selling collection, and the most common basket is a sofa ($2,500) with two matching chairs ($1,100 each) in the neutral Canvas colorway.
“The popularity of light-colored fabrics surprised us because people get nervous about light-colored furniture. But it looks great with teak and the Sunbrella fabric is the best on the market and gives customers confidence that it will stand up to the elements,” he continues.
In addition to supporting its own DTC channel, Neighbor is also sold through Crate and Barrel, Houzz and Huckberry, the men’s outdoor gear brand. It’s also looking into the possibility of physical retail distribution, but that’s further down the line.
“It’s really important to choose the right partners who appreciate the difference in what you do,” says Arambula. “We’re trying to build a brand, not just supply outdoor furniture to retailers like everyone else. If we go into a retail footprint, we want to do something to stand out and get our name out there so that customers understand who we are as a brand.
Build a brand
Coming from outside the industry, the Neighbor team brings a fresh perspective to the outdoor furniture market. And their track record of working with Tuft and Needle to disrupt an outdated and inbred industry and backed by the backing of forward thinking partners at Strand Equity, Neighbor is poised to make a splash in the outdoor living market.
“We’re fresh and new to the market like Tuft and Needle were,” says Chris Lee, Neighbor COO and Head of Operations. “It’s not that different from mattresses. We simply move from one room in the house to another, bringing the inside outside.
“There are thousands of regional and independent retailers in the industry who offer the same designs repeated over and over again. We have a new perspective on outdoor furniture. And we have learned how to handle large furniture purchases very effectively on Internet by providing excellent customer experience, excellent product quality and excellent design,” concludes Lee.