A Cut Above

Eight years ago, Terri Alpert reacted to a serious “holy crap!” moment. It was a reaction that set her company, then known as Professional Cutlery Direct, on a far steadier course than it might have wound up.

Alpert uttered the exclamation when she realized that, over a period of time, the high-end kitchenware catalog business she launched in 1993 with less than $10,000, which prided itself on exacting product detail and attentive customer service, was now being more or less duplicated by practically every large retailer from New Haven to Nevada.

“Things were looking good at that point, too,” says Alpert, founder/CEO of what are now two jointly operated companies, Uno Alla Volta and Cooking Enthusiast. “We could have easily rested on
our laurels.”

In just a few years of existence, by the late ’90s, Professional Cutlery Direct had made the Inc. 500 list three straight years. “We had our strongest financials ever and had been profitable every year since our inception,” Alpert reflects. But she realized that things had to change fairly quickly.

So she set forth to de-emphasize Professional Cutlery Direct (renaming it Cooking Enthusiast and retaining the Professional Cutlery Direct LLC name for the parent firm) while introducing a new brand and company with scores of proprietary products that carry higher margins. Enter Uno Alla Volta (Italian for “One at a time”).

Wider Variety
Today, the $20.5 million company’s two brands — Uno Alla Volta and Cooking Enthusiast — offer a variety of accessories, home accents and collectibles, all handcrafted by artisans.

Faced with all the same hardships other catalog/multichannel marketers are dealing with — expensive postage and paper costs, pressure from environmental groups, and so on — Alpert’s considering launching new brands, an acquisition or two, revamping the company’s Web sites, expanding the product lines, and potential spin-offs.

A high-energy CEO, Alpert remains a true entrepreneur who’s always looking three steps ahead. Her co-captain and brother-in-law Jay Alpert, Terri’s partner and the company’s president, helps navigate the changing current.

“Back in 2000 or 2001, when I was bemoaning that we had created all this infrastructure for a flawed business model — a business built on selling other people’s brands,” Terri Alpert explains. “Jay made the two of us take a closer look at our core competencies. He showed me that our infrastructure and our catalog expertise, that didn’t exist back in 1993, could lead to a new business model if only we designed it from a blank sheet of paper.”

On working with her brother-in-law, “It’s been a good partnership,” Terri says. “We really go after each other’s ideas. He’s more grounded, more middle of the road.”

Proprietary Matchback SW
The in-law team uses this drive and determination to innovate. Take the company’s proprietary software that Terri Alpert, a former Wall Street IT manager, built from scratch. “I didn’t set out to create my own business with the idea of creating my own software,” she says. “But I had the ability and the vision. And what began as a temporary solution, a stop-gap really, kept evolving. It’s one of the reasons we’re still here.”

The software conducts instantaneous square-inch analysis. In just seconds, it shows how merchandise categories trend over time or how categories without price-point bands trend. It shows how new products perform vs. continuation items for any category, subcategory, vendor or price point.

What’s more, it helps keep merchants from getting blinded by square-inch performance. It highlights best-selling products in terms of absolute sales dollars and units. “This allows us to spend more time using information to make decisions and a lot less time gathering information,” Terri Alpert says. “Because our information is in real time and there’s no need to gather it, we’re using the latest facts.” A separate company she set up, PCD Technologies LLC, owns the Internet protocol for all of this proprietary software.

The key elements in the companies’ databases are what Alpert describes as “smart codes” — unique product codes for every marketing presentation of an item. The two catalogs may have any number of different product codes for a single SKU, so each way it’s presented can be evaluated separately. “These codes allow us to always know the offer [catalog, e-mail campaign, Web search] and the page where a customer saw the item,” she explains. “This way, even if they don’t give us a source code and they order on the Web, we know exactly what drove the sale, and it feeds all the way down to the square inch.”

Alpert observed that many catalogers saw their merchandise and circulation analytics “break” when customer purchasing behavior migrated to the Web. “That didn’t happen for us, because all of these codes feed our custom-built forecasting tools, rendering much more accurate matchback analysis than most catalog companies. It allows us a better understanding of the true catalog component of Web volume, with better allocation of unknowns to the right campaign.” Both bring in about 30 percent of incoming catalog orders.

On the front end, both the Uno Alla Volta and Cooking Enthusiast sites will be relaunched in September. Their new incarnations will feature a new Web engine with ample opportunities to capture cross-selling as well as search engine optimization. According to Terri Alpert, “Our old platform prevented us from doing any of the natural cross-selling and the traditional Web analytics.”

For the two brands, not concentrating on the Web earlier represented a missed opportunity. “We did have a Web site,” Alpert insists of the early days, “just not a great one. It’s a question of priorities: Too many top priorities and you simply fail at a lot of things.”

As for a potential brand launch and/or acquisition, which the company’s been quietly pursuing, Alpert won’t reveal specifics now, but says proprietary product and housefile synergies are a must. “I want to get the foundation strong,” she says. “I’m always worried about the crashing and burning.”

Doing the Homework
As Lee Helman, managing director of New York-based investment bank Financo, observes, “Starting a business from $10,000 takes a tremendous amount of determination, cleverness and resolve. Most businesses don’t make it to the $10 million level, not to mention beyond the $20 million-plus level to which Terri’s already taken her companies,” he says.

“She learned from Professional Cutlery Direct,” Helman adds. “Now with Uno Alla Volta, she’s smart from the first time. You can tell she’s done her homework. She’s very thorough.”

Though the promise of an acquisition might expand the companies’ product offerings and add sales, it could cut the other way by virtue of lost focus, Helman says. He believes that the brightest opportunity lies in product expansions within Uno Alla Volta and potential spin-off books. “That could really take them into the stratosphere.”

Veteran Talent
Another element of the organization’s evolution is the level of top talent it’s accrued. In June, Jean Giesmann, the former creative services executive at BlueSky Brands and 1-800-Flowers.com, was brought in as executive creative director. Her hiring follows the November 2007 hiring of catalog veteran Chris Topping, who was brought in as general manager following stints at Petals, J. Crew and Wine Enthusiast.

“I was drawn here by the strategic vision of Terri and Jay to build a business around a portfolio of unique brands,” Topping says. “They already had a solid operating platform with a high level of information availability and analytics. Also, I’ve never seen inventory turns at the levels Uno Alla Volta and Cooking Enthusiast achieve.”

Also part and parcel to the companies’ growth is dealing with more than 400 artisans, many of whom are small and remotely located. “My merchandising team and I look for unique, handcrafted products world-wide,” Alpert says. “Recently I was in Paris and found wonderful lamps. The lamps have actual elements of nature: flowers, seashells and plant life of all kinds encapsulated in massive crystal. These are used as the bases of lamps.”

Alpert asked the French manufacturer if it could produce these with U.S. versions of the electrical parts. “They assured me that they could and that they had experience doing so,” she recalls. “I needed to prepay for the samples, but when they arrived, they were a total disaster: electrical fixtures were not UL approved; the cord which had been a subtle clear was an ugly black; and the lampshade didn’t even fit on this alternative light bulb socket. After all this expense, I didn’t even have something I could legally sell in our outlet store.”

Topping notes that the company’s had to migrate away from certain vendors “because they couldn’t handle the handcrafted volume we were giving them.”

For Alpert and her companies, handling such matters with myriad artisan vendors is a far cry from how she launched the business. In the beginning, she and her husband Bruce were on a quest to find a good chef’s knife. “We would go looking on the weekends,” she recalls, “and when we were done, I knew more about knives than anyone.”

Alpert left her Wall Street job at Morgan Stanley on maternity leave and eventually founded Professional Cutlery Direct. “I knew about high-end financial products and derivatives and could build technology around that,” she says. “I wanted to see if I could create a real company from $10,000 or less. That was the goal originally. But basically, I wanted to learn things on the cheap. I’d put those learnings into whatever I’d end up doing next.”

As a business model, however, “I wanted to create my own business, but [initially] didn’t believe Professional Cutlery Direct would work,” she says. “I mean, how many knives did people need?”

Freelance writer Mark Del Franco has covered the catalog/multichannel business for the past decade. Reach him at mark.delfranco@yahoo.com.