L. L. Bean, Inc.

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L. L. Bean, Inc.

Casco Street
Freeport, Maine 04033
(207) 865-4761
Fax: (207) 797-0047

Private Company
Employees: 4,044
Sales: $870 million
SICs: 5651 Family Clothing Stores; 5941 Sporting Goods and Bicycle Shops; 5961 Catalog & Mail-Order Houses

L. L. Bean, Inc., is a leading U.S. catalog company and the largest supplier of outdoor gear in the world. The L. L. Bean catalogs, a tradition since the companys founding, are the engine that drives company sales; in 1993 the company took in $745 million from catalog sales alone. The 1993 catalogs, 30 in all, offered approximately 6,700 different items, most tied to the pursuit of outdoor, active lifestyles. For the solitary fisherman or the fun-seeking yuppie, the name L. L. Bean stands for quality, value, and enduring styleso much so that each year more than 3.5 million visitors make pilgrimages to the companys original retail store, in Freeport, Maine, to soak up the Bean ambiance and the Bean bargains. Retail sales for 1993 (including those for five factory outlet stores and two independently owned retail stores in Japan) reached $125 million. L. L. Bean also enjoys a high reputation, among its corporate peers as well as its customers, for order fulfillment.

The founder of the company was a 40-year-old Maine outdoors-man named Leon Leonwood Bean. Orphaned at age 12, Bean began to develop his entrepreneurial skills by doing odd jobs and by selling soap door-to-door. He also earned money by trapping. Although he was a natural salesman, writes Robert B. Pile, he was never really satisfied in one job and drifted about from place to place. Finally, Bean went to work for his older brother, Otho, in a Freeport dry goods store. There Bean sold overalls to manual laborers and earned $12 a week. However, his true love was hunting and fishing in the Maine woods and streams, a love that would eventually lead to the development of one of the most popular and enduring products in American retailing.

Like most outdoorsmen in the early 1900s, Bean frequently suffered the problem of hiking with waterlogged boots. In 1912 he decided to add leather tops to a pair of ordinary rubber boots. He sought the services of a local shoemaker, and, after a few pairs of the boots had been sewn together, he penned a circular entitled The Maine Hunting Shoe. A model of early direct-mail advertising, the circular began: Outside of your gun, nothing is so important to your outfit as your foot-wear. You cannot expect success hunting deer or moose if your feet are not properly dressed. Bean mailed the letter to sportsmen from outside Maine who had purchased Maine hunting licenses and touted his original shoe as light as a moccasin, with the protection of a heavy hunting boot. He priced his product at $3.50 per pair and, to further entice his fellow hunters, offered a money-back guarantee.

Beans marketing was flawless; however, his product was not. Of the 100 pairs of his Maine Hunting Shoes that were ordered and sent, 90 were returned because the tops had separated from the bottoms. Rather than give up his fledgling enterprise, though, Bean honored his guarantee and then borrowed $400 to redesign and perfect his boots (Bean also perfected his guarantee, making it unconditional and, in fact, the essence of Beans customer service culture through the present day). His determination to satisfy himself and his customers paid off after he traveled to Boston to meet with representatives of the U.S. Rubber Company, who were able to fulfill his original design intentions. Bean redoubled his boot-making efforts and his commitment to the mail-order business, fortuitously in the same year that the U.S. Post Office began its parcel post service.

Beans revamped footwear quickly became successful, and he soon expanded his marketing push into other states. A Fortune Hall of Fame article records that when another of Beans brothers, Guy, became the town postmaster, Bean established his factory directly over the post office and facilitated the mailing process with a system of chutes and elevators. He never lost his touch. Knowing that hunters from out of state often drove through Freeport in the middle of the night on their way to some hunting camp in the far wilds. Bean opened for business 24 hours a day. Night customers found a doorbell and a sign that read: Push once a minute until clerk appears.

Beans name spread during the 1920s, due to word-of-mouth as well as print advertising and the founders continuing innovations. In 1920 Bean opened a showroom store adjacent to his workshop, in accession to the demands of visitors. In 1922 Bean reengineered the Maine Hunting Shoe by adding a split backstay to help eliminate chafing. Within two years, sales rose to $135,000 annually. In 1923 the company received welcome publicity when its boots were used to outfit the Macmillan Arctic Expedition.

The catalog expanded in 1927, adding fishing and camping equipment to the Bean line of clothing and hunting equipment. Typical of the ad copy was the inducement: It is no longer necessary for you to experiment with hundreds of flies to determine the few that will catch fish. We have done that experimenting for you. For years, in fact, Bean insisted on personally testing all of the products the company planned to sell. Perhaps this is why the Maine Hunting Shoe, as innovative as it was, proved to be simply the first in a string of classic Bean products, like the Maine Guide Shirt, the Chamois Cloth Shirt, Bean Moccasins, the Zipper Duffle Bag, and Bean Cork Decoys. (The company also included high-quality non-Bean products, beginning with the Hudson Bay Point Blanket in 1927.)

During the Great Depression era, the mail-order house managed not only to survive but to thrive, passing the million-dollar mark in sales in 1937. According to Pile, Bean invested nearly every dollar he made back into the business, with his eye on building it for the long term. The secret to L. L. Beans success during these growth years was a threefold emphasis on quality products, fair pricing, and creating a timeless appeal to the Bean catalogs, which always featured paintings of outdoor Maine scenes and stories that underscored the strong link between Bean products and an outdoor lifestyle. In addition, Leon Le-onwood instituted a postage-paid policy, further strengthening the companys reputation for catering to the customer. By the post-World War II era, both Beans, the man and the company, had become living legends. And the list of Bean customers was fast becoming a collection of legends itself, as such names as Calvin Coolidge, Franklin Roosevelt, Jack Dempsey, John Wayne, and Ted Williams were added.

In 1951 Bean, still at the helm as he approached 80, announced that the Freeport retail store would begin operating 24 hours-a-day, 365 days-a-year. Another important innovation during this decade was the introduction in 1954 of a womens department. Yet, despite the now-famous Bean name, as the company entered the 1960s its sales volume was not as high as might have been expected. Pile asserts that dark clouds loomed on the horizon as [Bean] became older.... No longer did annual sales increase 25 percent or more each year; dollar volume actually began to flatten. Merchandise in the catalog and in the store was no longer up-to-the-minute, and even worse, orders were being slowly filled by part-time people who had little interest in doing the best possible job. The downhill course the company appeared to be on was steepened by the inception of other sports specialty marketers. However, this course was altered following Beans death in 1967 when ownership of the company fell to the Bean heirs. Only one was interested in management: Leon A. Gorman, grandson of the founder.

Gorman was first hired by the company in 1960. In 1967 he became president of a languishing business, with $3.5 million in annual sales and $65,000 in profits. Strong leadership and redirection were required and Gorman filled the need. His first decisions included expanding the advertising budget and demographic target group and making prices more competitive. He refrained from seeking growth through more retail outlets for fear of jeopardizing the catalog business. During his first full year as president, sales rose to nearly $5 million. The company had gotten back on track just in time to enjoy a huge recreation boom that was spreading across the country. By 1975 sales had reached $30 million and the company was employing more than 400 people. During the 1970s, the computerization of many business segments and the relocation of manufacturing to a new building further speeded the companys growth.

Several trends contributed to Beans substantial growth in the 1980s. Among them was the accidental, or perhaps inevitable, affiliation of the Bean label with prep culture and clothing. According to Milton Moskowitz, Lisa Birnbachs Official Preppy Handbook, tongue-in-cheek or not in its declaration of the Bean store as nothing less than prep mecca, helped fuel a 42 percent rise in 1981 sales. A new health and fitness boom contributed to Beans growth, as well as a surge in mail-order shopping. First-time Bean customers, nearly 70 percent of which were women, increased rapidly during the 1980s.

However, as the 1990s approached, the country experienced a serious recession; sales slowed, returns rose, and a 30 percent postal increase loomed on the horizon. For a time, Bean suffered along with the other major catalog marketers and was forced to lay off ten percent of its hourly and salaried workforce over a two-year period. In a 1992 Forbes article, Phyllis Berman placed the problem in a more serious context: What went wrong? To some extent L. L. Bean is the victim of success. A whole generation is already outfitted with L. L. Bean leisurewear and camping equipment. Its durable, high quality clothing lines have spawned many imitators. Meanwhile, similar items turn up in discount stores.... Bean carried relatively few styles and introduced new products slowly. But todays trend-conscious and jaded consumers want variety and novelty.

Berman, who continued by questioning Gormans management decisions, may have been premature in her analysis; by the end of 1992, the companys 80th anniversary, sales had risen by 18 percent to $743 million. The same year, L. L. Bean opened its first store in Japan, a ripe market that also contributed high year-end catalog revenues. A second Japanese store was added in July 1993; both are jointly owned by Seiyu and the Matsushita Electric Industrial Co. More L. L. Bean Japan stores were scheduled to open in the mid-1990s.

Despite its problems in the late 1980s and early 1990s, Bean still had great strengths from which to draw, including its mailing list, which is thought to be approximately 15 million names strong, and its heritage. Of the latter, Gorman commented: In running L. L. Bean on a daily basis, we have been most successful by applying what my grandfather called his Golden Rule: Sell good merchandise at a reasonable profit, treat your customers like human beings and theyll always come back for more. Of the catalog, the very embodiment of the Bean heritage, James R. Rosenfield wrote in Direct Marketing: When you look at a great painting, you sometimes get the feeling that a kind of perfection has been reached, where nothing could be added or subtracted. In a more mundane way, thats how I feel about the L. L. Bean catalog. It gets a perfect 10. Whether that perfection will lead to a repetition of Beans strong 1980s growth remains to be seen.

Further Reading:

Alpert, Mark, Yuppies Want More Than Most Catalogues Offer, Fortune, October 22, 1990, p. 12.

Bean Sticks to Its Backyard, Economist, August 4, 1990, p. 57.

Berman, Phyllis, Trouble in Bean Land, Forbes, July 6, 1992, pp. 42-44.

Bonnin, Julie, In L. L. Bean Store, the Catalog Fantasy Lives, Minneapolis Star Tribune (Cox News Service), December 13, 1993, p. IE.

Brown, Tom, Worried About Burnout? Try Fly Fishing, Industry Week, January 17, 1994, p. 29.

For Your Information, Minneapolis Star Tribune, February 23, 1993, p. 8D.

Leon A. Gorman, Chain Store Age Executive, December 1992, p. 57.

de Llosa, Patty, The National Business Hall of Fame (Leon Leonwood Bean), Fortune, April 5, 1993, pp. 112, 114.

Moskowitz, Milton, et al, L. L. Bean, in Everybodys Business: A Field Guide to the 400 Leading Companies in America, New York: Doubleday, 1990.

Pile, Robert B., L. L. Bean: The Outdoorsman Who Hated Wet Feet, in Top Entrepreneurs and Their Businesses, Minneapolis: OliverPress, 1993, pp. 29-43.

Port, Otis, and Geoffrey Smith, Beg, Borrowand Benchmark,Business Week, November 30, 1992, pp. 74-75.

Rosenfield, James R., In the Mail: L. L. Bean, Direct Marketing, February 1992, pp. 16-17.

Sterngold, James, Young Japanese Like Rugged American Look of L. L. Bean, Minneapolis Star Tribune (New York Times), March 4, 1993, p. 6E.

Tucker, Frances Gaither; Seymour M. Zivan; and Robert C. Camp, How to Measure Yourself Against the Best, Harvard Business Review, January/February 1987, pp. 8-10.

Vannah, Thomas M., A Most Bucolic Business, New England Business, May 1990, pp. 64, 63.

Jay P. Pederson