All-Clad Snubs Discounters, But Draws Hordes to Its Pots
By TIMOTHY AEPPEL, THE WALL STREET JOURNAL, June 21, 2002
MEADOW LANDS, Pa. -- A few weeks ago, Kathleen Couvillion flew from Dallas to Pittsburgh, then drove here to a cavernous room underneath the grandstand at the Meadow Lands racetrack, to attend a rare retailing event: a sale on All-Clad cookware.
Standing next to a cardboard box she had filled with about $1,000 in saute pans and stockpots, Ms. Couvillion says it was worth all that trouble getting to this bargain basement. She figures she would have spent a lot more if she had bought her pile of All-Clad at full price at Williams-Sonoma or Bloomingdale's -- even taking the cost of airfare into account.
What's the catch? The All-Clad goods sold at the racetrack are factory seconds, marred by tiny scrapes and dents. The imperfections can't be seen easily, but they are big enough to keep the goods off regular retailers' shelves. "I've wanted [All-Clad] forever, but I refuse to pay retail," says Ms. Couvillion, an interior decorator and one of about 5,000 bargain hunters and cookware freaks who spent $750,000 over the course of two days at the racetrack sale. At the annual pre-Christmas All-Clad sale, held here in the fall, customers typically lay out about $1 million.
It is the kind of brand fanaticism that would prompt many marketers to open the floodgates. But All-Clad Metalcrafters LLC, a unit of Britain's Waterford Wedgwood PLC, is restraining itself. At a time when the cooking market is hot and expensive kitchen gear is a status badge, the company's distribution strategy is so old that it is a novelty. All-Clad calls it "skimming": It deliberately keeps its All-Clad brand out of big discount chains such as Kohl's Corp., Target Corp. and Wal-Mart Stores Inc. -- even though they are where the retail industry's fastest growth is -- in favor of full-price department and specialty stores.
People get hooked on All-Clad pots and pans, and not just because they look good. Owners say the brand helps them cook better. In its most popular line, All-Clad fuses layers of aluminum and stainless steel onto the bottoms and sides of its pans and sells four other variations, including one with copper sandwiched inside. The layers make for exceptionally even heat distribution -- a plus for amateurs famous for burning dinner or cooking at temperatures that aren't hot enough because they don't want to burn dinner.
Made in Canonsburg, Pa., All-Clad pots weigh a lot, and they cost a lot, too. A 10-inch fry pan goes for as much as $125 in a regular retail store; a top-of-the-line All-Clad stockpot can go for $422. The pots work so well that most customers don't mind if some of the lines can't go in the dishwasher.
John Ulam, a metallurgist by trade, invented All-Clad's process of sandwiching metals for industrial applications and wasn't especially interested in branching out into consumer products. Back in the 1970s, his company began producing cookware on the side -- an ancillary business that grew 25% a year through the 1990s to hit about $100 million in sales in 2000. Sales slumped last year, due to the recession and economic jolts of terror attacks, but All-Clad is projecting double-digit growth and $100 million in sales again this year.
Few upscale manufacturers can afford to ignore the big discounters, which together ring up more than a third of the $1.09 billion of pots and pans sold in the U.S. each year. Newell Rubbermaid Inc. for example, sells its high-end Calphalon line in department stores, but it also makes a lower-price Calphalon line that is sold in discount stores.
All-Clad, though, is firm about keeping the shiny All-Clad name out of the discount environment. "We want to keep it an aspirational brand to own if you're a foodie," says Peter Cameron, All-Clad's courtly chief executive.
For most of its retail distributors, All-Clad also imports an inexpensive cookware line from Asia. "Emerilware," named for TV chef Emeril Lagasse, lacks the distinctive bonded metal layers that set the All-Clad line apart. And it hardly makes any mention at all of its All-Clad connection: The Emerilware box has Mr. Lagasse's image all over it, but the All-Clad name appears in a box the size of a large postage stamp. The company watches closely to make sure stores don't try promoting Emerilware as All-Clad.
Meanwhile, All-Clad exerts an unusual degree of control over the 35 department store chains and 1,300 specialty retailers that carry the brand. All-Clad insists its flagship line be excluded from storewide sales. "It's intriguing that in a market where shelf space is limited, they're able to bully their dealers," says David Purcell, editor of ochef.com, a Web site that answers cooking questions. "But they've created such a powerful brand, these dealers really can't give them up."
The company helps retailers manage the issue of sticker shock with "kickers," single items sold at sharp discounts meant to get shoppers to try the All-Clad line. Right now, for example, All-Clad is offering a 7.5-inch frying pan and a one-quart saucepan, which would usually retail for about $60 each, for about $20 each. "This tantalizes the buyer to get a piece, then fill out the set at the regular retail," says Frank Johnston, All-Clad's chief financial officer.
Or they could visit the racetrack. All-Clad Chairman Sam Michaels says in their own way these sales contribute to All-Clad's allure, catering to an underground market that neither displaces nor cannibalizes sales in full-price stores. "It's a cult thing," Mr. Michaels says.
The company doesn't advertise the racetrack sales too heavily. The track is just a few miles away from All-Clad's decidedly unposh headquarters in industrial Canonsburg, famous for being the birthplace of Perry Como. "I'd imagine 99.9% of their target market isn't even aware of the sales, because it's still mainly a localized event," says Hugh Rushing, executive vice president of the Cookware Manufacturers Association.
Indeed, most of All-Clad's full-price customers have no interest in pawing through piles of pots at a racetrack. It can get nasty. The company used to have a special table marked 70% off, the deepest discount. But people were getting knocked over by more determined shoppers, and now All-Clad judiciously scatters the deeply discounted goods around.
Peg Fitzgerald recently showed up at the track with a list of items for four people from New Jersey to California. After 15 years, the 75-year-old real-estate agent from suburban Pittsburgh has the sale down to a system: She takes orders in the weeks before the event and arrives before the doors open on the big day. "It's sort of a ritual," she says. True, she isn't supposed to put her All-Clad into the dishwasher. "But you don't put a diamond in a dishwasher either," she says