president of InGear, a company he has run successfully for the past 20 years. InGear wholesales swim wear, resort wear and casual lifestyle fashions to independent stores, national chains and department stores. One of InGear’s lines, Kariza, has achieved large success selling through specialty retail channels. Launched in 2005, Kariza is a line of multi-wear wrap skirts sold through effective demonstrations; the skirts can be worn a multitude of ways. In China, Kevin connected with his friend, Isaac Galazan,


who was also visiting the country. At that time Galazan happened to be at an electronic cigarette factory. Kevin joined him, saw the product and its potential to be a strong contender in the specialty retail market. (Galazan later became a shareholder in Vapor Corp. and is a consultant to the company today.) Having already had specialty retail experience, existing


relationships with mall developers and the knowledge of what it takes to sell a demonstration product, Kevin saw the electronic cigarettes as a great sales opportunity. In addition, he knew the common area was the perfect place to highlight a new product.


Publicly traded (OTCBB:VPCO) Website: smoke51.com 2009 Sales: $8 million Projected 2010 Sales: $12 million Projected cart locations holiday 2010: 400 plus Current Number of Shopping Center Locations: 250 plus Number of Corporate Employees: 25 plus Headquarters: Hallandale, FL


Strength: “Residual sales are one of the biggest benefits. Customers return for weekly and monthly refills. Retailers don’t always need to attract new customers to turn a profit.”—Kevin


60 Specialty Retail Report n Winter 2011


And so it was, that in the summer of 2008, Kevin took his electronic cigarettes to market for an initial test run on a cart in the Staten Island Mall in Staten Island, NY. Success followed as expected. One cart quickly grew to two, and three, and then four. Early on, Kevin and his crew knew they were on to something. “Once a product is in the limelight, specialty retailers catch on


very fast, and many kiosk operators approached us,” says Adam. As the business grew from a handful to approximately 35


locations by year’s end, Vapor Corp. pulled out of any company- owned locations to focus on distribution. Vapor Corp.’s electronic cigarette components are assembled initially in China, and then finished and packaged for distribution in the United States. As the specialty retail movement grew, so did the company’s


marketing efforts. Not only did company representatives attend every trade show related to tobacco and electronics, both domestic and abroad, they went to unrelated shows, like apparel, where they drew even more attention, says Adam. It paid off: by the end of 2009, the company had over 150 locations.


What is an electronic cigarette? In November 2009, Vapor Corp. became a publicly traded company that designs, markets and distributes personal vaporizers under various brand names. Fifty-One and Krave are the primary brands sold through specialty retail venues. Brands sold in other outlets, such as convenience stores, include EZ Smoker, Smoke Star and Green Puffer. Personal vaporizers are essentially electronic devices that


vaporize a liquid solution. In this case, the device is an electronic “cigarette” and the solution is propylene glycol, a common food additive, nicotine (which may or may not be included) and tobacco flavorings. Smoke 51’s Duo product


SpecialtyRetail.com


SOUTH SHORE PLAZA, BRAINTRE E , MA


WESTGAT E MAL L , AMARI L LO, TX.


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