June 13, 2008
Sharper Image Shifts from Stores to Licensing
By Tom Ryan
Sharper Image, which filed for bankruptcy in February, is moving to close its remaining 86 stores to pursue a global licensing strategy focused on wholesale, catalog and online sales.
Hilco and Gordon Brothers led a group of investors including Bluestar Alliance, Windsong Brands and Crystal Capital in purchasing Sharper Image’s assets for $49 million.
Sharper
Image built its empire in the 1980s and 1990s selling high-end novelty gadgets
like cordless phones, digital answering machines, vibrating chairs, and nose-hair
trimmers. But many of its devices have since become commodity items, and it
hasn’t had a blockbuster hit since Razor scooters.
Also contributing to its demise
was negative publicity surrounding the Ionic Breeze after a Consumer Reports review
in 2003 found the air purifiers were not only ineffective but emitted harmful
ozone gas. Lawsuits followed.
But now, the new owners plan to partner with several global institutions to continue development of the company as a licensing property. According to the New York Post, Sharper Image generated between $5 million and $8 million in licensing revenue over the past year, helping support its sale price.
“We are proceeding immediately with our plans to partner with world class licensees and retailers to introduce innovative high quality products that will satisfy both the needs and enjoyment of The Sharper Image customers,” said Jamie Salter, CEO of Hilco Consumer Capital, in a statement. “The Sharper Image brand will be extended internationally in existing and new categories that consumers want and need.”
“Internationally,” added Joseph Gabbay, president of Bluestar, “the integrity of the brand is top in its field. The Sharper Image connotes quality and excitement with products that are unique in both feature and function, and translate into almost all categories.”
Discussion Question: Do you think Sharper Image has run its course as a retailer? What do you think of the licensing opportunity its new owners are pursuing for the Sharper Image brand?
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Sharper Image has a model whose time is clearly no longer pertinent in an Internet world, or one where global “cool” products are everywhere. Cataloging in general is a declining market, and high-end “cool” stores do not offer a reason to purchase premium priced products. This modality is better offered on the Internet in a world where technology changes every 6 months.
Licensing will not be successful for SI either, for many of the same reasons. SI does not offer a brand, so much as an experience. However, the cost of entry (i.e. purchasing a product) was too expensive to support their brick and mortar model. Instead, they should pursue a limited Internet strategy. Who really is going to pay a percentage of their profits just to put an SI brand on a product?
Seems like a smart move on the part of the investors. Let’s just hope that the Sharper Image name remains strong enough to draw people’s attention away from other established brands of similar products.
Either way, I think quality should be the driving force behind any new products. As great as innovative products are these days, any successful lines will quickly end up being copied, driving prices down.
Speaking of quality and price, take my advice: a cheap nose hair trimmer is no deal. Now I have to go to Brookstone to get a new one. They’re still in business aren’t they?
I think this is one of those opportunities where brick and mortar is over-rated. Think of shopping experiences like Amazon and eBay as well as great web based retail portals like Victoria’s Secret, Eddie Bauer and Lands’ End, where consumers are comfortable searching for and buying products in the comfort of their own homes. The best in class in this area to me is Zappos. So if Sharper Image can create an offer that people want based on the quality they expect then they have a great chance for success.
With many baby boomers realizing they have most of the “stuff” they need and many consumers having trouble paying for the mortgage, gas, and food, the market for “high-end novelty gadgets” is going to be tough for the foreseeable future. Good luck with this plan.
It is somewhat sad to see the deterioration of Sharper Image. In its heyday, the stores were great to visit and see gadgets that absolutely no one needed, but people purchased just for fun, and for bragging rights. When no other retailer would carry a high-priced electronic product that acted as a robot powered vacuum cleaner, Sharper Image would feature the product. But the world changed, and these products are now found at Best Buy, Target, etc, and usually for a lower price.
Can Sharper Image become simply a brand? Possibly. But at best, it might prosper as an “As Seen on TV” brand, or possibly have branded Sharper Image infomercials. Will the Sharper Image brand succeed as a licensed brand at retail? This seems to be a stretch, and I don’t think we will be writing a case study on this as a successful strategy.
First of all, let me express utter astonishment that this story broke in the NY Post, without any mention of dismemberments, “blood everywhere” or “Mom-Killer Cries at Sentencing.” You’re right: stuff that was unique to Sharper Image is now ubiquitous. If the stores are bleeding now, this soft economy will just murder them (Hmmm… Maybe there is a reason the Post broke this story after all.).
Licensing and online is a great idea to reach folk with money and the need for more gadgets. Less overhead. And as we’ve discussed before in this space, there are more people (especially aging boomers) out to get rid of stuff, not acquire more. The last few times I’ve been in a Sharper Image store, I got excited about a few things but then thought “Would I really use it? Where would I put it?” and decided against a purchase. (I’ve got some $100 neck massager thing that I’ll send to anybody who will cover the postage.) I don’t think I’m alone.
At least Sharper Image’s bricks-and-mortar strategy gave them a reason to expand the customer base from their catalog and online origins. However, the store became a victim of an unfocused merchandise strategy, questionable product quality and performance, and plenty of competition–not just Brookstone, but all the other retailers who jump onto “hot items” like the scooter and turn them into commodities.
So there’s not much brand equity left in the Sharper Image name. (If anything, it’s been tarnished by the performance of the past several years.) I don’t see a licensing strategy as a way to pull much value out of the brand at this stage.
Does The Sharper Image brand have clout anymore? The last few times I was in SI, most of their branded stuff looked cheap and poorly constructed. They should give up. Brookstone found out long ago that you need a large product mix to win this game. 14 different versions of the same ionic purifier doesn’t mean you have a big selection. Oh yeah, note to Thalmier: hire people who actually like working with customers!
It’s a brand that has lost. It had an outmoded way of getting these types of products to market. It’s too far behind in adjusting. It’s done.
We can all fondly remember the scene from “When Harry Met Sally” where Billy Crystal sang “Surrey with the Fringe on Top” from Oklahoma. It was already behind the times then and is way behind now. Just like leisure suits from the ’70s and Mullets from the ’80s, Sharper Image is and will be a memory from a bygone era. It really wasn’t all that cool then and isn’t now either. Quite frankly, I can’t believe it’s around at all anymore, in any shape or form–bricks and mortar, web, or licensing.
The move will be only as successful as the public’s current and future perception of Sharper’s “image.” The brand is not nearly as credible as it once was for any number of reasons.
The Sharper Image brand name has strong consumer acceptance both in the U.S. and Internationally. Licensing the brand has the potential to be a big success done correctly and quickly, before consumer awareness fades with the closing of all retail store fronts. Positioning the brand as a shop in shop concept with struggling mid-tier Department stores could be a win-win situation.
Sharper Image has lost most of its brand distinctiveness and consumer appeal. I don’t believe this retailer was or will ever become a leading brand in any category–it is too far outmatched by other brands, especially in electronics and housewares.
Licensing is often a mixed bag. They’ll need to sign up some very strong and committed licensees to be sustainable, and I don’t see that happening. Without real brand management and strong marketing support, the business is destined to be a modest success, at best.
The answer to the main question is, quite simply,”yes.” SI’s niche, after all, was overpriced novelty items, and while there might still be a few time-starved and money-sated groups who appreciate such things, the rest of us will head online (or to Tarjhay)and pick up the same thing at some fraction of the price.
(Note to Warren: the Post actually breaks a number of meaningful [business] stories…but why are the RW Editors reading it in the first place ???)
As a consumer, there was nothing Sharper Image offered that I couldn’t find for a better price via an online store.
While the brick-and-mortar concept has run its course, I do believe the brand name has value that can be leveraged for new innovative products. To many consumers, the new pocket fishing tool from Ronco will be more appealing with the Sharper Image brand on it.
Doron Levy made an apt comparison: Brookstone and Sharper Image were similar, yet Brookstone thrived and Sharper Image died. So many retail categories are like that: stores in similar businesses, yet some do well and some fade away. The only difference: leadership. Executives who know what they’re doing…who can implement a decent strategy.
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Sharper Image has a model whose time is clearly no longer pertinent in an Internet world, or one where global “cool” products are everywhere. Cataloging in general is a declining market, and high-end “cool” stores do not offer a reason to purchase premium priced products. This modality is better offered on the Internet in a world where technology changes every 6 months.
Licensing will not be successful for SI either, for many of the same reasons. SI does not offer a brand, so much as an experience. However, the cost of entry (i.e. purchasing a product) was too expensive to support their brick and mortar model. Instead, they should pursue a limited Internet strategy. Who really is going to pay a percentage of their profits just to put an SI brand on a product?
Seems like a smart move on the part of the investors. Let’s just hope that the Sharper Image name remains strong enough to draw people’s attention away from other established brands of similar products.
Either way, I think quality should be the driving force behind any new products. As great as innovative products are these days, any successful lines will quickly end up being copied, driving prices down.
Speaking of quality and price, take my advice: a cheap nose hair trimmer is no deal. Now I have to go to Brookstone to get a new one. They’re still in business aren’t they?
I think this is one of those opportunities where brick and mortar is over-rated. Think of shopping experiences like Amazon and eBay as well as great web based retail portals like Victoria’s Secret, Eddie Bauer and Lands’ End, where consumers are comfortable searching for and buying products in the comfort of their own homes. The best in class in this area to me is Zappos. So if Sharper Image can create an offer that people want based on the quality they expect then they have a great chance for success.
With many baby boomers realizing they have most of the “stuff” they need and many consumers having trouble paying for the mortgage, gas, and food, the market for “high-end novelty gadgets” is going to be tough for the foreseeable future. Good luck with this plan.
It is somewhat sad to see the deterioration of Sharper Image. In its heyday, the stores were great to visit and see gadgets that absolutely no one needed, but people purchased just for fun, and for bragging rights. When no other retailer would carry a high-priced electronic product that acted as a robot powered vacuum cleaner, Sharper Image would feature the product. But the world changed, and these products are now found at Best Buy, Target, etc, and usually for a lower price.
Can Sharper Image become simply a brand? Possibly. But at best, it might prosper as an “As Seen on TV” brand, or possibly have branded Sharper Image infomercials. Will the Sharper Image brand succeed as a licensed brand at retail? This seems to be a stretch, and I don’t think we will be writing a case study on this as a successful strategy.
First of all, let me express utter astonishment that this story broke in the NY Post, without any mention of dismemberments, “blood everywhere” or “Mom-Killer Cries at Sentencing.” You’re right: stuff that was unique to Sharper Image is now ubiquitous. If the stores are bleeding now, this soft economy will just murder them (Hmmm… Maybe there is a reason the Post broke this story after all.).
Licensing and online is a great idea to reach folk with money and the need for more gadgets. Less overhead. And as we’ve discussed before in this space, there are more people (especially aging boomers) out to get rid of stuff, not acquire more. The last few times I’ve been in a Sharper Image store, I got excited about a few things but then thought “Would I really use it? Where would I put it?” and decided against a purchase. (I’ve got some $100 neck massager thing that I’ll send to anybody who will cover the postage.) I don’t think I’m alone.
At least Sharper Image’s bricks-and-mortar strategy gave them a reason to expand the customer base from their catalog and online origins. However, the store became a victim of an unfocused merchandise strategy, questionable product quality and performance, and plenty of competition–not just Brookstone, but all the other retailers who jump onto “hot items” like the scooter and turn them into commodities.
So there’s not much brand equity left in the Sharper Image name. (If anything, it’s been tarnished by the performance of the past several years.) I don’t see a licensing strategy as a way to pull much value out of the brand at this stage.
Does The Sharper Image brand have clout anymore? The last few times I was in SI, most of their branded stuff looked cheap and poorly constructed. They should give up. Brookstone found out long ago that you need a large product mix to win this game. 14 different versions of the same ionic purifier doesn’t mean you have a big selection. Oh yeah, note to Thalmier: hire people who actually like working with customers!
It’s a brand that has lost. It had an outmoded way of getting these types of products to market. It’s too far behind in adjusting. It’s done.
We can all fondly remember the scene from “When Harry Met Sally” where Billy Crystal sang “Surrey with the Fringe on Top” from Oklahoma. It was already behind the times then and is way behind now. Just like leisure suits from the ’70s and Mullets from the ’80s, Sharper Image is and will be a memory from a bygone era. It really wasn’t all that cool then and isn’t now either. Quite frankly, I can’t believe it’s around at all anymore, in any shape or form–bricks and mortar, web, or licensing.
The move will be only as successful as the public’s current and future perception of Sharper’s “image.” The brand is not nearly as credible as it once was for any number of reasons.
The Sharper Image brand name has strong consumer acceptance both in the U.S. and Internationally. Licensing the brand has the potential to be a big success done correctly and quickly, before consumer awareness fades with the closing of all retail store fronts. Positioning the brand as a shop in shop concept with struggling mid-tier Department stores could be a win-win situation.
Sharper Image has lost most of its brand distinctiveness and consumer appeal. I don’t believe this retailer was or will ever become a leading brand in any category–it is too far outmatched by other brands, especially in electronics and housewares.
Licensing is often a mixed bag. They’ll need to sign up some very strong and committed licensees to be sustainable, and I don’t see that happening. Without real brand management and strong marketing support, the business is destined to be a modest success, at best.
The answer to the main question is, quite simply,”yes.” SI’s niche, after all, was overpriced novelty items, and while there might still be a few time-starved and money-sated groups who appreciate such things, the rest of us will head online (or to Tarjhay)and pick up the same thing at some fraction of the price.
(Note to Warren: the Post actually breaks a number of meaningful [business] stories…but why are the RW Editors reading it in the first place ???)
As a consumer, there was nothing Sharper Image offered that I couldn’t find for a better price via an online store.
While the brick-and-mortar concept has run its course, I do believe the brand name has value that can be leveraged for new innovative products. To many consumers, the new pocket fishing tool from Ronco will be more appealing with the Sharper Image brand on it.
Doron Levy made an apt comparison: Brookstone and Sharper Image were similar, yet Brookstone thrived and Sharper Image died. So many retail categories are like that: stores in similar businesses, yet some do well and some fade away. The only difference: leadership. Executives who know what they’re doing…who can implement a decent strategy.