A small businesswoman strikes a deal with a retail titan

Emily Gottschalk holds some of the DVDs her firm, TGG Direct, is selling at the Walmart in Somerdale. TGG’s DVDs will be sold at 1,300 Walmarts. CHARLES FOX / Staff Photographer
Emily Gottschalk holds some of the DVDs her firm, TGG Direct, is selling at the Walmart in Somerdale. TGG’s DVDs will be sold at 1,300 Walmarts. CHARLES FOX / Staff Photographer
Posted: April 15, 2012

Ask those who have worked with Emily Gottschalk to describe the Cherry Hill entrepreneur, and the compliments gush forth. Market savvy. Upbeat. Focused for success. Trustworthy.

But last week, the identifier that seemed to thrill Gottschalk the most was 011891.

It was the SKU, or stock keeping unit, on a DVD Gottschalk plucked from a display Wednesday at the Walmart in Somerdale, Camden County.

In bar-code language, that SKU stands for TGG Direct, the home-entertainment distribution company Gottschalk founded in 2006 to compete in an industry dominated by such behemoths as Disney, Warner, and Universal Studios and less-familiar independent companies such as Echo Bridge and Mill Creek Entertainment.

“In this bin, I have over 85 titles,” Gottschalk said with the kind of pride expected of someone actually starring in the DVDs she markets.

That bin represented the latest accomplishment for a young company that already has had an impressive run: a deal to sell TGG’s DVD creations — most of them movies from the 1970s, ’80s and ’90s and old television shows such as The Three Stooges — in 1,300 Walmart stores, predominantly along the East Coast and in the Midwest.

It’s a big score for a 12-employee operation. TGG expects close to $20 million in annual sales this year, $10 million through Walmart, where its DVDs will sell for $5 each.

“To be in 1,300 stores is enormous. … My head spins sometimes,” an enthusiastic Gottschalk said.

That from a seemingly unflappable 51-year-old mother of two who already has performed feats many would think improbable for a small-business owner — including talking her way into a licensing deal with MGM Home Entertainment a few years ago to secure the rights to 75 movie titles.

Just as that was a game-changer for Gottschalk’s company, so is the Walmart partnership, because of the market penetration it affords TGG. Competition for retail space in the DVD market is fierce amid declining sales industrywide of 20 percent or more a year, Gottschalk said.

“Most of the battle is just being present” in stores, said Matt Lasorsa, who has worked for 15 years in entertainment-studio marketing, most recently as senior vice president of marketing with 20th Century Fox Home Entertainment. “Most sales in video are impulse purchases.”

Walmart shoppers will have a hard time missing TGG’s offerings. They fill a cardboard bin set up either at the front of each store or in the entertainment section.

Walmart’s partnership with TGG is a relationship the mega-retailer considers a benefit for customers eager for more affordable entertainment options, said W. Mark Conley, a market manager in New Jersey whose territory includes the Somerdale store. The company also feels a responsibility, he said, to help sustain small businesses, which have long protested proposed Walmart stores in their communities out of concern over competitive inequities.

“What we figured as a company, in order for the economy to bounce back, we have to reach out to our smaller vendors and, in this case a minority vendor, to help pull up the economy,” Conley said. TGG is believed to be the only 100 percent woman-owned business in home-entertainment distribution.

An assist from big business is essential to small businesses’ ability to not only survive but thrive, Gottschalk said. For instance, the Walmart deal — and the sales potential it represents — have enabled her to hire two employees in the last 30 days, a senior purchasing director and a graphic design and marketing assistant.

“I believe very strongly in big business helping small business,” she said. “It’s hard out there to be a small company.”

Not that TGG has done much suffering. Its growth — fueled by package design that “separates us from the rest,” as Gottschalk put it — has been steady, even though its founder isn’t much of a television watcher.

“I don’t have a lot of time,” she said.

She never has. The Long Island native, one of four children raised by their schoolteacher mother, waited tables to put herself through college. After graduating from Cornell University’s School of Hotel Administration, Gottschalk worked for 10 years at Marriott and Four Seasons in sales and marketing.

“I loved sales,” she said. “To me, sales is puzzle pieces. It’s needs and wants.”

Having “hit a glass ceiling,” she left the hotel industry and started a family by the early 1990s. When she went back to work, it was with a company she considered the perfect fit for a mother with two toddlers: Zany Brainy, a retail chain specializing in educational toys and multimedia products for children.

As director of marketing there, she got valuable exposure to the exploding world of educational software. She moved on to a consumer packaged-goods company. Both experiences gave Gottschalk the confidence to start a company of her own that, for instance, put software on CDs that showed up on millions of cereal boxes.

But it was the $250,000 purchase of California-based Diamond Entertainment, which was going out of business, that launched TGG. Diamond owned the rights to hundreds of old TV shows and movies.

“She had such drive … great marketing strategy and great artwork and design,” said one of its owners, Jeff Schillen, now Gottschalk’s executive vice president of sales. “I was confident we were going to be successful right from the beginning.”

Not so Lasorsa, the former 20th Century Fox executive who helped arrange TGG’s MGM licensing deal.

“I thought, ‘This would never fly,’?” Lasorsa said, recalling his initial doubts about a small company’s chances in an industry of big players.

And then he met Gottschalk: “She instills a lot of confidence. She’s … a get-it-done person.”

For Gottschalk, it’s all about the thrill of creating, whether it’s a DVD of 270 classic cartoons or 20 westerns.

“I love seeing something we created on the shelf,” she said.

Or, in the case of her Walmart deal, in a bin.

Contact Diane Mastrull at 215-854-2466 or dmastrull@phillynews.com, or follow on Twitter @mastrud.

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