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Gift basket firms thinking outside the box to boost sales

Heavy networking and broadening their target market are approaches used by some Southern California companies. But gearing up for a hoped-for increase in demand can be tricky.

November 15, 2010|By Cyndia Zwahlen

After several rough years for the gift basket industry, the small companies that handle much of that business are hoping for even a small uptick in sales.

But just in case, many have been paring their payrolls and product lines. And business owners have been spending long days trying to stir up new customers.

Jean Fujita, owner of Bountiful Basket by Jean Inc. in Santa Monica, began a recent workday at a 6:45 a.m. chamber of commerce networking event. Then came more appointments, ending with another networking meeting in the evening.

"It is nonstop, but you never know where your biggest client is going to come from," she said.

Last year she got on an elevator holding a UCLA-themed basket she had created. The man standing next to her took notice and said, "Can I have your business card? I think I might have a big order for you."

His wife ended up ordering 50 themed baskets at $50 apiece for a corporate Christmas party.

Some business owners are widening their search beyond tried-and-true specialty areas. Julie Taylor, who started her Fountain Valley home-based gift basket business, A Sweet Adventure, in 1997, had largely focused on property management companies. Now, she targets doctors too.

"The medical industry is something I have marketed heavily toward since the economy has changed," Taylor said.

She recently got an order for 60 baskets, priced from $50 to $250 each, that a specialist is sending as thank-you gifts to doctors who have referred patients.

Some of her baskets this year will include dark-chocolate hearts in the shape of real human hearts and milk-chocolate ears displaying doctors' names or logos.

Local gift basket business owners said they expected an increase in sales this year in line with other retail sectors. The National Retail Federation has forecast that holiday sales, overall, will be up 2.3% from a year earlier.

Planning for an increase can be tricky, however. Overestimating sales can lead to product surpluses so costly that many gift basket business owners are loath to boost their supplies until orders are received.

"Nobody is willing to take that leap of faith, especially not a small business, because that can make or break you, ending up with $10,000 to $25,000 of product leftovers," Taylor said.

She and other gift basket designers are also facing higher prices for some basic supplies. Jon Kearley, whose family-owned JDW Distributors in Orange has supplied gift basket designers for more than 23 years, has seen a 35% hike in the wholesale price for wicker baskets. He expects chocolate prices to increase too.

The higher costs can kill a business on the edge.

"You'd be surprised how many people kind of disappeared. A lot have just closed their doors," Kearley said. Last year, he laid off three of his five employees for a time and temporarily suspended the paycheck of the business' founder — his father.

In another cutback, fewer companies are ordering over-the-top gifts such as baskets that include Cristal Champagne. Instead, baskets stocked with corporate-branded products, once thought of by some as tacky, are more common this year, said Debbie Quintana, who owns Gourmet Gifts in San Jose and is founder of the Gift Basket Assn.

"There's been a significant flip," she said. Now, she said, customers say, "We really want to brand our company heavily, we want other people to see that this gift is from us."

When an order does come in for a high-end basket with specialty items, it can be hard to fill. Some suppliers are having money troubles too, making it difficult for them to stock goods.

"I am having real issues with some of the smaller guys, which is who I like to use," said Terry August, co-owner of Los Angeles gift basket maker Fancifull Inc., which caters to the entertainment industry. "All of a sudden my olive guy, who I love, is having trouble. It's been weeks since he has had olives."

During the heady days when business was steady, August said she was too busy to seriously evaluate her business practices.

"You say, 'I'll think about that tomorrow,' " she said.

Then came the recession and its aftermath.

"Now tomorrow has come, and I have to totally change the way I am thinking. I don't want to, but I have to if I want to survive, and the people who are still here have realized that."

smallbiz@latimes.com

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