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Razor hones Sharper Image’s competitive edge

By Kimberly Pfaff

At a time when other retailers are posting lackluster sales, Sharper Image Corp. — purveyor of gadgets and those ultrahip Razor scooters — has seen phenomenal growth. The San Francisco-based firm’s August sales figures were enough to send competitors’ jaws dropping: an 80% increase in same-store sales, and total company sales of $30.9 million, up 90% over August 1999. And those stellar sales reflected every channel, with the firm’s Internet sales rising 162% and catalog sales up 87%.

While the company will not break out its scooter sales figures separately, there’s no question that the trendy Razor has been a major factor in Sharper Image’s resurgence. “The Razor has been one of the best products we’ve ever seen,” said Kathryn Grant, a spokeswoman for the retailer. “We were the first in the United States to carry it. We found it two years ago at a Hong Kong toy fair, and began marketing it soon after,” she explained. Razor is manufactured by the Hong Kong-based firm JD Components.

While the Razor is available through other retailers, Sharper Image’s strength — aside from jumping on the trend early — is that it sells a private-label version, with features such as multicolored wheels and handgrips, and offers exclusive models. Sharper Image, for example, is the only place you’ll find the Razor Xtreme, a sporty version with shock absorbers and a carrying strap, or the Razor Wheel.e, with its cool “wheelie” bar.

“Like any merchant, they’re riding the wave of a hot product,” said Ed Lubieniecki, vice president at Cap Gemini Ernst & Young. “Good marketers and merchants know how to identify a trend — it’s skill combined with a little bit of luck and magic.

“They couldn’t buy the publicity that they’ve been having with the Razor,” he added. “It’s a double hit — not only with revenue, but also in terms of getting people back into their stores in numbers they probably haven’t seen in a while. It’s given them a pop of good visibility, which will help in their downstream sales.”

But if Sharper Image’s resurgence is an example of a good retail eye and great timing, it’s also a tale of a brand successfully reinventing itself to keep up with the times.

Kristine M. Koerber, a senior analyst with W.R. Hambrecht & Co., said that while those eye-popping August numbers were clearly driven in part by Razor sales, Sharper Image’s core business continues to be very strong. “They’re firing on all cylinders now,” she noted. “They’ve come out with some innovative proprietary products that consumers are interested in. It’s a good merchandise mix.”

Once known for its high-end, high-tech gadgets, the firm has refocused to concentrate on more functional items for home and personal use, many of them exclusives. A full 60% of the firm’s revenue comes from proprietary and private-label products.

While Sharper Image will always carry some nifty electronic gadgets with a built-in “wow” factor — consider the $17,000 electronic car in the lobby of the firm’s new San Francisco flagship store, or the $799 Eye-Trek glasses that let the wearer enjoy a personal, big-screen, surround-sound experience with their own TV — the retailer’s new emphasis is clear.

Top sellers include the Ionic Breeze Quadra, a silent home air purifier for $329.95; the Turbo Groomer 2.0, a $59.95 facial grooming tool; and the Personal Cooling System, designed to be worn around the neck, for $49.95.

“What they’ve done is shift from being a high-tech, gadgety retailer to one that sells more functional, useful products — home-related and personal care products,” affirmed Koerber of W.R. Hambrecht & Co. “And their target customer has changed. It used to be 65% male, 35% female, now it’s 50/50.” That customer is also making $100,000 or more, and between the ages of 35 and 55.

Although the retailer — which plans to have 100 stores in operation by the end of the year — will not reveal any specific demographic shifts, Razor sales have clearly helped expand the firm’s customer base by bringing new consumers, such as mothers, into the stores. “Once they’re on our list of customers, we can market to them for Christmas and Hanukkah, etc.,” said Grant. “It definitely gives us another customer base for our proprietary products.”