Proprietary Products Make the Difference for Sharper Image

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SAN FRANCISCO -- Keynote speaker Richard Thalheimer, founder/CEO of The Sharper Image, told attendees at The Annual Catalog Conference here yesterday about his company's first loss and what he did to keep the business from becoming extinct.

"I determined that we would change our business model," he said. "Instead of selling other people's products, we would create our own products from scratch.

"The uniqueness of your product offering and your ability to differentiate yourself from others is really what makes your business successful," he said. "It's really hard ... to compete on price, and some people do. You can compete on service, and we do, but really having unique product ... is really what the whole story is about, at least at The Sharper Image."

In 1993, two engineers and Thalheimer created the company's first product. Ten years later, 75 percent to 80 percent of everything now sold is a product that can't be obtained anywhere other than The Sharper Image.

"Our challenge now is to continue to innovate every year," he said.

The numbers demonstrate the company's success, including:

· A rise in the customer database from 10 million in fiscal 1998 to 15 million in fiscal 2002.

· Internet sales of $62.1 million in 2002, up from $20.5 million in 1999.

· Total revenue of $520.9 million in 2002, up from $251.1 million in 1998.

"In 2003, we want to see another $100 million increase in sales to go above $600 million for the first time in our history," Thalheimer said. "We'll see record revenues as well, record net profits as well, if all goes according to plan and we don't have another national security threat.

"Our catalog will probably not grow 30 percent this year, but we'd settle for 15 percent growth in our catalog area. We are continuing to increase our circulation at 5 to 10 percent."

He also said the company is moving from a focus on male executives at the outset to selling products to both sexes. The demographic is now split 50/50 between men and women.


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