November’s A chat with Ashton Harrison, founder, president/CEO, Shades of Light

© Profile of Success, Catalog Success, November 2006

* Check back in January for an all-new Profile of Success in-depth interview with an industry expert.

Catalog Success: How did the company/catalog get started?
Ashton Harrison: We opened a retail store in 1986, launched the catalog in 1995, and started the Web site in 1999. Before that I worked for a furniture company. They had 40 stores when I left. I was with them from the time they had seven stores up to 40 stores.

CS: So you struck out on your own to start a retail store.
AH: Yes, that’s right.

CS: What led you to start a catalog?
AH: We had a lot of customers who came to our store from out of town. And they’d ask why we didn’t have a store in their communities. We thought that starting a catalog would prevent us from having to go everywhere.

CS: How did that first catalog mailing go?
AH: It was probably our least successful mailing, because we really didn’t know what we were doing. And at that point, that’s when I called my friend Philip Klaus — I was his ski instructor when I was younger, and I taught his kids to ski — so I knew him. I called him and said, “I know you have a catalog. Can you help me?” Philip had owned the company, Children’s Wear Digest, then he had sold it to The Right Start, then he bought it back. He’s an incredible success. Now his son runs the company.

CS: What was your biggest challenge in the first few years?
AH: Funding, for which we increased working capital line at bank and through the use of personal funds. Finding the right mailing lists, which we hired LENSER then Steve Lett to help us with. And just learning the business, which we did with Phillip Klaus’ help.

CS: How did he help you? What did he teach you about?
AH: He taught us about catalog layout, where to print, what kind of paper, how to get lists, what kinds of names to mail, how many to mail, what to do about prepress. He just taught us about the industry as a whole, what to do and what not to do.

CS: You said funding was a problem initially. Could you elaborate on that?
AH: When it was all said and done, the catalog cost us about $1 million to get started. So that kind of funding … people have to realize that you have to have a lot of bucks in your pocket before you can turn a profit with a catalog. And it’s probably closer to $3 million to start one now.

CS: How long did it take for you to turn a profit with the catalog?
AH: It took probably five years. Working with Philip helped with the profitability piece.

CS: What’s the biggest business mistake you made, and how did you deal with it?
AH: Hiring the wrong people and then not reacting quickly enough. I let them go but they had done a lot of damage to company sales and morale.

CS: Could you elaborate?
AH: Some people are just inherently negative. They gossip; they’re very passive-aggressive. I now know that when I spot one of those, I just have to get rid of them. But I left too many in the company for too long. I used to do that. They would ... well, I would call it creating a disease. Once they’re gone you realize how much better it is for everybody. In order to keep my company the cohesive team it is, I’ve learned to spot them a little more quickly and deal with it more quickly.

CS: Have you developed anything as part of the hiring process to combat that?
AH: We’re working on that. We try to listen for negatives in an interview. We listen for how many negative things are said in an interview, and they should be counted. They could be negative about a former company or boss or coworker. We ask a lot of questions on those three levels. We look to see if they say anything negative. That’s the only way I know so far to spot them early on.

CS: What is your current biggest business challenge and how do you plan to resolve it?
AH: Competition from new catalogs in our small niche market, such as Lamps Plus, Home Depot’s Paces Trading catalog. Since the market isn’t very large. Internet price competition has been a problem as well. We’ve matched Internet prices and are going towards mostly all exclusive product. Now Home Depot has started to pull some of those back, Pace’s Trading and 10 Crescent Lane aren’t being mailed on their own anymore, instead folded into the Home Depot catalog. That’s already helping us. Lamps Plus came out with a catalog. But Sincerely Yours has stopped mailing completely. It’s starting to get better, but for a while there, we had more competition than we ever had.

CS: What was your strategy to combat the Internet price competition?
AH: At first, we’d just wait until customers called and matched the price of the lowest priced competitor. Now we just match the price outright. So we lowest price match non-custom, identifiable items. It’s not that many items in our line, but if they are, we match.

CS: And you’re moving toward more exclusive products, so I imagine that’s less of an issue.
AH: Yes. We’re not at 100 percent exclusive, but for those few items that aren’t unique, we’ll match the lowest Internet price.

CS: That’s affected your margins, right?
AH: Right. We make the margin on the other products. We’re a price leader. Let the customer identify a couple of items as priced lower, then they think everything is that way. Then you’ve got their attention. It’s not how I prefer to do business, because we usually have a pretty high margin.

CS: What are some key points to your success?
AH: Exclusive products and product development. Knowledge of the business; I have 30 years experience in home furnishings. Ability to quickly react to market conditions and trends. And extraordinary customer service.

CS: What’s your product development process like?
AH: I sometimes talk to customers in our retail store because our offices are hooked onto that, so I can actually go in and work with customers. Sometimes we look at trends we see, either in shelter magazines or in markets. We’ll see, for instance, that people in our target market have beach homes, so we’ll make sure we have enough beach-themed lighting, ceiling lights, bath lights, etc. Here’s a hot fabric on the market. Do we have any lighting that matches it? We’ll start with a trend, then develop products that fill the void we see in the market.

CS: So you have designers on staff?
AH: Oh yes. We also have painters on staff. And we have a UL facility, so we can take items, say a vase or figurine, and we’ll turn it into a table lamp.

CS: And obviously you’ve been in this business for a while.
AH: Yes. I know a lot about it. I know when a lamp is going to give you enough light and when it isn’t. And if it isn’t, I either don’t carry it or change the shade so it can provide enough light.

CS: What goals do you have for the catalog, and what steps will you take to get achieve them?
AH: We’re currently growing out the retail stores — we plan to add one every six months — until catalog competition lessens. As I mentioned, several have already stopped mailing. But then we plan to ramp up circulation.

CS: How many retail stores do you currently have?
AH: We have a retail store and an outlet store. We’re planning to open one in Virginia Beach, probably between now and January. And there are a few others we’re working on. We’re hoping to open one every six months.

CS: All local? How far will you expand?
AH: We don’t know yet. We’ve been doing some studies, because our retail stores draws such a large range from such a large geographical area. So we’re studying our catalog buyers and our retail buyers and then grouping them by phone area codes. And then we’re also talking to our customers. Because they’ll tell us. They’ll say “There’s nothing like you in Virginia Beach. There’s nothing like you in Charlottesville. Please come to our town.” They’ve been telling us that for years. So we have this list of cities, which we’re then cross-referencing with our own statistics to see which ones we should go to first.

CS: What about the business appeals to you?
AH: The excitement of putting together a new book constantly and then finding out what worked and what didn’t. It’s like a painting. You put this whole creative thing together, and we have this wonderful team that does it, then you put it in the mail, hold your breath and wait for the sales to come in. Then you get the chance to analyze and say this new idea worked or that idea didn’t work. So you do more of the one and not of the other. Every time we mail, we try something new, whether it’s in layout, product, concept, pagination, we change something every time. What works we keep, and what doesn’t we change. We never print a catalog without a lot of changes.

CS: If a new cataloger asked you to name the keys to success in business, what would you say?
AH: Get twice the funding you think you will need.
Hire a catalog consultant (or fellow experienced cataloger) to help you.
Hire slowly, train thoroughly, fire swiftly.
Never have customer policies; train sales reps to find win-win solutions.
Get rid of any negative employee quickly. They become a disease to a company.
Rarely accept excuses for a job not done or a monthly goal not met.
Keep retail and catalog management separate (like Anthropologie).
Watch out for paid search (the big guys and affiliates have programs that automatically use up your daily paid seach).
Always keep your catalog “fresh” with a “look” and new products. Constantly reinvent yourself.

CS: What do you mean by not having customer policies?
AH: That’s interesting. Sales people always want me to say, “Let’s have a policy that the customer can’t return something after a year.” And I won’t do that. We had a customer who returned some outdoor lights he had purchased when he was building his house. He ended up not needing both of them. It wasn’t even a current product, but we took it back, full price. I don’t want policies you can hide behind. Work something out with the customer. I don’t care how long they’ve had it; if a product stops working, we’re going to take it back, fix it or give the customer a new one. We’ll figure something out. I empower the sales people and CSRs to make those decisions by asking “What do you think you should do?” They have to make the decision, and after a while, they get used to it.

CS: And that ties in with something else you mentioned, rarely taking excuses for a job not done.
AH: Right. Some folks are really good at telling you why they didn’t get their job done this month. They’re really good at pawning it off on other people.

CS: What are your hobbies?
AH: Skiing, tennis, golf, teenagers, second home in the mountains, eating at great restaurants, travel, grandchildren, partying!

CS: Are you an avid skier?
AH: Yeah, I do a lot of sports. I’ve been skiing since I was a teenager. We have a second home in the mountains of Virginia, at Wintergreen. That’s our little escape. Since my husband and I work together, we need an escape where we don’t discuss business. That’s what we do. We go to a completely different venue. It’s great.

CS: Your husband works in the business as well? Did you found the business together?
AH: No, he came along later on. He was a stockbroker. He’s a lawyer by schooling, and a stockbroker after that. Photography is his hobby, and he’s actually doing our photography today. He’s taught our IT guys a lot about how to process the pictures and that sort of thing.

CS: Do you have any insight on what it’s like to work with your spouse?
AH: You have to define the duties. In our case, he likes to do the stuff I hate to do, and I like to do the stuff he hates to do. So it works out well for us.

CS: Where have you traveled?
AH: We go to Europe a lot. We were just in the Adirondacks last weekend. We have grandchildren on the West Coast, so we go there a lot. We’re going to Mexico in December where my stepson is getting married. We go all over.

CS: And just so I get this right, are you considered president and CEO?
AH: I suppose it’s both. I wear many hats. I’ve just finished a new organizational change going from 13 people reporting to me to five. I’m in the process of implementing that so I can put on my CEO hat a little more. But I never was able to do that very well before I went to NEMOA. There I saw a presentation from a guy from Anthropologie talking about their organizational structure. We kept trying to find a sales manager who could run the catalog and retail sales. They’d always be able to get one part but not the other. Now we’ve separated those. That’s going to work well for us, I can tell already. I’ve also put all of our marketing under one hat so that all of our store signage, truck signage and catalogs match. I think it’s a plan that will improve things. It’s already better.