Double vision
by Burl Gilyard Hennes isn’t one of those hard-charging entrepreneurs who climbs over his desk and breathes fire down your neck. He’s not full of hot air about his latest plot to take over the world. He’s not prone to puffing out his chest and telling you that he’s the greatest CEO in the history of modern capitalism.
In fact, for the head of a company that’s cut a sales-doubling deal with giant retailer Marshall Field’s, Greg Hennes seems remarkably unflappable.
In 1989, Hennes founded Art Holdings Corp., then a one-man art consulting firm. For the firm’s fiscal 2003 (which ended September 30), Art Holdings did $5.2 million in sales. Until now, the core of the company’s business has been providing art and consulting for a wide range of corporate clients.
Hennes expects to double sales to $10 million in 2004 thanks to the company’s new partnership with the Marshall Field’s department stores. Art Holdings now operates 13 outlets of the LOOK Gallery in the Twin Cities-, Chicago- and Detroit-area Marshall Field’s stores, which expands the company into the residential art market.
It’s by far the biggest deal of his professional career, but Hennes remains calm. Hennes notes that the idea of selling art is not a foreign or even a new concept at Marshall Field’s. “I think it’s a minimal risk from the standpoint that there’s been a track record and a history of art sales through Marshall Field’s,” says Hennes.
But how did the small Art Holdings strike a deal with the $2.7-billion department store division of the massive Target Corp.? The groundwork for the deal was laid long ago. In 1991, the fledging Art Holdings merged with the Edina-based Scholes Fine Art, a framing business. The then-Dayton Hudson Corp. had been the first-ever client for Scholes when that firm was launched in 1980. After the merger, some of the designers at Marshall Field’s found that they liked to work with Art Holdings. When Marshall Field’s began looking for a new partner to run the art galleries in some of its stores, Art Holdings seemed like a natural fit.
“The decision to jump into it was totally a gut plan. We had had these conversations internally and with Marshall Field’s over a number of years,” says Hennes. “And this time, it felt like the timing was right.” Even so, it took a year of negotiations to hammer out the deal and the details.
“They weren’t taking this change lightly,” says Hennes. “Their previous relationship had lasted 17 years so they needed to make sure that what we were bringing to the table was going to stick.”
Does Hennes fret about tying up a huge percentage of his business in a new venture, in an arena that’s largely new to his company? He answers with a single word: “No.” After a pause, he says with quiet confidence, “It’s performing at a rate consistent with what we do here.”
Hennes’s older brother, Doug, serves as vice president for university and government relations at the University of St. Thomas, the alma mater of both brothers. He says that understated confidence is just his brother’s style. “He has a very quiet intensity,” he says. “He’s focused. He’s always thinking, but he also is able to find balance. He’s got a family. He knows how to balance work and family and work and fun. I think he leads with a quiet intensity, and he leads by example. It’s one thing to have an idea, it’s another thing to get it launched and make it successful. And what I’ve admired about him is his ability to do all of those pieces.”
The ambitious launch of LOOK Gallery takes Art Holdings into uncharted waters. Clearly, the project is no whim for either Art Holdings or Marshall Field’s. “It was very well thought-out on both sides,” says Hennes. “They wanted to grow the revenue, make their stores look better, and bring better service to their customers. We came in, we re-branded it, we re-inventoried it.” The galleries were previously known simply as Marshall Field’s Fine Art Gallery.
The project is not without its risks. “It was a huge financial undertaking,” says Hennes. “We had to purchase and frame 5,000 pieces of inventory.” Hennes says that he was able to finance the expansion by striking favorable terms with the firm’s vendors — all of whom were eager to be a part of the deal — and some loans from family members. But Hennes says that it’s already paying off: “We’ve been able to see some pretty strong results right from the get-go.” Sales in the galleries for September 2003, were up 3.5 percent compared to the previous year, when the stores were under different management.
The first galleries opened in Detroit in April 2003; Chicago and Minneapolis followed in June. LOOK Gallery has three locations in the Twin Cities: downtown Minneapolis, and the Marshall Field’s Home Stores at Southdale and Rosedale. Hennes notes that Art Holdings added 35 employees to launch LOOK.
The basic product mix at the stores is one-third original work, one-third limited edition prints, and one-third reproductions. Sixty-five percent of the business in the galleries comes through working with Marshall Field’s in-house designers. That’s good news for Art Holdings, because it means that much of its business is essentially built in to the deal.
Marshall Field’s is also pleased with the arrangement. “We were looking for an assortment that incorporated a broad range of art and price points,” writes Duane Austreng, manager for partner businesses and store operations, in an e-mailed response to questions about the partnership. “We were/are also impressed with the fact that they can obtain art from virtually any resource. We also felt Art Holdings/LOOK Galleries fit very well into our brand image. We like the vision they have for this business, and their team members are top-notch professionals.”
Austreng describes the relationship with Art Holdings as “very positive” and adds, “The level of professionalism, combined with their vision for the overall business, their growth strategies, and their detailed knowledge of art and the art industry have been tremendous. Art Holdings is a solid business partner and LOOK Gallery brings a lot to Marshall Field's guests.”
Not everything has been perfect. Last February, Hennes hired Conrad Roal as director of retail operations. Roal brought extensive retail expertise (16 years with Gap Inc.) to Art Holdings, a seemingly essential addition to a company lacking in direct retail experience. But just 10 months later in November, Roal was out. “At the end of the day we determined that there wasn’t a need for that position in a full-time capacity,” says Hennes, who assumed management responsibility for the galleries. “Once we got fully integrated into the stores, we had to right-size our administrative operations to fit the revenue that was there. We just had too much overhead.”
The fast-growing firm is a far cry from the modest beginnings of Art Holdings in 1989. The company that Hennes, then 26, was working for had just been sold and his job was slated to be eliminated. Hennes decided it was an opportune moment to take a stab at starting his own business.
“I always had an interest in art and architecture,” says Hennes, a native of Owatonna. But he also had a bug for business. While still in high school at 16, he’d risen to assistant manager of a local McDonald’s franchise. He may have inherited a desire to run his own show from his folks, both of whom were self-employed — his father in the insurance business, his mother doing income taxes.
Hennes had previously worked for an art gallery that specialized in selling art to corporations, and then an office furnishings firm, where Hennes added an art division to the firm’s business. When the latter firm was sold, he decided to light out on his own. He began with offices in the funky, artist-friendly Ford Center building near downtown Minneapolis. Thanks to some of the connections he’d already established, Hennes got off to a good start: The first client he landed was American Express. “They’re still one of our major customers,” says Hennes. Within a year, he had four employees and was off and running.
Throughout the 1990s, Hennes says, “We had very consistent sales growth.” In 1991, Hennes merged his company with Scholes Fine Art. At the time, Hennes says, “We were both probably doing $750,000 a year.” In 1998, Art Holdings opened up an office in Dallas, primarily to help serve a major client, the Minneapolis-based Gabberts Furniture & Design Studio, which also has a Dallas presence. In 1999, they opened The Art Outlet, a retail showroom featuring quality art at substantial markdowns. In 2001, Art Holdings merged with Doubletake Gallery, an online gallery specializing in collectible art.
“We were profitable from the start,” says Hennes of his firm. Art Holdings lost money in 2003, owing to LOOK Gallery startup costs, but Hennes predicts a return to profitability in 2004. Between all of its locations, the firm now employs 72 people and is headquartered in 26,000 square feet of space in Golden Valley.
Hennes says that his company strives to offer “total service, start to finish” for the corporate art market. Businesses retain Art Holdings to provide art for offices — or a string of offices. The company offers art consulting, custom framing, and installation services for clients, including access to the broad array of artworks in Art Holdings’ inventory as well as leasing and rental options. Art Holdings makes it a point to offer something for everyone, from abstract to representational styles of art, in a wide range of mediums.
CEO Hennes, now 40, remains the majority shareholder (other managers own partner-level stakes), but is quick to point out that he’s made a habit out of surrounding himself with good people. “I didn’t do this alone. I’ve had some phenomenally talented people work here. We’ve got some really key talent that has really made this company grow.”
Kim Cameron joined Hennes in 1990 as his third hire. Today she serves as director of business development for the firm, and has been with the company longer than anyone, save Hennes. She says that one of the strengths of Art Holdings is that the company has been able to build its business through repeat business, relationship building, and referrals. Merrill Lynch, for example, retained the firm to handle the art for 35 regional offices.
“I believe strongly in our concept: We’re the only company that does what we do. If you have 15 years of experience in corporate art consulting, there’s very few people who can say that,” says Cameron. “A lot of people are intimidated by art. We get them into a comfort zone. We help them to understand the process. Then we match them up with the art that’s appropriate. You couldn’t go somewhere and say ‘That’s an Art Holdings project,’ because every project is different.”
Art enlivens corporate work environments, says Cameron. “It’s a pleasant work environment, maybe it adds energy to their space or it adds calmness to their space. If you put a piece of art on your wall, it has to impact you.”
The firm’s clients sing the praises of Cameron and Art Holdings. Veta Micevic, director of facilities for Data Recognition Corp., has a relationship with Art Holdings stretching back a decade. “I think it’s wonderful for a person in my position, a person who handles multiple facilities, to be able to go to one shop and be able to find the range of artwork that they have. They’re just fabulous — landscapes, florals, abstracts,” says Micevic. “They have a fabulous framing department. The people there, they have a really good base of knowledge.”
Kathy Young, principal with BDH & Young Space Design, echoes those thoughts. “I have been working with Kim Cameron and Art Holdings for many, many years,” says Young. “Kim is almost like she’s a member of our firm, because when we get to that piece of the project we bring Kim in and she does the art piece. She becomes a member of our team as an art consultant. It’s so painless and so effective. Art Holdings makes us look good.” At any given time, Young figures that Art Holdings is working on two to six projects with her design firm.
Robert Varner founded Doubletake Gallery in 1994 and joined Art Holdings when the companies merged in 2001. The online Doubletake regularly offers collectible work by such artists as Andy Warhol, Norman Rockwell and LeRoy Neiman. He now serves as information technology director for the company and authors the firm’s proprietary software.
Varner praises Hennes as a “visionary” leader. “He’s done a really good job of assembling the elements that are really needed to pull together a company with a broader scope than has ever existed in the art market before,” says Varner. “He’s got a real vision for what a company in the art world can do. I’m real happy with the direction the company’s going.”
As with just about every other business in America, Hennes acknowledges that the economic recession prior to the launch of the LOOK galleries affected his business. “It’s slowed down our corporate business,” says Hennes, who’s quick to say that his company has weathered the downturn better than some: “We only saw a 5 percent drop in sales. We’ve had to work a lot harder to maintain that revenue.”
But Hennes reports that July, August and September 2003 were all record sales months for the company, thanks to the addition of LOOK Gallery and the rebound of corporate business. Sales dipped in October, but Hennes reports that sales were back up in November.
“The entire retail market was down in October, so what it’s made us do is look closer at how we can independently drive revenue to our stores,” says Hennes. He says that his company is working to create more awareness in each geographic area for the presence of its gallery and framing shop. There’s also talk of adding art, but not full-service galleries, to other Marshall Field’s stores.
Hennes estimates the company’s 2004 revenue picture will draw 50 percent of its sales from the new LOOK Gallery, 40 percent from Art Holdings, seven percent from Doubletake Gallery, and three percent from The Art Outlet. Hennes acknowledges that if all goes well, the experience with LOOK could open the door for new adventures. “This definitely will give us the opportunity to look into doing similar situations in other markets.”
But for now, he’s sticking to the quiet intensity plan for growth. “My goal at this point is really just to keep growing,” says Hennes. “We’re always trying to stay ahead of the game.”
