Profile of Success — What’s Good For the Goose …

BACKGROUND: A trained CPA Liz Plotnick-Snay will soon enter her 12th holiday season with the Delaware, Ohio-based Gooseberry Patch catalog, a company started in 1984 by her next-door neighbors JoAnn Martin and Vickie Hutchins. The two working moms — JoAnn was a teacher, Vickie a flight attendant — shared a love of collecting antiques, gardening and country decorating. As their children grew, so did Gooseberry Patch and they eventually moved the business to a building large enough to house their kitchen and home décor products, gourmet foods, cookbooks, calendars and organizers.

The Gooseberry Patch catalog is filled with hand-illustrations of its products. It also includes recipes and tips to set it apart from other catalogs. Known for its cookbooks, the company has published more than 100 titles and sold more than 7 million books, calendars and organizers, Plotnick-Snay says, which bring significant brand recognition and higher gross margins.

CURRENT CHALLENGE: Inventory management: Gooseberry Patch is a highly seasonal business. Balancing cash flow is always a challenge, Plotnick-Snay notes. But she says vendors increasingly are unwilling to take the risk of stocking inventory. So the cataloger is required to place non-cancelable orders 90-120 days before the summer catalog mails on July 1st. Although Gooseberry Patch may be able to get an initial read of 30 days, the company may not have an opportunity to reorder in time for Christmas.

As recently as two or three years ago, the cataloger would directly import what executives felt they wanted to carry the risk on and would use major importing vendors in the marketplace to balance the inventory. Plotnick-Snay says they were able to place initial purchase orders based on early projections and then react to customer demand throughout the season to both reorder and cancel product previously ordered.

HOW SHE DEALT WITH THE CHALLENGE: Plotnick-Snay says the company is using several solutions to solve the inventory problem. The first is seeking out vendors who’ll continue to work with the cataloger under the old ordering system. What’s more, Gooseberry Patch has developed better systems of projections and uses more creative “close-out” options. She also elected to print catalogs one drop at a time. Although this is more costly, Plotnick-Snay says it’s easier to drop or substitute a product later in the season.

BIGGEST MISTAKE AND RECOVERY: Gooseberry Patch ended up with too much space through no fault of its own. In 1999, the business was spread out into two buildings, plus an off-site storage facility. The creative staff had grown from five to 18. To consolidate operations and accommodate the growing staff, the company renovated a 51,000-sq.-ft. building. Gooseberry Patch moved into the new facility on June 30, 2001, and then Sept. 11 occurred just a few months later, and sales plunged. Over the past six years, however, Plotnick-Snay and other company officials initiated some changes that helped Gooseberry Patch grow, though not at the rate that the company initially planned for the space. The productivity savings have helped offset the additional costs of the space.

HER TAKE ON THE POSTAGE INCREASE: Part of these increases must be absorbed into the cost of doing business because from a branding point of view, Plotnick-Snay says, Gooseberry Patch doesn’t feel it can lighten the weight of paper any further than prior postage increases required. She’s examining who the company is mailing to and its contact strategy. The cataloger is currently doing revised zip models and has a new set of eyes looking at the past results of its buyer file segments. Rather than reduce its prospect mail quantity, she intends to refocus the company’s mailing strategy by using better models and a stronger merchandise focus to drive product category selects and list choices.

WHAT ABOUT THE BUSINESS APPEALS TO PLOTNICK-SNAY: She says it’s the people she works with and the work ethic that has been embraced and passed down from the co-founders to all the members of the team. Plotnick-Snay says she’s impressed by the involvement of the customers in the business. She also enjoys the challenge of the ever-changing needs of a small and growing business.

HOW THE WEB HAS AFFECTED THE BUSINESS: Plotnick-Snay says Gooseberry Patch was on-line back in the early 1990s. Once it put on-line ordering capabilities on the site 10 years ago, the volume began to grow. About two years ago, the cataloger realized that although its customer base was growing older, they were using the Web site for shopping, getting recipes, comparing prices and products, and sharing information with each other.

About Gooseberry Patch

Company founded: 1984
Headquarters: Delaware, Ohio
Primary merchandise: cookbooks, calendars, organizers, kitchenware, housewares, gourmet foods and food kits, quilts, candles and wreaths
# of SKUs: 900
Customer demographics: women ranging in age from 35 to 65 who enjoy spending time with family and friends; average age is 45; median income is $70,000
Sales channels: catalog 70 percent; wholesale distribution, 27 percent; licensing, 3 percent (approximately 51 percent of catalog sales are ordered online)
# of employees: 80 to 180, depending on the season.