Update 02/22: If you have a Sharper Image gift card laying around, beware that the merchant has stopped accepting them according to this report by Consumerist.
My favorite leisure time store and the place where I redeem all my Discover Card rewards announced on Tuesday that it filed for Chapter 11 bankruptcy protection and will close 60 90 of its 183 stores nationwide. CNN Money has re-published a great story of success and decline at Sharper Image, a must read for every entrepreneur.
According to the article, the company’s strength was in the narrow niche they had taken with the kind of products that appealed to geek lovers around the country. You know, the $300 electric shavers and $1,999 massage chairs that bring very fat margins. That changed in late 80’s and what was their main strength became their main weakness.
We had gone public in 1987, and we were well known enough by then that we had a lot of counterfeit competitors. There were no fewer than about ten other catalogs and two retailers attempting to copy our formula. At the same time big category-killer stores were rolling out, big electronics stores that were copying a lot of the products that were our bestsellers.
Sharper Image had one more sunny day when in 1999 they started selling the famous Razor Scooter, a single product that brought them over $100 millions in sales. The overall strategy hasn’t changed though and over time has brought the company to a downfall.
I find this other quote by the founder Richard Thalheimer (also from the CNN Money article) very entertaining:
I knew that men were not good shoppers. So my idea was to write intelligent, informative advertising copy and put it in magazines that men enjoyed, like car magazines or flying magazines.
Guess what, Richard, you were wrong. Men are great shoppers. If they were not, I wouldn’t be writing about Sharper Image filing for bankruptcy protection on a blog primarily read by male bargain hunters. ;-)
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