BUSINESS AGENDA - Home seller diversifies into home products to offset soft sales
Published:Sunday | November 21, 2010 | 12:00 AM
Avia Collinder, Business Writer
The current economic climate is forcing many entrepreneurs to radically rethink their businesses, and real- estate company Jewel Homes & Properties Limited is no exception.
Faced with a dramatic slowdown in property sales and rentals, Catherine Alexander-McDaniel and her mother, Fay Bangerter, the firm's directors, are now focusing on their new business activity: distributing a SmartKlean-branded laundry ball for household use.
The new business activity grew out of the duo's desire to try the product themselves after seeing it advertised on the Internet only this summer.
By the end of August, they were thinking of selling the product, highlighting its potential to generate big savings on laundering costs, including detergents and water, as well as helping to preserve the environment.
To date, they have imported four shipments, the smallest valued at US$2,000, with more on the way for the Christmas period.
"I estimate conservatively that there are 500,000 washing machine users in Jamaica. If we can get one-third of that market, I would be more than satisfied," said Alexander-McDaniel.
The new venture has been enthusiastically embraced by the businesswomen, for whom both home sales and rentals have fallen significantly since 2008.
In 2009, only four homes were sold by the company.
In 2010, Jewel Homes has done twice that amount of business, but rentals, which traditionally have generated the greater part of the company's earnings, continue to be depressed.
"As real-estate agents, we had found the market to be in a slump since the economic recession and we were trying to explore other ways to supplement our income, (and) that's when we came across SmartKlean," Alexander-McDaniel said.
The product is described as a non-detergent, chemical-free ball that can be used in any washing machine instead of detergent and fabric softener. It was developed by a Swedish company and is sold in North America by a Florida-based firm.
Home sales recovering
"It cleans and purifies your clothes by way of hydrodynamics, that is, water combined with magnets, minerals, and the motion of the washing machine, resulting in clean, fresh clothes," said Alexander-McDaniel.
Despite holding to the view that home sales are slowly recovering, as professionals with money to spend are believed to be again ready to buy, she is convinced that diversification into environmentally friendly, or green products, will be far more financially significant for the company, now staffed only by the two directors.
Alexander-McDaniel said the minimum annual sales requirement of the exclusive dealership agreement is more than manageable, with that volume having been surpassed in the first two months of importation and retail.
Profit margins, she said, have been eroded somewhat as the distribution chain deepens and now involves three stores in Kingston, and six sales persons, who work on a commission basis.
However, the cut in profit margin has been offset by an increase in the recommended retail price set by SmartKlean USA in response to increasing demand.
The distributor said she is not allowed to sell the product at a price lower than the recommended retail price, but is trying to maintain a local price below J$5,000.
The distribution business has met resistance, Alexander-McDaniel said, from supermarkets, which have refused to stock the ball, saying it would eat into their sales of detergents, softeners, and other laundry products.
But Alexander-McDaniel said she is not deterred and intends to sell other environmentally friendly products that are economical.
"I want to be a household name, then I will try a few more products," she said.
Jamaicans have not been impressed by the green message so far, she said, but consumers have been very eager to embrace the ball for the savings, she added.
"Green was not a seller, but the idea of savings was a sell-off."
The benefits, she said, include protecting the human body from harmful chemicals found in detergents, eliminating waste constituted by non-biodegradable plastic bottles, and prolonging the life of clothes.