October 31, 2006, 12:00 AM

A multi-channel pioneer tries to sharpen its focus on multi-channel retailing

After setting a pace for multi-channel retailing over three decades, Sharper Image Corp. is facing a major turnaround. Its founder Richard Thalheimer has stepped aside as chairman and CEO, as new top management forges a new merchandising strategy across its selling channels.

Over the last 30 years, Sharper Image Corp. has emerged as one of the more effective retailers selling through multiple channels, blazing the way to selling online, on TV and through catalogs as well as stores. With a global reach, its annual web sales have surpassed $100 million, putting it at No. 87 in the 2006 edition of the Internet Retailer Top 500 Guide. “They were unbelievable,” says Jim Okamura, senior partner with retail consultants J.C. Williams and Co. “They were leading the pack among specialty retailers.”

The company’s success had been largely driven by a strategy forged by founder Richard Thalheimer to sell unique products and market them across multiple channels. But new market pressures have led to steady drops in sales and profits for more than a year, and Thalheimer has resigned as chairman and CEO though he remains as a member of the board.

What happened? Okamura and other experts say Sharper Image came to rely too heavily on its strategy of emphasizing a handful of innovative products-most notably its Ionic Breeze air purifier-to attract consumers. But with competing products offered by other specialty retailers, experts say Sharper Image needs to broaden its merchandising strategy-a move already reflected in the series of automatically changing home page promotional images ranging from air purifiers to iSphere audio players and the Lotus food sanitizing device.

Just as important, however, the retailer needs to build out a more aggressive strategy of leveraging the web across its channels, expanding the range of merchandise available through its chain of mostly small-footprint mall stores, Okamura says. “They’ve done well with TV infomercials, but if you’re in their stores, there’s no access to web merchandise. They should be ideal for an interactive web-and-store channel.”

Sharper Image’s future course is now in the hands of former American Household CEO Jerry Levin, who’s known as a turnaround specialist and is serving Sharper Image as chairman and interim CEO. “With his experience and business acumen, we are confident that Jerry is the ideal person to ensure a smooth transition and lead our efforts to strengthen the business, put the company back on the path to profitable growth and create shareholder value,” the board says. To help things along, the board also has retained for one year Levin’s company, JW Levin Partners LLC, which specializes in rebuilding consumer brands.

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