No Business LikeSnow Business

entrepreneur profile

No Business LikeSnow Business

Cart Planet's Specialty Retail Team(Clockwise from left): Alex Israeli, Leo Mizrahi, Sol Darzi, Lee Makmal, Joseph Sherman, Sigal Sherman

In 2003, Joseph and Sigal Sherman needed “an in” to the world of specialty retail.

They knew they wanted to launch a cart business, but they needed a fresh new

product to get their venture off the ground. “Here in Los Angeles, it’s a pretty

competitive market—the malls are filled year-

round—so the only way for us to penetrate the

market was with a product that was brand-new,

something that nobody had,” Joseph recalls.

Fortunately, having previously worked for a whole-

saler who had a big presence in the specialty retail

arena, he was able to purchase from them a new-to-

the-market children’s toy that could be easily demon-

strated cart-side. Aware that demonstration products

were some of the highest-grossing products sold from

carts, the Shermans recognized the toy’s potential and

their window of opportunity—their “in.”

They opened five carts in the southern California

region over the summer and fall of 2003, staying close

to their L.A. home base so they could oversee their

managers. By the time the holidays arrived, they had

prime locations already up and running and were the

only retailers with a hot new toy that shoppers seemed

drawn to when they saw it demonstrated.

The season went “very well,” Joseph says. Mall leasing managers loved having an

eye-catching, entertaining demonstration product in their centers, and sales were

strong. More importantly, as they had hoped, “After we had that first successful year, it

was easier to expand in our second year with additional concepts because the mall

managers already knew us.”

When Joseph and Sigal Sherman launched Cart Planet in 2003,

they had five carts in and around Los Angeles selling one product.

Less than four years later they have four distinct specialty retail

concepts pulling in some of the highest sales in the industry and

exclusive rights to a new product that’s giving them entry to a

global market. by Nancy Tanker

Landing sales year-roundWith a successful holiday season behind

them, they started off 2004 with the

company’s first significant expansion.

They steadily worked to open more than

a dozen locations, mainly in upscale

centers in the southern California region.

Two were toy carts, but with mass

retailers now getting hold of their debut

product, Cart Planet needed to diversify,

so the rest of the carts were a mix of health

and beauty concepts such as Dead Sea

products and herbal heat packs.

They were pleased with how their

second year was shaping up—but every

day they kept their eyes open for that next

hot product nobody else had to give them

the “foot in the door” opportunity they

had in their first season.

Taking stock of their initial success,

Joseph and Sigal knew a few things

for sure. First, counter to the strategy

employed by many specialty retail entre-

preneurs, they didn’t want to operate

Cart Planet locations only during the

peak holiday selling season. “It’s a big

project to open dozens and dozens of

carts in one month, bring in all the

employees, train them and then shut

down everything two months later,”

Joseph explains. “It’s a

business concept we

thought about, and it’s

possible, but it’s not

what we wanted to do.

We wanted to develop

a year-round approach

that we can easily

expand on during the

holidays.”

They also wanted to

maximize their profit

potential within each

center by operating

multiple locations in

each mall. “If we go

into a mall and operate

two to three concepts

in that mall year-round, our manager’s

already there, storage is there, relation-

ships with the mall are already devel-

oped,” he says. To add an additional cart

there for Christmas is not a stretch.”

As they continued to refine their

operations, they focused on developing

“a permanent tenant mindset,” Joseph

says. That mindset included a salesper-

son dress code that went well beyond

what the malls required—which not only

pleased mall management but helped

develop the high level of professionalism

they wanted their company to project.

Intense employee training centered on

delivering superior customer service and

understanding the psychology of how

shoppers make their buying decisions.

Products were backed with lifetime

guarantees that went beyond what man-

ufacturers typically offered. Over time,

the permanent mindset took hold at Cart

Planet, and that evolution was paying off

in steadily growing sales.

Finding the next big thingThen sure enough, one day Sigal noticed

an obscure product on a science museum

shelf: Snow Powder, a nondescript

synthetic polymer that “erupts into

snow”—cold to the touch—when water

is added. Sensing that her kids might

enjoy some instant snow in balmy L.A.,

she brought home a box of Snow Powder

and let the kids have at it. Within minutes,

they were shouting for their dad to come

outside to watch as they added water to

the powder and screamed in delight as it

grew to more than 100 times its original

size.

“Within a second, I saw the [Snow

Powder] carts—how they were going to

be designed, how the packages of Snow

Powder would be demonstrated—hun-

dreds of carts nationwide,” Joseph

remembers. Contacting the manufactur-

er’s representative, he laid out his vision

for getting Snow Powder off the shelves

of science stores and onto carts nation-

wide where the product could really get

noticed and rack up the sales. Unfamiliar

with the cart industry, the rep never-

theless gave them the chance to test

their idea.

n Cart PlanetOwners: Joseph and Sigal Sherman

Headquarters: Los Angeles, CAProducts: Snow Powder, health andbeauty products

Locations 2006: 26 carts, plusmore than150+ owner/operators

Phone: 818.501.7414Web: www.CartPlanet.com;

www.Snow-Powder.comAdvice to retailers: “Start with a vision

for your business, form a plan andexecute.”

– Joseph Sherman

They opened four carts in the L.A. area

for the 2004 holidays. By the end of

December, they had more than $320,000

in sales, combined. Clearly, Snow Powder

had not only passed its first retail test, but

showed big potential.

As the buzz started to build about

Snow Powder among those in the

industry, the Shermans started getting

calls from mall managers who wanted a

Snow Powder cart in their centers, as well

as independent owner/operators who

wanted to open their own Snow Powder

locations. Having secured the worldwide

retail rights from the manufacturers rep,

it was tempting to go national with

dozens of owner/operators, but “follow-

ing the 2004 campaign, we felt we had to

learn the Snow product more,” Joseph

says modestly. “We sold it in 2004, but

only for about two months and we

thought our results could be better.”

By the time the summer of 2005

arrived and specialty retailers started

solidifying their plans for the holiday

selling season, the buzz about Snow

Powder had gotten louder. “The market

was begging to buy the [Snow Powder]

product from us,” Joseph recalls. “But we

refused. We just said no. We wanted to

learn it more and understand it, then

release it in 2006.”

“We decided to focus on opening two

carts for the holiday season, to perfect our

operations,” he says. The carts, in The

Grove and Simi Valley Town Center,

brought in a combined $346,000. The

Grove grossed $223,720, and a favorite

company photo from the season shows

Joseph handing The Grove leasing

manager and mall manager an oversized

overage check for $16,000.

Shopper response was “overwhelm-

ing,” Joseph says. “Everything worked,

everything fell into place. Unlike in 2004,

when it was our first season selling Snow,

in 2005 we came in with a running start.

We also opened one cart earlier, in mid-

October, and that gave us a real edge” to

tweak the product demonstration before

the holiday rush hit full bore. When it did

hit, the demonstrations would routinely

draw huge crowds.

Even local news stations sent their

reporters to cover Snow Powder. “There

are a million products at the average

mall, and they’d come to interview us,”

Joseph says. “One newscaster even

said, ‘I have here the must-buy prod-

uct for the holidays!’ and then she did

an on-air demonstration.” The coverage

was great for sales. “Customers would see

the news stories and drive for hours to

come buy a box of Snow Powder.” To

Joseph and Sigal it seemed like their new

product was fast becoming a cultural

snowball rolling down hill, gaining size

and speed with every passing day.

Selling to owner/operatorsBy 2006, they were ready to take their

company to the next level. They’d already

built Cart Planet up to be a formidable

specialty retail player in the southern

California region, with more than two

dozen year-round carts and holiday Snow

Powder locations.

And yet, with a string of successes

piling up, Joseph says, “When we’d

approach mall leasing managers for a

Snow Powder location, most of them still

probably believed the numbers might be

hype. They just didn’t expect us to be that

successful. They wanted us in because of

the entertainment factor, but they didn’t

believe the numbers—until they got the

overage check.”

In 2006, Cart Planet opened Snow

Powder to 50 owner/operators. But the

interest in the concept that now had a

proven retail track record was so enthusi-

astic that the Shermans found them-

selves fielding 80-100 calls a day even as

the holidays got underway. Some calls

were from operators who’d opted to

purchase a new Snow Powder knockoff

making the scene and then regretted their

choice when they received “a chemical-

smelling mushy mess,” Joseph says. “We

tried to help them out as much as pos-

sible, since they’d invested so much

of their money and many already had

locations.” The Shermans ordered

another 20 tons of Snow Powder and set

up a packaging and distribution hub

to get product out the door to new

owner/operators quickly.

By the time they hit the cut-off switch,

they were up to 150 owner/operators and

the holiday selling season was in full

swing. Cart Planet operated six Snow

Powder carts of its own, in addition to 20

health-and-beauty locations, which they

were finding easier and easier to expand

now that leasing managers had heard of

the company’s track record.

“The pattern is that we operate a Snow

Powder location, it’s very successful—

overwhelmingly successful on the enter-

tainment side—and the following year we

get the locations that we want for our

year-round concepts and repeating Snow

Powder locations. There’s a developer

who’s opening a center in 2008 and they

said, ‘Just let us know what you want to

do.’” Those kinds of opportunities don’t

appear every day in the specialty retail

market, he says. They come from years of

refining operations, racking up solid sales

and simply having the right product at

the right time.

Now that Snow Powder has taken off,

the offers are coming in worldwide, from

entrepreneurs who want to operate carts

in US malls from coast to coast, north to

south, as well as dozens of retailers from

overseas.

Going global“We’re getting calls from people all over

the world because [Snow Powder] has

been seen now,” Joseph says. What origi-

nally started out as a novelty for areas like

L.A. that have snow-envy during the holi-

day season has now expanded to sell well

in northern areas where real snow is

around for months. “Last year we had a

few operators up north who did

very well on the premise that

Snow Powder is an indoor item

for decorating. Even if you have

snow outside, you can’t bring it

indoors to decorate your tree

with it.”

Again the calls are streaming

in from potential owner/opera-

tors. “So far this year we’ve

already fielded more calls from

people who want to operate carts

up north for the 2007 holidays

than we received during all of

2006. We’re getting a pretty good

vibe.”

For 2007 Cart Planet is hoping

to have about 200 Snow Powder

owner/operators, and a half-

dozen or so of their own company-oper-

ated carts, plus more than two dozen of

the health-and-beauty related carts.

Going forward, “We’re looking at every

market, everywhere,” Joseph says. “But

what’s happening now is the world is

looking for us. There were enough carts

last year that people saw it and talked to

their colleagues, and now a lot of people

know about us worldwide. I’m not going

to discount the US market—half of what

the world buys is being bought in the US.

This is the biggest retail market and this

year there will be more Snow Powder

sold here than anywhere else, by a huge

margin. But I believe that worldwide we

can probably do 25 to 50 percent of what

we’ll do here in the domestic market,

which is great.”

There’s no doubt, he adds, that “Snow

Powder is going global—and it’s taking us

along for the ride.” n

Nancy Tanker is managing editor of SRR andcan be reached at ntanker@specialtyretail.com