Mark Del Franco

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

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