Stanhome Inc. History

Address:

333 Western Avenue
Westfield, Massachusetts 01085
U.S.A.

Telephone: (413) 562-3631
Fax: (413) 568-2820

Public Company
Incorporated: 1931 as Stanley Home Products, Inc.
Employees: 4,940
Sales: $790 million (1994)
Stock Exchanges: New York Pacific
SICs: 5947 Gift, Novelty & Souvenir Shops; 5961 Catalog & Mail-Order Houses; 5912 Drug Stores & Proprietary Stores

Company History:

A pioneer in the direct-sales industry, Stanhome Inc. markets a wide range of consumer products, including giftware, collectibles, cosmetics, and home care and personal care products, through a variety of distribution channels. For decades, Stanhome sold its home care and personal care products through its "Famous Stanley Hostess Plan," a marketing innovation in the direct-sales industry that produced remarkable results for the company and prompted other direct-sales marketers to follow suit. By the 1990s, however, the company made the bulk of its money through its Enesco subsidiary, which imported porcelain figurines and roughly 7,000 other products from the Far East and sold them through more than 50,000 retail outlets.

The origins of Stanhome can be traced to the birth of the company's founder, Frank Stanley Beveridge, the Nova Scotian native whose contributions to the art of direct sales created the nearly $800 million Stanhome empire and helped spawn the formation of direct-sales stalwarts Mary Kay Cosmetics, Tupperware, Jafra Cosmetics, and Home Interiors. Born in 1879, Beveridge was raised in the small Nova Scotia town of Pembroke Shores, where, as a youth, he developed an interest in horticulture. His interest in horticulture played an auspicious role in the formation of Stanhome, leading the would-be founder of the company away from the secluded confines of Pembroke Shores and to Northfield, Massachusetts. There the young aspiring horticulturist gained admittance to Mt. Hermon School, a highly regarded private academy. At Mt. Hermon, Beveridge intended to pursue a career in horticulture, but he was forced to find a job to defray the cost of Mt. Hermon's tuition. Beveridge's search for a part-time job introduced him to the world of sales and forever changed the door-to-door sales industry in the United States and abroad.

While at Mt. Hermon, Beveridge landed a sales job with a local company named Underwood & Underwood selling home entertainment stereoscopes and viewgraphs during his time away from studies at Mt. Hermon. Beveridge's career aspirations had been reshaped by his experiences at Underwood & Underwood, and after leaving school he shelved his dreams of a career in horticulture and instead chose to pursue a path in sales. In 1913, at age 34, Beveridge joined the Fuller Brush Company, beginning his tenure there as a manager of college sales charged with visiting campuses and recruiting prospective sales representatives for Fuller Brush. Beveridge distinguished himself as a successful recruiter for the company, achieving sufficient success to be named vice-president in charge of sales in 1919, the same year he hired Catherine O'Brien as his secretary. It was a pivotal moment in the history of Stanhome and in the lives of Beveridge and O'Brien. Together, Beveridge and O'Brien would build a pioneering force in the direct-sales industry and develop a working partnership that would span nearly 40 years.

Before Beveridge and O'Brien went on to launch the business venture that would help create a multibillion dollar industry, boss and secretary worked together at Fuller Brush for ten years, until 1929 when Beveridge decided to resign from the company and work as a consultant for Real Silk Hosiery. Catherine O'Brien remained at Fuller Brush for a short time, then she left as well, becoming the manager of an insurance agency in Hartford. The two long-time working associates each pursued their respective professional careers separately for roughly two years until Beveridge decided to use the savings he had accumulated over the years to start his own door-to-door sales company with the help of O'Brien. On August 15, 1931, Stanley Home Products, Incorporated, the predecessor to Stanhome Inc., commenced business. At age 52, Beveridge had decided to test his entrepreneurial skills; the success of his efforts would create a new type of direct-sales industry and induce other entrepreneurs to put the selling techniques learned while working for Stanley Home Products to work for themselves.

Initially headquartered on the first floor of a tobacco shed in Westfield, Massachusetts, the company's beginnings were quintessentially humble, established in the humblest of economic times. Beveridge started Stanley Home Products as the country was plunging into the most precipitous economic free-fall in its history, a decade-long financial slide that would put millions of Americans out of work and force thousands of companies out of business. Looking forward from 1931, economic conditions would worsen before they would improve, offering little help to fledgling business ventures like Stanley Home Products, which found itself thrust in the crucible of the Great Depression during its most vulnerable years. Expectations were particularly bleak for a company that relied on door-to-door sales to stay alive, although with more than 12 million people unemployed, the odds of finding idle, prospective customers at home were unusually good; their ability to pay for household products was another matter entirely.

Times were tough and sales were hard to come by, but the Depression, if it had any positive effect on Stanley Home Products, honed the sales techniques of the company's sales force. To sell products to customers with exceedingly tight grips on their wallets, sales pitches needed to be highly persuasive and thematically more diverse. Cost had to be downplayed, while service, quality, and educating the prospective customer about a product's invaluable uses had to be stressed. By developing this skill, Stanley Home Products salespeople recorded enough success to beat back the debilitating pressures of the Depression, giving Beveridge, O'Brien, and the generations of company dealers to come the opportunity to share in the riches that came pouring in as the intensity of the Depression began to ebb.

From the outset, Catherine O'Brien had taken responsibility for organizing Stanley Home Products' office in the Westfield tobacco shed and developing the company's initial product line of household cleaners, mops, and brushes. Frank Stanley Beveridge, meanwhile, took charge of recruiting salespeople for the company, assuming much the same duties as he had while employed as a manager of college sales for Fuller Brush nearly 20 years earlier. Business commenced in mid-August, and the first order arrived one month later. Shortly thereafter a sales manager in New York sent in the first $1,000 order for the company. As the company began to build momentum in spite of the general inertia that prevailed in the 1930s, Beveridge rallied his troops forward, reportedly telling his dealers, "There is something of real value in the home. You're not simply selling brushes and chemicals, you are also selling what they do. You are selling clean walls, clean ceilings, clean teeth. You are selling health and sanitation."

Beveridge's attempts to encourage his all-important sales corps steered the company through the most difficult years of the 1930s and perhaps instilled the motivating force in a particular Stanley Home Products dealer for the sales approach that would exponentially accelerate the company's growth. The first signal that triggered Stanley Home Products' rise to the role of pioneer in the sales industry and then ushered in decades of abounding annual revenues was vigilantly received in 1937 by one of the company's sales managers. The sales manager, who superintended a northeastern region of the United States, noticed that the sales orders sent in by a dealer in Maine were unusually high. The sales manager decided to investigate and talked to the surprisingly successful dealer. What the sales manager discovered set a spark beneath the entire organization of Stanley Home Products that blazed for decades.

As the sales manager discovered, the dealer in Maine had by chance knocked on the door of a minister's wife who had guests assembled inside and was attempting to raise money for her husband's church. Too busy for a home demonstration, the woman asked the Stanley Home Products dealer to return another day, which he agreed to do. As he was turning away, however, the woman stopped the dealer and made a suggestion that would dramatically alter the future of Stanley Home Products. She proposed that if the dealer would contribute a percentage of his sales to the church, she would allow him to demonstrate his products in front of the group gathered inside. The dealer agreed, and from that point forward Stanley Home Products' sales volume began to rise steadily. Word of the new marketing approach spread from the dealer in Maine to his sales manager and finally to corporate headquarters in Westfield, and soon Stanley Home Products dealers everywhere were approaching local clubs and meetings to ask if they could demonstrate their products in front of those in attendance.

By demonstrating in front of a captive group audience, a Stanley Home Products dealer could achieve results in one sales call that otherwise would have taken a day-and-a-half of knocking on individual doors, making everyone within the company appreciably more successful. When the company's dealers ran out of organizations to approach, they began organizing their own parties by asking a housewife to invite a small group of friends to her house for a demonstration of the company's products. As compensation for hosting the party, the hostess at first was given a percentage of the sales in Stanley Home Products merchandise. Later, after the company's compensation program was revamped, the hostess was rewarded with a collectible gift, such as a portion of a silverware set. It was the birth of the "Famous Stanley Hostess Plan," as the company called it, the success of which fueled the growth of Stanley Home Products and extended the company's geographic reach into an array of foreign markets.

By 1937, the company had moved out of its tobacco shed and into a new manufacturing facility. With the Stanley Home Products party plan propelling the company forward, growth came quickly in the next few decades, and the company's corporate staff and manufacturing personnel struggled to keep pace with the orders for products that came pouring in. Annual sales reached a record high of $3 million in 1940, then swelled exponentially to $50 million in 1950. During this decade of prodigious growth, the volume of business conducted by Stanley Home Products required continual expansion of the company's facilities. By the end of the Second World War, the company operated out of 16 separate buildings in the Westfield area. Even this sprawling collection of facilities soon proved inadequate, however, so Stanley Home Products acquired a large textile mill in Southhampton, Massachusetts and tailored it to the company's needs.

With manufacturing and shipping facilities stretching nearly one quarter of a mile, Stanley Home Products stood poised for the aggressive expansion that characterized its development during the latter half of the 20th century. Much of Stanley Home Products' growth was achieved overseas, as the company's party plan marketing concept crossed international borders and thrived in diverse cultures. The expansion into foreign markets began in Canada, where Stanley Home Products established operations in 1948. Next, the company entered Puerto Rico in 1955, with operations in Mexico and Venezuela established soon afterward.

By the beginning of the 1960s, the company was supported by 20,000 dealers, whose efforts to sell products through the Famous Stanley Hostess Plan pushed annual sales to the $100 million mark just in time for Stanley Home Products' 30th anniversary in 1961. In the following decade, the company continued to extend its geographic presence into foreign countries, as the network of Stanley Home Products dealers expanded to embrace a host of lucrative markets. The company's entry into Europe began with the formation of a wholly owned Italian subsidiary, Stanhome S.p.A., in 1964, followed by the establishment of operations in Spain in 1968 and entry into the French market in 1972. Brazil and the Caribbean became part of Stanley Home Products' growing global empire during the decade as well. With the company's entry into the Far East during the late 1970s its worldwide presence was spread in four directions from its home state of Massachusetts.

In the first 40 years of the company's existence, Stanley Home Products became a massive direct-sales marketer, both in the United States and throughout its extensive international sales territories. The company's party plan merchandising approach spurred its growth, attracting dealers into the Stanley Home Products' fold and fueling revenue growth, while carving a new niche in the sales industry. Other companies aped the sales techniques employed at Stanley Home Products, creating a host of direct-sales firms that relied on sales to organized groups rather than the time-consuming, less effective drudgery of walking through a neighborhood and knocking on doors. Not surprisingly, several companies that distinguished themselves as highly successful direct-sales marketers were founded by individuals who had learned the nuances of the party plan approach while employed by Stanley Home Products. Among the list of people who spent the early years of their careers under the employ of Stanley Home Products were Mary Kay Ash of Mary Kay Cosmetics, Brownie Wise of Tupperware, Jan and Frank Day of Jafra Cosmetics, and Mary Crowley of Home Interiors. Stanley Home Products originated the marketing technique used by these direct-sales concerns in their rise to success and served as a learning center for the founders of the companies. Despite the company's pioneering role in the direct-sales industry and the enormous success derived from the use of its party plan approach, however, the effectiveness of the Famous Stanley Hostess Plan began to wane by the end of the 1970s. In the years following, Stanley Home Products needed new sales strategies to ensure the company's continued success. America's social structure had changed; the structure of Stanley Home Products' business had to change as well.

By the late 1970s, the housewife had become an increasingly less ubiquitous fixture of American society, and her departure from the home and into the workplace signaled the beginning of the end for Stanley Home Products' Famous Stanley Hostess Plan in the United States. Elsewhere, particularly in parts of Europe and in Latin America where the traditional role of wife remained largely unchanged, Stanley Home Products' party plan continued to record encouraging success, but in the United States the performance of the company's direct-sales operations was beginning to suffer from the exodus of women from home to office.

A nationwide economic recession plagued Americans during the early 1980s and exacerbated the company's domestic woes. In 1983, however, Stanley Home Products made a move to relieve the pressures exerted both by the lackluster economic climate and the poor growth recorded by the company's domestic direct-sales operations. At the time of this significant redirection of the company's priorities, Stanley Home Products was stewarded by H. L. Tower, who joined the company in 1978 as chief executive officer. In explaining the decision behind the company's defining 1983 acquisition Tower later confided to Fortune magazine, "My strategy was to turn around our U.S. business and search for the right acquisition. We offer Stanley representatives free gifts if they host a party, so I decided a great gift company would be a synergistic move."

In July 1983, exactly one year after Stanley Home Products, Inc. changed its name to Stanhome Inc., the company acquired Chicago-based Enesco Imports Corporation, a giftware designer that imported a wide range of giftware and collectible items from Asia and sold the products through card shops and other U.S. retail outlets. Founded in 1959 as a division of Chicago retailer N. Shure Company, Enesco had become a leading giftware company in the United States by the time Stanhome acquired the company, recording much of its success through a line of porcelain figurines marketed under the name "Precious Moments." The ever-expanding line of porcelain figurines, each inscribed with a scriptural message, catapulted Enesco to the top tier of the U.S. giftware industry, attracting legions of customers who purchased the Precious Moments statuettes, treating them as a series of collectible items. At one point, more than 300,000 people counted themselves as members of a Precious Moments collectors club. The most faithful followers made pilgrimages to a Precious Moments chapel in Missouri.

Five years after the acquisition of Enesco, Stanhome's annual sales had risen sharply, jumping from $277 million in 1983 to $480 million in 1988. The porcelain and metalware figurines, music boxes, and other imported products--more than 7,000 in total--composing Enesco's giftware line accounted for nearly half of Stanhome's revenues in 1988 and generated more than half of the company's total profit. Conversely, Stanhome's direct-sales business, though doing well in parts of Europe and in Latin America, had become a barely break-even enterprise in the United States, accounting for a meager 9 percent of the company's total revenues in 1988.

The dwindling number of women who spent their days at home and the proliferation of discount retail chains that offered essentially the same mops, brooms, brushes, and cosmetics as Stanhome, but at much cheaper prices, had rendered the Famous Stanley Hostess Plan passé and largely ineffective. Stanhome management perceived Enesco as a source of hope for the future, in that it could compensate for the decline in Stanhome's U.S. direct-sales business, particularly after the subsidiary began retailing its giftware in Europe and Japan in 1989. From 1989 forward, Stanhome management also pinned its hopes on newly acquired Hamilton Group Limited, which sold collectible plates, dolls, and figurines through advertising and direct mail, as well as a line of giftware sold through traditional retail channels. The purchase of Jacksonville, Florida-based Hamilton in May 1989 gave the company a third selling strategy--direct-response&mdashø spur its growth into the 1990s, helping Stanhome record $571 million in sales in 1989 as it prepared to face the challenges of the coming decade.

In 1991, Enesco for the first time overtook Stanhome's direct-sales business segment in contribution toward overall sales and profits, accounting for 46 percent of operating revenues and 56 percent of earnings. The Precious Moments line of figurines alone accounted for one quarter of the company's total revenues, sending a clear signal to Stanhome's management that the future growth of the company hinged on the growth of Enesco's business.

One of the company's board members, G. William Seawright, was one who believed that the company's future growth depended on the continued success of Enesco. A 25-year veteran of Heublein, Inc., where he eventually took charge of overseas sales of brands such as Smirnoff vodka, J&B scotch, and Bailey's Irish Cream liqueur, Seawright joined Stanhome's board of directors in mid-1990 and almost immediately began railing against the company's seemingly sluggish development of its Enesco subsidiary, particularly management's slow progress in Europe and other foreign markets. After years of urging the company to accelerate Enesco's expansion, Seawright eventually was rewarded with the chance to effect the foreign expansion he wanted when Stanhome's board of directors named him chief executive officer in November 1993.

With Seawright at the helm, Stanhome moved toward the mid-1990s supported in large part by its Enesco subsidiary. In 1994, when the company acquired Lilliput Group plc, a maker of miniature replicas of English cottages, Stanhome's line of giftware and collectibles generated roughly $550 million of its $790 million in total sales and accounted for $73 million of its $81 million in operating profit. With Enesco performing as the primary earner for the company and instilling hope for future growth, Stanhome severed its ties with its floundering direct-sales business in the United States in 1995, marking the termination of the company's former mainstay business established 64 years earlier by Frank Stanley Beveridge. In an ironic twist, the domestic operations of Stanley Home Products were licensed to Leicester, New York-based CPAC Inc., a specialty chemicals manufacturer that prior to acquiring the licensing rights for Stanhome's U.S. direct-sales business had entered into the direct-sales business by purchasing the Fuller Brush Company. With the product of Beveridge's entrepreneurial efforts indirectly in the hands of his former employer, Stanhome charted its plans for the remainder of the 1990s and beyond, supported by the Famous Stanley Hostess Plan, continuing to thrive in international markets, and its Enesco and Hamilton subsidiaries.

Principal Subsidiaries: Border Fine Arts Company Limited (Scotland); Border Fine Arts Ltd. (N. Ireland); Collector Appreciation, Inc.; Consumer Products Group, Inc.; Cosmhogar, S.A. (Spain); Enesco Corporation; Enesco European Giftware Group Limited (England); Enesco Import GmbH (Germany); Enesco International Ltd.; Enesco International Limited (Hong Kong); Enesco Limited (United Kingdom); Enesco Worldwide Holdings, Inc.; Heinz Deichert GmbH (Germany); Lilliput Lane Limited (England); Lilliput Incorporated; N.C. Cameron & Sons Limited (Canada); Sports Impressions, Inc.; Stanhome Capital, Inc.; Stanhome de Mexico, S.A. de C.V.; Stanhome European Development Center, S.A. (Spain); Stanhome Iberia, S.A. (Spain); Stanhome Inter-American Corporation; Stanhome Panamericana, C.A. (Venezuela); Stanhome plc (England); Stanhome S.A. (France); Stanhome S.A. (Spain); Stanhome S.p.A. (Italy); Stanhome Trading Company Ltd. (Slovenia); Stanhome West Germany Limited; The Hamilton Group Limited, Inc.; The Hamilton Collection, Inc.; Via Vermont Ltd.; Via Vermont, S.A. de C.V. (Mexico).

Principal Operating Units: Enesco Corporation; Hamilton Collection; Stanhome Direct Selling Group.

Stanhome Inc. History

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