Online Extra: Case Study: Costco
By Reena Jana and Michelle Cham Yu
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Forks, spoons, and knives are everyday utensils, yes. But excellent design? Despite the myriad flatware design specialists who might beg to differ, it can be hard for laypeople to see what's so surprising, different, or award-worthy about items that have not essentially changed for centuries. Sure, filigree on a handle can add flourish, or the silhouette can be pared down to appear contemporary and sleek. Nevertheless, a fork is a fork is a fork. But this year, a flatware project, in which imaginative design thinking influenced every facet of the product's development, from manufacturing to marketing, garnered the Gold IDEA award for Design Strategy.
Toronto-based Gourmet Settings, a 13-year-old small business that makes stylish eating utensils, faced quite a challenge when it landed a distribution deal with wholesale shopping club Costco (COST ) in 2005 to create exclusive designs of flatware, packaged in boxes holding 52-65 pieces. Usually, Gourmet Settings sells its implements in much smaller packets, whether in big-box Wal-Marts or smaller, upmarket boutiques.
Owner and founder, Hildy Abrams, realized she needed a fresh design strategy to help Gourmet Settings products attract an audience in such a different setting for the brand. Membership-only Costco, which saw $60.2 billion in annual revenues and 8% growth in its warehouse sales in 2006, is known for competitive prices and raw spaces that average 140,000 square feet. Even when sold in bulk packs of 65-plus pieces, mundane, small objects such as flatware, without the chance for splashy store displays, can easily get lost among all the other rows of products. "The biggest challenge at Costco is the limited theatrics: no sales staff, so the product must do all the 'talking,'" writes Abrams, who was traveling in Hong Kong, in an e-mail. "The 'home' the product lives in or on is a pallet [a low, non-descript warehouse platform], so 'sexy' isn't the operative word here. And flatware itself suffers from looking all the same to the untrained eye."
Abrams asked Kerr & Co. and Hahn Smith Design, two firms she had been working with for five years on her brand, to collaborate on the project. The two, which share the same Toronto office building, had previously worked on product and package design, branding, and marketing for Gourmet Settings, bringing a big-picture awareness of manufacturing and shipping logistics to the process. Kerr designed elegant, shapely flatware with clean, modern lines, and Hahn Smith created the packaging: brightly hued boxes with clear plastic tops and emblazoned with elegant lettering. Now the team had to adapt its thinking to create products and packaging that would appeal specifically to Costco shoppers.
Kerr took an ethnographic approach, observing consumers in real-life Costco settings buying flatware. It also met with Costco buyers to discuss what styles are popular—or not. The team observed that Costco's bare-bones retail environment did not deter shoppers from purchasing luxury products such as Burberry clothing and flat screen Sony TVs.
To create the Costco line, the Kerr industrial designers first created computer renderings of their ideas. Gourmet Settings designs are sleek, modern, even sculptural, and the Costco flatware is no exception. But the designers wanted the products to have a "heavy," or substantial, feel in a user's hand to convey the sense of a quality object. After they created the 3D digital renderings of their ideas, they fashioned prototypes in foam to test the shapes of forks, knives, spoons. Then they created the same shapes in wood, which were sent to the Chinese factory that was to make the final products. The prototypes—along with complex technical drawings of the dimensions and measurements of each utensil—allowed factory workers to easily check the actual products and see how well they matched up. Having experimented with different types of metals to create heavier flatware, the final designs are made from a steel alloy.
Heavier flatware and the bulk order that needed to be shipped to North American Costco stores raised another challenge: how to keep shipping costs affordable and packaging waste to a minimum. Kerr says the team designed the boxes to be as compact as possible, made from thin cardboard. To further avoid wasting materials, Kerr worked with the factory to maximize the per-inch use of the metal sheets from which the flatware was stamped, cookie-cutter-style.
As the products were designed and manufactured, graphic designers at Hahn Smith Design focused on the aesthetics of the packaging, which featured the brand's signature bright colors and crisp, graphic photographs of food, such as piles of bright green apples. The boxes have a clear plastic top to showcase every piece of flatware—up to 65 pieces—stacked in neat piles and fastened to the back of the box. The promotional copy, which contains Gourmet Setting's slogan "We promise, and we mean it," is presented in a sharp, easy-to-read modern font in graphically appealing white letters.
Hahn Smith worked to create a package that would enable the product to stand out in its warehouse-like setting. "Costco is a tough environment to sell in," says Nigel Smith, Hahn Smith's president. "We were looking at a really raw retail space that wasn't like a department store. We had to be bolder and more dramatic." The designers asked themselves what consumers might find lacking in flatware-shopping at Costco and decided it was the inability to handle the utensils and feel the texture of the metal. So Hahn Smith fashioned a small opening in the box cover to allow buyers to touch the flatware.
Finally, given that Gourmet Settings didn't have much of an advertising and marketing budget—a disadvantage given that Costco already stocks better known brands of flatware, such as Oneida—the designers knew that point-of-purchase appeal was key. They arranged the boxes in rows to create an attractive, pattern-like effect. Together with the use of bold color and graphic typography, the presentation as a whole is intended to grab shoppers' attention within Costco's no-frills, no-display setting. Although privately held Gourmet Settings doesn't share sales figures, proof of the packaging's success as a marketing tool can be anecdotally measured in a surprising way. "We've been noticing more of our competitors copying our packaging style," says Smith, suggesting an unofficial—and flattering—metric.
Jana is a writer with Businessweek.com in New York. Yu is an intern at Businessweek.com.