• Sources and Sells South American and African artifacts – Also is a major source of southwestern Indian (Hopi and Navajo) jewelry and pottery.
• HQ is in Phoenix, Arizona but has offices in LA, Miami and Boston.
• Started as a trading post near Tucson, AZ in 1900’s – Established itself selling Indian artifacts.
o Through the years, Fe’nix expanded the product line to include Columbian artifacts (from Peru and Venezuela), and tribal artifacts from Africa.
o Reputable authentication process gives brand equity.
• 2001 – Fe’nix started selling replica artifacts.
o Replicas would be indistinguishable from real thing – Collectors could tell the difference.
o People in Central America, South America, Africa and southwest U.S. are now creating the replicas.
o Replicas are a small portion of sales – Only got into the business because clients want it.
o People who purchase are looking for gifts and ...view middle of the document...
o Must search harder for artifacts and competition is increasing (tenfold).
o Governments are not allowing certain exports due to “cultural significance”.
o Had to find three new buyers in the past two years.
o 5 years go there were five major competitors, now there are eleven.
o David Olson – Director of Procurement – states that the GM has slipped in the past years due to competitive bidding by the competition.
o Rangard believes that retail competition has increased as well.
Retailers are now buying directly from the source (Hopi Navajo and Africa) and fly-by-night salesmen (fly into town and dump a bunch of inauthentic inventory at high prices).
• Fly by nighters have given the industry a bad name.
Competitive products are also available online (without the overhead).
• African Collector Magazine – 90% of what is coming into the US are replicas, or tourist art, made to look old.
o People are making art that is not native to the culture they claim it to be from.
• In the past years, many mass-merchandise dept store chains started selling similar merchandise.
o Quality was mixed and most items were replicas.
o Losing buyers to these stores.
o Items are sold at retail price, much below what the dealers can offer.
• 2009 – Rangard was contacted by a mass-merchandise dept store who wanted to carry a Fe’nix product line.
o Chain was selling competitor’s line but wanted to add a more exclusive PL.
o The company would buy at 10% below Fe’nix’s existing prices, and that the initial purchase would be for no less than $750,000.00.
o Depending on customer acceptance, purchases would be near $4M annually.
o Fe’nix would have to triple the replica production to satisfy the contract.
o Fe’nix’s President (Andrew Smythe) believes the contract will have a dramatic effect on how Fe’nix defines its business.
Upside - $4M additional revenue above the annual growth.
Cons – Committing a large percent of business to replicas (brand degradation).
• Worried about effects that brand degradation would have on existing buyers and customers (Fe’nix now known for more replicas).