The Thirty-One Gifts founder and CEO hopes these changes will continue the turnaround.
Cindy Monroe likes to say she earned her “president’s badge” over the past few years. After a decade of astronomical growth, her company, Thirty-One Gifts, began to stall. Sales dropped from a high point of about $760 million in 2013 (when the company was named the fastest-growing woman-owned business in the world) to about $400 million in 2016, a nearly 50-percent decline. For the first time since she started her company in 2003, Monroe had to cut costs, fire employees, shake up leadership and communicate those difficult decisions with staffers.
Monroe used an analogy to get her point across during those tough days. Likening the company’s struggles to whitewater rafting, she bought several oars for her executives. She told them they needed to row together as a team to make it through the choppy waters. Not everybody was on board. “Some did leave,” Monroe says. “Some were like, ‘OK, that was way more fun when we were growing at 1,900 percent.’ ” But most stuck it out, she says, and after four years of furious paddling, she and her team are now enjoying a much smoother ride.
Though the company isn’t experiencing the go-go growth of before, it no longer is in decline, either. Sales stabilized in 2017 after a three-year downward trajectory, and Monroe in November predicted 2018 would wrap up with flat or slightly higher sales, as well. What’s more, Monroe says the company just had its biggest recruiting month of new independent sales consultants (the lifeblood of any direct-selling business) since 2011. “Whenever we have those small wins, we all celebrate them together, and everybody knows they had a part in it,” Monroe says.
And Monroe hopes for some bigger wins soon, perhaps courtesy of two major announcements she made in the fall. In January, about 350 Thirty-One Gifts employees will move into a new headquarters in New Albany. The company spent $24 million in November to buy the 40-acre campus, the former home of Bob Evans, which offers plenty of space for growth and amenities (walking paths, towering windows and an open floor plan) that could help attract and retain talent. In the second quarter of 2019, the company also will move its Columbus distribution center to the Dallas area. That shift will cost central Ohio about 800 jobs, but it will put Thirty-One Gifts closer to the markets where it anticipates the most growth, including the western United States and Mexico.
Monroe compares those changes to her decision to relocate her company from her native Tennessee to central Ohio in 2008. Like the Columbus move did a decade ago, she hopes these new changes will result in another flowering for the business. “This is a huge moment in history for us,” Monroe says.
The Fast Track
Thirty-One Gifts grew out of Monroe’s own frustration as a working mother of two young children. Family responsibilities and her job at Unum insurance company made it difficult to find the time to visit new boutiques popping up around the Tennessee town where she lived with her husband, Scott, a musician and Baptist pastor, and her children, Alyx and Evan. She recognized she wasn’t the only mother in this situation and decided to start a business that catered to this group. A former Pampered Chef sales consultant during college, she adopted a direct-selling business model, where independent, home-based consultants would sell her products—bags, purses and other accessories. Deeply religious, she named her company after Proverbs 31, which celebrates women’s strengths.
She started Thirty-One Gifts in the basement of her home in Soddy-Daisy about 17 miles north of Chattanooga. She faced plenty of skepticism. Cathy Smith, a friend from Monroe’s church, became her first employee, working in Monroe’s basement alongside both Monroe and her then partner, Julie Sutton, whose role with the company decreased in later years. Smith recalls a conversation with a UPS deliveryman who came by Monroe’s house back in those days. “He said, ‘Is this one of those garage businesses?’ ” recalls Smith, who remains involved with Thirty-One Gifts today as a member of the sales leadership team. “I went, ‘Yes sir.’ And he said, ‘Yeah, it’ll probably never make it.’ I really wish I got that guy’s business card to go, ‘Hey, do you remember what you said to me that day?’ ”
Indeed, Thirty-One Gifts took off quickly. Monroe and her team would pull all-nighters to keep up with demand, especially during Christmas. After about a year, the business moved out of Monroe’s basement and eventually settled in a 40,000-square-foot warehouse in Chattanooga around 2007. Smith says the fast growth led to some jokes about the company’s name. “Thirty-One, we said, changed every 31 minutes, and then we said it changed every 31 seconds,” Smith says.
Thirty-One’s emphasis on personalization (monogramming names and meaningful phrases on products) helped drive that growth, Smith says. “It was more of a unique gift,” Smith says. Plus, the company’s religious roots and Monroe’s leadership and charisma helped draw consultants and customers. “Cindy’s always been inspirational and always lifts people up and is always looking for the good in people and looking for how we can help them be successful,” Smith says. Adds Jenny Hillenburg, the first Thirty-One Gifts sales consultant: “She’s very visionary, and I think that’s very contagious to people, and that’s why she is successful.”
Monroe also turned out to be a shrewd corporate leader. Her decision to relocate to Ohio in 2008 paid off in a big way. In 2009, the company reported $38 million in revenue. Four years later, that figure made an astounding leap to $760 million—a 1,900-percent increase, which led the Women Presidents’ Organization to name the company the fastest-growing woman-owned business in the world. Hillenburg saw her sales consultant business grow beyond her wildest dreams during this period. Though obviously not typical—the average consultant makes about $6,000 annually—Hillenburg says she was able to build a sales network of more than 100,000 people and earn more than a million dollars a year.
Surviving the Fall
In Columbus, Monroe found a supportive environment for her business. With its new Midwestern location, Thirty-One Gifts was able to grow in Ohio and surrounding states, building upon the company’s strong base in the southeast part of the country. Central Ohio also provided good access to talent, the main reason for the move, Monroe says. And a lot of that talent was familiar with direct selling, which wasn’t the case in Atlanta, the other city that Monroe considered for relocation. The Longaberger Company, a Newark-based direct seller of handmade wooden baskets, helped create that familiarity in the Columbus region.
But Longaberger also presented a cautionary tale. On a downward spiral since the 1999 death of its founder Dave Longaberger, the basket maker’s struggles showcased what can happen to a direct-seller that doesn’t adjust to market trends. And when Thirty-One Gifts’ growth stalled in 2014 and continued to drop in the following years, central Ohio business observers couldn’t help but wonder if Thirty-One might be starting its own Longaberger-like decline.
Monroe acknowledges that the sales drops caught her and others at Thirty-One Gifts off guard. Though the company didn’t expect to continue to grow at a record-setting rate, it did expect some expansion and purchased inventory with that in mind. Monroe was forced to adjust. Her status as one of the most successful women entrepreneurs in the country has made her an in-demand speaker, but Monroe pulled back from those types of events to focus on turning around her company.
On the financial side, she was forced to “right-size” the company’s budget to match the new revenue realities. But perhaps the biggest challenge was more cultural. “We had lost a little bit of who we were, because we were so busy chasing sales, so busy getting orders out the door, so busy ramping up,” Monroe says. She wanted to refocus the company around its core values of empowering women and helping them succeed. “As we started that decline and started assessing, it was, ‘OK, where is this coming from, how can we evolve, how can we get back to some of the basics?’ ”
When other direct sellers have faced declining sales, Monroe says they’ve pushed hard into new demographics and international markets. She decided to go a different route, however. “That was one of the areas I chose not to get distracted with during the decline,” she says. Instead, she focused on strengthening the company’s foundation—internal operations and relationships with current customers and consultants. Some weren’t willing to stick around. The number of consultants dropped by nearly 50 percent, from a high-water mark of about 120,000 to around 61,000 in 2017. “Some people just left because they had to go get jobs or whatever to support their families,” says Hillenburg, who lost nearly 40 percent of her sales network. “But then there are those people who saw the vision and passion from Cindy and stuck around.”
Now, those loyalists are benefitting. In addition to improving sales, the number of consultants has risen again, back up to around 73,000. Hillenburg and Smith both praise the company’s new products, such as convertible purses and belt bags, wood caddys and photo holders—as well as table galleries, pillows and wall art that can be personalized with photos. “We’re at the point where we’re getting new stuff every three months now, which is amazing,” Hillenburg says.
Smith says the company has turned a corner. “You can see it in the sales, but you can also see it in the attitudes,” Smith says. “It’s another level of excitement, and everybody’s just happy for what’s to come.” Hillenburg echoes those comments. “We’re nowhere near where we were in those peak times, but we’re definitely on an increase, and our product line just keeps getting better and better.”
There’s also excitement about the company’s new headquarters and distribution center. In early November, Monroe sits in a conference room in the former Bob Evans building, next door to her future corner office. Eventually, Thirty-One Gifts employees will occupy about three-quarters of the building, while the company will lease back the rest of the property to Bob Evans. In addition to the main 136,000-square-foot building, the campus also includes two additional structures, including one that Thirty-One Gifts plans to use for training sales consultants. “We can have 200 people come in for the day and train them, and the hotels are right next door,” Monroe says. “It was a really good fit for our sales field and for our employees.” She says she anticipates hiring more staff in the coming years to fill the campus, though there are no immediate additions planned.
Meanwhile, the new Dallas area distribution center also may play an important role in expanding the reach of Thirty-One Gifts. “We know that growth opportunity out west is huge for us,” Monroe says. “We’ve not even begun to tap into that market.” And now that she’s addressed the foundational challenges, Monroe is looking to grow internationally beyond Canada, where the company has been since 2012. Mexico’s close proximity to the Texas distribution center could help expansion efforts in the bordering country. “I really feel like it’s a win-win,” says Monroe, who launched initiatives targeting Latinas and African-Americans in 2018. “There are so many Latinas here in the U.S. that are already selling for us, that have families in Mexico. So, as soon as we open up that opportunity, they’ll be asking their cousin, ‘Hey, would you love to sell Thirty-One and make some extra money?’ ”
To be sure, Thirty-One Gifts isn’t in the free and clear yet. Major questions still remain, such as the long-term sustainability of the business amid digital disruption and cultural changes. For many years, direct selling was popular with women because bias and sexism kept them from other employment opportunities. The late makeup tycoon Mary Kay Ash built her direct-selling empire on this inequity. But how can a direct seller like Thirty-One Gifts continue to compete as more lucrative opportunities open up for women amid changing societal norms?
Monroe says relationships will keep her business going. “I think that the younger generation is even more interested in a relationship with our consultants,” says Monroe, who even in the era of Amazon requires all sales come through consultants.
Despite her faith in her business, however, Monroe tries to avoid bold proclamations about its future. Tough times have taught her the importance of humility. She and others in the company used to talk about becoming a billion-dollar business. These days, they’re goals are more modest—at least financially. She talks about “healthy growth” and building her company on a foundation of strong values. “As long as our employees still love working here, and as along as our consultants are proud of Thirty-One Gifts, then I don’t care what size we are,” she says.***
Was your family entrepreneurial?
It was not. But both my parents worked very hard and balanced that family life. And so I really feel like [that’s] what has helped me be successful from just seeing that hard work growing up.
Did you face any challenges as a woman?
For sure. I would walk into a bank meeting, and they would be blown away that I could actually talk about my financials. It almost became fun for me. I didn’t take it as a victim. I really wanted to show them that I had done my homework, and that I was very confident in what I was asking for.
How important is personalization in helping your products stand out?
It’s huge. We’ve expanded into photos so I think that has helped us a ton. We’ve got some examples here where you can tell a story, and I think that’s what personalization does. And it helps you be able to show your personality.
Are consultants using social media to build relationships?
A lot of them have customer Facebook groups, and so they will go on there, and they will build relationships with their customers. Then they will take that conversation offline to messenger or texting. They’re showing up in Facebook Live, and their customers are getting to know them. Their customers don’t feel like they’re just buying from a company. They’re actually getting to know her.
Did you consider leaving central Ohio before buying the Bob Evans property for your new headquarters?
We definitely looked at it through all the analysis, but when we found this campus, it kind of felt like home. It felt like what we wanted to build upon.
Are you going to keep the Bob Evans logo on the silo on the campus?
I’m pretty sure it’s going to stay Bob Evans. I really do want to help co-brand and to help make sure that we are embracing this amazing farm, and kind of honoring what they’ve built. I really don’t think the silo is part of our Thirty-One brand, so why not honor Bob Evans?
Dave Ghose is the editor of Columbus Monthly.