The Sharper Image Dulls Its Edge

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Once a darling of the catalog market, The Sharper Image Inc. reports a steady decline in sales for 2006.

Most recently, company sales for July 2006 were $34.8 million, down 17 percent from $42 million in July 2005. The San Francisco-based electronics retailer, which has seen sales struggle for more than a year, attributes the drop to factors including falling sales of its bread-and-butter products.

"We are seeing weaker revenues from our Ionic Breeze line of air purifiers and from massage chairs, which are normally big sellers for us," said Tersh Barber, spokesperson for Sharper Image.

To curb falling sales, Sharper Image's plan includes discontinuing iPod sales, which Mr. Barber said have been a low-margin product during peak times of the year. Instead, Sharper Image eyes iPod-related accessories, which he called a promising category.

Glenda Shasho Jones, president of the Shasho Jones Direct Inc. agency, thinks that the electronics retailer is not cutting it like it did in the past.

"Sharper Image's brand was built on an image of cutting-edge, unique and hard-to-find product, and they have just not been doing a great job with the 'wow' factor in merchandise," Ms. Jones said.

"For example, noise cancellation headphones, zoom binoculars or a massage chair -- all featured on the current Sharper Image landing page -- are hardly items to get excited about," she said. "Other retailers and countless Internet sources are beating them out."

Sharper Image knows this. The firm is re-merchandising its business and adding a flow of new products. The retailer is adding more products to the catalog monthly, starting with 45 new items in the Father's Day book. The company aims to add up to 200 new products by the holidays.

One new product is the lotus sanitizing system, a device that turns tap water into a sanitizer that kills germs on surfaces and neutralizes pesticides on fruits and vegetables. Then there is the FresherLonger Miracle Food Storage containers, which claim to keep food fresher up to four times longer than conventional containers.

Products are a key factor, but so is the focus on channel. The numbers are not dropping by the same degree across every avenue of sales. Total store sales were $21.8 million, down 21 percent from $27.6 million in the prior July. Internet sales were $4.5 million versus last July's $5.5 million, down 17 percent.

While store and Internet sales took a big hit, total catalog sales/direct marketing sales, including wholesale, were $8.5 million, down only 4 percent from last July's $8.9 million.

This is a factor to consider when segmenting its audience.

"The catalog buyer is probably the best customer because their profile is more upscale, price is less an issue and there is less competition in the mail," Ms. Jones said. "Retail shoppers are bombarded with Best Buys, PC Richards. The same thing holds true of an Internet shopper, who can scour the Web for like products at a lower price."

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