Lillian Vernon, Sharper Image Crash. Why?
Oh, yeah? I once did detailed analysis of all the SKUs in the SkyMall catalog that is found in airline seat pockets and has pages from a slew of upscale existing catalogs (including The Sharper Image). I found seven different nose-hair clippers. They constituted the most popular item in the book with the exception of wristwatches.
When Peggy and I sold our newsletter and moved to Philadelphia, we decided to buy ourselves a CD player that would attach to our Bang & Olufsen stereo rig. We bought a nifty, high-tech, stand-alone model. A couple of years later I was stopped cold by a stereo in The Sharper Image catalog that looked like a clone of our B&O set for a fraction of what we paid.
In short, much of Thalheimer’s glitzy merchandise were knockoffs. He rode the high-tech wave for a number of years, but—like Lillian Vernon—he got competition. Suddenly he was running in a pack, along with Brookstone, C. Crane, Crutchfield, Herrington, Improvements, Hammacher Schlemmer, Radio Shack, Wal-Mart, Target, Best Buy and Circuit City.
Experienced direct marketers are inculcated with the Joan Throckmorton business model—profitability only comes with repeat sales. For example, I cut my teeth in the book club and continuity businesses where each order represented multiple sales.
Same thing when I became a freelance junk-mail writer—and later a newsletter publisher. My main business was paid circulation. A new subscription lost money or—if you were lucky—was a breakeven proposition. Only with renewals—selling the existing customer another year—do you start making money.
“It turns out that buyers of R2-D2 Interactive Droids ($129) are not the best repeat customers,” wrote Michael Barbaro in The New York Times. “That left The Sharper Image struggling for an identity in consumer electronics, a product line that is among the most competitive in American retailing.”