Competition for online shoppers among the nation’s big-box retailers is affecting small businesses, even in Colorado Springs.
Sears Holdings Corp. has followed Amazon.com and Wal-Mart Stores Inc. in allowing third parties to sell items on their Web sites.
That strategy is good news for niche retailers like Chef’s Catalog, based in Colorado Springs, which now can showcase its products to a wider audience.
Founded in 1979, Chef’s is primarily a direct marketer of culinary and kitchen products.
“Sears receives a data feed of our merchandise,” said Chef’s president and CEO Tim Littleton. “The deal was worked out through a third-party-affiliate arrangement. We also have a similar association with Amazon and some others, so over the Internet, we probably have over 1,000 different affiliate relationships. Among those, maybe a few dozen will drive revenue.”
Customers who visit the Sears Web site, can browse through the company’s products like many other retailer’s sites, only now, the Sears site will also show other company’s products, even those of its competitors. A search for kitchen utensils or culinary tools reveals products from Colorado Springs’ Chef’s Catalog. When online shoppers click around the product photo, a link sends them directly to the Chef’s Web site.
Littleton cautioned that this new development with Sears is an experimental one for the company, which employs 100 local workers and hires another 75 temporary workers during the holiday season.
“This particular affiliation with Sears is a test for us,” Littleton said. “We don’t have extremely high expectations, but we would be pleasantly surprised if it did produce revenue.”
With consumers continually favoring online shopping over traditional shopping, the tactic could prove to be a smart one for Chef’s and other smaller retailers.
Online shoppers spent $29.1 billion through retailers’ Web sites during November and December, a jump of 4 percent compared to a year earlier according to comScore, a U.S. market research firm.
The e-commerce market segment experienced hyper growth early in the past decade, but has slowed over the past few years. Our recent recession has helped to further cut that trend considerably, but companies like Amazon hope to capture a larger portion of online sales as the economy improves. Likewise Wal-Mart, J.C. Penny, Best Buy and Sears have followed suit, updating their Web sites and promoting them heavily to Web shoppers.
Online retailing is nothing new for Chef’s Catalog, however. JH Partners, a private equity firm led by former Chef’s Catalog CEO Jon Medved, acquired the company from Neiman Marcus Group during 2004 then moved the operation from Dallas to Colorado Springs. The company operates a 75,000 square-foot warehouse/distribution center at 5050 Centennial Blvd. and a 30,000 square-foot space next door that holds its corporate headquarters, call center and retail store.
Through its catalog and Web site, the retailer sells upscale cookware, dinnerware, appliances, cutlery and kitchen utensils by well-known manufacturers such as Cuisinart, Calphalon, KitchenAid and All-Clad among others.
“Ninety eight percent of our merchandise gets shipped from here,” Littleton said.
Chef’s already had an established Internet presence when JH Partners took it over, but Littleton said the company has been focusing more attention on Internet sales over the past few years. By contrast, its lone brick-and-mortar store represents just a small portion of its annual sales.
The store does provide local customers with a special experience, however, as local chefs stop by periodically to demonstrate and teach cooking classes at the in-store gourmet kitchen.
“We have grown this past year,” he said. “We had a very good holiday season overall. And, we have just the one retail store (5070 Centennial Blvd.), but it had a record year last year. Primarily, we intend to grow the business and add products to our assortment. We’ve refined our product line, eliminating some categories while adding others. Given the recent economic climate we’ve been rather conservative in our strategy.”
It remains to be seen whether Chef’s will continue its affiliations with Amazon and Sears.
“Strategically, we have been focusing more attention on the Internet over the last few years,” Littleton said. “We are looking for any opportunity to increase our revenue profitably.”
Scott Prater covers retail for the Colorado Springs Business Journal.
