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Winter 2002 Where Are They Now?

Entrepreneurial Spirit

Like Edison, these entrepreneurs didn’t give up. Instead, they worked to find new strategies that led to their success. For some, this meant changing product lines entirely; for others, finding new ways to merchandise and present a product that was already accepted in the marketplace. But in every case, these entrepreneurs prevailed despite myriad challenges.

During the past five years, Specialty Retail Report has profiled dozens of innovative retail entrepreneurs. These creative retailers run the gamut of concepts, products, marketing strategies, and—possibly most interesting of all—personal stories and styles. But where are they now, and how are they doing?

For this, our first issue of 2002, we checked back with Jim Simpson, Wondermugs; Aviva Jamensky, Tickers; Andy Glanzman, Northern Lights Candles; Frank Blumer and Ron Yoder, American Home Products; and Karen Sotomura, Joseph K. & Company. We wanted an update on how their companies changed and where they’re headed. Despite their individual qualities and the diversity of their concepts, a common thread runs through their stories: how to succeed in the dynamic business of specialty retail.

The Color of Money

Jim Simpson can relate to Edison’s quip. After a year or so perfecting his Wondermugs, he discovered at least one way not to retail them.

Wondermugs is Simpson’s exclusive line of mugs whose color and design change as if by magic “right before your very eyes” when hot liquid is poured into them. imageSimpson had every reason to be hopeful in the early ’90s: he tallied his first $50,000 in wholesale orders. After all, he had spent the better part of a year working toward those orders. He invested countless hours and more than $1,000 perfecting a prototype mug, painstakingly adjusting colors and ink levels to achieve just the right contrast between “before” and “after” images. And it took months and more than $10,000 to create full-color promotional materials that adequately showed the mugs’ graphic cold-to-hot transition. Finally, after countless glitches, Simpson had his mugs, his promotional info, and those first wholesale orders—from several national retail chains, no less. He figured Wondermugs would soon be everywhere. He was wrong.

To his dismay, most of those retailers simply placed the mugs on their shelves as they do with thousands of other products, and that was that. No promotion, no demonstration, nothing. Customers simply didn’t notice the mugs, let alone their “presto-change-o” feature, despite Simpson’s glossy promo materials. When SRR caught up with him early in 1998, Simpson was binding his retail wounds and shifting his strategy. “Wondermugs has just scratched the surface of the potential market,” Simpson lamented. “If I can reach [it], I can make a lot of money.” He had to find another way.

Having concluded that face-to-face demonstration was crucial to his product’s success, he abandoned selling to the large chains and shifted his focus to specialty retail. Not because specialty retailers were smaller or trendier, but because their one-on-one customer interactivity meant they could “show and sell” the product—precisely what Wondermugs needed.

The strategy shift paid off. In the last few years the increase in name recognition has been the real boost: “As Wondermugs have become better known,” he says, “we’ve built a growing base of customers who seek us out. And when they find us, [they] don’t need a demonstration. They just want to see the ‘before’ and ‘after’ designs, and [then] pick out the one they like,” he says. “We now have more than 60 mug designs and a network of more than 30 distributors or ‘dealers’ who sell Wondermugs from carts and kiosks in malls, or who set up at fairs and festivals throughout the year across the country.” In fact, Simpson spoke with us by phone from a hot-air balloon festival in New Mexico, where he was retailing Wondermugs for an eight-day run. And he mentions a dealer in Rochester, NY, “who sells 40,000 mugs a year from fairs and festivals year-round, and three mall locations during Christmas time.”

Hoping to capitalize on this growing brand awareness, Simpson decided to take another shot at wholesaling, but to a different market and with a different approach. “This time we’ve opted to wholesale only to a select group of upscale [gift] stores. I’ve designed a new in-store retail display rack that holds 72 mugs in dozens of styles. [It] comes with a color book that has pictures of all the mugs—’before’ and ‘after’—laminated in plastic so customers can leaf through to see how each mug changes,” he says. “Nothing substitutes for demonstration,” he acknowledges, “but as we get more well-known, it becomes easier to [sell] when demonstration isn’t an option, which is why I created the retail display rack.”

Despite the foray back into wholesaling, Simpson says “we’re always going to sell Wondermugs through distributors at fairs and festivals and malls.” To help his distributors, Simpson developed a new, comprehensive training program, complete with a manual and videotape. “When Specialty Retail Report wrote about Wondermugs a few years ago, I was really struggling to build the business, in part because I didn’t understand that distributors needed a lot of assistance selling our product. In the last few years I’ve worked very hard to develop a program that gives them the assistance they need.”

For example, once a week or so, Simpson e-mails an “informal” newsletter to all of them, sharing company news and marketing and sales tips. “If [a] distributor used a certain technique to increase sales, or if a particular product is selling well at a certain time, I put that in the newsletter,” he says. “When I did a two-day show near home [in Pennsylvania] in early October and sold $700 worth of our ‘God Bless America’ mugs before 3 p.m. the first day, I sent an e-mail… letting them know that.”

He also let them know that the “Big Apple” design featuring the World Trade Center’s twin towers “had become a collector’s item” on September 12th. “I told my distributors that we were turning that mug into a fund-raising opportunity, and if they wanted to participate, customers [would] pay $20 for the mug [instead of the $11.99 average price], and all of the profits would go to the 911 Fund that benefits the New York firefighters and their families.” He hoped the fund-raiser, which raised about $5,000 at that point, would quickly reach $50,000.

Like most entrepreneurs, Simpson is hands-on. When he’s not retailing Wondermugs, he’s on the phone with distributors or supervising an overhaul of the company website, where customers will still be able to buy online. Simpson estimates the site generates $10,000 to $20,000 a year in retail sales since it was launched in 1993. “Our online sales are now really going to ramp up, thanks to the exposure we’ve gained over the last few years and the name recognition I’m seeing now.” And with the revamped website, “customers will [also] be able to find out where Wondermugs are sold anywhere in the US,” including fairs and festivals.

Today, Wondermugs “is profitable, and has been since 1999, when our sales first topped $500,000,” Simpson says with understandable glee. Thanks to a clever product, smart shifts in strategy, the distributor network, hands-on management, and a retooled website, Wondermugs is vibrant and growing. “Today, I’m not struggling nearly as much as I was a few years back,” Simpson says. “Today, Wondermugs is doing great.”

Jim Simpson, President
Company: Wondermugs
Location: Point Marion, PA
Founded: 1993
Product: Color-changing mugs
Sales (est.) 2001: $700,000 to $1 million (wholesale)
Phone: 703.765.8001
Website: WonderMugs.com

Time on Her Side

“I’m glad I didn’t know what it was going to take to succeed in retail when I first started,” Aviva Jamensky says with a laugh, “because I probably wouldn’t have done it.” Today, she’s glad she did. Her company is Tickers, a manufacturer, wholesaler and retailer of watches that started not on a cart, not even in a shopping center, but in a parking lot.

imageJust a few years ago, Jamensky might have been labeled “unemployed waitress” rather than “visionary entrepreneur” but for her small, almost accidental foray into retail in 1995. She agreed to help her boyfriend, Roger Smith, sell 300 overstocked watches for his employer, a Canadian supermarket chain. Attracting the attention of passers-by in the supermarket’s parking lot, Jamensky sold all 300 watches at $10 each in just a few hours. Why had the watches sold so quickly when they had been gathering dust on the store’s shelves, she wondered. She came up with two answers: “First, you have a much better chance of selling something if you have a salesperson standing right there with the product, rather than on a shelf where customers have to notice it on their own,” she says. “Second, there’s a better chance of selling something if you have one product at one price point.” And while she didn’t realize it then, that one successful morning launched her career as an entrepreneur.

Less than a year later, she opened her first Tickers cart in the Richmond (BC) Center. With every watch at $10, sales were strong from the start: in Tickers’ first week, cart customers stood in line, and Jamensky rang up $20,000 in sales. In 1998, she opened another cart, this time in Vancouver’s Pacific Center. Today, the Richmond Center cart is going strong, with sales for 2001 estimated to reach $225,000. The Pacific Center cart’s 2001 sales are estimated to reach $500,000. And from the beginning, Tickers has averaged a 30 percent or more gain in sales each year, which Jamensky sees as testament to the quality of her product: “You can sell a lot of $10 watches, but if you want repeat customers, you need to sell quality watches.” She sells some watches she loses money on, but she does so “to give my customers wide variety and great value.”

Originally, Jamensky bought the watches wholesale from a manufacturer in China. She soon became their biggest customer and since 2000 has been its only customer. “They only make watches for us now,” she says with a laugh as she recalls a recent trip to the manufacturing facility. “Every sign, every word in the place was Chinese except for the words ‘Tickers’ and ‘Aviva.’”

Whether on a distant continent or on home turf, Jamensky is far removed from the parking lot where she once hawked overstocks. In addition to overseeing the company’s headquarters and warehouse in Vancouver, checking on the China facility and running two company-owned retail locations in Canada, she and Smith now supervise approximately 150 owner-operators in the US and Canada. In both countries, the watches sell for $10 in either currency (although, because of the recent weakness in the Canadian dollar, Jamensky says the 50 or so US-based owner-operators “are getting better margins right now” than their Canadian counterparts). To serve and supply the US retailers more efficiently, Tickers recently opened a second warehouse, this one in Blaine, WA.

The company also recently launched a private-label collection of timepieces called the “Aviva Collection,” a series of some 200 constantly changing styles in two-tone brushed gold and silver metal finishes and with shiny dials. Jamensky says these watches appeal to women of all ages. “They’re very stylish watches, basically our best sellers,” she says.

“With so many people now selling our products, every day I walk around and see our watches everywhere,” Jamensky says. “It’s kind of hard to wrap your head around” how much the company has grown since Day One in the supermarket parking lot, she says, as she looks to the future. “I would love to have 500 carts within a few years,” the vast majority of them run by owner-operators. She has considered opening a company-owned in-line store, and hasn’t ruled it out. Nonetheless, she believes that the visibility of carts and kiosks can’t be beat. “If you have a store, people have to commit to walking into your store, whereas if you have a cart or kiosk, people are ‘in’ your store as soon as they walk into the mall. If you have good signage and good visuals, everyone in the mall is a customer when you’re on a cart or kiosk,” she says. “They’re just drawn to it.”

Apparently so. Since SRR first spoke with Jamensky, the company has sold more than three million watches and today, Tickers is a $15 million, multi-national company with time on its side.

Aviva Jamensky, President
Company: Tickers, Inc.
Location: Vancouver, BC
Founded: 1996
Product: Watches
Sales (est.) 2001: $15 million
Phone: 604.669.2604
Website: TickersWatches.com

Getting Personal

When Karen Sotomura started her company 20 years ago, she readily admits she chose the name deliberately to make her company seem bigger. In reality, she wasn’t “big” at all: Sotomura was a company of one when she designed her first line of Christmas ornaments. But she didn’t want owners of the island resort shops and gift stores she visited to know she not only designed and manufactured her Poi People ornaments (based on poi, the Hawaiian staple food made from the taro root), but all the packing, shipping and invoicing, as well. Her bluff worked: three months after she started, she had lined up 95 wholesale accounts.

imageWhen SRR profiled Joseph K. & Company in 1998, those 95 accounts had grown to more than 4,000. And with 13 full-time and 30 seasonal employees, Sotomura no longer worried about looking small. On the contrary: her biggest challenge at the time was managing the tremendous growth of the company’s new retail division, Santa’s Pen—Christmas ornaments that are personalized with a special pen right at the point of purchase. Santa’s Pen had become the fastest-growing division of the company—more than 100 cart-and kiosk-based owner-operator locations across the country in only three years. And Sotomura was fielding calls daily from entrepreneurs who wanted to get in on the action. She still gets calls from retailers who want to join the company’s 150+ owner-operators. And the Santa’s Pen line has grown, too. It now includes 18 different Christmas ornament themes in hundreds of designs.

But the big news at Joseph K. is the company’s latest retail concept, Initials by Joseph K. Initials not only builds on the company’s success with personalization, but also gives specialty retailers the opportunity to ring up sales year-round. That’s because unlike Santa’s Pen, Initials isn’t based on Christmas merchandise. Instead, the concept features a wide range of home-décor items such as picture frames, desk accessories and clocks, plus children’s items, all of which are easily personalized with peel-and-stick lettering and graphics. No calligraphy skills are needed for the retailer to spell out a child’s name on a growth chart, for example; no artistic talent needed to decorate items with a choice of designs that include sailboats, trains, butterflies, flowers and more. Customers simply choose the elements they want, and the retailer applies the personal touch then and there.

“At the International Council of Shopping Centers conference in February [2001], we had an overwhelming response to the new Initials line from [mall] developers,” Sotomura says. “We were basically given carte blanche by every major developer. They want the Initials program in every one of their malls. One developer told us the Initials by Joseph K. line was the ‘Neiman Marcus quality’ they wanted in their malls.”

Sotomura carefully chose 30 specialty retailers to launch the line for Christmas 2001. She has high expectations but doesn’t give specific numbers. “I don’t feel comfortable revealing any of our sales figures, since we’ve become quite a target in the industry because we’re the leader in personalization,” she says. “But I can say our bank is happy and I sleep at night!”

The key to her company’s success, she says, is the inherent value of personalized merchandise. “Personalization is a service that adds uniqueness to any business. It adds value to the products you’re selling, and it brings people back,” she says. “Smaller retailers can’t compete on price with the larger mass merchandisers, but smaller stores can compete by offering great service, including personalization services.” To underscore the fact, her Santa’s Pen owner-operators are clamoring to open Initials carts or kiosks. “They can have an Initials cart year-round and a Santa’s Pen next to it during the holidays, to capture personalization within the mall,” she says.

Growth at Joseph K. & Company is on a steady rise. “Our annual growth is still up in the 30 to 33 percent range, where it has been since the very first year, and our carts are always one of the top three to five carts in the mall, according to the owner-operator survey we do at the end of every year.”

And because Initials retailers operate year-round, it’s logical for Sotomura to expect that division to become a major source of revenue for Joseph K. & Company. “Anything you’re selling over a 12-month period of time will outsell something you’re only selling for two months,” she says. “Santa’s Pen is a wonderful program with excellent growth, but Initials will probably exceed Santa’s Pen in a short period of time in terms of annual sales.”

Today, Sotomura says, “Santa’s Pen is still the fastest-growing division, but I expect Initials by Joseph K. to really take off.”

Karen Sotomura, President
Company: Joseph K. & Company Honolulu, HI
Founded: 1985
Divisions: Santa’s Pen; Initials
Product: Personalized merchandise
Locations: 150+ owner-operator locations
Phone: 800.459.9627
Website: JosephKCompany.com

The Way the Ball Bounces

When Frank Blumer and Ron Yoder started in specialty retail in the late ’70s, carts and kiosks didn’t exist. Malls had only two types of retailers—in-line stores and anchors—and vast hallways that generated no revenue. At the time, mall managers were so accustomed to viewing the hallways as “non-retail space” that when Blumer and Yoder pitched their new retail concept—demonstrating a toy airplane’s swoops and glides in a roped-off hallway area in the middle of shopper foot-traffic—the partners were met with blank stares. “It was very difficult to convince the first few leasing managers that we could not only sell a lot of products in their hallways, but we could also create a really fun, exciting environment for their shoppers,” recalls Blumer. “Back then, the benefits of adding entertaining products to the common areas weren’t obvious.”

imageBut the benefits became evident soon enough, once Blumer and Yoder had the sales numbers to back up their pitch to mall management. “In the first or second season we had a couple of locations that grossed over $100,000 in six weeks during the holidays,” Blumer says. “This made the mall managers pay attention. But it was still difficult to get into most locations. Still, we persevered and eventually grew to dozens of locations across the country.”

Over the years Blumer and Yoder sold “millions of dollars worth” of toy planes, and in doing so proved to many that “common-area retailers” like them could offer shoppers unique products and generate significant revenues for malls and entrepreneurs both. They were on the front lines as malls across the country started or expanded their cart/kiosk programs. In many ways, the two helped create the specialty retail marketplace—the continued success of which created an interesting challenge for their company in the mid-1990s.

“Once the bottom-line numbers [of specialty retail programs] started showing up on the financial reports of the large developers, the people in charge of specialty leasing started to focus on getting the most rent from every square foot of retail space they could,” Blumer says. “Even though our sales were still strong and we were still drawing crowds, we became the specialty retailer who was taking up too much space. We were sending in one rent check while mall managers could fit three carts in the space we occupied.”

Unsure of their company’s future, Blumer says “we did know a few things for sure.” They knew they wanted to stay in specialty retail. “And we wanted to continue selling a demonstration product. We had seen first-hand that demonstration products in the specialty retail market can sell in huge volumes, if they’re constantly demonstrated in the correct way.”

Enter the Bungee Ball, a palm-sized toy ball with a bungee string attached, something like a yo-yo, for one-handed throw-and-catch. The ball takes far less space to demonstrate than the toy plane did, and its $7.99 price tag made it a great impulse item. What’s more, because it’s compact, it’s easily merchandised on any cart or kiosk. When SRR profiled American Home Products in 1999, the Bungee Ball had already generated sales of about $8 million in just two years.

Today, Bungee Balls are sold at more than 150 independent owner-operator carts and kiosks plus several company-owned locations across the US during the holiday season. The company also wholesales its toy to retailers and distributors in Puerto Rico, Brazil, Venezuela, Mexico, South Africa, Canada, Japan, Australia, New Zealand, Sweden, Denmark and England. “We just finished shipping a half-million Bungee Balls to Japan,” says Blumer, who estimates sales for 2001 will have reached $15 million. The Bungee Ball website has generated “minimal” consumer sales, but Blumer says the site’s main purpose is to serve the company’s retailers, who can place orders online. “Retailers are the key to our business, and we want to make them as successful as possible,” he says. “Ultimately, the product you sell isn’t nearly as important as the people presenting the product and the way they present it that makes the difference between ‘big money’ and mere survival.” For more than two decades, American Home Products has focused on “ways to sell impulse products profitably,” Blumer adds. “We work hard to show retailers how to sell successfully, then we watch over them to make sure they win. When they win, we win.”

Frank Blumer, CEO and Ron Yoder, President
Company: American Home Products
Founded: 1979
Product: Bungee Ball
Sales (est.) 2001: $15 million
Phone: 213.483.0424
Website: BungeeBall.com

This Little Light of Mine

Andy and Christina Glanzman were reeling from the pace of their company’s growth more than five years ago when SRR first spoke to them in 1997. With wholesale accounts in more than 25 countries and more than two dozen specialty retail locations (a mix of company-owned and owner-operator), gross sales for Northern Lights Candles had topped $10 million in 1996. And the company was still expanding at an amazing rate.

image“I feel like we’re building a new building every year,” Andy Glanzman said back then, speaking from the company’s then-new office and warehouse complex in Wellsville, NY. But he asserted that the efforts required to grow were well worth it. “We’ve kept our competitive edge by being a ‘what’s-new’ company.” Today, he says Northern Lights Candles is still a “what’s-new” company. “I’m obviously a little bit biased. But when I look around, I don’t see anybody being as innovative as we are, even when I travel around the world. I just don’t see the innovation out there that comes from Northern Lights.”

He’s pleased with the company’s latest product lines. Avôra Home Fragranced Candles are a line of home-décor candles in 12 fragrances like Mango Medley and Harvest Apple. Zen Scents are another new line of candles, beautifully presented in Asian-style bowls with Eastern fragrances that elicit the benefits of aromatherapy, such as Lotus for harmony, Tea for health, and Bamboo for good fortune. And thanks to a re-design of the company’s popular AromaZone aromatherapy candles (new “vessels” and four new essential oils), Glanzman says “we’ve seen accelerated sales for that line. AromaZone is probably the best-known aromatherapy line out there now. We were one of the first and continue to be one of the best, with the greatest market share.”

Moving toward the more artistic side, their Wee Wizards line of “hand-sculpted keepsakes” now includes Wee Hippies—colorful, funky wizards sitting on top of a yellow VW-type bus; and an array of Christmas wizards. Their newest line is The Land of Azalon, a line extension from their handmade fantasy candles. Glanzman says these candles are targeted to tweens and young adults and “should do very well this Christmas.”

Glazman wouldn’t say what he expects in terms of sales for Christmas 2001, except that “Northern Lights is twice the company it was when Specialty Retail Report profiled us [nearly] five years ago.” The company now has approximately 50 seasonal specialty retail locations across the US, nearly half of them run by independent owner-operators. “We’re definitely looking for more owner-operators,” Glanzman says. “We’ve found that [they] sometimes have a better chance of success than we do because they can be right there at the cart or kiosk, managing the location with a vested interest.”

The company also wants to expand its newest retail division, Northern Lights at Home, a “presentation division” that focuses on consumer sales through home parties, à la Tupperware. And it’s growing incredibly fast. “It’s another outlet, another venue for us,” Glanzman says, “one that’s been growing at about 40 percent a year since we started the division three years ago.”

Last August, Northern Lights re-launched its website and added a section for owner-operators to place orders. Consumers can buy online, too, and although Glazman doesn’t share those sales figures, he does say he’s “very pleased” with results, as well he might: “Our online orders average three times that of the average order at one of our retail kiosks.” But, he quickly adds, he doesn’t expect millions of dollars in orders to start pouring in overnight. “We don’t look at the website [as] something that’s going to have immediate pay-back in terms of orders received. We view it as an information site where people can read the history of the company, browse our catalog, and find out where our candles are sold,” he says. “[It's] more of a public relations or marketing expense than a sales generator.”

To keep pace with the company’s growth, Northern Lights’ manufacturing and warehouse facilities have also grown—the warehouse is now two-thirds the size of a football field. New manufacturing equipment, including a tank that holds 8,000 gallons of melted wax, has helped the company increase capacity and efficiency. “We used to buy wax in 50-pound boxes, but now we bring in 40,000 to 50,000 gallons of wax at a time in tanker trucks,” he says. “We store the wax in… a ‘tank farm’ and from there, we add colors and blend the wax the way we want to.”

More than 250 employees help get the job done these days, shipping the company’s products to buyers in more than 30 countries. “Over the years I’ve had to give up trying to do everything,” Glanzman says. “Today my role at Northern Lights is as someone who helps pave the way, who helps guide people and projects, instead of doing the hands-on work—which is fine with me,” he says. “Once I’ve done something a few times and master it, I want to move on to the next new thing. Today, I feel like a conductor, and the orchestra is playing very well.”

Andy Glanzman, President
Company: Northern Lights Candles
Location: Wellsville, NY
Founded: 1978
Product: Candles
Phone: 716.593.1200
Website: NorthernLightsCandles.com


Nancy Tanker

Nancy Tanker is the former managing editor of Specialty Retail Report. She has covered the specialty retail industry for nearly 15 years for a variety of publications and can be reached at srrtanker@mchsi.com.

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