2003 - Chain Store Age

Transcription

❖Retail
Entrepreneurs of the Year ❖
In Recognition of
Retail Vision
E
ntrepreneurs remain the resilient resource be- foster the entrepreneurial spirit or helped entrepreneurs
hind the growth of the U.S. and world econo- become successful is eligible for the Supporter of Enmy—creating jobs, as well as innovative prod- trepreneurship Award.
ucts and services. In 1986, Ernst & Young perEntrepreneurs are the backbone of the world economy.
ceived the need to recognize the accomplishments of this While large corporations have been downsizing and leavrelatively obscure group and founded the Entrepreneur of ing millions of Americans jobless, these emerging and
the Year (EOY) program. Now, thousands of entrepre- fast-growing companies have created jobs.
neurs vie for this prestigious honor each year.
The detailed year-long process commences in January
The idea of the EOY program was conceived by Ernst when nominations are solicited nationwide. Finalists
& Young’s Emerging Growth Market, which is dediare interviewed to discuss their nomination
cated to accelerating the success of the world’s
information. Then a local, independent
best entrepreneurs.
judging panel of business and civThe program started in Milwaukee, but
ic leaders selects categories and
has evolved into an international event
award recipients.
honoring excellence and outstanding
Throughout the month of June,
success by dynamic owners of entreregional award banquets are held
preneurial companies. In 2003, the
to announce and honor the Enprogram was held in more than 100
trepreneur of the Year winners. In
locations and in more than 25 nations
2003, more than 25,000 people ataround the world.
tended these banquets in 42 cities.
Chain Store Age became the exIn November, past and present
clusive sponsor of the retail award
Entrepreneur of the Year award
category in 1990.
winners from around the world
The award criteria include fiare invited to attend the Ernst
nancial growth, firm history, cur& Young Entrepreneur of the
rent stage of development, future
Chain Store Age Year Awards where currentprospects, business leadership, team
sponsors the retail year winners are inducted into
category of the Ernst & Young the Entrepreneur of the Year
management and community involveEntrepreneur
of the Year Awards. Hall of Fame. The program also
ment.
However, a retailer does not have to be the fastest- provides an intellectual forum for discussion and debate of
growing, most profitable or largest to qualify for an current issues facing entrepreneurs nationally and globally.
award. The judges take into account an entrepreneur’s
This year, national award recipients in nine categories
vision and motivation, as well as other nonquantifiable were selected by an independent national judging panel
but critical factors.
and announced at the November Awards Gala in Palm
A nominee must be an owner/manager primarily re- Springs, Calif.
sponsible for the recent performance of a privately held
To nominate yourself or someone else for the 18th
company which is at least 2 years old. Founders of public annual Ernst & Young Entrepreneur of the Year award,
companies are eligible, provided the founder is still active call (800) 755-AWARD or visit the Entrepreneur of the
in top management.
Year Web site at www.ey.com/us/eoy. Deadline for nomiAnyone who has made an outstanding contribution to nations is April 4, 2004. ❖
CHAIN STORE AGE, DECEMBER 2003
www.chainstoreage.com
57
❖Retail
A Domain of Her Own Making
Judy George realized
her dream of reinventing
furniture retailing
T
hinking about running a business and raising a family?
Well, if you’re a woman, be
prepared to pay a price: your
personal life. So cautions Judy George,
the founder and CEO of Domain Home
Fashions.
“There is no such thing as a superwoman,” says George. “The reality for
most women is that something has to
give if you want to have a career and a
family, and that something is your personal life. I had no hobbies, quiet time or
social life. I spent my weekends in the
kitchen, cooking.”
Hobbies weren’t the only thing that
the 62-year-old George, who has been
married for 41 years and has four grown
children, gave up along the way.
“I had to cut out anyone who wasn’t
supportive of me,” she adds. “I lost some
friends.”
George credits strong family support,
especially from her mother and motherin-law, with helping her get by when her
children were younger.
“It was their support that enabled me
not to feel guilty about wanting to be so
successful,” she says. “Guilt is the biggest struggle working women face.”
Like many entrepreneurs, George is
confident and determined, motivated less
by financial motives than she is by a deep
passion for her business. Her husband,
now retired, was a successful businessman. She could have had an easier life.
She still could. What drives her?
“I’m very tenacious and persevering,”
she says. “I had a dream for a different
way of selling furniture. It was some-
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thing I was passionate about. Once I set
my sights on it, I never looked back.”
The dream was Domain Home Fashions, which George founded in 1985.
With its upscale store environments
and exclusive, European-styled furniture and accessories (the company has
an in-house design team), Domain has
amassed a devoted following among
affluent, style-conscious consumers. It
is considered a taste maker in the furniture industry and enjoys a high retail
profile given its relatively small size.
Domain’s success has been very
sweet, indeed, for George.
“The first people I brought my idea
Judy George started Domain in 1986,
with one store in Chestnut Hill, Mass.
to were my employers,” she says. “I
thought they would help fund it. Instead,
they fired me.”
That happened in 1985, when George
was president of the 86-store Scandinavian Design chain. The company wasn’t
happy that their star executive was getting itchy. They didn’t like that she had a
vision different from their own.
Not very long ago, George ran into
her old employer. He told her she owed
him, that getting fired was the best thing
that could have ever happened to her.
She agreed.
“It was a good thing in that it shocked
me into reality,” George explains. “I had
started believing my own press clippings. I thought I was so valuable that no
one would ever get rid of me. I learned
an important lesson, but it was a humbling and painful experience.”
As upset as she was, George was far
from defeated. Self-pity is not in her
DNA.
“I’m a survivor at heart,” George
says.
Less than a year after getting booted from Scandinavian Design, George
opened the first Domain, in Chestnut
Hill, Mass. It was, she says, everything
that most other furniture stores were not:
stylish, inviting and shopper-friendly.
“Domain was borne out of much research,” George says. “I spent years talking to customers. I knew the furniture
industry was missing the boat. People,
especially women, loved their homes
but they dreaded buying furniture.”
Part of the problem, according to
George, were the stores themselves.
Consumers were turned off by the endless rows of furniture and the slick, hardselling salespeople. They were afraid of
making wrong choices.
Domain was based on a different
model. The environment was relaxed,
with furniture and accessories presented
in fully merchandised vignettes. Instead
of salespeople, George hired “design
consultants.” The majority of the merchandise was in stock and ready for delivery. There was no hard sell.
“When you walked in, it was as if
you were being welcomed into a home,”
George says. “And there were experts to
consult with so you could feel more
secure about making a purchase.”
George raised venture capital money to launch Domain. A video figured
prominently in her business plan. In it,
she played roving reporter, interviewing
women (and a few men, just to be fair)
as they exited furniture stores.
“I asked them how they felt about
their homes and how they felt about the
furniture-shopping experience, from the
salespeople to the purchase itself,” she
says. “I also asked what their ‘dream’
furniture store would look and feel like.”
The tape helped George raise millions. It also served as a guide in the creation of the store.
Domain was a hit with shoppers from
day one. Financially, however, the concept lost money the first eight years out.
There were times George could barely
buy inventory. But she stuck with it.
“I made the same systems and operational mistakes that a lot of other people starting out make,” George explains.
“Malls came to me and I started opening locations all over. I wasn’t an astute
enough businesswoman to realize that I
needed to cluster stores so I could optimize controls. Plus, I had hired all the
wrong people in management. Instead
of finding the best, I sought out people
Judy George
Founder/CEO
Domain Home Fashions
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Headquarters: Norwood, Mass.
Annual sales: $67.5 million (2002)
Type of business: Specialty furniture
stores
Number of stores: 30
Area of operation: Northeast
who thought like me.”
Eventually, with the help of her first
backer, George began to turn things
around. Scattershot openings gave way
to more rational locations. The management team took on a different look.
“Retail will always be about people,”
George says. “If you don’t have the right
people, you’re in trouble.”
By 2002, Domain had grown to 25
locations in the Northeast. The brand
was profitable and thriving. That same
year, George sold the company to Aga
Foodservice Group PLC for $25 million. A mainstay in the United Kingdom
in consumer and commercial kitchenrelated products, including its topselling range brand, Aga was looking
for a beachhead in the United States.
The company sought out Domain.
“I had been looking for the right
strategic partner for some time,” George
says. “Aga was a perfect match. We’re
alike in looks, feel and customer base.”
The deal allowed George to repay in
full all her financial backers. It also
included a long-term contract providing
her with new opportunities to expand the
business. Although she sold the company, George is nowhere near retirement.
“I’m not even close,” she says. “One
of the reasons we went with Aga was
that it valued who I was and what I could
bring to the table.”
George opened the next chapter on
Domain this past fall, with the launch of
its larger-store or “Great Room” format,
in Huntington, N.Y. The 8,000-sq.-ft.
store combines the retailer’s signature
furniture bed, living room and dining
room vignettes with themed great rooms
that incorporate an Aga range and custom kitchen cabinetry.
“We will refit eight of our existing
locations to the new Great Room concept in 2004,” George says. “It will be
our format as we expand.”
Reflecting on her success, George
says the best advice she ever got was to
stop trying to hit home runs. Focus on
the small hits and the small wins, someone told her, and ultimately the team—
and the business—will succeed.
“It was hard because I like to hit home
runs,” George says. “I like to hear the
audience clapping. But eventually I
learned that smaller wins do add up to
big ones. Domain grew to be the company it is because of all those small wins.”
Today, with her children long out of
the house, George doesn’t have to do
quite as much balancing. But she still
doesn’t have any time to call her own.
The author of two books, she is active in
industry events, a frequent public speaker and a supporter of women’s business
groups. She recently joined the Board of
Aga Foodservice as U.S. retail director.
As for her weekends, not much has
changed.
“I have nine grandchildren,” she says.
“I spend the weekends cooking for
them. It all goes back to that guilt.” ❖
59
❖Retail
I
f Ralston Purina’s management had agreed
with Tim Kleptz and
jumped on a business
deal linked to a South Korean
buyer, Purity Foods might
never have seen the light of
day. But it didn’t, so Kleptz
went out on his own. Ten
years and more than a few
twists and turns later, he runs
the fifth-largest manufacturer of private-label oatmeal
in the country.
The Purity Food story begins in 1990 when, as a plant manager for packaged-goods giant Ralston Purina in Chicagoland, Kleptz
wanted to export oat flour to South
Korea. Such a move required governmental approval, which Kleptz al-
Tim Kleptz
Founder
Purity Foods
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Headquarters: Clayton, Ohio
Annual sales: More than $20 million
Type of business: Manufacturer of
private-label and store-brand oatmeal
and oat-related products
Sales channels: One Web store
Area of operation: Nationwide
ready had secured. It was a venture
that he describes as a simple matter
of sending oats through the mail.
“The brand manager’s response
was: ‘Why the hell are you worried
about business overseas?’” Kleptz,
now 42 years old, remembers. “It
didn’t even hit me until days later
when I was in a tree stand while deer
hunting. I’ve got a product. Somebody wants to buy it. I’ll do it myself.”
Today, Purity Foods operates out
of Clayton, Ohio, (near Dayton) in a
60
S
Tim and Michelle Kleptz moved in with his
folks to save money to build Purity Foods.
60,000-sq.-ft. facility that makes private-label and store-brand oatmeal
and oat-related products. Those products have expanded through the years
to encompass ready-to-eat cereals,
brownie mixes and toaster tarts. The
company’s exact sales are kept close
to the vest, but Kleptz describes annual revenues in excess of $20 million.
With the Korean deal under his
belt, Kleptz left his “$30,000 a year”
position with Ralston Purina and
began to secure other export accounts. “I quit my job, took equity
from the sale of the house to buy
ingredients and found somebody to
mix it for me.”
After riding that business model
as far as he could, he came upon
another idea—why not manufacture
it himself?
Another key decision along the
way was the effort to supply the dollar-store segment, as opposed to the
supermarket channel that had deep
ties with larger suppliers such as
Quaker Oats and Ralston Purina. The
dollar trade, in contrast, responded
more enthusiastically. “They’d say,
‘Wow, you’ve got these six hot cereals. What else do you have?’” ❖
ure Fit was losing money
when Bear Stearns, its new
owner, brought in Bert Shlensky as president and COO in
1990. The textile veteran was given a
virtual free hand to turn around the
faltering company. Shlensky not only
steered Sure Fit back to profitability,
but also helped re-energize an old-fashioned industry: ready-made slipcovers.
“Sure Fit was always a good company,” Shlensky, 58, says. “But it had fallen behind the times in many ways.”
No one could make that claim anymore. Shlensky blew out the cobwebs
at Sure Fit, infusing it with a new attitude and a new fashion sensibility.
The 87-year-old company is now the
leading ready-made furniture-cover
company in the United States, with an
estimated 85% market share. It has
an open, entrepreneurial culture, innovative management structure and
strong marketing focus. The product
line-up is stylish and contemporary.
“You have to be open to innovation if you want to grow,” Shlensky
says. “There are too many ‘yes’ people in the textile industry, too many
people who do things because they
have always been done that way.”
Shlensky is not one of these people.
His strategy for bringing Sure Fit into
the future included some big upsets,
from hiring a staff of professional managers (prior to its acquisition by Bear
Bert Shlensky
President/COO
Sure Fit
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Headquarters: Allentown, Pa.
Annual sales: $180 million (2003 est.)
Type of business: Manufacturer of
ready-made slipcovers and accessories
Sales channels: Catalog,Web and
wholesale distribution
❖Retail
Stearns, Sure
Fit was familyowned and operated) to a shift
in focus. The
longtime manufacturing-driven operation became customerand marketingBert Shlensky gave oriented. Today,
Sure Fit a new attiit ranks as one
tude and direction.
of the biggest ad
spenders in home textiles, with an estimated $13 million advertising budget.
Shlensky expanded Sure Fit’s product line, giving it a more contemporary
look. Fabrics and packaging were upgraded. Some items were discarded.
Consumers responded enthusiastically to the changes. Sales grew steadily
and the company’s profile—and distribution—increased. In 1998, with a
sizeable investment of his own capital,
as well as funds from company managers and private investors, he led a
management buyout of Sure Fit. Since
then, another 104 managers have become “owners” of the corporation.
“We have created a real entrepreneurial environment in that everyone is
president of his or her job at this company,” says Shlensky, who remains the
single largest shareholder. “Everyone
has a vested interest in making Sure Fit
successful and profitable.”
As bosses go, he is the first to admit
he can be demanding.
“But what’s important is that we
do everything as a team,” he says.
“You won’t find many companies of
this size where so many people have
stock options.”
The executive is modest when it
comes to explaining his success. “It
adds up to a little bit of brains, a lot of
intensity and a real love of the business,”
he says. “You’ve got to have that passion
for what you do to be successful.” ❖
62
success stories with all its associates.
“If Mary Jo is working in a store and
Joseph H. Scarlett Jr.
turns a disgruntled customer into a $50
Chairman/CEO
sell, we tell everyone. When a customer
Tractor Supply Co.
finds what they need in our store, and
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couldn’t find it at Wal-Mart, we’re exHeadquarters: Nashville,Tenn.
cited and we tell all our stores,” continAnnual sales: $1.2 billion (2002)
ues Scarlett. “Recognition is the No. 1
Type of business: Niche retailer
motivator of people, so we make an
serving the hobby rancher with supplies
and equipment for farm and livestock
effort to recognize individuals and
accomplishments.”
Areas of operation: 30 states
Tractor Supply has a long list of
accomplishments, including its ace may not own a ranch or celeration to 465 stores in 30 states
drive a pick-up truck, but and its continued increases in sales,
Joseph H. Scarlett Jr. has growing from 2002 sales of $1.2 bilspent almost 25 years cul- lion to an estimated $1.4 billion this
tivating a thorough appreciation for year.
the lifestyle of his core customer—a
“One of the things we do very well
“hobby” rancher who owns acres of is hire our customers,” lauds Scarlett.
land and herds of animals.
“We love to hire farmers, ranchers,
Working the farm is typically sec- horse owners and welders—people
ondary to a white-collar profession, who have a working knowledge of the
hence the reason Tracproducts we sell. At
tor Supply has named
least 50% of the hourits patrons “hobby”
ly work force falls into
ranchers. Most of the
one of these categorcustomers drive pickies, which gives our
ups, have incomes 15%
stores a tremendous
above the national avknowledge base for
erage and, surprisingcustomer service. It’s
ly, 50% are women.
what home improveIn the 10 years since
ment stores started out
he assumed the role
wanting to do.”
of chairman and CEO,
In the coming year,
the 60-year-old Scar- Tractor Supply’s Joseph H. Scarlett expects to take
lett has made it a point Scarlett Jr. spends quality time his company into Calito spend as much time in his stores.
fornia, where he says
in the stores as he does in the “store there are more horses than in any other
support center,” Tractor Supply’s name state including Texas. “We’ll start with
for its headquarters.
two or three stores to test the market,”
“The success of the company is not he says. “California is much more arid
my personal success; it’s a result of than the states where we currently operthe long-term commitment to develop ate so different products will be needa culture that is efficient and value- ed; however, Western clothing and
driven,” says Scarlett. “We work hard, equestrian products should be big sellhave a lot of fun and don’t take our- ers in California.”
selves too seriously.”
When he’s not on the road visiting
Tractor Supply frequently shares Tractor Supply stores and their neigh-
H
❖Retail
boring competitors, Scarlett and his
wife enjoy traveling for pleasure.
“Last weekend, we were in Houston;
this weekend, we’re going to eastern
Long Island; and the following week,
we’re going to Massachusetts to celebrate the 100th birthday of my mother’s
closest friend,” he recounts.
Wherever he goes, Scarlett returns
with more insights for his company.
“The lady who is turning 100 is remarkable. When I visited her last year,
she was still receiving and reading
Sports Illustrated.”
The message he took back to his
company wasn’t to play sports and
live longer; it was to keep focusing on
tomorrow, rather than dwelling on the
past.
“If it ain’t broke, let’s break it and
make it better,” declares Scarlett, whose
personal mantra is to never be satisfied
with the status quo. ❖
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C
hris Jones’ love affair with
motorcycles began with the
first bike he could get his
hands on: a Honda XR-75
dirt bike. At 14 years of age, it was the
only kind of motorcycle he was old
enough to drive legally.
Obtaining the motorcycle was easier
for Jones than it would have been for
most adolescents—his father was a
Napa Auto Parts jobber who ran a sideline business called Iron Pony Motorsports. The year he acquired his first
motorcycle was also the year young
Jones began working at his father’s
business officially, although he was
pitching in daily well before that.
When his father sold the parts business, Jones talked him into letting him
keep and run Iron Pony. He was still in
high school at the time.
Today, Jones is 37 and president of
the 31-year-old Iron Pony Motorsports
64
Group, and runs the business with his
wife, Tammy, 38, who serves as VP.
They operate Iron Pony’s retail and
direct-sales business out of Columbus,
Ohio. The acceleration of Iron Pony’s
business resembles that of a Suzuki
Hayabusa: Jones says that Iron Pony’s
sales growth has been in excess of
30% in each of the past eight years and
that revenues have tripled in the last
three. That heady growth impelled
Iron Pony to move into its current
22,000-sq.-ft. space from a location
one-quarter that size in November
2000.
Walking into the Iron Pony store,
one might be surprised to find a space
Chris Jones
President
Tammy Jones
VP
Iron Pony Motorsports
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Headquarters: Columbus, Ohio
Type of business: Motorcycle parts
and related lifestyle accessories
Number of stores: One
through direct-marketing business
that resembles The Sports Authority
more than it does AutoZone. The shopper’s eye is bombarded by racks of
brightly colored motorcycle-themed
apparel throughout the floor. In the
aisles, shelves are stacked with motorcycling accessories, including helmets, gloves, eyewear and protective
gear. Although wearable items are a
sizeable proportion of the merchandise, customers visiting Iron Pony in
search of actual motorcycle parts
won’t be disappointed. Iron Pony carries them, too.
Soft goods have taken on greater significance for Iron Pony in the past de-
Chris and Tammy Jones love the motorcycling lifestyle.
cade because of renewed interest in the
motorcycle and its place in American
culture. “ This business can be as much
about selling the motorcycling lifestyle
as it is about selling motorcycling gear,”
Jones says. “People associate motorcycling with rebellion, freedom and
adventure. Lots of people want to have
a piece of the lifestyle, even if they
don’t actually ride.”
For Iron Pony, the payoff comes in
increased apparel sales. Jones estimates that apparel accounts for about
half of Iron Pony’s revenues. The rest
comes from motorcycling parts and
maintenance equipment and supplies.
With this balance, the retailer is able to
broaden its appeal without abandoning
the hard-core motorcycling enthusiasts
upon which Iron Pony built its enterprise.
Jones and Iron Pony have no plans
to slow down. Jones is currently negotiating another move, into a space
quadruple the size of its current location. And in the summer of 2002, the
company debuted a mail-order catalog and Web store. Already, the directmarketing side accounts for more than
20% of Iron Pony’s business. ❖
❖Retail
I
f she could get past the investors
and the retailers, Monica Nassif
knew her products would be an
instant hit with consumers. That
was an enormous “if ” in December
1999, when Nassif officially incorporated her far-fetched vision for aromatherapeutic household cleaners.
“A lot of people thought we were
crazy and most investors just laughed
at me,” recalls Nassif, who has smiled
merrily all the way to the bank as sales
at The Caldrea Co. doubled year over
year for three consecutive years.
With a background in marketing
and retail, Nassif, now 47 years old,
had an accomplished career launching
consumer packaged goods (CPG).
“I had an epiphany about five
years ago while walking through a
retail store that I was visiting for one
of my CPG accounts,” she says. “ There
were gigantic displays of cleaning
Monica Nassif
CEO/founder/president
The Caldrea Co.
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Headquarters: Minneapolis
Type of business: Aromatherapeutic
household cleaners
Sales channels: Caldrea Web site and
wholesales to 2,600 retail locations
products; they all smelled awful and
looked alike.”
“Personally, I hated all the cleaning
products that were available. The
green brands didn’t work, and I was
afraid the [chemicals in the] mass
brands would kill my dogs and children.”
Nassif scribbled a business plan on a
scrap of paper, which she still keeps in
her office. Her mission was to revamp
the product category with aromatherapeutic cleaners that would give
66
C
Monica Nassif used beautiful packaging for
her aromatic household-cleaning products.
homemakers a healthful option and a
unified fragrance. She hired a chemist
to create the product while she developed upscale packaging that can
only be fully appreciated when seen—
imagine the equivalent of Tide in a
Tiffany box, with the fragrance of fresh
lavender and pine.
Colored in soft pastels, finished
with a gauze ribbon and scented to
perfection, the presentation has impressed retailers around the country.
Caldrea products are sold in 1,800
stores and on the company’s Web site.
A sister line, Mrs. Meyer’s, is sold in
800 stores, and private-label products
are manufactured for select retailers including Williams-Sonoma and
Crate & Barrel.
The products are organically derived primarily from plants, with no
harsh chemicals, petroleum distillates,
chlorine bleach or harmful additives.
Nassif’s advice to aspiring entrepreneurs is, “Walk quickly through hell,
don’t stop moving when things get
tough and stay passionate about your
product.”
In the rare moments when she isn’t
working, Nassif enjoys gourmet cooking and spending time with her daughters, Calla and Aundrea, after whom
the company is named. ❖
omplacency is not in Joseph
M. Wells III’s vocabulary.
With the future of The Homer Laughlin China Co. at
stake last year, the 62-year-old Wells
rose to the occasion and, joined by his
two sisters, took control of the company
that had been partially owned by his
family for four generations.
Built in 1871 by Homer Laughlin and
purchased by the Wells and Aaron families in 1897, the company was one of
the first manufacturers of whiteware
china in this country. Successive generations of the two families managed
the company for more than a century,
Joseph M.Wells III
President
The Homer Laughlin China Co.
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Headquarters: Charleston,W.Va.
Type of business: Designs and
manufactures foodservice and retail
china products
Sales channels: Internet, one
company-owned outlet store and
numerous retail chains including most
major department stores
with an extended family of employees that ran four or five generations
deep.
“When the Aaron family decided to
sell their interests, it appeared the
company would be bought by venture
capitalists who had no intention of or
interest in maintaining the company’s
heritage or traditions,” says Wells.
“This would have been catastrophic
for the company and for all of the
families who work here. These people mean an awful lot to me, and I
couldn’t let them down.”
Approximately 1,000 people are employed at Homer Laughlin and, while
jobs may be replaced by technology, the
❖Retail
M
Joseph M. Wells III tours HL China with
Hova Underwood, wife of former West Virginia Gov. Cecil Underwood.
people don’t become less valuable. “One
of the reasons our company has continued to succeed for generations is that
we are willing to invest in technology,”
says Wells. “When we eliminate nonvalue-added jobs, we become more
competitive and other jobs pop up elsewhere in the company.”
In 1986, about the time that Wells
entered the family business in a lead
role, the company reintroduced its
Fiesta line of china that originally debuted in 1936. Sold in all of the major
department store chains, Fiesta has
proved to be a timeless product that
has continued to create job opportunities and revenue.
“We’ll ride this Fiesta rocket as
long and far as it will go, but I know
it isn’t a solution forever,” continues
Wells. “Long term, we’ll invest in more
equipment and continue to make our
designs and products more competitive.”
Over the past two years, sales continued to increase. However, this year,
sales have not increased over 2002.
Despite the uncertain times, Wells felt
compelled to take control of the company. “At this stage of my life, I wasn’t
sure I wanted to take on the responsibility. But it was the right thing to do.” ❖
ost men who enjoy the
amber hue and full-bodied taste of a good beer
are content to down a
pint or two after work. John McDonald, however, is not your typical fan of
beer. Rather, the 50-year-old entrepreneur is the president of the 24th-largest
brewery in the country, Boulevard
Brewing Co., a concern he started from
scratch in 1988.
The story of Boulevard Brewing begins with McDonald’s appreciation of
premium beers. In the early 1980s, he
developed a taste for the imports from
the old countries—Belgium, Germany
and England, where the small brewer
was a respected local institution. But a
trip to Europe in 1983 led to a crucial
erica’s small breweries, but he wasn’t
far behind the vanguard. “We started at
a great time,” he says. “ The big brewers were all chasing a mass market, so
there was a void for us to fill.”
Originally, McDonald himself served
as head brewer. “I wasn’t totally qualified, but that’s what I was until I could
afford to hire one.” The current head
brewer learned his art in Belgium and
oversees the production of Boulevard
varieties including Bob’s ’47 Munich
Style Lager, Nutcracker Ale and the
flagship Boulevard Pale Ale.
One of the early key decisions was
to focus on the kind of beer that the big
breweries weren’t delivering. “We’ve
always tried to realize that we’re a
John McDonald
President
Boulevard Brewing Co.
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Headquarters: Kansas City, Mo.
Annual sales: $12 million
Type of business: Brewery
Sales channel: On-line store
Areas of operation: 10 Midwestern
states
realization about European beer. “A lot
of those breweries were just as big and
only slightly better than the ones over
here,” he says.
It was just a matter of time before the
budding brewer arranged a limited partnership among 17 friends and investors
to launch the company in 1988. The
first keg rolled out the next year. McDonald delivered it himself to a Mexican restaurant a couple of blocks away.
The key to getting started was being
“crazy” enough to try, he says. “I was at
a time in my life where it seemed like
the right idea and it seemed like a feasible business,” he says. In 1989, he certainly wasn’t leading the revival of Am-
John McDonald’s love of beer helps him
run the nation’s 24th-largest brewery.
product-driven business,” he says. “We
have to make the best beer we can
make, and work as hard as we can on
the marketing side.”
Beer in a can? Boulevard Brewing
Co. wouldn’t think of it. Lite beer?
That’s not going to happen. Nonalcoholic beer? No way. You also
won’t see Boulevard commercials
with customary bikini-clad models.
“We can’t afford to market to age
demographics,” he says. “We have to
stick to a single message, we’ve got
quality beer at a reasonable price.” ❖
67
❖Retail
hain Store Age caught up
with Thomas Sullivan,
Thomas Sullivan
president of Lumber LiqPresident
uidators, as he was travelLumber Liquidators
ing to Brazil, where several lumber
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mills churn out the cherry, teak and
Headquarters: Colonial Heights,Va.
koa that eventually finds its way to
the floors of kitchens and living rooms
Type of business: Hardwood flooring
in American homes.
The retail business hasn’t always
been an exotic, jet-setting venture for
Sullivan. In fact, he describes his first
effort in retail as a “weekend sale” of Sell, Sail”), and he’s starting to play a
the odds, ends and leftovers picked little bit of golf. But he still spends a
up at a construction-materials storage lot of time with his dog Dora at the
center.
company’s 80,000-sq.-ft. manufacturBefore his retail career took off, ing and distribution facility outside of
Sullivan was a contractor “building a Richmond, Va. The company moved
lot of decks,” he says. With an entre- from Boston to Virginia in 1999 to take
preneurial spirit that would later lead advantage of the central location.
to a 40-store hardwood-flooring speThe dedication has given Sullivan
cialist with revenues of about $100 and his company a story of revenue
million last year, Sullivan worked out a growth. The $100 million in sales last
way to bring in the lumber for his con- year was up from $68 million the year
tracting work directly from the mills. before, which in turn was up from $38
He found a public warehouse special- million the year before that.
izing in storage of building materials
Lumber Liquidators’ banner features
to serve as a kind of depot for his the phrase: “Hardwood Flooring for
work.
Less.” The chain’s direct-from-the-mill
“In the meantime, while storing stuff business model cuts out the middleman,
there, we saw a lot of leftover material,” Sullivan says. “I bought up
a bunch of that stuff and had a
weekend sale. It did better than
the contracting work.”
That was in 1993. After a couple years of similar sales and a
few successful hardwood-flooring deals, Sullivan introduced the
Thomas Sullivan
first Lumber Liquidators in West
attributes his
Roxbury, Mass. Asked when his
success with
first store opened, he didn’t hesiLumber Liquidators
to persistence.
tate—“Jan. 5, 1996,” as if it was
the birth date of a child.
In some ways, it was.
“I haven’t had too many hobbies in the last eight years,” says
Sullivan. He spends some time
with his boat (Christened “Sell,
C
68
Sullivan says, and allows for prices
lower than the typical home center. The
company also makes its own brand of
wood flooring—Bellawood, a product
he describes as easy to install and protected by a 50-year warranty.
The stores promise to beat any competitor’s written or advertised price.
On a deeper level, Sullivan, 44, describes the key to his entrepreneurial
success as persistence. His advice to
others: “Keep trying,” he says. “I’ve
tried a lot of things and a lot of them
didn’t work, but I basically kept trying
and worked at it.
“I always liked hardwood flooring,
and I always wanted some kind of retail business,” he says. ❖
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I
n the age of the monolithic, Main
Street department store, when
ladies donned white gloves and
festive hats for a trip into town,
shopping was an event, not an errand.
Every department would be visited in
search of the best bargains on the
newest, most exciting merchandise.
Kathleen Mason’s favorite childhood
memories recall shopping excursions
with her grandmother and aunt. The
time she spent learning to savor the literal event of shopping became ingrained
in Mason’s approach to retailing.
As president and CEO of Tuesday
Morning, Inc., the 53-year-old Mason
is committed to giving the customers in
her stores a memorable shopping event.
Tuesday Morning stores are the
antithesis of the current model for
lifestyle retailing. Customers visit the
stores expecting to search for surprises; they may find the coveted item
from Tuesday Morning’s mailer in
stock or it may have sold to early-bird
opportunists. The only guarantee is
that the eclectic merchandise on hand
will be top quality and priced 50% to
❖Retail
80% below other retail offerings.
“I get so excited about the merchanKathleen Mason
dise we sell; it’s always quality goods
President/CEO
with real value,” enthuses Mason,
Tuesday Morning, Inc.
whose personal preferences are as
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eclectic as the merchandise mix in her
Headquarters: Dallas
stores. She collects antiques from the
Annual sales: $729 million (fiscal 2002)
Type of business: Closeout retailer
Far East, as well as contemporary art,
of upscale, decorative home accesand is a voracious reader, enjoying
sories and gifts
everything from the Gothic novels
Number of stores: 577 by end of 2003
written by Elizabeth George, her distant
cousin, to Jeffrey Satinover’s complex
book, “Cracking the Bible Code.”
“Our customers are very loyal— paid off handsomely. In fiscal year
almost cult-like in their commitment 2002, Tuesday Morning had an earnto shop our events,” continues Mason.
ings increase of 46%, on top of a 26%
Tuesday Morning stores host 10 increase in earnings the preceding year.
“events” each year, closing for several
For the current fiscal year, Tuesday
days between events to restock and Morning predicts an overall 12%
refresh merchandise.
increase in top-line
This unique apgrowth with another
proach and “treasurehealthy increase in
hunt mentality” has
earnings.
kept customers comWith a resume that
ing back throughout
lists leadership roles
the chain’s 30-year
at Mervyn’s, The Limhistory. But when
ited, Kaufmann’s DeMason was recruited
partment Stores, TJX
to take the helm three
and Filene’s Baseyears ago, Tuesday
ment, Mason says,
Morning was strug“The biggest mistake
gling, despite the popis to hire people beularity of its concept.
cause of what they
“Tuesday Morning
accomplished in anKathleen Mason makes shopping
had serious working- an event at Tuesday Morning.
other company. People
capital constraints and
have to adapt previous
the stock was trading in the mid-single experiences to a new company.”
digits, a significant decline from where
She also serves on the board of direcit had once been,” notes Mason.
tors for the Dallas Chamber of ComThe challenges with constrained merce, The Men’s Wearhouse and Genworking capital were exacerbated by esco, which has expanded her perspecoperational inefficiencies.
tive and introduced her to some of the
“We consolidated 16 regional ware- issues unique to male shoppers.
houses into one central distribution cen“Professionally speaking, I grew up
ter in Dallas and we took control of our in women’s apparel,” says Mason. “At
store issues, implementing procedures Tuesday Morning, 95% of our cusand policies to support more efficient tomers are female; but we’re gingerly
operations,” says Mason.
expanding our strategy to attract more
Decisive, expedient actions have men.” ❖
70
M
id-life career changes
typically involve interesting details, but
going from Kentucky
racehorses to Swedish mattresses suggests a more intriguing story.
It started quite by chance, when
Robert B. Trussell Jr., visiting Sweden in the fall of 1991 for his thoroughbred-racehorse business, met another
horse trader who claimed his company made the world’s greatest mattress.
The secret behind the successful
Tempur-Pedic mattresses and pillows
is a formula originally developed by
NASA to relieve astronauts of the
pressures from g-forces.
One night of sleep on the proverbial
“greatest” mattress convinced Trussell,
who promptly submitted a marketing
proposal that would give him exclusive distribution rights for all of North
America.
The deal was signed and Trussell
raced to begin marketing the product
in January 1992. Year one was not a
promising run.
“ The horse business was in a recession, and I was looking for other opportunities; but in our first year, we
barely sold $300,000 worth of product,” says Trussell.
A slow start belied the winning years
Robert B.Trussell Jr.
President/CEO
Tempur World, Inc.
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Lexington, Ky.
Annual sales: $297 million (fiscal 2002)
Type of business: Pressure-relieving
mattresses and pillows
Sales channels: Direct to customer
via Internet, infomercials and catalogs,
wholesale to approximately 3,500
retail stores and sold to patients via
medical professionals
Areas of operation: 50 countries
❖Retail
to come. In its second year, the company produced $2.5 million in sales.
Last year, sales topped $297 million,
and Trussell predicts 2003 sales will
exceed $400 million.
The financial outlook is bright, although 52-year-old Trussell laughingly
recalls how he almost lost his first investor—literally. “When we started the
business, I prevailed upon my Uncle
Bill to invest in the company. Driving
back to Kentucky from his home in
Chicago, I stopped at a fast-food restaurant. The next morning, Uncle Bill received a call from the Burger King in
Lebanon, Ind.,
telling him they
found a $50,000
check on the
floor. Fortunately, Uncle
Bill decided to
give m e a n other chance.”
Maintaining
a nimble optimism is critical
Robert B. Trussell to success, says
Jr., went from racing Trussell, who
thoroughbreds to runencourages asning a Tempur-Pedic
piring entrepreempire.
neurs to continually improvise: “When one approach
doesn’t work, try another.”
“We learned quickly that a mattress
overlay, which was being sold very successfully in Europe, had to be modified
into a more standard mattress to appeal
to U.S. customers,” he continues.
Developing a multichannel marketing model has been another key contributor to the company’s success. The original marketing plan called for the majority of sales to be generated through
medical professionals, who would prescribe the product for patients. Although
the product continues to be sold through
30,000 physicians and chiropractors,
more than 3,500 retail stores also carry
72
Tempur-Pedic merchandise, most notably Brookstone, Linens ’n Things and
Bed Bath & Beyond.
“The most amazing thing is the
amount of product we sell via the
Internet, infomercials and catalogs,”
attests Trussell. “I went into this thinking no one would ever buy it without
seeing and touching the product.”
Although he still dabbles with racehorses as a hobby, Trussell has become
the consummate entrepreneur. “My
job is to put a winning team in place,
then get out of the way,” he declares.
On Jan. 1, 2000, the North American operation merged with the European company and Trussell took command of Tempur World, which sells
products in 50 countries. ❖
Robert Wildrick
President/CEO
Jos.A. Bank Clothiers, Inc.
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Hampstead, Md.
Annual sales: $243.3 million
Type of business: Men’s apparel
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R
obert Wildrick had been enjoying a self-imposed sabbatical, spending time on his
sailboat in Palm Beach, Fla.
That was until Andy Giordano, chairman of Jos. A. Bank, called … and
called … and called. Wildrick, who had
been serving on the Hampstead, Md.based men’s apparel retailer’s board
since 1995, took some time before he
agreed to become chief executive.
“It took Andy about six months to
convince me to come on board as
CEO,” says Wildrick, 55. “My plan was
to come in, get the company going in
the right direction and then slip quietly
off into the sunset after two years. But
we were able to achieve things much
faster than we originally thought we
could. I got caught up in the whole
thing and now I want to see it through.”
At a time when many had given up
on the men’s wear industry, Wildrick
took the reins and crafted one of the
most successful turnarounds in retail. A
big part of the change was shifting how
Jos. A. Bank bought its merchandise.
Under Robert Wildrick’s helm, men’s
wear retailer Jos. A. Bank returned to its
merchandising roots.
Rather than buying goods from one
place and then stitching its label on it,
Jos. A. Bank transformed back into a
manufacturer that just happened to
operate retail stores.
“The standard of quality was inconsistent,” recalls Wildrick. “Previously,
we had been akin to a department store
buyer. We went to market, bought things
and put labels on them. You can’t get
consistency that way. Today, we are less
market-oriented, and more brand- and
manufacturer-oriented. We control the
specs and have exacting standards. We
have a great deal of confidence in our
design ability and to do it ourselves, and
that is the single biggest change.”
The shift also has boosted Jos. A.
❖Retail
Bank’s bottom line. Operating margins
reached 8.1% of sales in 2002, compared with just 3.5% when Wildrick
and the current management team
took over in 1999. For the year-to-date
through September, the retailer’s sales
increased 19.7% to $171.7 million,
from $143.4 million. Comparable-store
sales are up 7.5% while combined catalog and Web sales rose 16.2%.
Another change Jos. A. Bank witnessed has been a reduction in the
median age of its customer. Last year,
men aged 26 to 55 accounted for 74%
of all customers, compared with 64%
two years prior. There was a major shift
in the 26 to 35 age group.
“ The trend over the past four years
has been toward more dressy outfits,”
he says. “People are dressing less
grungy and nicer, and I think that’s true
even with the young men’s category.
When I joined in 1999, I felt that the
company and the men’s wear industry
were way underrated and that we had a
great opportunity to grow. I never gave
up on the men’s wear industry.”
Despite the success over the past few
years, Wildrick believes that there is
much more to do. Reaching the 500store count by the end of 2007 is just
one of those goals. Jos. A. Bank recently opened its 200th store, its 40th new
store opened in 2003, near its goal of
adding 50 stores this year. Wildrick
plans to double the chain’s store base
over the next three to five years. Plans
call for 50 to 75 new stores in 2004 and
75 to 100 new locations in 2005.
Wildrick may still be around then.
“I get a lot of the credit because I’m
the CEO, but our top management
team is so outstanding,” he says. “I’ve
got three guys who could step in and be
president tomorrow. My contract is for
another year and a half, but there’s no
reason to believe that I won’t be around
after that. I’ll be here until my job is
completed.” ❖
74
Craig Jerabeck
President/founder/CEO
@Wireless
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Rochester, N.Y.
Type of business: Wirelesscommunications retailer
Areas of operation: Primarily the
East Coast, from Virginia to Vermont
I
t’s a good thing Craig Jerabeck is
the president, founder and CEO of
a wireless-communications provider. Otherwise, he might not
ever keep in touch with his busy wife
and their three active children.
“My daughters are 8 and 13, my son
is 11. The girls do ballet, softball, soccer, swimming and cross-country. My
Craig Jerabeck, president, founder and
CEO of @Wireless, still finds time to
spend with his family.
son plays baseball and hockey,” the 42year-old says. “I sponsored their softball and baseball teams, and I assistant
coach the little one’s soccer team. All
my free time I dedicate to the kids.”
His wife is no slouch herself. She volunteers at the kids’ school and serves
on the church advisory committee.
“Everyone’s so busy that without our
wireless phones, it would be impossible
to keep in touch,” Jerabeck says. “I sent
my wife to the store to get herself a
phone, and she came back with a $500
palm phone. At first, I asked her, ‘Did
you really need to spend that much?’
But she uses it all the time.”
Jerabeck supports his family’s expensive cell-phone habit with his business, @Wireless, a franchiser of wireless-communications stores. Currently
the company has 72 locations, primarily
across a swath of Atlantic seaboard
stretching from Virginia to Vermont.
The company continues to grow at a
heady clip. Jerabeck forecasts more than
100 locations by the end of next year.
The day he spoke with Chain Store Age,
four new franchisees were engrossed
in a training and orientation session
at the company’s Rochester, N.Y.,
headquarters. Revenues are keeping
pace, too. Jerabeck expects sales to
increase by roughly one-third next year,
and same-store sales this year are poised
to top last year’s by
10%.
The @Wireless
business was a natural outgrowth of
Jerabeck’s career
experience in the
telecommunications
business. Jerabeck
went to work at
AT&T’s commercial long-distance
business in 1984, spending eight years
there before jumping to a young upstart
called Cellular One. “Wireless seemed
like a hot business at the time, so naturally I wanted to be involved,” he says.
The Cellular One division Jerabeck
worked for was sold to SBC Communications two years after he joined.
Jerabeck had an employment contract
with SBC, but SBC’s preference for
third-party distribution, plus Jerabeck’s
own entrepreneurial drive, gave him
other ideas. “I went to SBC and asked
them how they’d feel about me becom-
❖Retail
ing a distributor for them,” he says.
SBC agreed, and Jerabeck launched
Cellular Unlimited in 1994. By 1997,
the chain had grown to 23 locations.
Jerabeck sold 14 of them to Let’s Talk
Cellular and Wireless.
The remaining stores became the
core of @Wireless, which Jerabeck began building out in spring of 2000.
Jerabeck’s @Wireless continues to
grow.
Jerabeck’s own family is a testament
to growing consumer demand for wireless communications. “With all of us so
busy and in different places, we’d find it
very hard to keep in contact without
our cell phones. A few years ago, you
wouldn’t have dreamed of buying your
kids cell phones, but now it’s commonplace,” he says.
“People have realized in the past few
years that wireless devices are personal
productivity tools as much as they are
tools for business,” he concludes. ❖
Jon Nordmark
CEO/founder
EBags
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Greenwood Village, Colo.
Annual sales: $40 million (est.)
Type of business: Bags, luggage
Sales channels: Web site, catalog
been reading books such as “Blur,”
which outlines the changing business
landscape and the new rules of the connected economy. That got him excited at
the prospect of a new way to sell merchandise. But when Samsonite rejected
the idea of selling merchandise via the
Web—it was too early for them—he left
in the spring of 1998 to found eBags.
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
I
t’s a good thing eBags didn’t raise
more than $30 million when it
started out. Otherwise, it might not
have made it past the Internet bust.
“When you get a lot of money, you
create a lot of waste,” says Jon Nordmark, CEO and founder of Greenwood Village, Colo.-based eBags.
“You do things that are easy, not
smart. Had we raised more, we probably wouldn’t be here today.”
EBags was able to survive the Internet bust by being prudent with its
spending and predicting many potential
problems ahead of their arrival. And
while the drop-off in airline travel also
had an effect on sales a few years back,
eBags has overcome those setbacks, too.
Prior to starting eBags, Nordmark
spent 11 years at luggage company
Samsonite, where he oversaw distribution. An avid reader, Nordmark, 40, had
76
CEO Jon Nordmark adapted to a new distribution channel when founding eBags.
The site launched in March 1999.
“I had been studying the theoretical
rise of the Internet as a major distribution channel for the future,” recalls
Nordmark. “Amazon hadn’t gone public yet, but I had ordered from them and
it seemed natural to sell goods to people
over the Internet. It was a big opportunity for selling bags beyond Samsonite.”
Nordmark then reconnected with
some former coworkers who had already left Samsonite to start eBags. Of
the five people who founded eBags,
four were former Samsonite employees. Taking what they knew about selling luggage, they simply adapted the
process to a new distribution channel.
Switching from distribution to marketing was not a problem for Nordmark,
who spent a year after college writing
direct-marketing copy with his dad,
who runs a small ad agency.
To date, eBags has sold roughly 2.3
million bags. Over the next 12 months,
it expects to sell another 1.5 million
bags. The company also launched a
catalog, which is shipped mainly to
customers. One million copies will ship
this holiday season. Today, about 10%
of eBags’ sales come from the catalog
business. More importantly, it has been
profitable for five straight quarters.
“ The catalog is an opportunity for
us to build our brand that can’t be done
on line,” he says. “It allows us to showcase our selection. We make it more
lifestyle- and visual-oriented. We want
to be seeded in emotion, not price.”
EBags is now expanding beyond
premanufactured luggage. The company is accepting orders from people
who want to put a picture of their baby
on a diaper bag or of their pet on a carrier bag. It also is dabbling in monogramming, although Nordmark doesn’t
want that to be eBags’ focus. Rather, he
hopes to create a process of discovery
for unknown designers across the country who can’t get distribution to major
channels. He also wants to double the
number of SKUs to 20,000 by including items such as urban gear bags and
sport bags for carrying skateboards or
snowboards.
“ There are a lot of specialized bags
that we want to get to,” Nordmark
says. “We want to make complete bags
for someone and we are tying to find a
way to get to that. We’re trying to
carve out a shopping segment that has
never been carved out before.” ❖
❖Retail
A
lan Rosskamm got started
in the family business early.
As a boy, he would spend
weekends tidying up his
grandparents’ fabric shop and running
the occasional errand there. The errands
always began with a tap on the shoulder, and a dollar bill and a note silently
passed to him from his grandmother.
On the note was the name of the fabric
pattern Rosskamm was to buy from the
Woolworth’s across the way. The pattern was one a customer had requested,
but was not in stock. Rosskamm speedily retrieved the pattern for his grandmother to sell. The sale generated no
profit for the family business, but the
customer’s loyalty was saved. For that
reason alone, young Rosskamm understood, the shoe leather was worth it.
Since then, Rosskamm, now 53, has
Alan Rosskamm, above center with
founders, values Jo-Ann’s family focus.
advanced from errand boy to CEO.
The business has grown, too, transforming from a single fabric shop to
Jo-Ann Stores, a leading fabrics and
crafts chain with 826 stores across the
nation. In its last fiscal year, the retailer
collected $44.9 million in net profit on
$1.68 billion in sales.
The seeds of Jo-Ann Stores were
planted in 1943 when Rosskamm’s
grandparents, Hilda and Berthold
Reich, fled to the United States from
Nazi Germany. They were supporting
themselves with a cheese shop in their
adopted hometown, Cleveland, when
78
Alan Rosskamm
Chairman/president/CEO
Jo-Ann Stores
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Hudson, Ohio
Annual sales: $1.68 billion
Type of business: Fabric/crafts retailer
they were approached by Sigmund and
Matilda Rorhbach, themselves refugees from Hitler’s Germany. The Rorhbachs’ son had lost his job selling fabric
for a mill when he was drafted to fight
in the war. In a gesture of goodwill, the
fabric mill offered to provide the
Rorhbachs with fabric if they could find
a storefront to sell it. The Reichs invited
the Rorhbachs in as partners,
and the cheese was moved to
the back of the store.
As Jo-Ann Stores pushes
forward—the company celebrates its 60th anniversary this
year—Rosskamm tries to keep
the company true to the principles set by the family founders:
Superior focus on the customer, fair dealings with suppliers, and
respect for team members. The bronze
bust of his grandmother that Rosskamm keeps on the wall of his office
serves as a constant reminder of those
values.
Although the days of getting out-ofstock patterns from the competition are
long past—the merchant added a new
630,000-sq.-ft. DC in Southern California not long ago—pleasing the customer remains a Jo-Ann Stores priority.
One of the ways Rosskamm is doing
that is by giving the customer more of
what she wants, in the form of a larger,
35,000-sq.-ft. supercenter. The new
format, which is more than double the
size of Jo-Ann’s traditional stores, indi-
cates the new direction for the company, Rosskamm says. Jo-Ann Stores
already has 80 supercenter locations.
Rosskamm plans to convert all of JoAnn’s existing stores to the new format
in the coming years.
The increased customer satisfaction
can be seen at the bottom line. The
new stores collect more than $150 in
sales per square foot, more than half
again as much as the older stores. The
company’s founders would certainly
approve. ❖
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
S
taying in sync with consumer trends isn’t enough in a
competitive retail arena; the
most successful entrepreneurs are at least one step ahead of
the pack.
When Donald L. Tate opened the
first Fas Chek Supermarket in 1965,
he was several paces ahead of his
time. “We were the first 24-hour
supermarket in our region, probably
one of the first in the country,” he
says. “The other grocery stores
closed at 6 p.m. and weren’t open on
Sundays.”
“ Television was just taking off
and Americans were becoming more
nocturnal,” he continues. “Suddenly,
people who had always gone to bed
at dark had a reason to stay awake.
My store was covered up with business. My favorite description of
those years was that we were an
‘overnight’ success.”
Within five years, he had opened
six stores under the Fas Chek banner,
a name intended to convey fast service in a full-line grocery store.
Almost four decades later, Tate
has continued to bring competitive
innovations to the retail industry in
his West Virginia and Virginia markets. In the late 1990s, he converted
❖Retail
Donald L. Tate, left, Fas Chek president
and founder, poses with NASCAR driver
Mark Martin at a Fas Chek grand opening.
Donald L.Tate
Founder/president
Fas Chek Supermarkets
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Annual sales: $116 million (2002)
Type of business: Regional grocery
stores
Number of stores: 24 conventional
Fas Chek supermarkets and six
Sav-A-Lot stores
Areas of operation: West Virginia
and Virginia
select stores to the popular Sav-ALot brand, which are ideally positioned to compete with Wal-Mart’s
entrance into the markets.
“Our six Sav-A-Lot locations have
recorded sales increases every year
since 2000,” he notes. “ The biggest
increase, more than 12%, was in
2001 and, in 2002, our Sav-A-Lot
stores had an 8% increase on top of
the previous year’s growth.”
The Sav-A-Lot stores produced
$34 million of the company’s total
$116 million revenues last year. Average sales at each of the Sav-A-Lot
stores is nearly $6 million, signifi-
80
cantly higher than the
average Fas Chek
store. However, the
69-year-old Tate has
reached a comfortable
point in life where he
doesn’t have to make
all of his decisions
based on financial returns.
“I recently bought a
small independent grocery store and turned
it into a Fas Chek location. The store probably isn’t going to be a top performer, but sometimes you do things
for the sense of accomplishment,
not the money,” he explains. “There
were 52 employees in the store, all
members of our local community. It
would have been hard for those
people to find jobs if that store had
been closed; all but one of the
employees have continued to work
for us.”
Before opening his first store, Tate
worked for Kroger, which was the
dominant national chain in the market until Wal-Mart came on the
scene. When he was only 23 years
old, Tate managed the second-largest
Kroger store in the Charleston,
W.Va., division of 65 stores. By the
time he was 31, Tate was eager to
open his first Fas Chek, although he
admits he was “scared to death.”
He attributes his success to the
people who work in his company
and to the autonomy he has as an
independent retailer. “I have flexibility that major chains can’t have,” he
says. “I can make a decision instantly that could take weeks or months
for a national chain to evaluate.”
In addition to the grocery business, Tate owns a car dealership in
Ohio, which sells every brand manufactured by General Motors. ❖
S
tanley R. Smith had a few false
starts early on his career, but
with Shoes For Crews he
struck paydirt. Starting with a
small nurses’ footwear business in
1984, Smith grew the company to its
current status as the nation’s leading
manufacturer of slip-resistant footwear.
Along the way, he created a new footwear niche.
The company’s success, however,
was far from a sure thing in its early
days. At the time, Smith and his wife
were struggling, selling “comfort”
shoes for nurses out of their Manhattan apartment. They started promoting
darker versions of the shoe to the fastfood industry.
Stanley R. Smith
Founder/CEO/chairman
Shoes For Crews
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: West Palm Beach, Fla.
Type of business: Manufacturer and
marketer of slip-resistant footwear
Sales channels: Web and catalog
Areas of operation: Nationwide,
Canada and Europe
“We made a lot of cold calls,” says
Smith, founder, CEO and chairman,
Shoes For Crews, West Palm Beach,
Fla. “Most people couldn’t hang up
fast enough. But a safety manager at
Burger King told my wife that while
comfort shoes were of no interest to his
company, they would be impressed if
we could create a shoe that was ‘slipresistant.’”
Smith jumped on the idea. Within a
short time, he had made contact with a
Korean manufacturer and had a prototype.
“We changed the name of the company to Shoes For Crews because it
was catchy and to the point: We sold
shoes for restaurant crews,” Smith says.
❖Retail
Donald L. Tate, left, Fas Chek president
and founder, poses with NASCAR driver
Mark Martin at a Fas Chek grand opening.
Donald L.Tate
Founder/president
Fas Chek Supermarkets
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Annual sales: $116 million (2002)
Type of business: Regional grocery
stores
Number of stores: 24 conventional
Fas Chek supermarkets and six
Sav-A-Lot stores
and Virginia
select stores to the popular Sav-ALot brand, which are ideally positioned to compete with Wal-Mart’s
entrance into the markets.
“Our six Sav-A-Lot locations have
recorded sales increases every year
since 2000,” he notes. “ The biggest
increase, more than 12%, was in
2001 and, in 2002, our Sav-A-Lot
stores had an 8% increase on top of
the previous year’s growth.”
The Sav-A-Lot stores produced
$34 million of the company’s total
$116 million revenues last year. Average sales at each of the Sav-A-Lot
stores is nearly $6 million, signifi-
80
cantly higher than the
average Fas Chek
store. However, the
69-year-old Tate has
reached a comfortable
point in life where he
doesn’t have to make
all of his decisions
based on financial returns.
“I recently bought a
small independent grocery store and turned
it into a Fas Chek location. The store probably isn’t going to be a top performer, but sometimes you do things
for the sense of accomplishment,
not the money,” he explains. “There
were 52 employees in the store, all
members of our local community. It
would have been hard for those
people to find jobs if that store had
been closed; all but one of the
employees have continued to work
for us.”
Before opening his first store, Tate
worked for Kroger, which was the
dominant national chain in the market until Wal-Mart came on the
scene. When he was only 23 years
old, Tate managed the second-largest
Kroger store in the Charleston,
W.Va., division of 65 stores. By the
time he was 31, Tate was eager to
open his first Fas Chek, although he
admits he was “scared to death.”
He attributes his success to the
people who work in his company
and to the autonomy he has as an
independent retailer. “I have flexibility that major chains can’t have,” he
says. “I can make a decision instantly that could take weeks or months
for a national chain to evaluate.”
In addition to the grocery business, Tate owns a car dealership in
Ohio, which sells every brand manufactured by General Motors. ❖
S
tanley R. Smith had a few false
starts early on his career, but
with Shoes For Crews he
struck paydirt. Starting with a
small nurses’ footwear business in
1984, Smith grew the company to its
current status as the nation’s leading
manufacturer of slip-resistant footwear.
Along the way, he created a new footwear niche.
The company’s success, however,
was far from a sure thing in its early
days. At the time, Smith and his wife
were struggling, selling “comfort”
shoes for nurses out of their Manhattan apartment. They started promoting
darker versions of the shoe to the fastfood industry.
Stanley R. Smith
Founder/CEO/chairman
Shoes For Crews
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: West Palm Beach, Fla.
marketer of slip-resistant footwear
Sales channels: Web and catalog
Areas of operation: Nationwide,
Canada and Europe
“We made a lot of cold calls,” says
Smith, founder, CEO and chairman,
Shoes For Crews, West Palm Beach,
Fla. “Most people couldn’t hang up
fast enough. But a safety manager at
Burger King told my wife that while
comfort shoes were of no interest to his
company, they would be impressed if
we could create a shoe that was ‘slipresistant.’”
Smith jumped on the idea. Within a
short time, he had made contact with a
Korean manufacturer and had a prototype.
“We changed the name of the company to Shoes For Crews because it
was catchy and to the point: We sold
shoes for restaurant crews,” Smith says.
❖Retail
J
Stanley R. Smith and his son, Matthew,
work together to grow Shoes For Crews.
Today, the company services more
than 100,000 foodservice, hotel, supermarket, health-care and industrial
customers, and offers some 40 styles
of slip-resistant footwear.
Smith developed a number of innovative business models to grow the
company. One of the most successful
was a payroll-deduction plan whereby
the cost of the footwear can be paid for
through multiple deductions from employees’ paychecks. It proved especially appealing to large national operators.
At 72, the chairman entertains no
thoughts of retirement. While his son
Matthew, who holds the titles of president and COO, oversees day-to-day
operations, Smith now spends most of
his time developing the company’s
European operations.
Smith says he realized a while back
that in order to grow Shoes For Crews,
he could not oversee every aspect of the
business. It was an important lesson.
“The reality is, if you want to have
a successful business of a certain size,
you have to stop thinking and acting
like an entrepreneur at some point,” he
says. “You have to build an executive
team and develop the company with
them. It helps a lot if you are fortunate
enough to have a good son or daughter to come in and help you out.” ❖
82
oe Fedele may sell groceries over making everything to order, not to
the Web, but he doesn’t necessar- stock. We aggregate the orders at
ily consider himself an e-grocer. noon and then begin cutting and
The Web is simply how Fresh- picking orders, so it’s only hours old,
Direct, the company he founded in not days old. I don’t even grind cof1999, interfaces with its customers.
fee until a few hours before I ship it.
“Companies that have been suc- Also, the only hand that goes on the
cessful on line are those that are run product is the guy packing your
by people who follow a simple busi- order. The customer’s hand is the
ness procedure that has been around second and final one.”
for years,” says Fedele, 50. “If I sell
Since it launched in September
you better food at a lower price, will 2002, FreshDirect has fulfilled more
you buy from me or someone who than 500,000 orders, primarily in
gives you poor qualiManhattan. A fleet of
ty at a higher price?”
82 trucks, which opTheorizing that traerate at about 90%
ditional supermarkets
capacity, deliver an
had fallen out of line
average of 24,000 orwith the consumer’s
ders each week, leavchanging taste, Fedele
ing from a 300,000formed FreshDirect
sq.-ft. manufacturing
with the purpose of
plant that is 95% rerevolutionizing how
frigerated—from 36
fresh food is sourced,
degrees to minus 30
processed and deliv- For Joe Fedele, CEO and foun- degrees Fahrenheit.
ered to customers. As der of FreshDirect, controlling FreshDirect’s average
growth is the toughest part.
the name suggests,
order size is more than
FreshDirect focuses on getting the $100, and a delivery charge ranging
highest quality of product to the cus- from $3.95 or $4.95 is added to
tomer with the fewest number of each order.
touchpoints.
While controlling the growth of
“Meat has to go through three dis- the company is Fedele’s biggest chaltribution systems, which can take lenge, he is taking a steady approach
anywhere from 10 to 14 days. We cut to expanding beyond Manhattan.
that down to one to four days. I’m
FreshDirect only recently began
delivering to parts of Brooklyn and
will begin shipments to Queens in the
Joe Fedele
near future. After that, it will expand
CEO/founder
into peripheral markets such as Long
Island and Westchester. Fedele is
Jason Ackerman
confident that he will never fall the
President
way of e-grocers past, who “weren’t
FreshDirect
business people.”
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
“I won’t send a truck out to an
Headquarters: Long Island City, N.Y.
area
unless it’s 80% full with delivAnnual sales: $250 million (2003 est.)
eries,” he says. “I’m not going to pull
Type of business: Grocer
Sales channel: Web site
a Webvan, where the truck will
Area of operation: New York
deliver two orders and then become
a marketing vehicle.” ❖
❖Retail
John Mackey founded natural-foods retailer Whole Foods Market in 1978.
J
ohn Mackey, 49, might not deserve all of the credit for transforming natural foods from an
alternative fad to a lucrative,
mainstream business, but he certainly deserves the lion’s share. The cofounder and CEO of Whole Foods
Market, Mackey heads the world’s
largest retailer of natural and organic
foods, a Fortune 100 company that
raked in $2.7 billion in sales and $85
million in profits in 2002.
John Mackey
Founder/president/CEO
Whole Foods Market
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Austin,Texas
Annual sales: $2.7 billion (2002)
Type of business: Natural and
organic-foods supermarkets
Mackey started the business in
1978, opening a store called Safer Way
Natural Foods in Austin, Texas. In
1980, he merged it with another store
under a new banner, Whole Foods.
The company flew under the radar for
a while, growing slowly but steadily.
In the early 1990s, it started to accelerate its expansion and up its profile
with a series of similarly minded regional acquisitions. By the end of the
decade, Mackey had put together a
coast-to-coast network of stores under
the Whole Foods banner.
84
Oddly enough, if things had gone
differently, Mackey might have
achieved his fame on the court rather
than in the aisles. Back in high school,
he planned on being a professional
basketball player in the National Basketball Association. For whatever reason, it didn’t work out.
Mackey got interested in natural
products and organic foods the very
first time he walked into a food co-op.
He was about 20 years old and the
experience was one of those life-defining moments. He became a vegetarian,
learned to cook, read books and set
himself to learning about nutrition and
“the politics of food.” In 1978, he and
his girlfriend opened Safer Way.
Mackey, often described as a New
Age capitalist, has said he never prepared or planned for the Whole Foods
phenomena. As he tells it, he started out
with one store, added another and so
on, learning as he went along. Whether by fortune or design, however, he
turned himself into a first-class supermarket operator and a fierce competitor.
Mackey wasn’t the first retailer to put
a new, more upscale spin on natural
foods. But industry experts agree he has
done it better than most anyone else.
Whole Foods’ stores combine the best
of natural-foods retailing—high-quality
organic products, friendly, knowledgeable service and a social mission—with
the selection, inviting interiors and
amenities of a traditional supermarket.
Mackey’s business know-how is
matched by his commitment to a larg-
er mission. The company’s motto—
Whole Foods, Whole People, Whole
Planet—informs all of its operations
and decisions. The retailer holds itself
to stringent quality standards for the
products it sells, supports sustainable
agricultural and promotes environmental responsibility.
Whole Foods is a generous neighbor.
It donates at least 5% of after-tax profits to not-for-profit organizations and
encourages community service. It provides financial support to associates
(called team members) for volunteer
community work.
The CEO has tried to eliminate the
“us vs. them” thinking so common in
large corporations. A salary cap limits
the maximum potential annual compensation (wages plus profit-incentive
bonuses) of any associate, including top
executives, to 10 times the companywide average for full-time associates.
The company’s list of core values
includes providing an “empowering
and fulfilling” work environment for
employees. They are encouraged to
participate at all levels and to experiment with new ideas.
Whole Foods’ growth and success
have made it—and Mackey—a sitting
duck for all sorts of advocacy groups.
Recently, after two years of intense
pressure from animal-rights groups,
the company became the first major
grocery store chain to adopt humane
animal-treatment standards. Mackey,
who has said Whole Foods will never
respond to coercion, said the move
was not motivated by outside agitators
or the desire to be politically correct.
Rather, the retailer re-examined the
activists’ claims and decided they were
largely right. Mackey himself switched
from being a standard vegetarian to a
vegan (someone who abstains from
foods with animal byproducts).
By far, however, Mackey’s biggest
and most unrelenting critics are union
activists, who say there is a huge gulf
❖Retail
between the chain’s stated values and
claims when it comes to employees.
The CEO has made no secret of his
disdain for labor unions and some
associates and union advocates have
complained of union-busting practices. Allegations of dirty tactics on
both sides have been raised. To date,
only one Whole Foods store has been
unionized, in Madison, Wis. Recently,
a group of employees initiated an
effort to reverse the election.
It’s inevitable that as Whole Foods
expands, it will find itself increasingly
open to criticism on all fronts. But
criticism has never seemed to bother
Mackey. He keeps his eye on the
future. And with natural and organic
foods the fastest-growing segment of
food retailing, it’s looking pretty
promising right now.
“By 2010, our goal is to have $10
billion in sales,” he wrote in the company’s 2002 annual report, which
“should translate into approximately
300 stores.” ❖
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S
ome entrepreneurs are amazed
at the twists and turns of their
career paths, but not Chris
MacAllister. The president
and COO of family-owned MacAllister Machinery Co., the Indianapolis-based dealer of heavy Caterpillar
construction equipment, always had a
feeling he’d be where he is today.
“As a kid, I was mechanically inclined and naturally drawn to the family business,” says the 47-year-old
MacAllister. “I never really wanted to
do anything else.”
Walking around one of the seven
Indiana locations today, any young fan
of Tonka trucks or Bob the Builder
would enjoy the impressive collections
of Caterpillar bulldozers, dump trucks
and backhoes. MacAllister Machinery
86
President and COO
Chris MacAllister hopes
to grow MacAllister
Machinery beyond the
borders of Indiana.
Chris MacAllister
President/COO
MacAllister Machinery Co.
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Indianapolis
Type of business: Construction
equipment sales, parts and rentals
Number of stores: Eight
Area of operation: Indiana
has been a Caterpillar dealer since
1945, selling and renting machines
capable of moving massive amounts
of earth. The family has played a significant role in the physical development of the Hoosier state by supplying
the big builders with the machines for
the big jobs—major roads, housing
subdivisions, farms, even golf courses.
Since MacAllister rose to president
in 1991, the company has made a couple of major strategic moves designed
to keep up with the times in a mature
industry. Promoting the rental business
more than it had in the past was one of
the moves. Another was to introduce
smaller machinery into the mix.
“ The decision to embrace and enter
the rental business in a much broader manner was a big decision for us,”
MacAllister says. “We had always rented equipment and we stuck to traditional Caterpillar equipment. But people
also wanted a one-stop shop to build or
maintain a project. And I think when
we finally decided
that smaller equipment was where the
future was headed,
we began to service
that market.”
MacAllister has
an equipment-rental
division called MacAllister Rental &
Supply, The Cat
Rental Store, with
locations on the west side of Indianapolis, Fort Wayne and Terre Haute.
The company’s major push into
rentals took place in 1999, and the
smaller equipment began finding its
way into the dealerships not long
afterward.
“ These days, the big dirt jobs are
few and far between,” he says. “And
our machines are smaller than we ever
envisioned.”
The changes failed to disrupt the
company’s tradition of customer service. A 2001 Caterpillar survey gave
the company the highest customer
satisfaction rating in North America.
When he’s not in the driver’s seat of
MacAllister Machinery, MacAllister
enjoys machines of a different kind:
race cars. He’s yet to drive on the
world-famous Indianapolis Motor
Speedway, but he has reached high
speeds at a lot of other tracks around
the state and the country. Part of his
passion is the joy of restoring classic
old cars. For instance, at the 2003 U.S.
Vintage Grand Prix, he took to the
track in his 1970 Porsche, as well as a
1969 Gulf Mirage.
MacAllister also is keeping his eyes
on the road when it comes to the family business. “We’d like to keep growing
and expanding,” he says. “We’re always
positioning ourselves for an opportunity, and we’d be keenly interested in
expanding beyond the borders of Indiana. I think we will someday.” ❖
❖Retail
Gerald Heller, president and CEO, has been
running May’s Drug Stores since 1971.
G
erald Heller believes in
keeping things in the
family. He joined May’s
Drug Stores, founded by
his father and uncle, in 1960, shortly after receiving his pharmacy degree. Forty-three years later, he is
still going strong—and so is the still
family-owned May’s, which ranks
among the top 25 drug store chains in
America. Does he ever think about
retirement?
“Not really. I still enjoy what I do
very much. I’m very content,” says
Heller, 66, president and CEO, May’s
Drug Stores, Tulsa, Okla.
Heller, who was named president
in 1971, transformed May’s from a
four-store pharmacy to a regional
drug store powerhouse with two formats, May’s Drug Stores and the
deep-discount Drug Warehouse. Despite intense competition from national chains, May’s maintains the
No. 1 share in the Tulsa market. To
what does he attribute his and May’s
success?
“I think it all comes down to people, to having the right people in
place and getting the best out of
them,” Heller says. “Beyond that, we
have always stayed focused on run-
88
ning clean, well-merchandised stores
with good in-stock positions. I’ve always tried to tell people exactly what
I want our stores to be like.”
May’s hometown advantage also
figures into its success.
“We are very involved in the community,” Heller says, “and we know
the market very well.”
Heller decided years back that
May’s operations would be limited
to an area within a 165-mile radius
of Tulsa. That strategy remains in
place, at least for the foreseeable
future.
“We still have plenty of sites left
for expansion within that radius,” he
says.
Gerald Heller
President/CEO
May’s Drug Stores
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Tulsa, Okla.
Annual sales: $178.6 million (2002)
Type of business: Drug stores
(11 May’s Drug Stores and
27 Drug Warehouse units)
Areas of operation: Oklahoma
and Missouri
Currently, May’s has one store under construction and two other sites in
negotiation. Most of the new stores
will be under the Drug Warehouse
banner.
May’s has been a family-owned
and operated business since its inception. Among the family members
currently employed by the chain are
Heller’s son, son-in-law, cousin and
cousin’s wife. The CEO admits that
running a family business takes a
certain amount of finesse. The key is
not to treat family like family during
the course of business.
“Everyone has to be treated on the
same footing,” explains Heller, who
is the largest single shareholder in
May’s. “You have to treat everyone
equally so that, ultimately, it’s all
one big family.”
Still, every so often the boss has to
take someone aside and remind them
who is in charge.
“But that doesn’t happen too often,” Heller says. “My family works
hard and they do a great job. We all
respect one another.”
Heller has a high profile in the
chain drug store industry. Highly respected and well-regarded, he serves
nationally on the National Association of Chain Drug Stores (NACDS)
board of directors and has served
twice as NACDS chairman. A member of the Oklahoma Pharmaceutical
Association, he is active in state political affairs regarding health care
and serves on the board of the
Jewish Federation of Tulsa. Despite
a busy schedule, he still finds some
personal time.
“I just returned from two weeks in
Turkey,” he says. “I like to travel.” ❖
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
T
he students of Cleveland’s
John Carroll University can
get their Internet fix a little
more easily thanks to a recent donation of more than $1.2 million in wireless technology from one
of the school’s most successful alumni. Nextel Communications president and CEO Tim Donahue’s personal donation brought integrated
cellular and wireless broadband service to all 60 acres of John Carroll’s
campus.
“Innovative thinking is a given at
universities,” Donahue, 54, said this
fall when he made the donation. “Innovative technology should be, as
well. The donation of ubiquitous
❖Retail
Tim Donahue
President/CEO
Nextel Communications
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Reston,Va.
Annual sales: $8.7 billion (2002)
Type of business: Wirelesstelecommunications provider
Number of stores: More than 400
communication
is just a small token of my appreciation for John
Carroll University and its contributions to my
development as a
business leader.”
To
some,
Donahue’s degree from John
Carroll—a
Tim Donahue has B.A.
in
helped Nextel grow
English
Literto serve 11.7 million
ature—might
U.S. subscribers.
seem like a dubious credential for running a wireless-communications empire. But
don’t tell that to Nextel’s shareholders. They’ve seen Reston, Va.-based
Nextel grow to $1.66 billion in net
income in 2002, its last completed
fiscal year. Nextel’s domestic revenues leapt 24% that year to $8.7
billion.
Donahue began his Nextel career
in January 1996 as president and
COO. In August 1999, he swapped
the COO position for the CEO title.
Prior to that, he learned the ropes
of the wireless market as Northeast
regional president for AT&T Wireless Services, where he spent 10
years.
Under Donahue’s watch, Nextel
has built up a sizeable retail pres-
90
ence. Today, the company markets
its wares at well more than 400
Nextel stores nationwide. Those,
plus its telephone and Web sales
divisions, account for more than
22% of all Nextel sales. The rest
comes from other merchants that
market Nextel’s offerings.
Nextel’s reach only continues to
grow. The telecommunications provider already serves 293 of the top
300 U.S. wireless markets, and
serves more than 11.7 million U.S.
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Same-day delivery gives Keith Koenig’s
City Furniture an edge over other chains.
Y
ou may not want to believe it, but free cookies
and coffee can go a long
way in turning a mundane family shopping trip into a successful sale. Just ask Keith Koenig,
president of City Furniture, a homefurnishings chain that dispenses the
snacks at all of its 13 stores in South
Florida.
“If a family is out shopping and
someone gets a grumble in their
stomach, that can curtail the shopping trip,” says Koenig, 52. “We have
seen that cookies and coffee help
fix that.”
Of course, the company’s success is due to more than just free
cookies and coffee. Koenig believes that City Furniture has raised
the bar in customer service, particularly with its same-day delivery
service.
“The home-furnishings industry is
only now waking up to the 21st-century
consumer, who has a fast and active
life and seeks immediate gratification,” says Koenig. “Most home-furnishing retailers are not technologysavvy, nor are they very efficient in
Keith Koenig
President
City Furniture
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Fort Lauderdale, Fla.
Type of business: Home furnishings
Area of operation: South Florida
their delivery and logistics method.
We offer same-day delivery, seven
days a week. You can buy furniture
until 9 p.m., and we will deliver it to
your house that night.”
❖Retail
City Furniture was originally
founded as Waterbed City in 1971
by Kevin Koenig, Keith’s brother,
who used the few thousand dollars
he had saved by working his way
through college to open an 800-sq.ft. store in Fort Lauderdale, Fla.
In September 1994, the company
transformed into City Furniture
after the “handwriting was on the
wall” for the waterbed business.
Today, City Furniture sells a full
line of home furnishings for the
entire house. Sales of mattresses,
which still include some waterbeds,
account for about 10% of overall
revenues.
After working here and there for
the company for a few years, Keith
joined his brother full time in 1975
after earning his M.B.A. at the University of Florida. At that time, the
company had just three small waterbed stores.
“Kevin made me an offer I couldn’t
refuse,” recalls Keith. “We worked
hard to recreate the business. Money
was tight when we grew up, but he
saved. We couldn’t have had more
humble beginning.”
After Kevin passed away in
November 2001, Keith took over
the helm.
City Furniture plans to double its
business over the next four to five
years. One of the reasons why
Keith is particularly upbeat is the
growth of second-home owners in
Florida. The globalization of furniture manufacturing, which is bringing in more quality furniture at affordable prices, is also contributing
to a gain in sales volume.
“ There is much more attention
to detail at a value that used to be
available only to the high-end customer,” says Koenig. “Now, most of
our customers can afford what used
to be only that high-end look.” ❖
94
Daymond John
Co-founder/CEO
FUBU The Collection
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: New York City
Annual sales: $350 million (2002 sales)
retailer of urban-influenced apparel,
accessories and home goods
Sales channels: 40 stores and
wholesale distribution
Area of operation: Worldwide
John, who learned how to sew from
watching his mother, bought some fabric and enlisted the help of three childhood friends. In one day, they sold 40
hats and made about $800. Convinced
he was on to something, John mortgaged his house, turning half of it into
a factory and the other half into living
space for him and his three buddies.
The four remain partners today.
The fledgling business did all right
for itself selling hats with the new
FUBU logo. T-shirts and other items
followed. Its audience consisted large-
From left, Carl Brown,
Daymond John, J. Alexander Martin
and Keith Perrin
founded FUBU in 1992.
S
ome 11 years after he began
selling hand-sewn hats out of
his mother’s home in Queens,
N.Y., Daymond John, 32,
heads a hip-hop global fashion empire. As the co-founder and CEO of
FUBU (“For Us, By Us”) The Collection, John helped turned streetwear
into mainstream fashion. What began
simply as a means of making “easy
money” has evolved into a sportswear
and lifestyle powerhouse.
“It started in 1992, back when I
was working as a waiter at Red
Lobster,” John says. “I bought this
hat and thought, ‘I could make this.’
So I decided to give it a try.”
ly of young males.
The company’s repute grew, largely
by word of mouth and some wellplaced music tie-ins. John got an old
neighborhood buddy, rap artist LL
Cool J, to wear FUBU gear in music
videos. Other performers also embraced the brand.
“Our connections with the music
industry helped us a lot,” John says.
“We were a very small company, but
our stuff was in music videos all the
time.”
The brand reached a major turning
point in 1995 when Samsung America
was brought on as manufacturer and
distributor. With Samsung’s involve-
❖Retail
ment, FUBU wear was introduced to
a national audience.
“Things took off from there,” John
says.
Its funky, hip designs and street
credentials gave FUBU wide appeal
and a mystique that other, more mainstream brands couldn’t match. Currently, the label is carried in more
than 5,000 doors, from Macy’s to
The Buckle to Foot Locker. The company operates 40 freestanding stores
in 60 foreign countries and a number
of outlet stores in the United States.
“We are looking into opening a
flagship in downtown Manhattan,”
John says.
FUBU has proved adept at extending its brand. It has licensees in everything from tuxedos and children’s
wear to fragrances and handbags.
Home goods and eyewear are new to
the line-up. The company also has an
entertainment division, FB Entertainment, that develops music, film
and television projects.
John stays close to his roots through
the FUBU Foundation, which refurbishes inner-city basketball courts,
provides scholarships to design students and gives assistance to the homeless and to low-income families. In recent years, the company has racked up
one award after another, as much for
its community involvement as for its
fashions. Despite the acclaim, neither
John nor his partners take their good
fortune for granted.
“In the beginning, we were always
thinking, ‘Something is going to happen and soon we’ll be out of business.’
We still say the same thing today,”
John says.
The growth of FUBU has surprised
no one more than John himself.
“In the beginning, I thought we could
have one store … a boutique,” he says.
“I never imagined we would have
stores around the world.”
To what does he attribute the company’s success?
“Luck had a lot to do with it,” he
says. “I think we came along at the
right time and that the market was
ready for us.”
Other factors, including FUBU’s
music connections, savvy marketing
and distribution network, also played
into it, John adds.
“We’ve been good at making the
right moves at the right time,” he says.
As for advice, John cautions wouldbe entrepreneurs to learn their business inside and out.
“That way,” he explains, “no one
can ever hold you hostage to your own
business.” ❖
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
B
ecoming one’s own boss is
an achievement. Becoming
the employer of one’s family
is another. Robert W. Barnitz,
owner of Bob’s Market & Greenhouses, the Mason, W.Va.-based wholesaler and retailer of flowers, vegetables
and related products, has managed to
achieve both since launching his company in 1971. His five sons—Alex, Jeffrey, John, William and Eric—are with
him today as VPs, and wife, Corena,
serves the company as secretary.
In addition to his role as head of
the family, Barnitz, 71, oversees an
operation that includes more than
80 additional employees and more
than six acres of greenhouses that
produce and sell more than 20 million greenhouse plants every year.
The business was recognized by
Ernst & Young as an agricultural
entrepreneur, but the company also
runs a thriving retail business.
Bob’s Market & Greenhouses gets
about 75% of its revenue as a wholesaler, and the rest comes from its
retail operation. The company has
three year-round stores and one seasonal store in Ohio and West Virginia.
Customers in these areas come to
Bob’s for flowers, bedding plants and
hanging baskets, garden-center hard
goods, mulches and gardening needs
and also produce. Barnitz is also on
the board of directors of the Ohio
Florists Association.
One thing, though, Barnitz has
kept his business going without the
help of the chain-store distribution
channel. And he’s proud of it.
As a wholesaler, Bob’s Market
products can’t be found on the
shelves of the big retail chains, and
Robert W. Barnitz, Owner
Corena L. Barnitz, Secretary
Eric D. Barnitz,VP
William R. Barnitz,VP
John M. Barnitz,VP
Jeffrey A. Barnitz,VP
Alex S. Barnitz,VP
Bob’s Market &
Greenhouses, Inc.
❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖❖
Headquarters: Mason,W.Va.
Type of business: Wholesaler,
retailer
Number of stores: Four
and Ohio
that’s the way Barnitz likes it. The
unconventional attitude for a wholesaler stems from his view that the
smaller retailers are easier to deal
with. “We’re not in the big chains,
and we’re proud of that,” he says.
Barnitz declined to elaborate on
the decisions that led to his success,
but his 32 years of making a living
from the soil—with the help of his
family and the greenhouses—speaks
for itself. The company reached $8
million in sales last year. ❖
95

2003 - Chain Store Age

Transcription

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