Harry & David heartache

THE NEWS THAT HARRY & DAVID may not have the funds to continue operating is tough to hear for people who have been following this business for a while.

The food gifts marketer was the gold standard in catalog creative, merchandising and marketing — it’s got a shelf full of MCM gold awards to prove it.

True, most awards don’t necessarily mean a strong business. But the MCM Awards is a results-driven competition, and the mailer’s gorgeous catalogs, stellar merchandising and strong service elements had been working well for years.

But Harry & David Holdings’ direct sales have fallen from about $385 million in 2007 to $348 million in 2008 to approximately $300 million for 2009 to about $280 million for 2010. What went wrong?

The story “Grim outlook for Harry & David” on page 8 provides some insight. (Full disclosure: Multichannel Merchant parent company Penton Media and Harry & David are both owned by investment fund Wasserstein & Co.)

I won’t belabor the merchant’s missteps here. But certainly the recession played a role — pricey fruit baskets were no doubt a tougher sell in recent years.

And this year Harry & David outsourced its creative work to an agency. The redesigned catalogs revealed this past fall were a disappointment to fans expecting Harry & David’s whimsical propping and signature hero shots and styling. There was nothing wrong with the catalogs, but they didn’t capture the essence of the brand and what makes its products special.

Other merchants have no doubt envied Harry & David’s vast expertise and resources. But bigger isn’t always better. As Internet/creative visionary and entrepreneur Josh Linkner said in a recent post on his blog (http://joshlinkner.com/blog/), more companies need to think like start-ups.

“The most innovative breakthroughs come from start-ups with almost no money, experience or resources,” Linkner says in the post. “In contrast, organizational giants with more cash than small countries get beaten to the punch with startling regularity.”

Harry & David’s downfall isn’t as simple as that it just got too damn big. But that didn’t help matters as the economy and technology changed the way people shop. A nimble start-up might have been able to react quicker to market shifts.

I just hope someone rescues Harry & David before it’s too late. It would be a shame to see this brand of more than 70 years die.

P.S. Speaking of Josh Linkner, he’s going to keynote an exclusive event we’re planning in New York, May 3-4, to celebrate our 2011 MCM Award winners and provide some innovative content and networking opportunities. We’re finalizing the program now — you can learn more at MultichannelMerchant.com/mcmlive.

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