Strouds Hopes to Rise From Ashes Via Direct Sales a la Tupperware
By DAVID GREENBERG
The once-thriving chain of 70 Strouds stores was on its last leg in April 2003 when its founder, Wilfred “Bill” Stroud, died of a heart attack.
A month later, his son Jeff, then senior vice president of Strouds Acquisition Corp.’s operations, would oversee the second Chapter 11 bankruptcy protection filing and this time, the liquidation of the remaining 47 stores’ assets.
“The only thing I can say on a personal level is I’m glad my dad didn’t have to see the liquidation,” said Jeff Stroud.
The stores might be shut, but the family’s drive to sell sheets and pillowcases remains.
Late this spring, Jeff Stroud and Wayne Selness, the former president and chief executive, plan to resurrect the linen sales operation using the fastest growing distribution channel: direct sales.
Private Quarters LLC plans to sell sheets, towels, and other linens, this time, Tupperware-style using a sales force, mostly women, that hosts in-house parties.
The company has a built-in coterie of prospective hosts former Strouds employees based throughout California where Strouds had the bulk of its stores.
Stroud said he is modeling his company after large direct-sales operations in other product markets, most notably billionaire investor Warren Buffett’s Pampered Chef, a $740 million-per-year kitchenware operation.
“With all these job losses, people are turning toward entrepreneurship,” said Stroud. “A lot of women do these in-home parties to supplement the family income because their husbands’ income isn’t growing.”
Commissions will likely be 20 to 25 percent of retail sales. Hosts, who will be independent contractors, will also have the opportunity to make as much as 10 percent of the revenues generated by other salespeople they bring on board. (The company would pay out those costs as well.)
An initial product line consists of 20 bed and bath items, from a shower sponge costing $3 or $4 to a down comforter priced at several hundred dollars.
Before joining the operation, saleswomen must buy a sales kit that will cost $100 to $300 and contain sample items, order forms, catalogs and training materials.
Strouds was formed in 1979 in Pasadena as a specialty retailer designed to grab market share from large department stores’ bed and bath products. By 1997, Strouds had generated sales of $215 million.
But the regional operation’s 20,000-square-foot stores were no match for the big-box retailers, such as Bed Bath & Beyond and Linen ‘N Things, national chains with 50,000-square-foot stores.
“When we first entered new markets outside California, we met with some initial success,” said Selness. “But we began to see weakness in the later stores in those markets.”
The new company plans to raise $3.5 million to cover initial startup costs, which include products, materials and a sales- tracking software system.
“What happens is people work through their network of contacts,” said Selness. “Most of it comes from sales consultants who contact friends and relatives.”