Alex Tabibi

The virtually simultaenous bankruptcies of The Sharper Image and Lillian Vernon shouldn’t have surprised anyone. The rules of the game have changed. It started with merchandising. Once the merchandise in these catalogs went stale, both companies entered a dangerous spiral, losing demand per book while driving up marketing cost as a percent of sales. Once demand started to decline, the only lever left was price and reduced marketing costs, both of which lowered gross margins. Starving Margins Gross margins are more important this year than in the past because the Internet has flattened competition among retailers, making the marketplace more efficient every

The virtually simultaneous bankruptcies of The Sharper Image and Lillian Vernon shouldn’t have surprised anyone. The rules of the game have changed. It started with merchandising. Once the merchandise in these catalogs went stale, both companies entered a dangerous spiral, losing demand per book while driving up marketing costs as a percent of sales. Once demand started to decline, the only lever left was price and reduced marketing costs, both of which lowered gross margins. Starving Margins Gross margins are more important this year than in the past because the Internet has flattened competition among retailers, making the marketplace more efficient every

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