Summer 2006

Personal Profits By Kasia Dawidowska

Personalizing Pays

Consumers’ tastes might change from minute to minute, but one thing remains constant year after year, according to Karen Sotomura, president and founder of Joseph K. & Company, a gifts manufacturer and wholesaler in Honolulu, HI. “People like to see their names on products,” she says. It makes them feel good and “adds a special touch” to any gift.

Not only that, but personalization increases a product’s perceived value. This gives gift shop owners higher profit margins while allowing them to build personal connections with their customers. In the case of in-store personalization, the process itself provides retail entertainment, as customers watch while their gift is created right before their eyes.

Years ago it was difficult for gift shop owners to offer either pre-personalized or ready-to-be-personalized merchandise. To carry pre-personalized lines, retailers had to stock dozens of SKUs with the most common names, hoping to carry the names customers were most likely to buy. For ready-to-be-personalized merchandise, the personalization system was often labor-intensive or required artistic ability. But no more!

Today’s manufacturers and wholesalers have created an imaginative array of personalization systems designed to fit any gift shop owner’s needs. Some companies even offer “no-inventory systems,” where gift retailers stock display samples and order the personalization by fax, phone or online. Once the product is created (often within 24 hours!), it is either drop-shipped to the customer, or sent to the gift shop, where the customer can return to pick up the custom-made merchandise (and perhaps buy another item or two!).

Personalize it your way

Karen Sotomura is one of those creative manufacturers who has designed a personalization system—in fact, several different setups—that allows gift shop owners maximum flexibility. Initials by Joseph K. is her company’s exclusive collection of fun and colorful ready-to-be-personalized children’s furnishings, home accessories and gifts, all of which can be personalized easily in-store, or personalized at the company’s headquarters and drop-shipped if desired.

The drop-ship program is arguably the easiest route for gift shop owners. Here’s how it works. Retailers stock a few personalized samples of the Initials line, which includes chests of drawers, clothes hangars, clothes trees, dry-erase boards, photo frames, bookends, animal sounds banks (animal-shaped piggy banks that make animal sounds when the coins are dropped in), wall racks and wall hooks. They help their customers choose the type of product and the specific personalization they would like—first names being the most popular choice—and then send the personalization order to Joseph K., where the child’s name is painted on or spelled out using the company’s unique, patent-pending alphabet letter components and decorative charms. Many store owners who want to provide a personalization service for their customers but don’t want to do the personalizing themselves love the system, Sotomura says, in large part because “there is no investment in inventory.”

The downside of the drop-shipping

The system is that it isn’t much fun. It doesn’t have the instant gratification and entertainment thrill that customers get from watching the personalization process. For retailers who want to offer in-store personalization, Joseph K.’s pre-cut alphabet letters and charms are about as easy as it gets, since all retailers have to do is choose the right letters and glue them onto the merchandise to spell out a child’s first name, a family’s last name, monogram, or anything the customer wants. The company’s personalization start-up kit costs $3,000 to $4,000, which includes a supply of alphabet letters and an assortment of Initials’ products ready for customizing.

The personalization options are endless, Sotomura says. “You can take one picture frame and change the look 100 times with different letters and colors.” The Initials products “are both pretty and functional,” she adds, noting that family members often team up to buy a whole collection of room decor for a new baby or young child. “Grandma will buy a six-drawer chest, matching wall hooks will come from Auntie, and a picture frame from the sister,” she says.

Joseph K. & Company also offers ready-to-be-personalized Christmas ornaments through its Santa’s Pen division. The colorful and often humorous ornaments include a blank space for a family name (or first name, or whatever the customer wants!). Names are applied with an easy-to-use paint pen. In addition to more than 800 ornament designs, Santa’s Pen offers retailers personalization training, special packaging, customer service support, gift bags, and a retailer consultant to assist with any issues that might crop up. Retailers only need “someone on staff with good handwriting,” says Sotomura. Beyond that, “we offer all the support and knowledge they’ll need to get started.”

A Santa’s Pen start-up package comes with a free personalization kit and detailed instructions. Costs of the start-up packages vary from $3,000 to $10,000 depending on the amount of inventory. Markup is typically 300 to 500 percent. “Some [retailers] will buy ornaments for $3 each and sell them for $9, [while] others can sell them for $12, depending on their location,” Sotomura says.

When it comes to Christmas ornaments, many families buy at least one personalized ornament every year, as part of an ever-growing collection, Sotomura says. “It has become a tradition in many families.”

Grandparents in particular are great customers, she adds, echoing the sentiments of some retail experts who say there has been a huge increase in the market for children’s gifts in large part because baby boomer grandparents have more disposable income than previous grandparent generations and are willing to spend big bucks on “the kids.” Some refer to this phenomenon as “grandspending.” Sotomura says she’s seen the phenomenon again and again first hand: “Many grandparents come prepared with lists of grandchildren’s names ready to go!”

Thanks to the fact that Santa’s Pen has so many different ornaments from which to choose, buyers not only can personalize their ornaments but they can choose themed ornaments that reflect the family’s current interests, such as one showing a family of skiers, or a soccer-player ornament to show off a child’s new sports interest. “The ornaments become collectibles, a memory of the child’s life and what they’ve done,” she says. Gift shop owners who sell personalized ornaments and other personalized gifts can build life-long relationships with their customers, Sotomura says, with the family returning year after year to celebrate special achievements or occasions.

Off-site personalization

For retailers who don’t want to handle the personalization in-store, but want to offer their customers hundreds of different personalized products, Heartstrings Enterprises in Auburn, AL, offers more than 2,000 products, all of which are ready to be engraved by the company—at no charge—and shipped to the gift shop or the customer, usually within 24 hours. Lines include jewelry, watches, pet tags, luggage tags, cufflinks, business card holders, purses, pens, key chains, a variety of wedding items and even soaps (yes, monogrammed bath soaps!).

Most products are designed for monogramming, but some include spaces for complete names, or even inspirational messages. The company’s Hour Power watch flips up much like a locket watch, providing a space for a photograph and an engraved message of the customer’s choosing. Fashion bracelets and pendants have spaces for monograms, and purses, towels, gloves and even chaise lounge covers are ready for names or initials.

For retailers who would like to try the Heartstrings personalization system, the company offers several starter programs that showcase jewelry ($300 to $500, depending on the extent of the samples) and numerous other supplemental programs for line expansions beyond jewelry. And a catalog shows customers the full range of products available for personalization. On the catalog that retailers share with their customers, the Heartstrings logo is absent and a space is provided for gift shop owners to place their own logo and contact information. “They can use our catalog to do mailings, or marketing, or whatever they want to do to grow their businesses,” Heartstrings’president Alicia Storbeck says.

Monogrammed sterling silver jewelry is the company’s most popular line, Storbeck says, but she adds that personalized merchandise in general appeals to a wide range of customers who are looking for something unique. “Being able to offer personalized merchandise allows gift shop owners to set their stores apart from others,” she says. “Personalization also is a service they’re providing to their customers. The customer doesn’t have to go out to figure out how to get a gift monogrammed; they can do it right there” at their neighborhood gift shop. Although her company is happy to drop-ship direct to the customer, she notes that having the item shipped back to the store “gives retailers another chance to sell to those customers.”

The Heartstrings system gives gift shop owners “unlimited sales potential,” Storbeck says, in that “the sales potential is not limited to what the retailers can stock on their shelves. They don’t have to figure out, ‘I think I can sell six of these, or four of those,’ and only order that many. And if they make a misjudgment, they’re left with inventory. Or the customer wants 20 and there are only six in stock. With Heartstrings, retailers can sell as much as possible, without worrying about [planning] inventory.”

And retailers don’t have to worry about “having their dollars tied up in inventory, or in the machines for personalization, or in the training of employees to do the personalization,” Storbeck says, adding that gift shop owners can put that money to use elsewhere to grow their businesses.

In-store musical thrills

When it comes to personalization and kids, nothing compares to the thrill children get from hearing their own names featured in a song. Mediak, based in New Albany, Indiana, has created a system gift shop owners can use to produce personalized CDs in-store. The hardware and software costs $3,995 and comes complete with 2,000 first names ready to be inserted into any song the customer chooses. The start-up package price includes 200 CD burns (after that, the royalty on each CD is $5).

The name of the child is positioned throughout each song so that it flows naturally with the music regardless of the number of syllables in the name. To make the CD even more special, the child’s name is printed on the CD label along with a three-line message of the customer’s choosing. It can be a birthday wish, a Christmas greeting, or something as simple as: “For My Special Daughter.” “It’s a computer system that can burn three CDs at a time, but it’s very easy to use,” explains Mediak’s owner and founder, Charles Sublett, adding that the system only takes up about four square feet of floor space. “Years ago, with pre-recorded cassettes, it was virtually impossible” for retailers to stock all of the most common names, says Sublett. But with today’s technology, gift shop owners can select from a list of 2,000 names, choose the list of songs the customers want, and one click later, the CD is ready. “The reaction from the child is unbelievable,” says Sublett. “They want to play it all the time and carry it around with them.”

The company has themed “albums” (an eight-song CD) for Christmas, Chanukah, lullabies, friendship and even selections for sports fans, including songs about football, basketball, baseball, soccer, hockey, and even Nascar. The sports songs feature amazing, realistic sound effects (cheering, crashes, etc.) and professional announcers calling out the child’s name. The broadcasts make each child the star of their favorite game, Sublett says.

Younger children (under seven years old or so) will love the “You Are My Friend” collection with eight songs about a day’s activities featuring the child’s name in the music 98 times. The album begins in the morning with the first track and moves through the day with games and activities, ending with a bedtime lullaby. For the Christian community, Mediak offers a collection of 10 Christian songs and verses. “This is the first time a Christian album for children has been personalized,” says Sublett.

My personal flame

Another first in the personalization world is the Picture-in-Candle line recently introduced by Tallahassee, FL-based Spa at Home. Owners A.J. and Meena Chad, who have invented many unique candles over the years, now have a personalization kit that allows retailers to take a customer’s photograph, apply it to a special 11/2” x 13/4” “stone,” or disc, and slip the stone into a special space built into the Spa at Home candle holders. After the photo is positioned, the candle is sealed from the top with a heating tool.

The process from start to finish is very simple, A.J. Chad says, and requires no artistic skills. “It’s very easy and takes only two to three minutes to create a special candle” the customer will love, Chad says. The cost of a Spa at Home license to sell the products is $250, including equipment and materials.

Using the same system, instead of photographs retailers can customize the candles with an unlimited number of short messages, such as “Mark Loves Heather,” or “Wanda and John.” “It’s a beautiful gift in the $10-$20 price range,” says Chad. “There is so much variety to choose from, and the candles last a very long time with a wonderful aroma for the whole room.” With wholesale candle prices starting at $2.85, the markup is significant, and customers are happy to purchase such a unique personalized gift for less than $20, Chad says.

It’s a wrap

Another unique personalization concept for the home, this one for the outdoors, is offered by Magnet Works, Ltd., of St. Louis, MO. Curt and Sue Todd invented MailWraps, magnetic mailbox covers that can be easily changed for different holidays and are pre-personalized with the first initial of the family’s last name. MailWraps are thin and flexible magnetic covers that tightly “wrap” around the mailbox, with the family’s initial set against an elegant dark brown background.

“We offer only 12 last-name initials because, according to our research, this covers 80 percent of the US market,” says Curt Todd. The available letters are: B, C, D, G, H, K, L, M, P, R, S, and W. The wraps retail for $15 to $20 and there are 250 themed designs to choose from. Wrapped mailboxes actually look as if they’re painted, the wrap fitting snuggly around the mailbox but easily removed and replaced with a new one: whimsical pumpkins for Thanksgiving, followed by a wintry landscape with red robins or funny snowmen and a smiling Santa for Christmas. Todd says many customers have whole collections of MailWraps and use them as a form of expression. “The mailbox is the first thing people see when they come to your house,” says Todd. “It’s the first impression and a statement about you.” He adds that, “about 65 percent of our customers have three or more MailWraps and 16 percent have more than ten. People like to change them.”

Magnet Works offers attractive display stands that include an actual mailbox, with room to display dozens of MailWrap designs. The initial start-up package of 60 MailWraps costs $450, and the display is included free of charge. A smaller investment of $360 includes 48 MailWraps and the display can be added for $50 more.

Differentiate your store

Personalization is a no-brainer for gift shop retailers, going to the heart of what gift shops offer their customers—personal service. And nothing is more personal than your name on a product. For retailers, personalization provides big profit margins, pleasant entertainment for the customer, and value-added perceptions that enhance customer relations. And personalization doesn’t have to be expensive or difficult. There are many exciting options, even off-site systems with no up-front inventory investment. Even retailers with limited floor space and no artistic skills can offer their customers beautiful custom-made, unique merchandise with little or no investment.

“With the mass channels doing what they’re doing today, independent retailers have to have something that’s unique and different,” if they’re going to succeed in the long term, says Heartstrings’ Alicia Storbeck. Personalization is “a specialty industry that fits perfectly with specialty retailing.”

Kasia Dawidowska

Dawidowska writes frequently for both trade and consumer magazines. She can be reached at kasia76@gmail.com.