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Retailers Use Secret Formulas in Stocking the Right Stuffers

November 30, 2000|ANDREW BLANKSTEIN |

As the retail equivalent of the Oklahoma land rush gets into full swing, shoppers nationwide will be staking their claim to the latest and greatest holiday gifts--from interactive canines and shower-mounted CD players to a $20,000 Hummer golf cart.

But before basking in the glory of your gift-giving acumen, recognize that someone else--someone like Bob Thompson--really had the idea first. A senior vice president for merchandising at San Francisco-based the Sharper Image, Thompson decides what's hot and what's not from a dizzying array of electronic products.

"Our job is to sell something unique," said Thompson, a 30-year retail veteran. "But you just don't throw a dart at the wall to get there."

In fact, it's even more fickle than that. Buyers for major chains and specialty retailers spend the better part of the year agonizing over what Americans will want under the tree. In other words, they have to predict not just what you will want this year but also what someone will think you want.

How they decide this gadget is cooler than that thingamajig is a mix of market research, constant sleuthing and gut-level intuition--all in a brutally competitive environment. Not surprisingly, few retailers are keen to divulge their secret formulas.

But at the Sharper Image, Thompson said company researchers try to identify the areas of technology they want to chase early on, whether it's robotics or miniature stereo components. Preparation typically involves scouring electronics trade publications, the Internet and other sources for new technologies.

The chain, which markets gifts through its catalogs and stores, develops 35% of its own products, with the balance made up by whatever wizardry Thompson and other researchers dig up. The race to stock shelves begins six months to a year out, Thompson said.

At many companies, however, gadget hunters also look at designs that could be incorporated into already successful product lines--adding features to make them faster, better packaged or just jazzier.

Although the most cutting-edge technology can be a major selling point, Jim Babb, spokesman for Circuit City, said less can also be more.

"Our buyers work with manufacturers to develop products that American consumers will want to use at a price American consumers are willing to pay," Babb said. "There are times when a product will have to come down in price to become a mass-appeal product."

Although he won't reveal specifics about how Circuit City targets products or what it takes to make it to store shelves, Babb said buyers concentrate on the epicenter of the electronics universe--Asia.

Buyers, he said, discover many of their products while touring factories and visiting trade shows in Japan, Hong Kong, South Korea and China.


This year, Circuit City stores are launching electronic books that will sell for between $300 and $700 each, Babb said. The chain is also pushing "everything digital," including television replay systems, DVD players, home theaters, digital cameras, MP3 players and digital projection television.

Babb said that many of those products start out miniaturized and with complicated functions. "We work with the manufacturers to see what's out there," Babb said. "But we shape them for the American market."

Babb said U.S. consumers are eager to have electronic products with multiple and new functions, but they also want them to be simple and easy to use.

Chatsworth-based Gadget Universe takes a slightly different approach, which Chief Executive Alexander Elnekaveh likens to his own special brand of "gadget Darwinism." At Gadget Universe, company product analysts review dozens of products each month, finding them through a process that company officials say is akin to an audition.

The judges for this ongoing review include merchandisers, marketers, new-product analysts and art and photography directors. Goods are ranked with an informal scoring system throughout the year. Company officials also get an idea of what will work from catalog and Internet sales.

Using that formula, Elnekaveh said, the company found its bestseller this year, the Robonagi interactive robot. Another successful find: atomic clocks and watches, accurate to 10-billionths of a second and calibrated to the U.S. atomic clock in Boulder, Colo.

Both products were found in Asia, where 60% of the company's products are developed.

Robert Waldrup, who heads the purchasing and mechanizing departments at Gadget Universe, said finding these gifts comes down to "keeping your eyes and ears open." Just recently, Waldrup said, he was thumbing through an electronic trade publication and found a digital camera that immediately prints an image like a Polaroid camera.

"I said to myself, 'I gotta have it, it's a fit,' " Waldrup said. "We work up to the minute, and when something breaks, we beat the competition to it."

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