Introduction
Small store retail gets into your blood. Before being in the insurance business, he was a small store manager and, after a five-year hiatus from the game publishing business, he was a partner in a small chain of retail stores. Now it’s good to look back from my new perspective as an insurance professional and present insights for small retail store owners.
love what you sell
My journey into retail began as a vacation job at the Lubbock Mall Toy Store (South Plains Mall – Toys by Roy). This was my third year at Texas Tech (Go Raiders!) and my parents had flipped my first job in college (compatible desk at the Lubbock newspaper from 5am to 9am) because I made the mistake of bragging that he was in the morning classes, but still “taking advantage of them”. I applied as a vacation clerk in the hobby area selling model trains, Estes Rockets, plastic model kits, and other fun stuff. The manager, Phil Hixon, noted my work ethic and understanding of model trains (my older brother was a model railway) and kept me on a part-time basis. While completing my fourth year of my Business degree, I became the manager of the hobby section of this large specialty toy store. I loved selling hobbies and wanted our customers to have what they needed for their projects and I soon took over orders for the entire hobbies area. After all, I was a business student focused on retail studies and this was my first time putting my learning into practice. I also took up selling children’s toys as an additional passion. I was hooked and although I had several job offers at big box retailers in the spring of my senior year, my journey was into toy and hobby retail because it was what I loved selling.
Perception- One of the secrets to success in small store retail is to love what you sell. Your passion will attract loyal customers. Your personal interest in your products will help you see trends and correctly balance your inventory with the right stock selections.
Rite of Passage: First Christmas in the Toy Business
In the toy retail business, you have to prove your worth by working the Christmas gift shopping season. Toys, more than most retail, is very seasonally focused on the Christmas gift-buying event. The entire year is focused on getting ready and having the right selection to “bring the bacon home” during November and December. Last year’s “must have” toy is now only selling well and the popular toy from two years ago is on the clearance aisle. Your buyer (that is, you in the small retail world) had to guess at January’s Toyfair what would be the hottest items for this year’s holiday season. Half of your total sales will occur between mid-November and December 24. The manager and assistant manager are expected to work long hours and stay focused. Being willing and able to work more than 80 hours a week for the entire holiday sales season is “the Rite of Passage” in toy retailing. My baptism as assistant manager in the toy business was the Star Wars Toy Mad Christmas of 1978.
Perception- Hard work and long hours come with retail store territory. You will earn your mark.
Ertl riding tractor
I still dream of putting together the big green Ertl John Deere tractor to ride (Lubbock was Cotton Farm country and this was the ultimate big “like daddy” gift for five to eight year olds). None of the consumers successfully assembled this expensive toy. There was no point in selling them the kit at the box because it would just turn into a messy and mangled return. It took him an hour per unit, even with practice, to put this beast together. As assistant manager, I became the designated Master Assembler. We sold a ton of them in 1978 and 1979 when I worked at Lubbock Toys by Roy as assistant manager.
Perception- Retailing is about matching your customers’ product wants and delivering them. An assembled Ertl ride-on tractor was something our customers couldn’t get anywhere else. We had them in stock and happily put them together. We delivered what they needed, the other local stores didn’t care. We won the big tractor sale and often a Christmas gift-buying event for the whole family and repeated off-season visits from the excited father who had gotten his son’s pivotal gift “under the tree” without the torture to put it together on Christmas Eve.
Perception- Your product in retail is the entire shopping experience, not just the item sold. Our “product” included a wide selection, help finding the right toy, location, free gift wrapping, and yes, free Ertl riding tractor assembly. We were never the leader in low priced toys, but we had a loyal customer base because of all the product we offered.
be destiny
As a small retailer, you must achieve and maintain “Destination” status. I ended my career in retail rather than give in to my former partner at our chain of three game stores in Dallas, Texas for maintaining “Destination” status with adequate inventory selection. Let’s be honest; Wal-Mart will beat you on price and ad spend in any market segment you want. Your store needs to develop a small niche that the big retailers don’t want and then dominate it. This is the classic “big fish in the little pond” approach. If you become another “Little Fish in the Ocean”, your store sale will close in the near future. In game retailing, the focus is on a selection that includes new game releases and having a wide range of accessories in stock. My ex-partner, after selling everything, paid off the IRS and other creditors by not replenishing inventory for four months. It then refilled but had lost the “Destination” status and our regulars had gone to other better stocked stores where they could buy what they wanted. The chain was liquidated a couple of months later.
Perception- Decide your little niche and do whatever it takes to make yourself important to your regular customers. Be the destination for your chosen niche. You need to provide a reason for your customers to come, buy and bring their friends.
smart lease
Most small retail stores are in leased space and getting the location right with an acceptable lease is a critical business decision. My second retail business was a chain of game stores. Envision has a store that offers chess, dominoes, board games, and adventure games (Dungeons & Dragons, etc.) and not a video game store. We had a successful location in Amarillo, but we wanted to move to a big market and we were in love with shopping malls. Dallas was the “Land of Oz” in the eyes of a small-town retailer. The only mall in Dallas that would offer a lease was Red Bird Mall in the south end of Dallas. While evaluating the mall opportunity, I made the key mistake of viewing the location from an Amarillo perspective and not the necessary big city perspective. This was a rundown strip mall in the wrong part of town and we had just signed a five year lease in hell. The financial wounds of this poor choice ultimately lead to the demise of our companies.
As a commercial insurance salesperson, I often see new store owners sign their lease without understanding the insurance requirements they have agreed to. The insurance required by the lease can be extensive, sometimes ridiculous, and well beyond any affordability. Luckily, I can be the messenger. While this is a different error, it can have similar results.
Information: Your location and lease are critical to your financial success in retail. Make sure you understand your market and have a professional review the terms of your lease before signing up. By all means, have an insurance agent quote you the insurance required by the landlord. A bad or overpriced lease or a lease in the wrong location is a quick way to file for bankruptcy.
Evolution and Listen to Your Customers
The wolf at the door may be the driver of innovation needed to survive in retail. Faced with an expensive mall store with declining sales, I had the three staff members write down everything our customers asked for that we didn’t have. This act of listening was the reason we survived the unfavorable lease of the mall and led us into a new niche that made real money. We found many good extensions of individual product lines based on requests from 2 or 3 customers, but we added a whole new product segment with 153 votes for Nintendo. At first, my partner and I were completely deaf to this big wave that was engulfing the game, movie rental, and toy business. Nintendo was extraordinarily “hot” and people expected a “game store” to carry it. With no capital for major expansion in this very expensive area, we developed a low-capital approach of a small selection of new games, taking trade-ins and then renting them by the week or selling them used for a good margin. It was a cash mover and, in fact, pushed us into “percentage rent” (our nasty mall lease had a provision to charge a percentage based on sales).
Retail is never a steady state. We cornered the “Best Value at Nintendo” market for several years, but the market never stops. Big money (Blockbusters, Funcoland, now Game Stop, et.al.) invaded our niche of used game sales and extended video game rentals. One of my conflicts with my former partner was that we had to go further and find new niches. He resisted any increase in our product selections and insisted that we stay focused on cost reduction and not growth.
Perception- Retailing requires listening to your customers and paying attention to what they want. The evolution of new product niches is part of the retail business. Not growing your concept or changing your product selections to stay focused on your customers will doom any store.
Resume
I hope my vignettes of my personal retail experiences have been helpful. Retailing was a passion of mine for many years and helped shape me into the insurance salesperson I have now become. I don’t miss the long hours, weekend shifts, or bounced paychecks, but I still have fond memories of my years in retail.