Sharper Image: Recession canary?
One of my favorite metaphors is the mine canary, the little songbirds that traditionally traveled with miners on their trips into the earth. The birds functioned as early warning detectors: if there was a buildup of poisonous gas, the canary would die from it very quickly, leaving the miner with enough time to escape relatively unscathed.
The miners' canary is particularly relevant now, as we seem to be approaching a recession. Given the increased costs of essential items, it seems likely that luxury items will become a much harder sell and stores which rely on them will start to have major cashflow problems.
Enter Sharper Image.
When I was a kid in the eighties, Sharper Image was my favorite store. Going through its doors was like walking onto the bridge of a spaceship. Everywhere I looked, there were cool technological gadgets, perfectly displayed on carbon-fiber gray shelves under tastefully recessed lights. Unlike the gaudy materialistic free-for-all that went on in lesser establishments like Brookstone, Sharper Image relied on taste, refinement, and the quality of its goods.
And such goods! I remember wistfully checking out the reconditioned Wurlitzer jukeboxes and back-massaging armchairs. Sharper Image had the coolest gadgets and usually put them out a year or so before the cheap ripoff versions showed up everywhere else. It's where I discovered GPS receivers, cordless phones, electric grills, and plasma globes. Sure, I didn't need all this junk, but it was incredibly awesome and not insanely expensive.
Looking back, I realize that Sharper Image was the ultimate 1980's store. It was pricey, which was half of the fun; most people couldn't afford its cool stuff, which meant that anything you bought was sure to garner massive envy from all your friends. Best of all, it specialized in gadgets. In the entire store, it was impossible to find a single necessity. As much as I might claim to "need" a cool retro lighter or a vibrating footstool, I knew that I could easily survive without these luxuries.
Fast forward a few years. I'm now witnessing the spectacle of Sharper Image trying to tread water in a changing economy. The first problem is that we are now living in the gadget-infested world that Sharper Image hath wrought. One doesn't have to go to a high-end mall or a specialty boutique to find a supercool item that it is impossible to live without. Every gas station has a collection of mini blowtorch lighters and the internet is an endless cornucopia of technologically advanced junk. In this cool gadget world, Sharper Image is having a harder and harder time finding ground-breaking items with a great wow factor.
The second problem, of course, is that people just don't have the money for supercool junk. Sharper Image was banking on the holidays to energize its flagging fortunes; to that end, it got a $20 million loan from Wells Fargo. However, the expected sales revenue didn't materialize and my childhood techno-haven found itself in serious trouble. The chain has now filed for Chapter 11 bankruptcy. It is currently planning to close half of its stores and hasn't yet decided if it's going to close its doors altogether. Upon release of the news, Sharper Image's stock price slid from $1.71 to $.41.
It remains to be seen if this is an isolated occurrence or the beginning of a trend. I just hope Hammacher Schlemmer is watching its back.