It was 2003, and Alex Lee knew he had an issue on his hands. On the surface, OXO, the 13-year-old housewares company he had helmed for nearly 10 years, seemed to be doing just fine. Its iconic "Good Grips" line of ergonomically designed kitchen tools had solidified the company's identity as a design pioneer.
And its mantra of Universal Design, promoting products designed to be usable by the largest number of people, from children to senior citizens, was widely acclaimed and supported by robust sales. Design magazines and organizations loved the brand, bestowing positive press and awards left, right, and center.
Yet Lee knew that in order to keep the tide moving in the correct direction, he needed to take action. "Design awards are all well and good, but they don't necessarily correlate to sales," he says.
Extending the Brand
"I look at the growth of the company as a 3D matrix," Lee says. "Firstly, we need to take our universal design philosophy and apply it to as many categories as are relevant. Secondly, we need to expand and grow channels to make them as diverse as possible. And thirdly, we have to take what we've done locally and apply it to other markets."
Extending the brand's initially kitchen-centric product range to other rooms in the house (there are now 11 categories, including hardware and gardening) and increasing distribution to include big guns such as Lowe's (LOW) and Bed, Bath & Beyond, as well as over 1,000 national mom and pop stores, fulfilled the first two parts of his matrix. But in the last category, he confesses, OXO was falling short.
"We're a small, young company and we'd suffered from the typical American syndrome," Lee admits. "There's the idea that our backyard is so huge that we don't have to bother with anywhere else. I'll never forget traveling in the South Pacific and going into the general store of a town with a population of maybe 2,000 people. It stocked a product by [competitor] Zyliss. And I remember thinking, 'How in the world are they here?' Well, if you're a Swiss company and your market is smaller than New York City, that's how. It was time for us to pay attention."
In the three years since then, that's exactly what OXO has done. And its means of entering the scene as a global player present an insightful case study for international expansion. Not least because OXO manages to remain a company that thinks and acts like a boutique firm, despite its 55 employees and the fact that its owner is Helen of Troy (HELE), also licenser of the likes of Vidal Sassoon, Revlon, and Brut.
First up was a decision on where exactly to focus their global intentions. Instinctively wanting to avoid a peppering approach of randomly scattering the globe with OXO products, and despite the 13 hour time difference from their head office in Manhattan to Tokyo, they chose to focus on the Japanese market. Not least because, as Lee describes it, the Asian housewares market is much less entrenched than Europe, with its century old brands.
There was another factor, too: The largest slice of the Japanese population pie is Baby Boomers over the age of 60—OXO's core audience. In fact, the average age in Japan is 10 years older than in the U.S.
Not a Good Fit
"Japan has even more urgent need for products that are comfortable and easy to use by people with hand strength or dexterity problems," Lee says. "Equally, just as in the Western world, that generation doesn't want products that look or feel like geriatric tools. They want to feel that they're active. The market fit our model and philosophy perfectly."
What wasn't perfect, however, was the feedback from the market when OXO tried to introduce regular U.S. products into Japan. In fact, the response was almost unremittingly negative. Many of their products were laughed out of the room for being too big.
A salad spinner, one of OXO's best sellers in the U.S., was unceremoniously rejected as "restaurant-sized." Regular nylon kitchen serving tools were declared entirely unsuitable. One-size kitchen tools, as it happens, do not fit all.
So OXO hired Japanese native Hideyo Hayami, a former management consultant, to work as the New York-based country manager for Japan and to act as an aide and translator between the two cultures. Hosting informal groups of Japanese friends and families, Hayami quickly identified some serious, but not insurmountable, problems.
"Most Westerners hold a spatula like a tennis racket when they stir, flip, or cook," says Lee. "But the Japanese women we observed cooking all held it like a pen. Clearly the design of the tool had to be entirely rethought." A set of six adjusted nylon server designs was released for the Japanese market only, along with precision tongs and angled measuring cups. Lee declines to share sales figures but says that the redesigns have "paid off nicely."
Meanwhile, the salad spinner was redesigned to be 35% smaller than the original. It's now the brand's No. 1 seller in Japan—and, unexpectedly, it has also proven a hit within the U.S., where the design exposed an entirely unexpected layer of demand.
The realization that the two cultures demanded such diverse design and strategic thinking subsequently led OXO to reevaluate its own business strategy. Ironic, really, that a company which made its name on principles of "Universal Design" should be so bluntly confronted with the reality that "universal" doesn't mean "global".
Despite the success of the tweaked designs and their longstanding collaborations with U.S. design companies such as Smart Design, TODA, and others, "There were certain products that an American design firm could never understand," he says. "We could educate them, but some things are very culture driven."
So OXO commissioned Form to work on some dry-food containers, and Leading Edge Design and its rock star Japanese head, Shunji Yamanaka, to work on a teakettle and a grater, in development since 2003 and going into stores now. Already the winner of a Japanese Industrial Design Promotion Organization Award the grater is designed to deal with the radish-like daikon, a condiment almost omnipresent at Japanese dinner tables (see BusinessWeek.com, 10/25/06, "The Best Designs from Japan").
Lost in Translation
The grater features a practical, tactile container base along with plastic grating teeth, and the hope is that it will become as stalwart an object in the Japanese kitchen as the potato peeler has proven to be in the West.
The idea that Japanese-prompted design developments could find an additional market within the U.S. did not go unnoticed, another irony given the distinct lack of interest in U.S. designs from the East. It's not so appropriate in the case of the daikon grater, which has to date met resistance from within the U.S. sales force (indeed, this reviewer's attempts to grate her own condiment of choice, Vermont cheddar, were unremittingly disastrous).
Hopes are higher for Form's dry food containers, which were designed for the Japanese market but which will initially be launched in the U.S. market next year. Lee already describes them as "our biggest item ever".
Slowly but surely, the expansion continues. As of September, OXO has its own Tokyo office, where four employees handle distribution, sales, and marketing. "It's difficult to be a brand in Japan unless you have an office there," says Lee. Product development is still overseen by the New York office, with early morning/late night video conferencing taking the place of face-to-face meetings with the various design partners.
"Everything is a challenge, everything is new," Lee concludes. "Our Japanese experiment is an evolution. We've been doing well enough to take this kind of venture and we haven't bet the farm on it. If we fail, there are enough growing pieces of the company to compensate." All the same, you get the feeling that failure is not an option.