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Lillian Vernon

Catalog Queen
October 10, 2008
URL: http://www.entrepreneur.com/article/197704

Lillian Vernon

Lillian Vernon
Founder of Lillian Vernon Corp.
Founded: 1951

"I never let my mistakes defeat or distract me, but I learn from them and move forward in a positive way."-Lillian Vernon

Lillian Vernon is one of the catalog industry's most accomplished and well-known leaders. A true pioneer who blazed the trail for women in a field once dominated by men, her achievements rank with those of such mail order giants as Richard Sears and A. Montgomery Ward. Realizing that vanity is a powerful magnet, she was the first catalog entrepreneur to personalize products, and in the process, she turned a mom-and-pop start-up operation into the leading gift catalog in the world.

In 1951, while pregnant with the first of her two sons, Vernon began to worry that her husband's $75-per-week salary would not be enough to support a growing family. She wanted to help, but her options seemed limited. "It was very unfashionable for women to work in those days," she writes in her autobiography, An Eye for Winners. "So I thought mail order was a wonderful thing. I could do it from the house, stay home, change diapers, the whole thing."

From the very beginning, Vernon showed a natural talent for marketing and product selection. While walking through her father's leather-goods plant in Manhattan, New York, she came to the conclusion that she should sell handbags. "I knew about those," she writes. "Why not sell them; and belts to match? Didn't every teenage girl strolling along the street anywhere in the United States, sport a handbag and belt?"

Working from her kitchen table in Mount Vernon, New York, and using cash she received as wedding gifts for seed money, Vernon placed a $495 sixth-of-a-page ad in Seventeen magazine offering a monogrammed leather handbag and matching monogrammed belt for $7. "I knew with absolute certainty that teenagers would go for items that made them feel unique," she explains. What she didn't know was that she'd hit upon an idea that would become her company's trademark-monogramming.

Within three months of placing the first ad, Vernon received $32,000 worth of orders. Inspired by her success, she officially formed Lillian Vernon Corp. Plowing her profits back into the business, she expanded her product line to include combs, blazer buttons and cuff links, and took out larger ads in a half-dozen fashion magazines. As before, she offered personalization free with any purchase. "Monogrammed items make such nice gifts," she remarked in a 1987 Nation's Business interview. "You simply can't rush out to a store and buy a present that's instantly monogrammed. It takes planning and thought. That makes the gift all the more special to the recipient."

In the early days, Vernon handled virtually the entire operation by herself-selecting and designing the products, writing the copy, opening the mail and shipping the orders. But by 1954, Vernon's business had outgrown her kitchen, so she rented three buildings in downtown Mount Vernon to serve as a warehouse, a shipping department and a monogramming workshop.

Despite Vernon's success, some suppliers refused to do business with a woman. She had difficulty getting credit, and when she did find suppliers who would work with her, she was often dissatisfied with the quality of their products. To get around these obstacles, Vernon set up her own light manufacturing plant to produce such items as charm bracelets, signet rings and bobby pin holders. By the end of the 1950s, her plant was accepting orders from big-name cosmetic companies such as Revlon, Elizabeth Arden, Max Factor and Avon for customized lipstick containers and makeup cases.

As her business grew, Vernon decided that she could reach more customers more effectively through catalogs than magazine ads. In 1956, she put together a 16-page black-and-white catalog featuring dozens of inexpensive gifts, knickknacks and household items and mailed it to 125,000 customers. "We sold a $1 sterling silver monogrammed ring and got thousands and thousands of orders," she told one interviewer. Response to the catalog was, in Vernon's words, "fabulous," and raised her annual revenue to $150,000 by 1956.

In 1965, Vernon officially assumed the titles of chairman of the board and CEO. She continued to experience tremendous success, but it didn't come without a price. The long hours she regularly put in took their toll on her marriage, and Lillian and her first husband divorced in 1969. He took over the manufacturing business while she kept the catalog, which by then was pulling in nearly $1 million per year in sales.

During the 1970s, Vernon's company experienced explosive growth, spurred in part by the legions of American women entering the work force. With a newly found discretionary income but little time to waste strolling through malls, working women became Lillian's best customers. At the same time, the energy crisis made casual station-wagon expeditions positively un-American and prompted a boom in catalog sales across the board.

In 1987, with annual sales at $112 million, Vernon decided to take her company public, selling 35 percent of the stock and keeping the rest for herself. The sale yielded $28 million, $12 million of which was reportedly split between Vernon and her children. The remainder was used to help finance a $25 million computerized national distribution center in Virginia Beach, Virginia, which opened the following year.

Not content to rest on her laurels, Vernon branched out into the specialty mail order market in 1989 with the debut of her Neat Ideas catalog, which featured merchandise for bath, bedroom and kitchen, with an emphasis on "organizers" such as dish racks and drawer dividers. The catalog was an instant hit, yielding an average order of $80-more than double the flagship catalog's average sale for the same year.

Despite difficulties caused by a sharp increase in paper and postage costs in the early 1990s, Vernon's company continued to prosper, and by 1998, boasted revenue of $255 million.

Vernon's awesome success is a tribute to her talent for working overtime in bringing unique products to customers wanting personalized service. While the catalog industry has become pervasive, with new catalogs emerging monthly, none have been able to dislodge Vernon from her dominant position at the top of the industry. A self-confessed workaholic, Lillian Vernon stands poised and ready to guide her company into the next century. "Toughness is a good thing," she says. "Yet it is considered good only in men. When a woman is tough, men can't stand it. I like being tough. Tough.and smart."



"I Know My Customer Because I Am My Customer"

One of the key ingredients in Lillian Vernon's success is her knack for picking winning products. Surprisingly, she avoids using traditional marketing techniques, such as focus groups, relying instead on her own keen intuition, which she refers to as her "Golden Gut." Her selection philosophy is simple: She only offers products that are interesting and that she herself would use.

Lessons From The Mail Order Maven