Hammacher Schlemmer & Company Inc.

views updated

Hammacher Schlemmer & Company Inc.

9307 North Milwaukee Avenue
Niles, Illinois 60714
U.S.A.
Telephone: (847) 581-8600
Fax: (847) 581-8616
Web site: http://www.hammacher.com

Private Company
Incorporated: 1898
Employees: 250
Sales: $170 million (2001 est.)
NAIC: 454110 Electronic Shopping and Mail-Order Houses

With over 150 years of history under its belt, Hammacher Schlemmer & Company Inc. publishes America's longest-running mail-order catalog. Though it does not rank among the nation's largest catalogers, its clever and unusual offerings have made it one of the most recognized names in the business. The company's varied lines of specialty goods includes housewares, electronics, leisure and sports products, giftware, collectibles, and toys for adults as well as children. The company boasts that it was first to offer a number of innovative gadgets and goods to American consumers over the years, from the electric toaster in 1930 to the robotic lawnmower in 2000. The catalog, which claims a circulation of over 30 million, generates an estimated 70 percent of revenues, with the remainder coming from online sales and a retail location in New York City.

Mid-19th Century Origins

The origin of Hammacher Schlemmer as a company name comes not from its founder but from a pair of early investors. William Tollner founded the business in 1848 as a hardware store in Manhattan's Bowery section. Over the next 11 years, German immigrant Alfred Hammacher invested about $5,000 in the store, accumulating a half-interest in the business along the way. The company name was changed to Tollner and Hammacher in 1859 in honor of his financial contribution. Throughout the early 1860s, Tollner's nephew, William Schlemmer, gradually bought out his uncle's stake in the store. Young Schlemmer had immigrated to the United States in 1853 at the age of 12 and thereafter worked for his uncle, often hawking tools on the sidewalk in front of the store. By the time Tollner died in 1867, 26-year-old Schlemmer had entered into partnership with Hammacher. The company published its first catalog in 1881 and took its present name two years later. Hammacher Schlemmer & Company was incorporated in 1898, 50 years after its founding.

Though there were only 600 cars in all of New York in 1908, Hammacher Schlemmer diversified into automotive tools and replacement parts at the turn of the 20th century, soon amassing one of the broadest selections available at the time. The company's international renown grew with its product line; at least one budding Communist considered its collection seminal. According to a company publication, "In 1916 a member of the Russian government's staff purchased a sample of every piece of hardware offered in the company's 1,000-page catalog to use as manufacturing masters in preparation for the Bolshevik Revolution."

Hammacher Schlemmer maintained its original location until 1906, then moved into its flagship, 12-story New York store on East 57th in 1926. Though this would be its sole retail outlet for over a half-century, during which retail sales often exceeded catalog revenues. William F. Schlemmer succeeded his father as president of the company upon the latter's death in 1914.

Hammacher Schlemmer launched its first housewares catalog in 1931 and began to earn a reputation for making the newest technologies available to American consumers. Many of the now-mundane items were the first of their kind to appear in the U.S. market. Company publications crow that the Hammacher Schlemmer catalog offered America's first toaster in 1930, the first steam iron and electric dry shaver in 1948, the first answering machine (the "Telephone Valet"), and first microwave oven (Amana's Radarange) in 1968. Though revolutionary at the time they were launched, these and many other "gadgets and gizmos" inaugurated by Hammacher Schlemmer would later become staples of the American household.

Hammacher Schlemmer had its own trademarked elves to promote its wares, and a 1929 Broadway production titled TheLittle Show gave the company free nationwide publicity. The program included the song "Hammacher Schlemmer, I Love You," which rhapsodized, "Hammacher Schlemmer, I love you / Roebuck and Sears, I adore you / If you want to buy a bassinet or buy a hog / Don't be in a fog, use our catalogue / Hammacher Schlemmer / You're sweet and dear / Hammacher Schlemmer I repeat dear / Macy's and Gimbel's have plenty of thimbles / But I love you."

Postwar Emphasis on Luxuries

Though the company's early housewares probably seemed exotic to catalog recipients, it was not until after World War II that Hammacher Schlemmer shifted its focus to luxury goods. The change came after 1953, when William Schlemmer's widow, Elsie, sold the cataloger to Chester H. Roth's Kayser-Roth investment group. The firm dropped its hardware items two years later and began to emphasize unique, sometimes one-of-a-kind articles targeted to upscale customers.

Dominic Tampone, who had joined the cataloger as a stock boy at the age of 15, worked his way up to president of the company in 1959. He has been credited with leading Hammacher Schlemmer's quest for the unusual and outlandish for its catalogs and store. Tampone described the typical Hammacher Schlemmer item in a September 1968 profile in Merchandising Week: "It's brand new … it could be too clever in concept and looks. It could be like a Rube Goldberg contraption. But the idea is good and it serves the purpose for which it is intended." Offerings in the catalog soon ran the gamut from electric shavers and massagers to such fantasy gifts as British taxis and spa trips. In 1961, the company proffered regulation-sized bowling alleys for $4,300 a lane, or a $600 "discount" for two. Hammacher Schlemmer also started offering limited edition and collector's items, including signed baseballs and lithographs during this period.

Over the years, Hammacher Schlemmer's unique range of items drew a globe-trotting clientele. Sheiks, princes, Hollywood stars, and U.S. presidents all shopped at the flagship store, buying everything from flashlights to beds to cars. Their shopping sprees often brought Hammacher Schlemmer free publicity, as the press eagerly covered the spending habits of the rich and famous.

Tampone created a wholesale operation in the early 1960s that quickly grew into Hammacher Schlemmer's Invento Products Corporation. Invento soon evolved into a clearinghouse for the new and unusual, sourcing items from around the world and selling them under its own namesake brand. It sold goods not only to Hammacher Schlemmer but also to such major national retailers as Sears and Neiman Marcus. By the end of the decade, Invento was generating annual sales of about $2.5 million.

Changes in Ownership: 1970s and 1980s

Tampone continued to guide Hammacher Schlemmer through two changes in corporate ownership. Conglomerate Gulf + Western Industries, Inc. acquired the company in 1975, then sold it five years later to John Roderick MacArthur's Bradford Exchange Ltd. Inc. After over a half-century with the company, vice-chairman Tampone died in 1982.

Under MacArthur's chairmanship, Hammacher Schlemmer opened two new retail outlets in Chicago (1984) and Beverly Hills (1986). The company's reputation for carrying outlandish, extravagant, and expensive products continued to grow, driven by such products as $139,000 "bionic dolphin" personal submarines, $39,000 home ski slopes, and $34,000 model train sets. Hammacher Schlemmer's unconditional guarantee of satisfaction clearly inspired a great deal of confidence in its customers. However, high-priced, "gee-whiz" articles like these were little more than attention getting devices for Hammacher Schlemmer. Long-running favorites were far more down-to-earth: electric shoe buffers, portable clothing steamers, ultrasonic jewelry cleaners, and air cleaners. Furthermore, while the prices of its most widely publicized items were often sky-high, the cataloger's annual sales totaled less than $35 million at the end of the 1980s.

Though Hammacher Schlemmer did not manufacture any of its products, it stamped many with its own seal of approval. The company started "an associated but independent" testing arm, the Hammacher-Schlemmer Institute, and inaugurated its "Best" rating in 1983. At the Institute, products are graded by both consumers and category experts for ease of use and durability, among other relevant criteria. Instead of touting brand or manufacturer names in its catalogs, Hammacher Schlemmer emphasizes quality by highlighting products that win its "Best" rating. "Bests" and "Firsts" in 1997 catalogs ranged from the "Best Nose Hair Trimmer," at $19.95, and the "First Flat Panel Television" for $25,000.

The 1990s and Beyond

Like many other catalogers, Hammacher Schlemmer rode a cresting wave of mail-order success in the 1980s and early 1990s. As baby-boomers entered their peak earning years, they found themselves with more disposable income and less time to spend it in malls and shopping centers. Many turned to catalogs as a convenient way to shop without leaving the house, and mail-order houses were quick to oblige them. The catalog industry in general benefited tremendously from these trends in the 1980s, as mail-order sales increased more than 300 percent during the decade. Catalog sales constituted about three-fourths of Hammacher Schlemmer's total revenues by 1989, up from 40 percent in 1968. The company's overall sales grew as well, nearly tripling from an estimated $70 million in 1992 to about $190 million in 1996.

Company Perspectives:

Hammacher Schlemmer continues to serve customers' needs in ways that no one else does or can. While some of the products may appear unusual, they all share the common goal of meeting the special needs of our many customers, just as a one-of-a-kind plumb bob did over a hundred years ago. From the beginning, our standard was quality-functional quality plus exemplary service. Some things should never change.

To celebrate the company's 150th anniversary, New York City renamed the block on 57th Street between Lexington and 3rd Avenue "Hammacher Schlemmer Way." Notwithstanding its global renown, Hammacher Schlemmer was one of the U.S. catalog business's smaller players in the 1990s, constituting far less than 1 percent of the industry's total annual sales. Moreover, though the venerable merchandiser faced competition from upstarts like Richard Thalheimer's The Sharper Image, it seemed highly unlikely that a company with 150 years of experience and the backing of the wealthy MacArthur family would soon relinquish its reputation for "Offering the Best, the Only and the Unexpected."

Hammacher Schlemmer entered the 2000s on solid ground. Determined to maintain its reputation for offering new and cutting edge products, the company teamed up with PatentCafe to create a Fast-Track Product Review program that expedited the concept-to-store process for new inventions. For the first time in its history, the company relied on an outside firm to review new consumer-created products that would possibly end up in the famous Hammacher Schlemmer catalog.

During this time period, intense competition in the retail sector left Hammacher Schlemmer's catalog sales flat. Meanwhile, the company's online sales were growing at a rate of 30 percent per year from 2002 to 2005. By 2005, online sales accounted for one-third of company revenues. That year, the company shuttered its Chicago retail location, leaving the historic New York City store as the single remaining Hammacher Schlemmer outlet in the cataloger's arsenal. Company headquarters were also moved to a Chicago suburb at this time.

By now, the company's main product categories included electronics, leisure and recreation, travel, home office, automotive, kitchen, garden, patio and pool, children's toys, memorabilia, furniture, decorative accessories, and apparel. New products such as the Folding Strolling Pet Carrier, the Feline Drinking Fountain, and The Three-Step Pet Staircase hit catalog pages in 2004. Another best selling product was the Progression Wake-up Clock. Retailing at $49.95, this alarm-clock gradually wakes up a sleeper with light, aroma, and nature sounds. The company's new garden-related products included the Upside-Down Tomato Garden, the Umbrella Greenhouse, the Effortless Motorized Wheel Barrow, and the Hover Mower.

Hammacher Schlemmer's focus for the future continued to be on providing exciting products that met its customers' needs. If the company adhered to this tradition, the Hammacher Schlemmer catalog and online shopping site would no doubt feature fun, quirky, and creative products for years to come.

Principal Competitors

Cornerstone Brands Inc.; The Neiman Marcus Group Inc.; Sharper Image Corporation.

Key Dates:

1848:: William Tollner establishes the business as a hardware store in Manhattan's Bowery section.
1881:: The company publishes its first catalog.
1898:: Hammacher, Schlemmer & Company incorporates.
1926:: The company opens its flagship, 12-story New York store on East 57th Street.
1930:: The Hammacher Schlemmer catalog offers America's first toaster.
1953:: William Schlemmer's widow, Elsie, sells the cataloger to Chester H. Roth's Kayser-Roth investment group.
1975:: Conglomerate Gulf Western Industries, Inc. acquires the firm.
1980:: The company is sold to John Roderick MacArthur's Bradford Exchange Ltd. Inc.
1998:: Hammacher Schlemmer celebrates its 150th anniversary.
2005:: The Chicago-based retail location closes its doors, and company headquarters move to the suburbs.