OXO's housewares have been selling well during the downturn. Now, the company is moving into office supplies and products for babies and toddlers
OXO's kitchen and household products are winners with consumers, from its rubber-gripped potato peelers to its no-leak travel cups. The eye-catching designs have been featured in museum exhibitions and, despite premium prices, have continued selling well during the recession. OXO's parent company, Helen of Troy (HELE), reported an 11% bump in revenue from housewares in its spring quarter.
Having exhausted much of its original market, OXO is now branching out to office supplies, medical devices, and baby products. The company hopes the expansion will boost sales. But the new lines also expose OXO to added risks. Incumbents already have loyal customers. And while OXO has built a following by designing everyday items so people of almost any age or physical ability can easily use them, shoppers may balk at paying up to five times more for an OXO staple remover than for a store brand.
OXO President Alex Lee sees only promise. "At every dinner I go to, someone says, 'OXO should make…a garage door opener!' Just fill in the blank," says Lee, 49, who took over from company founder Sam Farber in 1996. He also points out that OXO has moved into new markets before: It redesigned its own kitchen gadgets for Asia in 2006, shrinking its salad spinner by a quarter, for instance, to fit into Japan's smaller kitchens. Lee says sales have been hurt by the recession in Japan but in general "things are going well" in Asia.
Hooking Up With Staples
Farber launched New York-based OXO in 1990 after watching his wife, who had severe arthritis in her hands, struggle to peel a potato. OXO's reimagined peeler, with a wide, rubber handle, was just the start. The company now offers than 800 tools for use in the home and the garden, many bearing its "Good Grips" tag.
OXO's latest ventures are separate partnerships with Staples (SPLS) and UCB, a pharmaceutical company. UCB's new syringe bears the hallmarks of an OXO design, from the large, smooth thumb pad on top of the plunger to the oblong shape of the barrel, which won't spin or slip in gnarled fingers. The prefilled device, which became available in May, is designed specifically for rheumatoid arthritis patients who use it to self-inject UCB's drug Cimzia.
A self-administered injector isn't exactly a design breakthrough, however. Abbott Laboratories (ABT) created a syringe for rheumatoid arthritis patients back in 2002. Since 2006, Abbott has been offering an alternative, a push-button "auto-injector" for its drug Humira, whose penlike design moves even further away from a typical needle. "The OXO syringe may look interesting, but it's still a syringe," says Kelly Morrison, an Abbott spokeswoman. Executives at Belgium's UCB say it's too early to gauge the success of OXO's syringe in the marketplace.
OXO for Tots
Staples began stocking two dozen OXO products in May, including a $7.99 tape dispenser and a $24.99 three-hole punch. The 2,200-store chain won't disclose sales figures, but it plans to extend the line of OXO Good Grips products later this year.
OXO Tot is the company's next frontier. The collection of 69 products for babies and toddlers has been in development for nearly two years. OXO was able to come up with such a wide assortment of goods in such a relatively short period because so many of its employees had young children and therefore knew the shortcomings of other companies' products, including how quickly kids outgrew them. To make the OXO line longer-lasting, they designed cups come with handles that slide off for when infants become toddlers and high chairs that can convert into big-kid seats. "We are heavy users of most of the products we decide to work on," Lee says. "You don't need to make a big investment if you assign product development to someone who is interested in improving them." The products will hit the stores in January.