Summer 2004 Leaders of the Pack

Bruce Singer and Jay Oxenhorn are opposites: Singer, the quintessential entrepreneurial spirit; Oxenhorn, the by-the-book numbers guy. Together, they make serious money. With hats and hot packs, Singer and Oxenhorn have made HotHeadz/Natures Way a $4-million company. They not only own the company, they “own” the product categories. And there’s no stopping them: they’re projecting $7 million for next year.

The formula is familiar to retail entrepreneurs everywhere: good idea, good product, hard work, drive, brain power, and a little luck. Toss them into the proverbial hat, and Presto!

That’s pretty much Singer’s story, too, which is where the HotHeadz story starts. But with a few details that are, well, a little different. For starters, Singer’s career as an entrepreneur began at age 8—with a traveling magic act.

Quick résumé: In 1979, Singer sold clothing in the flea-market industry and grossed as much as $30,000 a weekend. In 1982, he opened his first store selling men’s and women’s high-fashion apparel. In 1984, he moved into casual apparel, Sunshine Blues. This was his first franchise—and, by the way, he proposed the franchising idea to them. In 1986, he had seven of them without having paid a dime in franchise fees. Sunshine Blues had made him a buyer, as well, and that was one of his perks.

There’s more. In 1987, he opened his first kiosk, Wild Wear activewear, in the Franklin Mills Mall in Philadelphia. (“I saw a hot product and I wanted to get into it,” he says.) Through retail sales and distribution to other retailers, Singer sold 20,000 units the first year, 300,000 the next.

Meanwhile… Jay Oxenhorn was rapidly climbing the Accounting Dept. ladder at General Instrument Corporation, where he picked up many of the financial skills he’d use later. Then he took a detour: head of the Customer Service Dept., also something he’d be thankful for later. (“I learned a lot about how to keep the customer happy,” he says.) He didn’t realize it then but, like magic, his entrepreneurial wings were about to unfold.

In 1993, after 20 years with General Instrument, Oxenhorn was laid off. (“The best thing that ever happened to me,” he says.) Unsure of the direction to take, he bumped into his old friend Bruce Singer. “Hey, if you don’t know what you’re doing yet… , ” Bruce said. That’s when Oxenhorn started retailing Wild Wear on a cart in a mall in Cherry Hill, NJ.

Next to that Wild Wear cart, someone was selling Polartec hats. Turns out these hats could be worn six different ways—as ski masks, hoods, neck warmers, combinations of the three, beanies, and sacks to carry ski wear. “They were doing $3,000-$6,000 a day and we were, to say the least, jealous,” says Singer. So the next season, Singer and Oxenhorn moved into hats. Presto! HotHeadz. And phenomenal sales.

With three HotHeadz kiosks under their belts, they decided to take the product to market the next year. At the ICSC Specialty Retailing Conference, they met the guys from UV3, known for their line of sunglasses, and worked a deal. “They opened up 30 locations with us and put us on the map,” says Singer. “It was a gift from God.” But he wanted more. “We’re making money, lots of money, but it was only Christmas money. We needed a line that would make money year-round.”

Magic beans

imageThen along came a little “beanbag” that would change everything. The one that heats up and cools down, relaxes and soothes achy muscles, eases tired eyes: R&R in a fabric sack, and smells good, too. They located suppliers for the fabrics and herbs they’d need, and off they went. The trick was to go beyond the same old rectangular pack other retailers were carrying and turn it into a variety of shapes and sizes: basic pack, jumbo (twice the size), belted, eye pillow, neck ring, and foot warmer. Later they would add the knee-and-elbow pack, hand-and-wrist pack, and shoulder wrap.

There’s a wide array of patterns—dreamy clouds and celestial designs, whimsical puppies and smileys and much more. “Fabrics are my forte,” says Singer. Whatever the pattern, each pack is filled with flax seed, rice and dried herbs, and can go into the microwave or the freezer. Heat the pack to help alleviate pain from arthritis and cramps, to name a few; freeze it to treat heatstroke, burns and swelling. The packs themselves last 6-18 months, depending on how often they’re microwaved. Heating eventually causes the herbs to lose their effectiveness, which means customers come back to buy more packs.

“We opened a couple of our own locations [and] once again, we were an overnight success,” says Singer. The business continued to skyrocket and, today, Singer and Oxenhorn are the largest manufacturers and distributors of herbal packs in the US. “We maintain the hat business, but it’s strictly a Christmas item,” says Singer. But “the herbal pack business is amazing. We created that category. That’s my baby,” he says.

Now, just as he intended, success is not simply a holiday song. And because herbal packs aren’t flash-in-the-pan items, a retailer can carry them for an unlimited time. “It’s not a fashion thing,” says a San Diego retailer. “You can stay with the same product a number of years because your customer base is large, from age 13 to 100. Plus, you get both sexes,” she says.

Hooked on a feeling

Sell the feeling first, proclaims the brochure for retailers. Singer makes no bones about it: Demonstration is at the heart of their success. “We have a microwave at the cart, and when someone puts [the heated pack] on, they’re in heaven,” he says. “You want to have four or five hot at all times. It creates a feeding frenzy—attention draws attention.”

For retailers to fine-tune their demonstration skills, Singer hosts a seminar four times a year at company HQ in Philadelphia. There’s also training by phone for those who can’t get there.

Demo know-how is important not only for operators but for the sales staffers, too. Hiring likeable, outgoing salespeople is key “You need to interview, interview, interview until you get the right people,” says Singer. He also recommends placing them on a commission structure.

HotHeadz is opportunity, one that Singer and Oxenhorn are more than willing to share. “A lot of people come [to the US] looking to start a business,” says Singer. “We offer them a start-up kiosk, either with terms or a buy-back clause at the end of the season. There’s no risk… If you can come up with the rent, we can come up with the inventory.”

Markups are also attractive: “Between 300 to 600 percent, depending on the operator,” he says. “Our basic pack is retails for $12.” Other items such as the number-one selling shoulder pack retail higher, to as much as $35. “You can drive people into which product to buy” depending on what you’re demonstrating, says Oxenhorn. “We believe the [shoulder pack] is the best product, and we have the highest margin on it.”

And retailers can count on finding it in stock. “I always, always, always have product. I have 200,000 units year-round at any given time,” says Singer, “and at Christmas, I have double that.” The company can produce 20,000-30,000 units a day, and their storage facility holds 30,000 s/f of inventory.

Equally impressive is their distribution system: orders are filled as soon as they come in. “In the cart and kiosk industry, if you’re out of product for one day, it could make or break your season,” says Oxenhorn. “We would never allow that to happen.” This is especially important for newcomers who may not realize how quickly a weekend can empty their shelves and that they would need a reorder delivered in a jiffy.

And retailers have plenty of options to keep their stock interesting. For one thing, there are more than 100 prints just for herbal packs, some available in two or three colors.

And then there’s Singer, who scours the market for additional best-selling items like Cool Downz, which they added two years ago. Immerse what looks like a necktie in cold water, and it’s a cool eight hours of relief from heat. But what really excites the two co-owners and their company are the two items scheduled for rollout in September. It’s under wraps, though: you have to wait to see what they pull out of the proverbial hat this time. All Singer will say is that “those two items will absolutely revolutionize the heating-pack industry.”

TV power

Nothing like being on Oprah’s show to amp sales. In 2000, Oprah featured a HotHeadz/Natures Way foot warmer as one of her 10 best holiday gifts. As soon as it aired, “sales went through the roof,” says Singer. Then “Monica” sported a Natures Way shoulder pack on Friends, always a huge boost for a product. But that’s nothing compared to the profit potential of cable.

Six years ago, they went live with the herbal packs on QVC. Last year, Cool Downz had the spotlight—and 70,000 sold, and they project selling 250,000 units when Cool Downz airs again this year. Sales on Home Shopping Network have been equally strong. Last Christmas, Singer sold 85,000 units of HotHeadz product himself. In four hours and 20 minutes.

But wait, why shopping TV? Doesn’t that compete with cart sales? On the contrary, says Singer. “We feel it helps the kiosk business. Customers see it on TV and want to try it,” he says. Presto! There it is at their local mall.

TV is only one of the many marketing avenues they pursue. In fact, 25 percent of sales come from sources other than specialty retail. Herbal packs are marketed to chiropractors and massage therapists, for example; Cool Downz are sold in amusement parks and golf shops. “We’ve aggressively marketed our product outside of [carts and] kiosks,” says Singer.

Opposites attract

Where Singer takes center stage, Oxenhorn works behind the magic curtain. Integral to the operation, his practical, no-nonsense approach balances Singer’s style. “Jay is very focused and driven,” says Singer, whereas “I’m your ‘A’ personality, very hyped up, always looking for opportunity.” One keeps things moving at high speed; the other keeps the wheels on track. It’s the differences—”We’re so opposite”—that Oxenhorn attributes to their success.

“We didn’t realize [the herbal products] would take us to where we are today,” says Singer. And where they are is exactly where they want to be: leading the pack.