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Get Four
|  | JANUARY 6, 2004
Sharper Image's Broader, Richer Focus [Page 2 of 2] Q: Many retailers had a more difficult time than expected this Christmas. What set Sharper Image apart? A: As consumers become more sophisticated, they know better values come after Christmas. We don't markdown much since we don't have much that's seasonal, but [other retailers' discounting] gets a lot of people into the malls. Our products tend to be the same year round. Q: If this is such a good strategy, why don't more retailers do this? A: Because they usually don't know what will sell, so they'll have hits and misses. [For every 30 hits], we have about one miss. [In the 26 years since the company was founded], I've been here the whole time. People in our buying department that buy what we don't invent have been here between and 5 years and 10 years. Our store managers have been with us 15 years to 20 years. They are firm in their opinion of what will or won't succeed. Also, we're dealing more in products that are less [subject to people being] fickle than something like fashion. Our goods are somewhat insulated from competition. One thing we do is consciously stay out of commodity electronics, where companies like Dell (DELL ) and Best Buy (BBY ) play. Q: What's a miss that you've had recently? A: We had a home robot last year that sold for $700. It didn't do a whole lot -- it greeted guests and could be used as a video camera. It didn't sell as well as we thought it would. We just finished selling it this past Christmas. Basically, it would need higher functionality or lower price, and in the 21 months since we introduced it, we haven't figured out how to do either. Q: What is your role in developing products? A: I am the leader of the group that comes up with the product ideas and eventually creates and finalizes every product. We meet once a week for four hours, and the rest of the design team works the rest of the week to get everything done. [I'm involved] from product idea, to graphic design, to how buttons work, what the features are, down to what the box looks like. I'm very hands-on in product creation. Q: What were the big sellers this Christmas? A: Our Ionic Breeze air purifiers were a huge contributor to holiday sales. Word-of-mouth has been positive. Others make ionic air cleaners that use the same principle, but our [Quadra 4 model] is unique because of the slim, space-saving design, lack of a filter, ease of cleaning it, and lack of noise. Massage chairs were fantastic. The chairs sell well at all prices. This is the first year we've sold the iJoy massage chair. This chair, at $700, expanded the market to so many people, and it easily doubled our massage-chair business from a year ago. The next item in the massage-chair line is $1,500. Q: What are your goals for Sharper Image in 2004? A: We will continue to add stores in lifestyle centers in midsize cities, in addition to filling in stores in upscale malls. We will continue to build our online business and expand catalog sales. And we will continue to leverage our expense structure as we add another 30 stores on top of the 150 stores [that we had] as of the end of 2003. All of that should allow us to achieve our goal of at least 20% growth in sales and profits. We will continue to build our proprietary products as a percentage of sales. They are currently about 80% of all dollar revenue, and I think this can continue to grow a few percentage points each year. Q: How would you characterize the holiday retail season in 2003? And what kind of year will 2004 be for retailers? A: This was an excellent holiday and fourth quarter for us. We recently raised guidance for earnings. This will make for a record year for earnings and revenues in our 26th year of business. As for 2004, we are planning for at least 20% growth in revenues and earnings. There is reason to believe, based on what economists are saying, and the fact that Presidential election years tend to be expansive, that the economy will continue to accelerate, and retail sales will benefit. 2004 should be another record year for Sharper Image.
 Edited by Patricia O'Connell
BW MALL
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