Merz’s Grows

Merz Apothecary is proof that even small, old-time retailers can become successful multichannel merchants. The company, which has had a shop in Chicago for more than 130 years, has expanded into e-commerce as well as grown its direct mail and retail presence, in part by partnering with larger players.

Even before the store, Merz sold natural apothecary items from Germany via a one-page mail order flier. The company now mails an 84-page annual catalog. But when Merz saw a new opportunity to sell merchandise online during the dot-com boom of the late 1990s, says president Anthony Qaiyum, it recognized that “” wasn’t an ideal URL. So in 1998 Qaiyum came up with, which is easier to spell and remember, he says.

The Web business, run out of the back of the retail store, now represents about 30% of the company’s sales, which were in the $5 million-$6 million range for 2006. In fact, later this year Qaiyum plans to rename the catalog Smallflower, to match the name of its Website.

To expand its online reach, Merz became an merchant in November 2004. Its sales via its Amazon affiliation now rival the revenue from, Qaiyum says.

Merz grew its retail presence with a similar partnership. In September 2003 it teamed up with retail giant Target to open a 2,000-sq.-ft. boutique inside Marshall Field’s Chicago flagship location, which became a Macy’s store last year.

Merz isn’t the first store-within-a-store tenant at the location. Levenger, a Delray Beach, FL-based reading accessories cataloger, opened a shop inside the department store in 2003; it has another store within a Macy’s at a second downtown Chicago location that had also been a Marshall Field’s.

“So many of our customers are happy to see us at Macy’s, but it’s obvious to us that our customers love the fact we’re not a chain,” says Qaiyum. “We’re still an independently owned and operated business.”

The boutique in Macy’s has helped boost sales at the original store as well. “More people are coming up here to check it out,” Qaiyum says. And new signage in the freestanding store that explains the various herbs and their uses is leading to larger average order sizes, he adds.

While most experts talk about the importance of one unified brand from one channel to the next, it also pays to know your local customer. “The two brands make it a little more complicated for us,” Qaiyum admits, but “people are excited to know the Web business is part of a brick-and-mortar business.” It also helps that “we have an interesting story and a rich history,” he says.

Qaiyum has no plans to change the name of the brick-and-mortar business, which has been in the Lincoln Square neighborhood of Chicago since 1875. “I feel we have almost an obligation to preserve the name out of a sense of our history,” he says.

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