Start-up , Coldwater Creek's center ready to open

SUNDAY GAZETTE-MAIL

The Coldwater Creek distribution and call center in Mineral Wellsis vast and empty, but by next week 400 employees now working intemporary Parkersburg offices will start moving in.

They'll stock Coldwater Creek's clothing, jewelry and knickknacksinto 40-foot inventory racks. By this summer, they'll be packingitems into boxes for shipment to more than 2 million of thecompany'scatalog customers.The facility is 600,000 square feet, five times larger than itsheadquarters in Sandpoint, Idaho. Plus, there's room to expand onthe 20-acre site developed with $25 million in state and regionaldevelopment money.Sales in 1998 were slower than expected for Coldwater, creating130 layoffs in February. But company representatives are stilltalking big.Their cards are on the growth of Internet shopping. By thissummer, the catalog company will spend $2 million to transfer morethan 500 gift and clothing items onto the Internet."I use the analogy of when the telephone was first installed,"said Dennis Pence, the company's founder, chairman and chiefexecutive officer. "Very, very quickly you couldn't live without atelephone. I think the Internet may have the potential to be thatbig of a deal."At startup this summer, Coldwater will ship about 40,000 packagesfrom Mineral Wells a day, and employ 500 to 600 full-time workers.At full capacity, 120,000 packages will be shipped a day by 1,000permanent and seasonal workers. One-third of Coldwater's work forceis seasonal help.An Internet order comes into Coldwater Creek's computer system inIdaho just as a call-order would. It's sent on high-speed telephonelines to Mineral Wells where employees fill the invoice and move thepackage to be shipped in the same day's mail.Coldwater Creek was initially slow to embrace online shopping.Prior to 1998, less than 5 percent of its business came from theInternet because women hadn't moved online, said David Gunter,director of corporate communications for Coldwater.Men in search of specialized equipment, compact discs and bookswere the majority of Internet shoppers. That didn't suit Coldwater,whose three catalogs - North Country, Spirit of the West and Bed &Bath - target affluent 35- to 55-year-old women in urban areas.But in 1999, there was a "substantial increase" in Internettraffic to Coldwater's site, Pence said. He did not divulge how manyorders have been placed, or how many hits the site receives. He saidthe increase from 1998 to 1999 is more than 100 percent, and heexpects about half of the company's sales will come from theInternetin the future.Industry expectations for Internet growth are equally optimistic.In 1998, the Internet generated $4.7 billion in sales and isexpectedto double to $9.4 billion in 1999, according to the Direct MarketingAssociation in Washington."The Internet was a cute little aside, but it wasn't somethingthat was seen for Coldwater Creek as a real launching pad," Guntersaid. "In the fall and winter of 1998 there was an amazing shift toalmost exactly equal gender equality."Coldwater's Web page today, Coldwater-Creek.com, is still mostlyinvestor information and the story of the its romantic beginning.Dennis and Ann Pence were burned-out New York City executives whocashed in their 401(k) plans to move west. Their first catalog in1984 had 18 items, and was sent to 2,000 people. In 1997, thecompany went public and in 1998 its sales topped $32 million frommore than 2 million customers.By this summer, more than 500 items will be for sale onColdwater's Web site and eventually all catalog items will beonline."Wherever our customer wants to buy from us is fine - telephone,mail or Internet - we'll be there and responsive to their needs,"Pence said.Economic developers in Parkersburg don't much care where Coldwatergets its orders from either. They're just happy the company decidedto move to West Virginia last summer. The decision hinged onColdwater's desire to save on shipping costs to its east coastcustomers. Company representatives did not release how much it hassaved so far.Parkersburg Mayor Jimmy Columbo said the company will be thecatalyst for future expansion in the region.It was the first business to move into the 90-acre industrialdevelopment site in Mineral Wells. Since, several other businesseshave expressed interest in the site, but Columbo did not namenames."Developments like this attract other developments," he said."I've seen a lot of things that could happen if we could just getover that hump. With Coldwater Creek, we got over the hump."To contact staff writer Kelly Regan, call 348-5163.