Brave New Catalogers: Hangers Come Out of the Closet

May 01, 2007 9:30 PM  By

You might not think that the humble clothes hanger would make for a successful catalog/Web business. But former stockbroker Devon Rifkin does. He founded the Great American Hanger Co. in Miami in 2000 as an online-only business and has enough faith in the company’s potential that he launched a print catalog in January. The 40-page debut edition mailed to 260,000 customers and Web requesters.

Great American Hanger specializes in supplying wooden, metal, plastic, padded, custom, and personalized hangers to retailers, hotels, and cruise ships. It sells to consumers as well: “Because we’re already manufacturing the hangers for customers, such as Ralph Lauren, there’s very little that has to be done to make the hangers applicable to consumers,” Rifkin says. But business-to-consumer sales account for only 20%-25% of its revenue.

Last year, Great American Hanger pulled in $7.4 million in sales, up 23% from the previous year, and it’s forecasting sales in the “double digits” this year. It has been featured for two consecutive years on the Inc. 500 list of fastest-growing companies.

HANGING ON TO AN IDEA

A business selling nothing but clothes hangers may sound a bit like the old Saturday Night Live skit about the store that sold only Scotch tape. But Rifkin, 33, got the idea after working in his father’s Miami-based company, which sold retail supplies such as mannequins, store fixtures, and yes, hangers.

“I noticed retailers kept coming in and wanting the hangers for their homes,” he says. “And it got me to thinking: For as fanatical and superficial as we can be as a society, there wasn’t a central place to buy hangers.”

Ten years later Rifkin used his apartment as collateral to borrow $30,000 to go into the hanger business. Soon he was traveling to Asia and South America to learn about sourcing hangers. On a whim, he bought $25,000 worth of wooden hangers from a vendor in India, “because they were the cheapest and the Indians spoke English — that was the key, because we wouldn’t have known what we were buying or negotiating.” He sold the $25,000 worth of hangers in three months in 1999 and invested $500,000 in hangers the next year. He credits selling to his father’s customers as a big break for his business.

Word spread, and soon Rifkin was selling to celebrities such as Donald Trump, Jerry Seinfeld, and Arnold Schwarzenegger. The Sultan of Brunei brought 25,000 hangers. Rich-and-famous clotheshorses aside, the company’s consumer clientele tends to be prototypical catalog shoppers. The majority are women in households with annual income of $50,000-$100,000 a year who buy fashion apparel and home goods. The average order size is $150.

Rifkin intended to produce a Great American Hanger catalog from the very beginning. But in typical Rifkin fashion, he studied the business well in advance before jumping in.

“We research everything,” he says. Rifkin attended conferences, spoke with scores of vendors, and even met with potential printers to evaluate the level of clay content in the papers he was considering using for the catalog. “I’m old-school that way,” he says.

The company has already sent out two mailings; its next mailing will be in early fall. The plans call for six mailings annually reaching more than 1 million consumers.

Great American Hangers has a warehouse in Reno, NV, and offices in Hong Kong in addition to its Miami headquarters. Rather than leasing a giant office space and growing into it, Rifkin has moved headquarters nine times in seven years to ensure that the business growth justified the space.

While the upcoming postal rate increase is a blow to all catalogers, particularly new and small mailers, Rifkin is taking it in stride: “It is what it is. As a business owner, you have choices to make in order to mitigate the costs increases. You can choose less-expensive paper or stop mailing as many catalogs.”

With less than six months as a print cataloger under his belt, Rifkin knows he still has a lot to learn about the selling medium. What’s been his biggest surprise about the catalog business so far? “I was surprised to hear so many people saying, ‘Take me off your list.’”