Big Company Retains a Small Company Feel

Jim Klaus, president of Children’s Wear Digest, sees his company as a unique hybrid of the big and small business models. Initially conceived in 1987 as a companion to his father’s retail business, the catalog has since grown to a circulation of 15 million. His father, Philip Klaus, sold the business in 1992 to The Right Start in order to allow it to grow.

In 1995, the elder Klaus bought back the now larger and healthier business, and Jim was appointed president. He discussed with Matt Griffin, associate editor, the difficulties encountered during that transition and the challenges he currently faces.

Catalog Success: What was your biggest challenge in your first few years as president?
Klaus: Working within what had been a 100 percent entrepreneurial company. Restructuring was particularly difficult, even after we bought it back from The Right Start. One person, my dad, called the shots, and there weren’t many controls. Although my dad indicated he was open to changing the way the business was run, that ultimately was a more difficult proposition for him. Putting in place controls and systems that made it an established company was the first big challenge.

CS: How did you deal with it?
Klaus: Since things before had been done by one person making all the decisions, the No. 1 thing we had to establish was a committee structure. We’d grown a lot and had more people. Decisions that were made by one person are now made by committees and groups. I distributed the decision making and divided responsibility.

No. 2 was adding quantitative analysis to decision making. We put in place sales reports and analysis rather than just what had existed in my dad’s head. While the first priority was getting other people in the decision-making process, we had to get good data out to those people. They must analyze information to make decisions, rather than just using gut feeling.

CS: What has been your greatest career challenge?
Klaus: The rise of discounters, like Target. Although we have an upper-income client base, and Target has perhaps a more moderate-income base, there are many upper-income people who shop there. It’s really changed our business.

Prices have declined in the basics arena (such as girls’ leggings and turtlenecks) as a result. We’ve had to replace basics with fashionable and unique items. We’ve had to not only pick new merchandise [that discounters don’t carry], but find both new and branded vendors that stand out enough from the generic products discounters carry. Ralph Lauren is probably the best example of a new vendor [whose products] we’ve acquired in the last five years. It sets us apart, because customers are willing to pay a premium for that brand.

CS: What else sets CWD apart?
Klaus: It’s the change we went through, from being a small entrepreneurial company to a big company. We’ve retained a small company feel. We have the controls and the analysis, but at the same time we’ve retained an ability to act quickly. We’re not paralyzed by huge committees.

We’ve established a good balance between a big company’s controls and analysis, and a small company’s ability to get things done. That carries through to every aspect of our business. For example, with merchandising, we meet with vendors, we make a decision very quickly; it’s not a long process. This helps us get product into catalogs quickly.