What is the purpose of the Noritake outlets?

The Noritake outlets do two things. One of them is we are able to dispose of a lot of excess inventory ...department store returns that type of thing. The other thing we are able to do is we are able to create full displays of our products. For a lot of our dealers, the most that they can carry is maybe 20-25 patterns in a collection. We have 120 patterns in our collection. So we are able to show everything in our factory stores and carry the stock. Because they are in an outlet store this kind of environment and we don't have middlemen so we can pass savings along to the consumers. So it's an opportunity for Noritake to use to serve as a lab to introduce new things and see what the reaction is going to be and then often times based on that reaction, we can go back into the wholesale market and show it again. I am thinking of a great example, we just introduced the pattern called Luxemburg, which is a very, very unique kind of coral color to it... coral and cream colors in bone china and we put it in the outlets and the response was incredible. I mean people just loved the pattern but when we introduced it to the market the buyers from the stores were really skeptical about putting it in. So based on the success that we had at the stores and the sales we were getting on the stores, I then went back and said you really have to take a second look at that. Now stores are starting to place it and we think it's going to be a really good pattern and that was strictly because of the success that we had in the outlets.

It's important to know that we will always supply the department stores first and then it gets back to the outlets. So we have had things we have just been out of. The problem with dinnerware is that you can't turn up the line; you can't just say okay we are going to double our production. It's a very complicated process and most of what you are limited to is the kiln and the capacity in the kiln. So if you can only stuff the kiln with say a1000 sets of dinnerware then that's it. You can't put 1200 or 1500 sets in there.

Another misconception is that our outlet stores are only for damaged merchandise. The only thing we carry in seconds is color wave and we carry first and second quality and label them that way. The factory has actually five different qualities first, second, third, fourth and fifth. Fifth they destroy, third and fourth they sell to like third world countries, basically at give way prices and then seconds we carry in the factory outlets and first quality we carry also in the outlets and in the department stores. One very important thing about chinaware from all manufacturers is the first quality is not perfect quality because it's an art made product. It's a craft piece and just like you are not going to go and get a leather handbag that's "perfect" because animals are animals and cows that bump up against barbed wires and scratch themselves. It's the same thing with dinnerware. There is no such thing as a perfect piece and if you put it under a microscope it's not going to be absolute... because its not made by machine.