Studio McGee, founded by the team behind Netflix’s Dream Home Makeover series, decided it needed a makeover of its own to support its booming business.
The problem was that the business had a patchwork of legacy systems—Xero for accounting, Stitch Labs for inventory, Shopify for e-commerce, ShipStation for order fulfillment, and myriad Excel spreadsheets to try to make sense of it all—which made it difficult to access, coordinate, and analyze key financial data.
For instance, the VP of merchandising had to pull information from Xero, ShipStation, and Shopify to figure out basics like sales volume, shipping costs, and profit margins. That’s a lot of legwork, and for a business needing a comprehensive, real-time look at its key performance indicators, that was an issue.
“We started out by cobbling together applications and systems from different vendors, but as growth exploded, we moved to centralize operations,” says Josh Batchelor, VP of technology for the Salt Lake City-based business founded in 2014.
Studio McGee’s growth has been significant; its revenue, generated mostly from home redesign consulting and retailing, has increased by 8 times since 2017 and surpassed $80 million last year.
In order to support and advance its hypergrowth, Studio McGee deployed Oracle NetSuite to manage billing, accounting, inventory, and other key operations, pooling and continually updating the business’s most important data.
One big factor driving demand was the work-at-home mandates stemming from the COVID-19 pandemic. People figured that if they had to spend all their time at home, why not spruce it up? Market research firm NPD estimates that U.S. consumer spending on home facelifts soared 22 percent in 2021 compared to the previous year. Studio McGee’s popularity was then turbocharged by its starring role on Dream Home Makeover, which debuted in 2020.
A SUCCESSFUL TRANSITION
Studio McGee’s leaders, including President Patrick Ord, realized that transitioning successfully from startup to high-growth enterprise would require more than a great eye for product and design.
“We knew in order to support our growth, we needed something different,” said Ord.
It required an integrated business system that would allow Studio McGee to update and standardize its financial processes and provide more robust data analytics and reporting, which would lead to improved forecasting and financial decision-making.
With NetSuite, Studio McGee’s finance team has more time to spot trends and ask insightful questions, instead of having to spend much of their workday finding raw numbers and then manually creating reports.
Studio McGee fields several subsidiaries, including the original SM Design interior design business and McGee & Co., its e-commerce business. Controls built into NetSuite help ensure that sales orders, purchase requisitions, and other transactions between different parts of the business are recorded properly.
Previously, the team entered bills from shipping carriers at the summary level, which could leave landed costs unclear. Now they can enter carrier bills individually to get a clear picture of profits from each vendor.
In addition, interior design clients now get a user-friendly, App Store-like e-commerce experience for purchasing products and reviewing their invoices and account details. Meanwhile, the application of these modern processes helps Studio McGee’s finance team spot trends faster and take appropriate action.
“Studio McGee was well-positioned when demand for homewares spiked in 2020 but our disconnected systems made it difficult to understand what the actual numbers were and to capitalize on opportunities,” said Batchelor. “NetSuite connects data from across our operations, automates our reporting, and enables us to manage our entire business from a single system—which allows us to ultimately make quicker and more informed decisions.”
For example, amid ongoing supply chain disruptions related to the global pandemic, the inventory management capabilities in NetSuite help Studio McGee foresee potential product shortages so it can work with suppliers to address them—and communicate looming issues to buyers. To mitigate the impact of possible shipping delays, Studio McGee started stocking up on a core selection of popular furniture, rugs, and accessories, which are featured on the website’s “Ready to Ship” section. As the name suggests, there is no wait time for these items.
The improvements will keep coming. Studio McGee is adding a new 325,000-square-foot fulfillment center, moving from a third-party warehouse. The facility will incorporate “pick and pack” robots that integrate with NetSuite to accelerate order distribution.
Studio McGee is also eyeing expansion outside the U.S. Its use of NetSuite Global Business Management—which supports 27 languages and 190 currencies—will support that move.
THE HUMAN TOUCH
The NetSuite support team continues to evaluate how Studio McGee’s finance team works and is “thinking about how we can make our jobs more efficient,” Batchelor says.
While he’s bullish on NetSuite’s ability to support growth, he’s also realistic that technology alone isn’t a cure-all. The human touch and clear communications are essential, especially when problems arise.
While consumers remain concerned about supply chain delays and rising prices, Studio McGee will keep enhancing its technology and strategy to minimize the downside, Batchelor says. And it will continue to communicate with customers about the reasons for delays and price changes. “Transparency is one of the biggest things customers want,” he says.
The big question for Studio McGee, and retailers generally, is how to remain profitable with compressed margins. “We’re doing all we can to find that happy place where our customers don’t have to shoulder all of the increased costs, but at the same time, we’re not selling things at below cost,” Batchelor says.
A combination of modern technology and enlightened management will increase its chances of success on that front.
While Netflix’s Dream Home Makeover series has added to Studio McGee’s visibility and social media following, NetSuite will help the business drive more profitability. Ultimately, this is about helping Studio McGee with the next chapter, helping it reach new homes and find more people who share the mission.
“Today, Studio McGee continues to design homes across the country through our business,” said Ord. “Whatever the next opportunity or trend, we have the right team and technology in place. And knowing that will make growth that much easier.”