bankruptcy | Oct 17, 2023 |
What the home industry loses with Z Gallerie in bankruptcy again

The news today that Z Gallerie has filed for Chapter 11 bankruptcy for the third time and appears to be headed for liquidation is both sad and not at all surprising.

The onetime outlier darling of the lifestyle home furnishings retail space has repeatedly fallen on hard times in recent years. Now reduced to just 21 stores, Z Gallerie once had close to 60 locations scattered throughout the country, a strategy that no doubt contributed to its first bankruptcy in 2009. Back then, the company was still run by the siblings of the founding Zeiden family.

Originally launched in 1979 as a picture framing and poster shop in Sherman Oaks, California, Z Gallerie morphed into one of the most distinctive retail formulas of the time—and maybe today as well. While competitors like Pottery Barn and Crate & Barrel were all about understated neutrals and clean lines, Z Gallerie was anything but, with a merchandise mix that featured equal parts French, Asian and other global design influences. You always knew what to expect at Pottery Barn or Crate, but you never knew what you’d find at Z Gallerie.

Maybe that, along with the company’s disjoined store map, were factors in the start of its downfall—but let’s not forget that the Great Recession of 2008 and 2009 was also disastrous for so many larger, better-financed retailing companies.

Z Gallerie went under the bankruptcy knife again in 2019, at which point DirectBuy, a digital-first company that focuses on a membership model, picked it up with plans to make Z Gallerie part of that strategy. This third bankruptcy a mere three years later probably tells you all you need to know about its success. Clearly the current climate for the furniture and home furnishings sector couldn’t have helped: Z Gallerie is just the latest company to go down in recent months, following in the footsteps of Mitchell Gold + Bob Williams, Klaussner, and others.

In bankruptcy filings, there is talk of a potential sale of the business, a meager line of credit to keep the lights on in the meantime and the very real possibility of liquidation if all else fails.

Such a liquidation would be very disheartening, although the Z Gallerie that was so exciting and different from its competitors—a welcome alternative to home decorating blandness—has long since evaporated. Anyone who walked into one of the brand’s few remaining stores in the past few years wouldn’t necessarily have recognized it and might even have had to take a second look at the sign over the front door.

That’s one of the great takeaways from Z Gallerie’s struggles: It’s harder and harder to escape the homogenization that has consumed the home furnishings channel over the past couple of years. The once-distinctive ABC Carpet & Home store lives on only in a severely toned-down version. Pottery Barn and its kid sister West Elm are increasingly indistinguishable; Crate and CB2 aren’t much better. The DTC players could all stand in a police lineup and you’d be hard-pressed to pick out one from the others.

Z Gallerie had that zag when everyone else was zigging. It may not have been the best business model, but it sure was a great store to shop.


Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.

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