Autumn Harp learns the hard way

Vermont Business Magazine, Sep 01, 1998

Autumn Harp, a 20-year-old maker of natural and petroleum-free skin and lip care products that has been one of Bristol's leading employers, had grown to more than 60 employees by 1997. Their "UnPetroleum" brand lip balm was often the leading seller among related products in health food and specialty stores. Clients like Body Shop International and the Gap had come to them to have products custom manufactured.

So the company decided it might be right time to enter the mass market the supermarket chains, big department stores, and so on--and take the big leap forward. A year later, after taking losses that resulted in previously unheard-of layoffs of eight staff positions and a dozen or so temporary work, Autumn Harp has a better sense of its direction and has aligned its operations with its strengths in a way they believe will let them grow back from current 40 employees.

Many companies would be reeling from a year that saw a third of their employees depart--and indeed, it was a very painful chapter that left its share of hurt feelings. Fortunately, it came at a time of low unemployment. As Bristol town administrator Robert Hall observed and president Kevin Harper confirmed, all the staff had to be let go had good severance packages and have since found other jobs.

Meanwhile, as Harper sees it, Autumn Harp learned some important truths about the "free market"--lessons of the road that many other Vermont businesses with good retail products, strong ambitions and high hopes might ponder.

Harper said they found that while space on supermarket shelves tooled potentially lucrative, access to it only came after paying slotting fees. There were require contributions for store advertising. Manufacturers had to guarantee certain amounts of sales. And there was no effective competition to keep the stores from setting such requirements because the market was dominated by a handful of firms.

Then, months later, came the returns--not the financial returns, but the unsold products.

"There's nothing pleasant about it when 40 percent of it comes back to you eight months later in unusable condition," Harper said. On top of that, they had to pay 13 percent of the value of the returned items, for shipping and handling.

"Everything is consignment in today's marketplace," Harper said. "They don't call it that, but that's what it amounts to. The stores like it because they can offer all kinds of stuff. The chains make their money when they buy, not when they sell. If nobody buys a single one, it doesn't bother them a bit."

While consumers may like the variety they experience now, Harper thinks the day may come when the system begins reducing choices rather than expanding them. He noted that in the book publishing industry, chain dominance is already being accused of limiting the choices publishers make, with authors frequently finding they make little or nothing because of the way their contracts make them financially responsible for returns.

But weep no tears for Autumn Harp, the company founder said. A press release from their times of troubles put it this way: "Our goal is to refocus our business to put our resources behind supplying our natural, petroleum-free skin and lip care products to customers with whom we can establish long-term, values-based relationships."

More recently, Harper told Vermont Business, "We are can and mean and optimistic about our future. Our business has expanded its customer base to include Estee Lauder, Coty and numerous others, giving us a diverse customer base that value what we offer. We are planning a slow but steady growth over the next couple of years and remain active in the community as an important and fair employer."

Downsize and restructure. There are lots of ways that's happened in the '90s--and now, as Harper observed, Autumn Harp is in a good position to act as the source for companies that have decided to concentrate on marketing rather than manufacturing.