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Enterprise Home business idea really caught on fire



Candle & Gift Factory Outlet


Owners:

Christina and Jeff McClelland


Revenues:

$700,000


Estimated revenue for 2002:

$3 million


Employees:

25


Business:

Candle manufacturing, wholesale and retail

Originally, Christina McClelland worked in the advertising industry. But a burning desire to be with family and to express her creativity led her to found the Candle & Gift Factory Outlet of San Diego.

The company, which began as a home-based business four years ago, has since grown to three stores in the San Diego area, with 25 employees and projected revenues of $3 million next year, said her husband, Jeff McClelland.

The Candle & Gift Factory had its start in September 1997, when their daughter Emily was born. At the time, Christina left her job and wanted a new career that would keep her at home, she said.

Christina decided to make candles, figuring they’d do well. Previously, Christina had painted on wood as her artistic outlet, but saw that her work didn’t sell well at art shows, while candles went quickly, she said.

She founded a company, then called Checkerboard Cow. At first, their image was rustic, and so were the candles , she made only “grubbies,” the trade name for bumpy, almost shapeless candles, Christina said.

In February 1998, Checkerboard Cow began selling the grubbies at street fairs and through mail order. They did well, especially on the East Coast, because grubbies remain popular in rural areas and among people with strong Old World traditions , Pennsylvania, for example, she said.


Mainstream Candles

By early 2000, Christina decided to expand into more mainstream pillar candles.

“We sat down and said, ‘You know, it looks like there’s a good profit margin in the candles; it looks like something we could probably do at the retail store level. Let’s talk about how to do it, and incorporate an extensive candle lineup,'” Jeff said. “So we went from the kitchen sink to , this, all in one very short period of time.”

It took Christina about eight months to learn how to make candles professionally, unlike the grubbies, which are supposed to be flawed. During that time, the McClellands also looked for a retail location large enough to allow them to make the candles on site, she said.

Eventually, they found an 8,000-square-foot building near the San Diego Sports Arena, and set up shop thanks to “friendly venture capital” , i.e., her family and his family. Without their early support, the venture would never have caught fire, Jeff said.


Quick Success

Christina’s education in candles was complete at just about the same time the McClellands acquired the space. The store opened Sept. 15 of last year and has done well ever since, growing from 200 customers a week to about 2,000, Jeff said.

For the McClellands, such quick success is easy to explain. Candles have always had a certain cachet , romantic scenes in movies or on television often take place by candlelight. That helps open up a market, he said.

“As an Average Joe shopper, I hadn’t ever bought a candle in my history,” Jeff said. “And now, I’m shocked to see the number of guys coming in to buy a candle, because they want to have dinner with their significant other, or a gift for mom, or for somebody’s anniversary.”

Christina, meanwhile, cited industry figures stating that candles are a $6 billion-a-year business. That means the industry has a lot of room for growth, she said.

The Candle & Gift Factory, meanwhile, is poised for growth. Already, they’ve opened two branches.

The first new store opened Oct. 9 in Parkway Plaza and has grown to almost 150 customers a day in less than a month. Some are repeat customers, Christina said.

Jeff added it happened even though there’s already a competing candle store in the mall, and overall business in the mall is down in the aftermath of the Sept. 11 terrorist attacks.

Another Candle & Gift Factory store opened Nov. 1 in the Carmel Mountain Ranch shopping center. Christina expects it to do well, since it’s opening next to Pier 1 , and that’s the sort of customer they’re after, Christina said.

Ron Burns, vice president of management for Westfield Shoppingtowns on the West Coast, said the Candle & Gift Factory is a good addition to Parkway Plaza’s mix of 170 stores.

Burns was not able to provide specifics about how well one store does compared against other stores in the mall. But in general, a regional mall like Parkway Plaza attracts enough customers to create a heavy demand for more than one store carrying the same type of product, he said.

Burns added that candles are hot right now.

“The selection and the kinds of products that are available is much broader than they were five years ago,” he said. “There are a lot of new products on the market that are exciting for customers. You’ll see a lot more ‘themed’ candles, and not just in our centers, but in others. The products are better, and the selection is better.”


Wide Appeal

Also, candles have a wide appeal, to a broad cross-section of customers, Burns said.

The McClellands, meanwhile, hope their unique formula helps them attract more of those customers. What sets the Candle & Gift Factory apart is that unlike similar stores, the McClellands make the candles themselves, in-house, Christina said.

This allows them to sell the product at the wholesale price. Competitors have to deal with a middleman, she said.

For example, a pillar candle, 6 inches tall by 3 inches around, sells for $6.95 at the Candle & Gift Factory. A similar candle elsewhere might be more than $20, Christina said.

Making the candles in-house also gives the McClellands a much greater degree of control over the quality of their candles, she said.

“If you aren’t the manufacturer, you buy your candles. So you have no idea how your candles burn. Every batch is different,” Christina said. “The coldness or hotness inside your store where you’re manufacturing could determine whether they burn good or don’t burn good. They could have the wrong size of wick. We’re able to control all that.”


Greater Variety

Making the candles in house also means McClellands have a much greater variety. A customer can buy a palm-sized votive for 75 cents, or a 5-foot-tall “monster candle” weighing more than 100 pounds. The monster candle burns for about 2,500 hours and costs about $360, Christina said.

The wide selection also applies to their scented candles, as well. A competitor may have a dozen different aromas, but the Candle and Gift Factory has about 150, including tuberose, jasmine, clove, cinnamon, pumpkin, and even exotic combinations like cucumber cantaloupe, which Christina called a strong seller.

With such a wide variety of scents, the McClellands have a competitive edge in more ways than one. First, customers can be sure they’ll find something they can’t get anywhere else. Also, with so many different fragrances to choose from, people are more likely to stay in the store longer , and that means they’re likely to buy more, Christina said.

Ironically, the home-based business Christina founded as an alternative to her busy career now has her more pressed for time than ever.

“I didn’t want to go back to work full-time, which is now a solid joke,” she said. “This is the 12-hours, 16-hours-a-day regimen.”

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