Things Remembered, Inc.

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Things Remembered, Inc.

5500 Avion Park Drive
Highland Heights, Ohio 44143
U.S.A.
Telephone: (440) 473-2000
Toll Free: (800) 274-7367
Fax: (440) 473-2018
Web site: http://www.thingsremembered.com

Private Company
Founded: 1967
Employees: 4,000 (est.)
Sales: $300 million (2005 est.)
NAIC: 332812: Metal Coating, Engraving, and Allied Services (Except Jewelry and Silverware) to Manufacturing

Things Remembered, Inc., is a privately owned retailer of gifts for all occasions, whether they be weddings, baby showers, birthdays, job promotions, graduation, or general holidays. The company specializes in gifts, such as jewelry, that can be personalized through onsite engraving. In addition, Things Remembered offers such items as leather goods, glassware, religious items, pens and stationery, clocks, frames, desk accessories, lighters. The company also sells personalized gifts through a license with the 32 teams of the National Football League, including framed prints, shot glasses, and blankets. Things Remembered sells its gift items through approximately 650 stores and kiosks, located primarily in shopping malls, and through catalogs and the Internet. The customer base comprises three categories: wedding, business, and general. Based in Highland Heights, Ohio, Things Remembered is owned by GB Merchant Partners, LLC.

FOUNDING COMPANY ESTABLISHED: 1950

Until 2006, Things Remembered was part of Cole National Corporation, whose roots date to the years following World War II. The company was founded by Joseph Edmund Cole, a native of Cleveland, Ohio, born in 1915. After a year at the Ohio State University, Cole went to work as a salesmen for Waldorf Brewing Company from 1933 to 1935, at which point he became involved in the key business. It was with keys that he was to make his fortune. After spending nine years at Cleveland's National Key Shop, where he rose to the rank of general manager, Cole left in 1944 to work for another Cleveland company, Curtis Industries, tasked with establishing a key retailing business. His first shop operated out of the parking lot of a Cleveland Sears, Roebuck & Co. store. Cole developed strong ties with Sears and other department stores, such as Montgomery Ward and Kresge, leasing space in their parking lots to offer key-making shops. He found a profitable niche, providing the level of training, inventory control, and customer service in the highly profitable key duplicating business that the department stores simply could not provide. Cole also benefited from the postwar economic boom that led to increased home and automobile ownership—and, thus, a growing need for duplicate keys to open doors and start engines. By 1950 Cole had built the Curtis key business into the country's second largest key retailer. It was at this point that he bought the Curtis operation as well as his old employer, National Key, whose name he assumed. He also earned the newspaper moniker, the "king of keys."

Far from satisfied with his dominance in the key-duplicating field, Cole began to diversify in the 1950s. He became involved in the making of key chains, which led to the manufacture and selling of jewelry. He also transferred his business model to other services, creating a while-you-wait shoe repair operation. By the end of the 1950s he had succeeded in growing sales from $2.3 million at the start of the decade to more than $10.5 million. The business was so prosperous that in 1959 he took the company public and had no difficulty in selling its initial offering of stock.

Proceeds from the initial public offering (IPO) were used to fuel expansion through acquisitions in 1960. Cole branched into such areas as greeting cards and novelties, but the most significant addition was that of Masco Optical, a move that put him in the eyeglass business. Having strayed far afield from keys, Cole also dropped the National Key company name in favor of Cole National Corporation. Much as he had done with key duplication, Cole opened eyewear counters within department stores, the first in a Detroit Montgomery Ward store. Again, by focusing on the details of the business better than the department stores were able to, he found plenty of retailers willing to turn over their optical counters to his charge. It proved to be a good marriage for both parties: the retailers had the foot traffic, and Cole was able to offer the customers excellent value and service. The new business line was so successful that by 1964 it had emerged as Cole national's largest division, generating almost half of the company's total revenues.

"CAN DO" SHOPS LAUNCHED: 1967

In 1967 Cole applied the successful formula of specialized counter operations that had worked so well with key duplication, shoe repair, and eyeglasses to engraving. The original shop was called "Can Do." It was a natural progression to move from engraving to the selling of gifts that could be personalized through engraving and monograms. As a result "Can Do" evolved into the "Things Remembered" gift-counter chain in shopping malls. This business did well for Cole in the 1970s, something that could not be said for some of the company's other ventures. A number of units were divested in the second half of the decade, while Things Remembered grew to a chain of 280 shops located in 38 states.

Cole National was taken private in 1984 through a leveraged buyout backed by Kohlberg Kravis Roberts and Co., an investment firm known for its penchant for taking profits by carving up acquisitions. Cole National was no different, and soon Cole Craft Showcase and Original Cook Company chains were lopped off. The Cole family reasserted its hold on the company when Joseph Cole's son, Jeffrey, was able to gain control through another leveraged buyout, creating CNC Holding Corporation. In the meantime, the company had become involved in a new area, toys, through the acquisition of Child World Inc., which in the early 1980s trailed only Toys 'R' Us in toy retailing. The subsidiary prospered for a while, and in 1985 Cole was able to take the unit public. Unfortunately the business was not able to cope with a sales slump in the late 1980s, a heavy debt load, and strong competition. With the start of the 1990s, Jeffrey Cole unloaded the money-losing operation, leaving CNC with three lines of business: Cole Key, Cole Vision, and Things Remembered.

Cole Vision remained the dominant subsidiary, while increasingly less emphasis was placed on the original key business. In fact, hundreds of Sears department store key counters were converted into a new line called "Gifts Center." While the shops resembled Things Remembered in many ways, they were operated separately. Cole was enjoying so much success with gift-ware that it expanded its stores and added soft goods, such as towels and apparel, that could be personalized through monogramming.

COMPANY PERSPECTIVES

The Things Remembered mission is to please our customers. We will do everything possible to serve, guide, and help our customers find the perfect personalized gifts for all gift-giving occasions.

Cole rebounded strongly from net losses incurred in 1990 and 1991. By 1994 sales had increased to more than $525 million and earnings approached $25 million. In order to ease the company's debt load to prepare the ground for renewed expansion, especially in the optical segment, Cole was taken public once again in 1994. A major step taken to bolster Cole Vision came in 1996 when Pearle Inc. was acquired, making Cole the country's second largest optical retailer. Integrating the operation proved difficult, however, and the unit struggled in the second half of the 1990s.

REBRANDING: 1998

The Gifts Center business was also enduring hard times, and in January 1998 the 430 counters within Sears stores were closed, erasing about $55 million in annual sales from Cole's balance sheet. Things Remembered, in the meantime, generated about $225 million a year, but the 800-store chain fell short of its sales goal. Cole remained committed to the business, and in early 1998 took steps to rethink the strategy behind the gift business, aided by the hiring of a Customer Relationship Management agency. Research revealed that while customers had a positive shopping experience at Things Remembered, they came infrequently and were not particularly sure what the stores had to offer beyond personalized wedding gifts. Customers also had difficulty recalling the name, more often than not calling it "Things to Remember." In essence, Things Remembered was seen as a "brass and glass" gift shop that offered some engraving.

One of the first steps the chain took to build its brand was to focus the product mix, keeping only items that could be personalized or monogrammed in order to support the subsequent marketing claim that every item in the shop could be personalized. This was reflected by dropping the current advertising tag line, "Great Unexpected Gifts" to "The Place for Personalized Gifts." Customer research also revealed that most of the company's customers were women and that they viewed themselves as creative gift givers. Hence, the company endeavored to make the stores less masculine and controlled, instead growing a brand personality that embodied warmth between associates, called "Gift Advisors," and customers, as if two friends were coming together to find the ideal gift. In this way, Things Remembered hoped to build customer loyalty that had been sorely lacking previously.

Another key element in positioning the brand was the introduction of a catalog, which to this point had only been pursued as a test. It could be used in the stores as well as a direct sales tool to take advantage of a house list of store customers, and as a way to reach out to potential new customers. The catalogs reinforced the idea that Things Remembered focused on personalized gifts by showing numerous examples of engraved gifts. Test catalogs had photographed actual engraved items, but new computer software was employed to simulate engraving, allowing much greater flexibility. For example, one gift that had been engraved "Ann and Dave Smith" in the test catalog, became "Ann and Dave, our honeymoon in Bermuda." The simulated engraving software also allowed the catalog to show readers that Things Remembered was more than just a place to find wedding gifts, as evidenced by such engravings as "Congratulations on Your First Marathon," "Tina's Tooth Fairy Box," and "The Wilcox Family Reunion." Interspersed throughout the catalog were tips to emphasize the brand promise of creative gift-giving. Moreover, they were presented as written by actual Gift Advisors, their name and home store listed at the end of the tip. In this way another brand promise, the friend-to-friend relationship between customers and salesperson, was reinforced.

Research revealed three groups of customers for the catalogs. First, there were the general customers. Although greatest in numbers, they spent the least on average. Next was the wedding audience, which spent four times the average amount of general customers. Finally, there was the business audience, one that Things Remembered had neglected but which offered great potential. Rather than produce one catalog to appeal to all three of these target customers, the company elected to produce three versions of the catalog, each one focused on a specific audience. The gift-giving tips could be tailored to each group and make specific sales pitches. The business customer, for example, was told about the economic benefits of showing appreciation to employees through gifts. The wedding audience would be encouraged to buy gifts for everyone in a wedding party: "Did you know that the bride and groom often forget to buy gifts for their parents?" As a result, the company was building a need for its products while providing an incentive to buy them.

KEY DATES

1944:: Cole National Corporation is founded.
1959:: Company is taken public.
1967:: Cole establishes Things Remembered.
1998:: The first Things Remembered catalog is mailed.
1999:: A company web site is launched.
2004:: Cole is sold to Luxottica S.p.A.
2006:: GB Merchant Partners acquires Things Remembered.

The branding effort paid immediate benefits for Things Remembered, which in 1998 not only surpassed sales projections for the first time in a few years but also topped the retail industry's average in all-important holiday sales. In 1999 the company more than doubled the number of catalogs its mailed to 3.5 million. Things Remembered also added a web site to provide another sales channel and avenue to build the brand. The result was a record-setting year for the company.

Sales improved to $275.9 million in 2000, but a downturn in the economy resulted in a dip to $272 million in 2001. Things Remembered's parent company also struggled with the economy, and the increasing acceptance of corrective laser eye surgery that cut into the sales of eyeglasses and contacts. However, the optical business remained strong and it soon became the target of larger companies that saw it as a prime acquisition target. In 2003 the Italy firm of Luxottica S.p.A., the world's largest maker of prescription eyewear and name-brand sunglasses, offered $410 million to acquire Cole National. As shareholders were about to vote on the offer, Hong Kong-based Moulin International Holdings Ltd. countered with a bid of $419 million. Ultimately Luxottica won the prize in October 2004 at the cost of $495 million.

Things Remembered carried on as a Luxottica subsidiary, building sales to $300 million in 2005. The company's Internet business was doing especially well, growing each year at a 40 percent clip. Moreover, the Internet also helped grow store sales. Increasingly people picked out items on the web site, and then called in an order to a local store where it could be engraved and then picked up. The company was also pursuing larger format stores, and many of its mall kiosks were being upgraded to full-fledged stores. Despite the gift retailer's success, it was not surprising, however, that the chain did not fit into Luxottica's long-term plans. In September 2006 Things Remembered was sold for approximately $200 million to GB Merchant Partners, a private equity affiliate of Boston-based Gordon Brothers Group, and New York's Bruckman, Rosser, Sherrill & Co. As an independent company, Things Remembered was expected to pursue an aggressive growth strategy.

Ed Dinger