Entrepreneurship and Retail and Real Estate & Retail and Small Business

Firm that sells sunglasses for large heads lands Wal-Mart deal

January 28, 2008

The media attention probably made Rico Elmore's large head swell a bit more.

In March 2006, USA Today picked up a local newspaper's profile of Indianapolis-based Fatheadz Inc., the company Elmore and two partners founded in 2005 to sell eyeglass frames for larger heads. That led to an appearance on CNBC's television show "Squawk Box," radio interviews and a spike in the firm's mostly Internet-based sales.

It also turned out to be its big break: A Wal-Mart Stores Inc. executive read the article and ordered buyers to track down Fatheadz to make a deal.

"I thought it was a prank by one of my fraternity brothers," said Fatheadz Vice President Dan Elmore, Rico's brother and business partner. He asked the buyer to send him an e-mail so he could verify the address.

After meetings in New York and at Wal-Mart's headquarters in Bentonville, Ark., the partners in 2007 finalized an agreement with the retailer, which began carrying three of Fatheadz's designs in its optical stores this month. The frames are available in 311 Wal-Mart stores now--including locations in Indianapolis--and should be in all 3,000 by fall.

"The goal was always to get to middle America, to the everyman," said Dan, 35.

Scoring space on a Wal-Mart shelf is an amazing feat for such a young company. While other would-be vendors all but beg Wal-Mart to consider their products, only to be put on decades-long wait lists, Fatheadz is living a fairy tale.

"These guys should buy a lottery ticket," said Theresa Williams, director of Indiana University's Center for Education & Research in Retailing. "That's unbelievable. That never happens."

What happens in Vegas

Fatheadz got its start while Rico was in Las Vegas tying the knot in 2005. He wanted to buy sunglasses in a boutique, but couldn't find a pair that fit.

"I told [Dan] that I was going to start a sunglasses company and call it Fatheads," said Rico, 34, and the company's CEO.

That name already was taken by a Pittsburgh pub, so the Elmores and business partner Mark Casey settled on Fatheadz. "The 'z' was a little edgy," Rico said, in line with the company's slogan: "Size does matter."

The Elmores are new to business ownership. Rico worked in the commercial fleet department for a large car dealership. Dan is in medical-device sales. Casey is majority owner of Landsharks bar in Broad Ripple.

Fatheadz built an early following through product endorsements, many from big-name--and big-boned--athletes.

One of its first customers was retired NFL tackle Lincoln Kennedy, who came across the local firm's Web site when he was looking for Fatheads, a Michigan-based company that sells life-size vinyl cutouts of sports and entertainment figures. Having always had a problem finding large-enough sunglasses, he bought a pair.

Dan said the partnership has invested $500,000 in the business, which has yet to turn a profit. The owners won't disclose financial details, but they expect the five-employee company will be in the black in 2008, with projected revenue of more than $1 million.

The Wal-Mart deal certainly helps. Before signing it, Dan tried to get online behemoth FramesDirect.com to carry the Fatheadz line, but his calls weren't returned. Now, FramesDirect is among the company's top sales channels.

The company gets its frames from manufacturers in Coatesville and Asia. Fatheadz offers about 23 types of sunglasses and four optical frames. About 80 percent of sales are sunglasses.

Ups and downs

For many suppliers, landing a contract with the nation's largest retailer is the holy grail. Wal-Mart deals with about 23,500 U.S. suppliers each year, said Jim Lowry, a Purdue University retailing professor.

But success could come at a cost, IU's Williams said. A quick break like this can be overwhelming, she said, as a supplier quickly increases its inventory even as it strives to meet stringent quality-control standards.

Wal-Mart even dictates how products must be packaged and shipped--requirements that take up four three-ring binders. If she were in Fatheadz's shoes, "as soon as I stopped celebrating, my brain would automatically go to the challenges," Williams said.

Still, Wal-Mart works with suppliers, making certain they've squeezed as much cost out of their products as possible. The company also gives suppliers access to a tracking system to see how their products are selling, Lowry said.

"Wal-Mart views all aspects of your business," he said.

Cutting the deal was tough, the Elmores concede, but they don't expect any problems meeting the expectations.

The partners packed their initial shipment themselves, loaded the truck, and delivered it to the Ohio distribution center. Rico said he expects they'll soon stop driving the shipments, but he wants to stay very involved.

"You can hire companies to do that, but we wanted to do it in-house," Rico said. "We wanted to make sure everything was executed right."

Next steps

Despite its big win, Fatheadz is not content to stop with the Wal-Mart account. The company is still out pitching its product to retailers including Cabela's, Dick's Sporting Goods and Bass Pro Shops.

It's also bringing on help, hiring a consultant with experience in the prescription glasses realm to beef up that side of its business.

"We've gone as far as people who don't know anything can go" in that market segment, Dan said.

While most of the company's frame designs are technically unisex, they appeal more to men. Dan said plans are in place to roll out a women's line this year.

That's another good move, Lowry said. Although the Wal-Mart deal is a big one, larger companies that already make sunglasses could see Fatheadz's success and role out a similar line, offering it to Wal-Mart at a cheaper cost.

"They don't want to put all their eggs in one basket," he said. "If that basket sinks, they're out of business."

Fatheadz's owners just hope 2008 is the year they finally get to take some profit from their work.

"We've risked a lot and our families have stood behind us," Rico said. "I tell people who want to get into business--you better have a strong family and a strong backbone."

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