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Zagg Puts the Cart Before the Store

After years of selling its electronics accessories at mall carts, Salt Lake City-based Zagg Inc. has opened its first inline store—a move that marks a new direction for a company that has grown exponentially in 2009 even as other retailers have faltered.

The company, which produces and sells protective covers for mobile phones, iPods and other handheld devices called invisibleSHIELD, operates more than 80 mall carts in 21 states. The strategy has helped the upstart firm grow, but the carts have now become too small to showcase all the products developed by the company, says Derek Smith, Zagg’s vice president of sales. As a result, the firm is now making the move from carts to full line stores.

Zagg’s first store opened earlier this month at the University Mall in Orem, Utah. Smith says the mall had previously been the location of a Zagg cart that was one of the company’s most successful. “It was one of our oldest locations and one of our top sales cart locations,” he says.

The cart, however, had reached capacity and could no longer service demand from customers. “About 90 percent of our business at mall carts are repeat or referable customers and there just wasn’t enough space,” he adds. Rob Kallas, general manager of University Mall, agrees, saying, “They’d been with us a long time and their sales and the amount of business they were getting justified a larger space.”

The company also wanted enough space to introduce customers to new product lines, including audio accessories like in-ear headphones, laptop speakers and portable electronics chargers. With 900 square feet at the inline store, Smith says it will be possible to showcase those products.

The new store comes after a period of expansion for the company. At the end of 2008, company licensees operated 37 carts. The company reached its goal of 80 carts in 2009, a month ahead of schedule. For the first nine months of 2009, the company also more than doubled its revenue to nearly $27 million compared to the first nine months of 2008—a feat Smith attributes to the resilience of the consumer electronics market.

Despite its year of speedy growth, Smith says the company plans to slowly start opening inline stores and has yet to begin site selection on any new locations. He adds the company likes to start small and prove its success before growing. “We’ll have to wait and see as we go,” he says. Even if new stores do open, the company does not plan on abandoning the mall cart concept. Smith says Zagg will continue to operate them for licensees who prefer to operate on a smaller platform. “I don’t think they’re mutually exclusive,” Smith says.

–Lauren Shepherd

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