Up close and personal

Lillian Vernon CorpWith only $2,000, Lillian Vernon began a business venture that would become a leading catalog and online retailer. Lillian Vernon Corp., named after the founder, is a multi-channel retailer that sells through eight catalogs, two Web sites, 17 outlet stores and a business-to-business division.

The company markets gift, housewares, gard­ening, Christmas and children’s products and is one of the largest catalogs in the United States. Lillian Vernon’s business-to-business division, which was established in the 1950’s, sells corporate gifts, custom premiums, incentives and gift certificate programs to more than 1,000 accounts including many Fortune 500 companies.

The division offers custom and private-label product develop­ment, custom cataloging, Lillian Vernon catalog products at quant­ity discounts and state-of-the-art personalization capabilities in addition to a full range of telemarketing, fulfillment and drop-ship services. The new Lillian Vernon Web site features a special cor­porate sales section to serve the business-to-business market.

Its founder and chairwoman, Lillian Vernon, spoke with US Business Review about taking risks in a male-dominated business environment and how the Internet is shaping the future of direct marketing.

US Business Review: What was the inspiration for starting a mail order business at a time when women weren’t generally accepted as members of the business world?

Lillian Vernon: I was young and recently married in 1951 when I started my mail order business on my kitchen table. My first child was on the way, yet I felt restless staying at home while my husband worked. I felt I wanted to contribute to our family finances so we could enjoy the extras in life. My father owned a small leather goods manufacturing business in New York City and he taught me the art of merchan­dising at an early age. When I was a teenager, he asked me to select products for him to manufacture that I believed young women would want to wear and all my selections proved to be good sellers.

Since I had developed a talent for merchandising, I thought why not use my expertise and work from home. Skimming the pages of Seventeen Magazine – my favorite magazine at the time – I decided to design a leather bag and belt, which I personalized for free with my customers’ initials and placed an ad in Seventeen. I used $2,000 of my wedding gift money as my venture capital to start my company and the ad cost $495. It was a gamble that paid off. My ad brought in $32,000 in orders, which was a lot of money back then and my business was launched.

I never bowed to societal pressure or the criticism that accom­panied being a working woman in a man’s world during the 1950s. Back then, most women stayed at home to care for their husbands and families and very few worked outside the home. It was even more unusual for a woman who was pregnant to work. Not every­one in my family was support­ive about my embarking on my own busi­ness.

My mother felt my sole priority should be my family and my husband was concerned about the money I was risking. However, my father was a huge supporter. He believed that I had the talent to be a success and he encouraged me to pursue my dreams. He was my biggest fan and I owe my expertise in merchandising to him. He felt I had a special talent and I didn’t fail him.

USBR: Now, more than 50 years later, you have embraced the Internet to reach out to customers. In what other ways is your market changing and how are you adapting?

LV: Our reputation in the direct marketing industry is built on satisfying our customers’ evolving needs. We conduct focus groups and carefully analyze changing marketing and merchandising trends. Based on these studies, we reemphasized our value-pricing strategy by offering even lower prices. We successfully launched a new catalog title, “Favorites Under $20,” perfectly suited to today’s consumers seeking unique products at unbeatable values. We are repositioning all of our catalog titles to attract new customers through redesigns and the introductions of new logos.

USBR: What key demographics does your market include?

LV: Lillian Vernon’s customer database totals more than 26 million households. More than 90 percent are women, with an average age of 44 and an average household income of $65,000. Most are employed outside the home and more than half have children living at home. The Lillian Vernon Web site, www.lillianvernon.com, generally attracts more men and a better-educated, higher-income demographic.

USBR: Lillian Vernon is one of the 10 most popular catalogs in America. What sets your company apart from others in the industry?

LV: What distinguishes our company and our brand is our trademark-free personalization, a service I began 51 years ago, which is still very popular today. Lillian Vernon is the industry leader in personalization. Half of our 6,000 products can be personalized and we are always developing new and exclusive personalized products.

We have a special catalog, “Personalized Gifts,” devoted exclus­ively to this service and all our catalogs and Web site feature it as well. Our business-to-business division sells customized products to more than 1,000 accounts, including many Fortune 500 companies who choose Lillian Vernon because we have a full-range of personalization and fulfillment capabilities.

USBR: What is your most popular item and when is your busiest season?

LV: Our most popular product is our exclusive 24-piece Dress-Up Trunk featured in our “Lilly’s Kids” catalog. Our customers love this item because its gives children a chance to use their imaginations and role-play. The trunk comes with different types of accessories including hats, gloves, fans, scarves, stoles and jewelry. It retails for $39.98, which is a great value. Customers enjoy giving this as a gift or a gift to their own children.

Christmas season is our busiest season of the year. We employ more than 5,300 from September to December to ensure that our customers are satisfied. Our two call centers in Virginia Beach, Va., and Las Vegas are staffed with more than 1,700 representatives to take customer orders. During our peak week, we receive 267,000 orders.

USBR: What are some specific challenges that the company or industry as a whole has recently faced and how did you work to meet them?

LV: There are several challenges that the entire direct marketing industry faces. First and foremost is the continual rise of postal rates. To compensate for these increases, direct marketers are reducing their catalog circulations and refining and targeting their mailing lists to reach the best prospects.

The Internet is proving to be our most valuable channel to counter the rise in mailing costs and is an integral part of our company’s future. Many direct marketers, including Lillian Vernon, are making a concerted effort to drive more traffic to the Web and we are succeeding. During the past Christmas season, our Web sales increased 33 percent over the fall of 2001. In addition to this, our sites are accelerating the growth of our customer database.

Our second challenge is maintaining customer loyalty in a highly competitive retail marketplace with a glut of 10,000 mail order catalogs, hundreds of thousands of e-commerce sites and the over-storing of America.

USBR: How many employees do you have and what is the general breakdown of labor and management? How do you work to make sure everyone communicates effectively?

LV: Year-round, Lillian Vernon employs approximately 1,000 at our Rye, N.Y., headquarters and our national distribution center in Virginia Beach. Though we are a large company, we keep alive the spirit of entrepreneurship by having a lean management team. We realize that communication is key to maintaining employee morale and promoting worker productivity.

We e-mail a monthly e-newsletter filled with news about our company to our staff. I conduct quarterly building meetings to inform our staff about the latest initiatives and to gather feedback. We also sponsor an employee suggestion program with rewards for new ideas and better ways of conducting business.

USBR: What is your corporate culture and how do you work to keep up morale and enthusiasm ?

LV: Because we are an entrepreneurial company, we have a corporate culture that is not conservative or bureaucratic. Unlike some CEOs, I always have an open-door policy and I encourage my management team to do the same. Because they know I am always accessible, I meet with them when they need my input. We work hard to keep our staff focused as a team so everyone is involved and knows they are working toward a common purpose.

USBR: Describe your training and develop­ment programs. Are you focused on promotion from within and internal growth. If so, what are your strategies to accomplish this?

LV: I like to promote from within and I en­courage our staff to better themselves. Since we are primarily a company that caters to women, the majority of my staff is female and many of them are key members of my management team. They have made many contributions to our company because they are talented and they understand our business and customers.

I am very passionate about helping women in business achieve success because corporate Amer­ica is still predominantly a man’s world. Because I entered the workplace as a female entrepreneur at a time when this was rare, I have been a role model who can help bring about change by participating in causes and organ­izations that promote the advancement of women.

USBR: Does the corporation participate in any events with schools, charities or the community at large?

LV: Because I believe in giving back to the community, we are a socially responsible company that partners with a national charity each year. Our company follows my lead by participating in charitable work that helps those in need.

This past year, we partnered with Habitat for Humanity to build a house for a family in need in Virginia where our national distribution center is located. Last year, our Rye and Virginia staff joined Citymeals-On-Wheels to distribute hot meals on a daily basis to homebound senior citizens.

Our staff volunteered their time to visit seniors and spend time with them. Through my personal foundation, the Lillian Vernon Foundation, I donate funds to many charities each year. I also make time in my busy schedule to serve on the boards of several non-profit organizations.

USBR: What is your vision of the future of the company in five to 10 years? Where do you see it heading?

LV: The Lillian Vernon brand is very strong and we are known to more than 39 million Americans. Because we have been in business for 51 years and we have built a solid reputation in our industry, we have an enduring future. I see the Internet having the greatest impact on our business because it is so cost-effective, its reach is vast and marketing can be almost instantaneous.

Over the next decade, the Internet will comprise almost half our annual sales as we drive more traffic to the Web. Most direct marketers are making a similar push to boost Internet sales because the costs of postage and printing catalogs are always going up.

We have undertaken an exciting new initiative to license the Lillian Vernon name. This is an ideal way to expand our brand by capitalizing on our merchandising expertise in partnership with well-known manufacturers and retailers.

USBR: You’ve been inducted into the Direct Marketing Association Hall of Fame, published an autobiography and were named one of the 50 leading women entrepreneurs in the world by the National Foundation for Women Business Owners. Looking back on your career, what are you most proud of?

LV: I am proud of the fact that I am a role model to women who want to succeed in business and to immigrants who have come to America, seeking a better life as I did. My family fled the Nazis and moved from Leipzig to Amsterdam, Holland in 1933, and later to New York City in 1937 to escape the Nazis and World War II.

I had the honor several years ago of being a recipient of the Ellis Island Medal of Honor and having my name placed among other notable dignitaries who received this award. Attending the awards ceremony on Ellis Island in New York City and seeing my name etched in the wall of this historic attraction was a day I will never forget. My father would be proud of me because he had the foresight to move to America, which saved our lives.

USBR: What is your advice to men and women who want to start their own business but might be intimidated or afraid of failure?

LV: I advise those thinking about starting their own business to get experience in the workplace for several years before you branch out on your own. When you work for different companies, you learn first-hand how they conduct business and then you can decide what practices would work best for you.

I would also make sure you have enough financing to sustain your company during the first few years until you show a profit. Hire talented people who will commit themselves and possess the passion that you do.

USBR: Back on your career, can you cite changes in the rate of females aspiring for upper-level positions – are there more today.   How have their challenges changed?

LV: Women are slowly gaining power in corporate America and it’s long overdue. However, men still hold most of the top executive positions at America’s largest corporations and this needs to change as well as the pay scale inequality.

Women are making the best advances as entrepreneurs who own their own companies because they control their own destiny. In order to have a successful career as an executive in today’s competitive job market, a woman has to be well educated and should hold a Master’s degree.

Women must work harder than their male counterparts, take on more responsibilities and be more creative to be recognized and promoted for their abilities. A woman should always carry herself with poise and dignity to earn the respect of her male colleagues.

USBR: Why is it important that more women be encouraged to aspire to become business leaders?

LV: Women are just as talented and intelligent as men and they should be given the same opportunities to pursue a career if they want to. Companies would benefit greatly from the creativity, sensitivity and multi-tasking abilities that many women instinctively possess.   I believe that all woman should have a degree of independence and some financial security regardless of whether they are in a relationship.

USBR: Hagberg Consulting Group reports that women represent more than 50 percent of the professional work force but only 6 percent of the executive team. Do you think this will change in the next 10 years or so?

LV: Society has changed for the better since I started my business in 1951 and our culture is more tolerant of women working, having successful careers and raising a family.

Lillian Vernon Corp. is unique because we are a female-oriented company. However, it will take considerable time for women to break the glass ceiling in corporate America and be a part of senior management. Beliefs and attitudes must change and this is a challenge.

My advice [to women] is to become an entrepreneur and own your own company if you have the resources to do so. There are less barriers when you are the boss and you can succeed on your own if you are talented and dedicated.