specialty retail article. cart planet.july 07
TRANSCRIPT
No Business LikeSnow Business
entrepreneur profile
No Business LikeSnow Business
Cart Planet's Specialty Retail Team(Clockwise from left): Alex Israeli, Leo Mizrahi, Sol Darzi, Lee Makmal, Joseph Sherman, Sigal Sherman
In 2003, Joseph and Sigal Sherman needed “an in” to the world of specialty retail.
They knew they wanted to launch a cart business, but they needed a fresh new
product to get their venture off the ground. “Here in Los Angeles, it’s a pretty
competitive market—the malls are filled year-
round—so the only way for us to penetrate the
market was with a product that was brand-new,
something that nobody had,” Joseph recalls.
Fortunately, having previously worked for a whole-
saler who had a big presence in the specialty retail
arena, he was able to purchase from them a new-to-
the-market children’s toy that could be easily demon-
strated cart-side. Aware that demonstration products
were some of the highest-grossing products sold from
carts, the Shermans recognized the toy’s potential and
their window of opportunity—their “in.”
They opened five carts in the southern California
region over the summer and fall of 2003, staying close
to their L.A. home base so they could oversee their
managers. By the time the holidays arrived, they had
prime locations already up and running and were the
only retailers with a hot new toy that shoppers seemed
drawn to when they saw it demonstrated.
The season went “very well,” Joseph says. Mall leasing managers loved having an
eye-catching, entertaining demonstration product in their centers, and sales were
strong. More importantly, as they had hoped, “After we had that first successful year, it
was easier to expand in our second year with additional concepts because the mall
managers already knew us.”
When Joseph and Sigal Sherman launched Cart Planet in 2003,
they had five carts in and around Los Angeles selling one product.
Less than four years later they have four distinct specialty retail
concepts pulling in some of the highest sales in the industry and
exclusive rights to a new product that’s giving them entry to a
global market. by Nancy Tanker
Landing sales year-roundWith a successful holiday season behind
them, they started off 2004 with the
company’s first significant expansion.
They steadily worked to open more than
a dozen locations, mainly in upscale
centers in the southern California region.
Two were toy carts, but with mass
retailers now getting hold of their debut
product, Cart Planet needed to diversify,
so the rest of the carts were a mix of health
and beauty concepts such as Dead Sea
products and herbal heat packs.
They were pleased with how their
second year was shaping up—but every
day they kept their eyes open for that next
hot product nobody else had to give them
the “foot in the door” opportunity they
had in their first season.
Taking stock of their initial success,
Joseph and Sigal knew a few things
for sure. First, counter to the strategy
employed by many specialty retail entre-
preneurs, they didn’t want to operate
Cart Planet locations only during the
peak holiday selling season. “It’s a big
project to open dozens and dozens of
carts in one month, bring in all the
employees, train them and then shut
down everything two months later,”
Joseph explains. “It’s a
business concept we
thought about, and it’s
possible, but it’s not
what we wanted to do.
We wanted to develop
a year-round approach
that we can easily
expand on during the
holidays.”
They also wanted to
maximize their profit
potential within each
center by operating
multiple locations in
each mall. “If we go
into a mall and operate
two to three concepts
in that mall year-round, our manager’s
already there, storage is there, relation-
ships with the mall are already devel-
oped,” he says. To add an additional cart
there for Christmas is not a stretch.”
As they continued to refine their
operations, they focused on developing
“a permanent tenant mindset,” Joseph
says. That mindset included a salesper-
son dress code that went well beyond
what the malls required—which not only
pleased mall management but helped
develop the high level of professionalism
they wanted their company to project.
Intense employee training centered on
delivering superior customer service and
understanding the psychology of how
shoppers make their buying decisions.
Products were backed with lifetime
guarantees that went beyond what man-
ufacturers typically offered. Over time,
the permanent mindset took hold at Cart
Planet, and that evolution was paying off
in steadily growing sales.
Finding the next big thingThen sure enough, one day Sigal noticed
an obscure product on a science museum
shelf: Snow Powder, a nondescript
synthetic polymer that “erupts into
snow”—cold to the touch—when water
is added. Sensing that her kids might
enjoy some instant snow in balmy L.A.,
she brought home a box of Snow Powder
and let the kids have at it. Within minutes,
they were shouting for their dad to come
outside to watch as they added water to
the powder and screamed in delight as it
grew to more than 100 times its original
size.
“Within a second, I saw the [Snow
Powder] carts—how they were going to
be designed, how the packages of Snow
Powder would be demonstrated—hun-
dreds of carts nationwide,” Joseph
remembers. Contacting the manufactur-
er’s representative, he laid out his vision
for getting Snow Powder off the shelves
of science stores and onto carts nation-
wide where the product could really get
noticed and rack up the sales. Unfamiliar
with the cart industry, the rep never-
theless gave them the chance to test
their idea.
n Cart PlanetOwners: Joseph and Sigal Sherman
Headquarters: Los Angeles, CAProducts: Snow Powder, health andbeauty products
Locations 2006: 26 carts, plusmore than150+ owner/operators
Phone: 818.501.7414Web: www.CartPlanet.com;
www.Snow-Powder.comAdvice to retailers: “Start with a vision
for your business, form a plan andexecute.”
– Joseph Sherman
They opened four carts in the L.A. area
for the 2004 holidays. By the end of
December, they had more than $320,000
in sales, combined. Clearly, Snow Powder
had not only passed its first retail test, but
showed big potential.
As the buzz started to build about
Snow Powder among those in the
industry, the Shermans started getting
calls from mall managers who wanted a
Snow Powder cart in their centers, as well
as independent owner/operators who
wanted to open their own Snow Powder
locations. Having secured the worldwide
retail rights from the manufacturers rep,
it was tempting to go national with
dozens of owner/operators, but “follow-
ing the 2004 campaign, we felt we had to
learn the Snow product more,” Joseph
says modestly. “We sold it in 2004, but
only for about two months and we
thought our results could be better.”
By the time the summer of 2005
arrived and specialty retailers started
solidifying their plans for the holiday
selling season, the buzz about Snow
Powder had gotten louder. “The market
was begging to buy the [Snow Powder]
product from us,” Joseph recalls. “But we
refused. We just said no. We wanted to
learn it more and understand it, then
release it in 2006.”
“We decided to focus on opening two
carts for the holiday season, to perfect our
operations,” he says. The carts, in The
Grove and Simi Valley Town Center,
brought in a combined $346,000. The
Grove grossed $223,720, and a favorite
company photo from the season shows
Joseph handing The Grove leasing
manager and mall manager an oversized
overage check for $16,000.
Shopper response was “overwhelm-
ing,” Joseph says. “Everything worked,
everything fell into place. Unlike in 2004,
when it was our first season selling Snow,
in 2005 we came in with a running start.
We also opened one cart earlier, in mid-
October, and that gave us a real edge” to
tweak the product demonstration before
the holiday rush hit full bore. When it did
hit, the demonstrations would routinely
draw huge crowds.
Even local news stations sent their
reporters to cover Snow Powder. “There
are a million products at the average
mall, and they’d come to interview us,”
Joseph says. “One newscaster even
said, ‘I have here the must-buy prod-
uct for the holidays!’ and then she did
an on-air demonstration.” The coverage
was great for sales. “Customers would see
the news stories and drive for hours to
come buy a box of Snow Powder.” To
Joseph and Sigal it seemed like their new
product was fast becoming a cultural
snowball rolling down hill, gaining size
and speed with every passing day.
Selling to owner/operatorsBy 2006, they were ready to take their
company to the next level. They’d already
built Cart Planet up to be a formidable
specialty retail player in the southern
California region, with more than two
dozen year-round carts and holiday Snow
Powder locations.
And yet, with a string of successes
piling up, Joseph says, “When we’d
approach mall leasing managers for a
Snow Powder location, most of them still
probably believed the numbers might be
hype. They just didn’t expect us to be that
successful. They wanted us in because of
the entertainment factor, but they didn’t
believe the numbers—until they got the
overage check.”
In 2006, Cart Planet opened Snow
Powder to 50 owner/operators. But the
interest in the concept that now had a
proven retail track record was so enthusi-
astic that the Shermans found them-
selves fielding 80-100 calls a day even as
the holidays got underway. Some calls
were from operators who’d opted to
purchase a new Snow Powder knockoff
making the scene and then regretted their
choice when they received “a chemical-
smelling mushy mess,” Joseph says. “We
tried to help them out as much as pos-
sible, since they’d invested so much
of their money and many already had
locations.” The Shermans ordered
another 20 tons of Snow Powder and set
up a packaging and distribution hub
to get product out the door to new
owner/operators quickly.
By the time they hit the cut-off switch,
they were up to 150 owner/operators and
the holiday selling season was in full
swing. Cart Planet operated six Snow
Powder carts of its own, in addition to 20
health-and-beauty locations, which they
were finding easier and easier to expand
now that leasing managers had heard of
the company’s track record.
“The pattern is that we operate a Snow
Powder location, it’s very successful—
overwhelmingly successful on the enter-
tainment side—and the following year we
get the locations that we want for our
year-round concepts and repeating Snow
Powder locations. There’s a developer
who’s opening a center in 2008 and they
said, ‘Just let us know what you want to
do.’” Those kinds of opportunities don’t
appear every day in the specialty retail
market, he says. They come from years of
refining operations, racking up solid sales
and simply having the right product at
the right time.
Now that Snow Powder has taken off,
the offers are coming in worldwide, from
entrepreneurs who want to operate carts
in US malls from coast to coast, north to
south, as well as dozens of retailers from
overseas.
Going global“We’re getting calls from people all over
the world because [Snow Powder] has
been seen now,” Joseph says. What origi-
nally started out as a novelty for areas like
L.A. that have snow-envy during the holi-
day season has now expanded to sell well
in northern areas where real snow is
around for months. “Last year we had a
few operators up north who did
very well on the premise that
Snow Powder is an indoor item
for decorating. Even if you have
snow outside, you can’t bring it
indoors to decorate your tree
with it.”
Again the calls are streaming
in from potential owner/opera-
tors. “So far this year we’ve
already fielded more calls from
people who want to operate carts
up north for the 2007 holidays
than we received during all of
2006. We’re getting a pretty good
vibe.”
For 2007 Cart Planet is hoping
to have about 200 Snow Powder
owner/operators, and a half-
dozen or so of their own company-oper-
ated carts, plus more than two dozen of
the health-and-beauty related carts.
Going forward, “We’re looking at every
market, everywhere,” Joseph says. “But
what’s happening now is the world is
looking for us. There were enough carts
last year that people saw it and talked to
their colleagues, and now a lot of people
know about us worldwide. I’m not going
to discount the US market—half of what
the world buys is being bought in the US.
This is the biggest retail market and this
year there will be more Snow Powder
sold here than anywhere else, by a huge
margin. But I believe that worldwide we
can probably do 25 to 50 percent of what
we’ll do here in the domestic market,
which is great.”
There’s no doubt, he adds, that “Snow
Powder is going global—and it’s taking us
along for the ride.” n
Nancy Tanker is managing editor of SRR andcan be reached at [email protected]