And how stale merchandising can bring them down

By Mark Del Franco

The virtually simultaneous bankruptcies of The Sharper Image and Lillian Vernon shouldn’t have surprised anyone.

The rules of the game have changed. It started with merchandising. Once the merchandise in these catalogs went stale, both companies entered a dangerous spiral, losing demand per book while driving up marketing costs as a percent of sales. Once demand started to decline, the only lever left was price and reduced marketing costs, both of which lowered gross margins.