Business Spotlight: Catalog Capitalists

The owners of Rockridge Group LLC are living the dream of capitalism.

Phil and Gretchen Dexter, and Gary Cummings were facing the loss of their jobs in 2008 while their employer plodded through bankruptcy court.

With company operations winding down through the bankruptcy proceedings, a senior manager of catalog merchant Direct Retailing Inc. in Ozark planted the seed for survival of the company – and of the trio’s employment as catalog and e-commerce merchants.

“‘If you guys want to take this and run with it, I won’t stand in your way,’” Phil Dexter recalls the major stakeholder saying. “We all looked at each other and thought this is a once in a lifetime opportunity. How could we say no?”

The three middle managers scraped together $60,000 from family and purchased the physical inventory of Direct Retailing, once a $20 million to $40 million company mailing millions of catalogs before slumping sales and overhead costs spiraling upward spelled its bankruptcy. In the liquidation case, the trio negotiated payment of 10 percent of annual sales until the purchase price was met for the company’s three catalog and Web brands: The Music Stand, Linda Anderson and Characters. The Dexters and Cummings have since added a fourth brand, iGift, and a fourth partner, Adrienne Crow. They renamed the company Rockridge Group and scaled way down, first as a retail storefront known as Ampersand in downtown Springfield. Two years after paying off the bankruptcy court-approved acquisition – well ahead of the payment schedule – Rockridge notched its first $1 million year in sales and was recognized statewide for its journey.

On Jan. 30, the Rockridge owners collected an Excellence in Business Award from the Missouri Small Business & Technology Development Centers and Missouri Procurement Technical Assistance Centers. At a gala in Jefferson City, Rockridge was among 22 companies honored across Missouri and the only business from the Springfield area.

Learning from mistakes
In 2004, Direct Retailing owner Phil Wiland offered Gretchen Dexter the marketing manager position responsible for planning catalog circulation. Her husband, Phil, worked on the creative, product imaging side, and Cummings was an information technology professional. They realized their complementary roles as this new business idea began to gel, and they say they’ve learned from the failed company’s mistakes.

“They really weren’t going after the Web side of the business. They were attached to the catalog,” Gretchen Dexter says of the Direct Retailing executives.

With the restructuring to Rockridge, the new partners didn’t mail a single catalog until 2010 and turned the Characters brand exclusively online.

Still, in the first year of operation, Rockridge recorded nearly $400,000 in sales – this on the brink of the Great Recession – and topped it with $530,000 in 2010, before doubling results last year.

Phil Dexter credits the partners’ intentional pace for growth.

“We’re kind of risk averse,” he says. “The reason we’re still growing despite the recession is because we’ve been very careful. We’ve tried to grow as fast as we can within limits.”

Rockridge got out of the retail segment with Ampersand’s 2011 closure and moved into larger space across two suites with loading dock access at 310 S. Union Ave. The company has gradually built its inventory, and among the 5,000 SKUs now in the warehouse are a set of Peanuts pint glasses, a Johannes Brahms bobblehead and crossword puzzle pajamas.

“You have to compete by being unique, quirky and hard to find,” Gretchen Dexter says.

Big shipments
The top-selling brand is The Music Stand line, which comprises 60 percent of sales offering musical-themed items. The Music Stand 2012 holiday calendar, mailed to 127,000 households, included such products as a Zildjan cymbal wall clock, Elvis shot glasses and a steel washboard tie with two thimbles for playing.

The Linda Anderson brand, designed for female shoppers with home decor, jewelry, and kitchen and gardening products, is second in sales, making up 25 percent of volume. Characters, which targets collectors with licensed merchandise such as Disney, Beatles and Wizard of Oz items, and iGift, which offers a complete gift service including wrapping and messaging, evenly splits the remainder of sales.

Half of the company’s sales are processed October–December, and the partners are considering ways to spread the volumes throughout the year by emphasizing everyday-use items.

“In a recession when money is tight, people aren’t saying, ‘We need more Mickey Mouse stuff,’” Gretchen Dexter says.

Rockridge contracts with Wisconsin-based printer Quad Graphics for printing and mailing services, and the firm belongs to Epsilon’s cooperative database division called Abacus to help predict future buying behaviors. Dexter says Rockridge’s customer retention rate is 3-4 percent against an industry average of 1.5 percent.

With the recent rise in sales and social interaction online, the partners say organic Web searches and email campaigns still get the best results. “After that, it seems to be shopping aggregator sites such as TheFind or Pinterest, and Facebook comes in a poor last,” Phil Dexter says.

But the partners know their bread and butter.

“Catalogs are king,” says Cummings.[[In-content Ad]]