Idaho Mail-Order Firm Sells Romance Along With $12 Pencils
It was no ordinary purse.
“For centuries the natives of Madagascar in the Indian Ocean have sun-dried leaves of towering African palms and hand-woven the raffia into lacy, weightless carry bags of surprising strength.”
For $27.95, you can buy one from the Coldwater Creek catalog.
The Sandpoint, Idaho-based company is a star in the booming world of catalog sales, where romantic prose and hefty price tags meet middle-class affluence.
With its $42 T-shirts and $22 baseball caps, Coldwater Creek is at home in the world of L.L. Bean, Lands’ End, Sundance and J. Peterman.
The company sells clothes, jewelry and gifts. Just don’t look for the Urban Sombrero.
Established in 1984, Coldwater Creek has posted sales growth of more than 60% annually over the last five years, with sales climbing to $143 million in the last year.
Dennis Pence and his wife, Ann, both 47, moved to this small northern Idaho resort town from New York City in 1983. They were looking for a mountain environment without large crowds.
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Sandpoint is a place where “wildlife still thankfully outnumber the traffic lights,” a catalog said. “The rivers here still run wild and free as the moose” into “a glacial lake that gets only bluer with every stroke of high country sunlight.”
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Modern telecommunications and same-day shipping allow a catalog company to locate virtually anywhere, Pence said.
“The choice of location was for lifestyle, not business,” said Pence, who was a marketing executive for Sony.
Starting with $40,000 in savings, the couple used credit cards and pawned their possessions to survive the first two years. Their first catalog was in black and white and printed by the local newspaper.
But starting in 1986, they posted a profit.
In the last decade, Coldwater Creek has become an economic force in this town of 5,000. The company employs 864 people, about 388 of them considered temporary help, Pence said.
Permanent workers receive medical benefits and profit-sharing, coveted commodities in a region of 12% unemployment.
During the busy Christmas season, when catalogers typically record most of their sales, Coldwater Creek could add more than 300 additional temporary workers.
They are busy packing gifts such as two note pads that cost $14.95.
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“The Anasazi of the Southwest recorded important events and kept legend alive with petroglyphs, painstakingly chiseled in stone. Today it’s easier,” the ad for the pads read.
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Jonathan Coe, executive director of the Sandpoint Chamber of Commerce, said Coldwater Creek may be the largest private employer in Bonner County.
Start-up businesses are the best chance for small towns such as Sandpoint to get new jobs, he said. Luring an established company the size of Coldwater Creek is unlikely.
“You would be competing with San Francisco or whatever for that,” Coe said. “We see small companies that arrive and grow, or people who arrive with an idea and turn it into a success story.”
The company is looking to expand its sales in other countries and has begun opening some retail stores.
Coldwater’s first retail outlet was built in 1995, when the company leased the entire Cedar Street Bridge, a covered bridge turned shopping mall in downtown Sandpoint. Coldwater built a two-story shopping complex patterned “after the famed Ponte Vecchio bridge shops of Florence, Italy.”
The company opened a store in Seaside, Ore., in April and is scheduled to open one in downtown Jackson, Wyo., in June. Plans call for up to 10 retail stores in the next few years, all in tourist areas.
The company introduced men’s clothing last year, dramatically increasing sales. For $21.95, a guy can pick up a denim baseball cap called The Duke.
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“He had all the right moves; the loose-shouldered walk, the steely gaze that scoped a man in a glance; the voice. But when he gave the brim of his hat a bare hint of a snap, you knew the Duke meant business.”
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Catalog analyst Todd Barr said the company is doing well in the crowded field of upscale clothing and housewares.
“They have a tremendous track record in terms of growth,” said Barr, of Atlanta-based Kurt Salmon Associates.
It is not clear how many companies are operating in the $100-billion U.S. catalog industry, Barr said. But he estimated that no more than 400 have annual sales as high as $80 million.
Coldwater mails up to 4 million catalogs and reports 1.1 million “active customers”--those with recent purchases.
In January, the company issued 2.5 million shares of stock at $15 per share. After the stock sale, the Pences own 75% of the company. In many ways, they resemble their target customers: well educated, middle- and upper-income, living mostly in the nation’s top 25 metropolitan areas.
The ideal Coldwater customer is a woman who lives in San Diego, drives a Volvo, is an attorney, is stuck on the San Diego Freeway but wishes she were in Yosemite National Park, Pence said.
“But she is too busy, so she calls us up,” he said.
She loves gourmet cooking and foreign travel and “will never go bowling in her life,” he said.
“We can’t be all things to all people,” Pence said. “We know this one type of customer very well.”
Simple writing implements won’t do for this crowd.
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Priced at $12.95, the 24 pencils in a wooden box are “not your average run-of-the-mill pencils, mind you, but rich, easy-grip soft-lead number 2s. These six-sided beauties are made out of cedar, with authentic Blackfeet Indian emblems on the side.”
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Pence, a native of tiny St. Paris, Ohio, has a philosophy degree from Antioch College in Ohio. An intense man given to quiet, methodical conversation, he has little of the gregariousness of the mail-order catalog owner portrayed on “Seinfeld.”
Pence’s office is decorated in pen-and-ink drawings of wildlife, and the huge windows have a view of the Rocky Mountains, including the runs of the Schweitzer ski resort.
Ann Pence used to be an advertising copy director for Macy’s, and now is creative director.
When they were bit by the entrepreneurial bug, catalog sales seemed a good fit for their skills.
“I would never make it as a lumberjack,” Pence said. “Ann has no qualifications to be a waitress.”
Despite rising paper and postage costs, two big expenses for catalog companies, profits have been rising. The company posted $1.6 million in profits in 1991, and $12 million by 1996.
The average order rose from $91 in 1995 to $133 in 1996.
Pence said there were several goals in taking the company public.
One was making Coldwater Creek into a national brand name, similar to L.L. Bean.
Going public will also help lure top executives from throughout the country to the company’s headquarters campus in remote Sandpoint.
“Being public allows stock-option opportunities,” Pence said. “That is an incentive to stay and drive up the value of the stock.”
Now the company is seeking to increase its catalog sales in Japan and Canada and to introduce its catalogs to some European countries. People in the new markets will get a chance to pay $28.95 for a 7-inch wooden letter opener.
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“A letter just arrived from Pamplona. In the soft light of evening, you reach for the letter opener you got last Christmas. So right for this, and better used opening handwritten letters from Spain full of good news than your telephone bill.”
