French Quarter Gem Shines in Era of Declining Retail
The largest antiques dealer in North America, M.S. Rau, will soon double in size.
Some of Rebecca Rau’s fondest childhood memories of her family business, M.S. Rau Antiques, involve Mardi Gras celebrations with cousins in the Royal Street store, pressing their luck on antique slot machines and “assisting” the staff behind the jewelry counter.
Today, Rebecca Rau oversees strategic development for M.S. Rau, representing the fourth generation of the family in the business. She works alongside her father, owner Bill Rau, who first learned the trade from his father, uncle and grandmother when he began working in the store part-time at age 13.
And while both Raus attribute much of the business’s success over 105 years to luck, the journey has been considerably less random than playing the slot machines. Years of savvy decisions around inventory and marketing have helped make M.S. Rau the largest antiques dealer in North America (in terms of sales), bringing what Bill calls “the best of the best” to a growing number of clients around the world.
M.S. Rau’s latest undertaking is a 19,000-square-foot expansion that will nearly double the store’s French Quarter footprint. The addition, made possible through the purchase of two neighboring buildings, is intended to house a breathtaking inventory of treasures more comfortably and make M.S. Rau even more attractive to art collectors and antiques enthusiasts.
“I think we’ll have a more recognized presence in the French Quarter, and I think it will feel more like a destination,” says Rebecca Rau. “We love staying in touch with our clients and doing business with them remotely, but it’s really nice when they come visit us too, and I think this will give reason for them to be here.”
THE ONE THAT GOT AWAY
The Tower of Katoubia Mosque by Sir Winston Churchill
Over Bill Rau’s long career, he only regrets selling one item — this work by accomplished painter Sir Winston Churchill. Though Churchill was a prolific artist, this was the only painting he made during World War II. It was even more special because he gifted it to President Franklin D. Roosevelt after the 1943 Casablanca Conference, which both men attended and marked a turning point in the war.
“Even though we made a lot of money on it, I wish we hadn’t sold it,” says Rau, whose father was a World War II veteran. “This work had it all. It was painted by one of the most important people of the 20th century and given to another of the most important people of the 20th century at one of the most important moments of history. And it was absolutely beautiful. Every single box got checked. That’s the type of thing that really excites me.”
“The great news is we’re in a historic landmark with great charm,” says Bill. “The bad news is we can’t change it. So, when we had an opportunity to buy a building that attaches to us, we had to take it.”
Although M.S. Rau acquired the first of its two additional buildings (622-624 Royal Street) in late 2015 and the second (616-618 Royal Street) only months later, construction has yet to begin. The two buildings are historic structures (archival records from the Historic New Orleans Collection date them to 1831), which means they are eligible for historic tax credits. However, it also means that their renovation and restoration is subject to stringent oversight by entities such as the Vieux Carré Commission.
Rau said he is hoping construction will start in March 2018, but the application process for historic tax credits has taken longer than expected.
“One of the difficulties of dealing with [the State Historic Preservation Office] is they have specific ideas of what should stay and what shouldn’t stay that we have to work around,” said Bill Rau. “You have this vision of everything in the beginning, and it sort of gets eaten away bit by bit. At the end of the day, it’s still going to be great.”
M.S. Rau’s inventory and staff (which currently numbers around 50) continue to expand, so the Raus say they are eager to see their new home completed.
“Even though we have a lot of space, we have so many objects that I think you’ll be able to appreciate them more as individual things when they have room to breathe,” says Rebecca Rau.
As with any major construction project, there are concerns. The new structure will have two entrances (both facing Royal), which will change the flow of customer traffic. After 86 years on the block, the Raus say they feel a strong sense of responsibility to their neighbors.
“I want to be cognizant that we disrupt everybody’s livelihood and homes as little as possible,” emphasizes Bill Rau.
Though he labors over every decision — “It makes me lose my hair!” — Bill Rau and his staff believe the careful consideration will result in a better project, benefitting both his business and the city.
His daughter shares that optimism.
“As a young New Orleans native, I’m kind of nervous but also excited to feel like we are investing in the future of the city and trusting that we will continue to matter and people will continue to come here and spend time and money.”
Cornering the high-end market
M.S. Rau built its reputation on high-end fine art and antiques, specializing in one-of-a-kind items. According to Bill Rau, that was a conscious choice.
“There’s a term in the antique world called ‘brown wood dealers,’ and it was a person that sold typically English or American tables, chairs, beds — and everything was brown wood… Years ago, we decided we didn’t want to be that. We wanted to buy the best of everything.”
That decision to differentiate themselves from other dealers through their inventory has paid off.
“One of our [local] competitors… gave us a very nice compliment,” Bill Rau recalls. “He said, ‘Y’all used to be competition with us, but you’re not anymore.’ You have to change with what the market wants. And, luckily, we have, and we made some good guesses… The market has unequivocally moved to where we are. I won’t say we were smart — I’m sure part of it is luck.”
Rebecca Rau credits her father’s knowledge of historical performance and a forward-thinking view for the business’s success.
“I think he has a really solid understanding of the types of objects that have thrived historically and also of artists and silversmiths with solid potential,” she says. “That includes not only market value but also art historical value and historical importance, having foresight and being able to let go of things, like wrought iron, that might have been popular once upon a time, but were not the future of the business.”
Bill Rau also believes in keeping a long-term perspective when it comes to performance.
“Because we have things that are very expensive, we can have outlier years,” he says. “The people that like looking at data — we drive them crazy because we have so many outliers. We’re not selling 87,000 bars of soap a year. If we sell two [Norman] Rockwells in a year, one might be $200,000 and one might be $5 million.”
By any measure — sales, profits, new customers — M.S. Rau’s growth has moved steadily upward.
“When you look at the long term, it’s two-and-a-half times what it was 10 years ago, and five times what it was 20 years ago,” says Bill Rau. “Our CFO, who started right after Katrina, was utterly shocked. He had come from a business where everything was about next month. We look at things really long term.”
The art of predicting demand
As with most markets, it’s difficult to forecast the ups and down of art and antique categories. The Raus’ track record over time is excellent, as evidenced by their continued growth. But Bill Rau acknowledges a few decisions he might have made differently.
“There are a number of things going gangbusters that we don’t deal in,” he says. “So, when I say we moved in the right direction, we didn’t move completely in the right direction.” He points to the “extraordinarily hot” contemporary art market as an example, although he believes that market is a bubble.
Rau also admits being late to recognize the potential of World War II artifacts.
“Twenty years ago, somebody asked me about something from World War II, and I said, ‘I can’t really agree that it will be a good long-term investment because 800 WWII vets are dying every day,’” he said. “The part I missed was that their kids and grandkids were much more interested in the things than they were.” He cites a German Enigma I cipher machine as an example. “It’s the ugliest thing we have in the store, but it stops people: ‘Wow! You have an Enigma machine!’”
Reaching their target market
When your business is selling the “best of everything” to discerning clientele, effective marketing is critical.
“We want to reach people that love our things and can afford our things,” says Bill Rau.
Approximately 12 percent of M.S. Rau’s customers are local, a designation Bill Rau gives to anyone who would drive to New Orleans for a meal. The rest come from every corner of the globe. And customers, according to Rau, fall into two categories: those with “the collecting gene” and the “decorators.”
His favorite “collecting gene” example is the porcelain-loving customer who, after a call from Bill alerting him to the availability of a new piece, skipped an emergency dental appointment to come in immediately for a better look. “I wish more people had that gene,” he laughs.
The “decorators” are those who might just want “a really important painting for above the fireplace…and a really nice table,” he says. “You get those two pieces and you’re finished. You have fond memories of us, and you still come in to see what we have. But you don’t have to have anything else. So those are the basis of our two best types of clients. Obviously, we prefer the collector.”
To reach both types, M.S. Rau advertises heavily in national publications including The New York Times, The Wall Street Journal, and USA Today. They participate in shows, and they do a lot of research on their customers and potential customers.
“At the end of the day, we have still only gotten the tip of the iceberg,” says Bill Rau. “It’s a huge iceberg, and getting to them all is not easy. But we chip away at it, and I know we have a far bigger portion than we ever did.”
The role of the internet
M.S. Rau has invested heavily in its website, which has expanded the company’s reach and reputation. In Bill Rau’s opinion, the internet is also “the greatest de-inflation tool of all time.” When a customer is making a purchase decision, he explains, they can research it immediately online. “It only becomes about money: ‘Can I sell you one cheaper than you can buy somewhere else?’”
However, while pricing competition is true with commodities (e.g., a Wedgewood piece), it isn’t necessarily for unique items.
“When something is a ‘one of,’ you have this great advantage,” says Bill Rau. “This is really where our market is. The internet has helped us in that. You come in here and see a Norman Rockwell and you flip on your phone, and say, ‘Gee, this last Rockwell sold for $7 million in auction, and this one is less money than that, so…’ That makes it really easy for us.”
As for online dealers that sell antiques, Rau considers them a “two-edged sword.”
“When someone says, ‘You’re asking $10,000 for something I saw on eBay for $500,’ I would respond: ‘a) Was it real? b) What kind of condition was it in? c) Maybe it was as good as ours, and it did sell for $500, but I didn’t know it nor did any of my competitors, and something slipped through the cracks.’ But that will probably happen once every 30 years.”
And while online antiques marketplace sites like 1stdibs.com do present some competition, they also offer M.S. Rau a sales platform to a broad audience. “We made a $35,000 sale this week on 1stdibs.com. We have picked up some nice clients from it,” he says.
The next generation of collectors
As millennial consumers continue to demonstrate spending patterns that favor the “experience economy” over objects (a departure from previous generations), the Raus have considered how this trend might impact their industry.
Rebecca Rau, herself a millennial, isn’t worried.
“There is a reason humans have produced things across history,” she says. “I think things allow you to have recurring experiences — every time I look at something I love, I get a lot out of it. I believe there will be a time when ‘stuff’ will matter again, and we’ll need that attachment to history because everything else is becoming more abstract as so much of our lives moves toward devices. The handmade and the tangible is something immediate. It might take some cultivation to push that, but I know there are other millennials out there who will value and want to collect what we deal in. It’s just a matter of when.”
Being part of a family business
Both Raus acknowledge the pros and cons of their arrangement. Bill Rau recalls a conversation held during his twenties with an older friend who was also part of a family business.
“My friend said, ‘Bill, when you go into a family business, the road to the top is a lot shorter, but it’s a lot rockier.’ And I just always made it my goal just to get along with everybody. Don’t let that stop the right decisions, but keep everybody’s feelings in mind.”
He said he also appreciates the fact that he’s constantly learning on the job — and has been since childhood.
“Most businesses, if you’ve done it long enough, you know 99 percent of the things you need to know,” he says. “I’d like to think we know more than most people in this business, and I personally only know 15 to 20 percent of what I need to know. I got a head start. I never would have gotten to learn what I learned at a young age if it had been any business but a family business.”
For Rebecca Rau, the learning has been more self-driven as the organization has grown.
“In terms of product knowledge, I’m sure my father spent more time with his father learning the inventory himself,” she says. “Some of that I have to seek out and teach myself because it’s become a fast-paced business, and people are not as available as they once might have been. I think that’s just the times.”
She says she also had to come around to the idea of joining M.S. Rau, which she did after spending several years studying and working across the fine arts in New York, California and London.
“Growing up, I felt a lot of pressure to join, and it kind of made me want to flee,” she says with a laugh. “I felt like if I committed, it was a real, long-term serious commitment and that was daunting. But once I did some soul searching, I came to terms with the fact that I’m going to be working in the arts in some capacity, and this is an amazing business in an amazing city, so why not embrace it?”
Pushing toward the future
Every segment of the retail industry has seen big changes, and Bill Rau believes his business is no exception.
“The days of sitting down and waiting for people to come in and buy are gone,” says Bill. “When I first started, we used to make a bank run every day at 1 p.m. because we’d already had four or five sales by then. I smile about it now — the $100 or $300 sale. Those days are gone. You’ve got to go out and find the clients. You’ve got to push. There’s a general axiom of business that if you’re staying still, you’re falling behind. And there’s no doubt about that.”
MARK YOUR CALENDARVice and Virtue: An Exhibition of Sex, Saints and Sin
April 7 – June 9, M.S. Rau Antiques
Over the past couple of years, under Rebecca Rau’s guidance, M.S. Rau has stepped up the caliber of its gallery exhibitions — producing catalogues and wall text and displaying a greater number of items on loan. The upcoming exhibition, “Vice and Virtue: An Exhibition of Sex, Saints and Sin,” is inspired by the city’s tricentennial and will explore, through art and artifacts, the themes of vice and virtue and the relationship between the city’s Catholic heritage and its more indulgent leanings.