This week’s post was supposed to be a break from my drawn-out hand-wringing soap opera. I’m tired of thinking about it, so you must surely be tired of reading it. But my wife and chief advisor caught up on my blog yesterday, so I need to keep hammering at this now that discussion has become possible.
The wife (Anne) clearly wants me to own a store. She revealed an ulterior motive last Saturday at the Union Brewhouse. She has the idea, based on a craft store that rents out its basement, that my store might have “extra” space in which she could hold her art meetings and classes. I don’t know how this store found a lease with “extra” space. Rent and sales are both measured per square foot, and square footage includes all floor space – sales, office, storage, and even the bathroom. Because you pay the same rent on all footage, maximizing the percentage of selling space relative to non-selling space is key to profitability. There is no such thing as “extra” space unless you own your building, and thus break free of the rent-per-square-foot convention. Even then, you can't escape the need to maximize sales-per-sq-ft.
Buying a retail building is not in the cards anyway.
I spent a little time last week trying to update the numbers that I set out in this old post. These are the same numbers that made me shelve the store idea last year. What little I found is not encouraging.
Putting the Numb in Numbers
Rent should run about $20 per square foot -- $3,000 per month for a 1,500 ft store. I found some current local listings ranging from $14 for a ratty looking building in
Without paying for proprietary reports or subscriptions, I could not find specific, locally relevant statistics on the other important number: sales per sq ft. Hunting down published numbers confirmed what I found last time. Gift/specialty stores average anywhere from $148-268 per sq ft, depending on location. A new store feeling its way and finding its clientele should strive for the bottom of that range ($150). The 2,500 sq ft median size of such stores is also much larger than the 1,500 sq ft I consider optimal – 2,500 sq ft at $20 per sq ft is a whopping $5,000 per month! My old spreadsheet breaks even at $185 per sq ft at 2,000 sq ft (annual sales of $370,000) – not impossible, but not very reassuring, either. And that assumes that I either have only one part-time employee for two months out of the year, or I work without any salary for myself to afford more help.
So a few hours of research just confirmed what I discovered last time. I still can’t figure out how a store affords rent, payroll, and debt service without achieving daunting sales expectations. And I will not open a store until I’m confident in its chances of success. I’ll probably have to cough up some bucks for solid local sales data before I can settle this.
As I’ve said before, there are lots of stores in the world. They do alright, so there has to be something wrong with my assumptions or calculations. I’m going to dig up the old spreadsheet and see if half a year’s additional experience has brought any insights since the last time I went over it. But before I jump down that rabbit hole again, here’s a new thought.
Happy Whatever Day
First, I eschew the Hallmark holidays. After the 900-pound gorilla of Christmas, Mothers Day and Valentines Day are the high points of the retail calendar, and I do almost nothing to take advantage of those. (Fathers Day, St Patricks Day, and Halloween are all bigger than either of those for me). I don’t want to carry kitschy cliché stuff emblazoned with “mom” or red hearts and sappy sentiments. Yet, that’s what the masses expect and buy. Also, pay-per-click advertising for generic holiday keywords (e.g., “Valentines Day gift ideas”, “gifts for mom”, etc) is prohibitively expensive. I pulled the plug on my generic Valentines ads this year when mainstream retailers bid the price well above 30 cents per click. My usual ceiling is 20 cents, and I try to stay below 15 cents for most of my words. I’m already spending nearly 10% of gross on PPC ads. In retrospect, I probably should have rewritten the ads for some of my product-specific keywords to include a Valentines Day reference.
Exploiting minor holidays and everyday gift-giving occasions (weddings, graduations, retirement, etc) would smooth out the year somewhat. I have to learn how to do that without giving in to garbage merchandise and cheapening the
Second, I need to escape the “gift shop” trap. I deliberately didn’t use the word “gifts” in my business name. “Gift shop” sets up many expectations that I don’t want to meet. Gift shops are tacky and frivolous and predictable. You don’t go to a gift shop to buy something for yourself. Should I start by junking my “Curious Gifts for Curious People” slogan? Maybe I can come up with something better before I reorder business cards again.
My real problem is not slogans, though. It’s that I sell little or nothing that people actually need. And this is where Anne’s hobby could come into play.
Could the Wife Be Right?
Artist Trading Cards are not the same thing as “scrapbooking”, but they use many of the same supplies. Expensive supplies. Difficult-to-find supplies. In case you didn’t click my links, here’s what Wiki says about the business of scrapbooking:
In the late 1990s, many scrappers in the
opened stores to turn their hobby into a business. Within approximately 5 years, many of those stores were forced to close due to a downturn in the economy and the fact that many store owners mistakenly assumed that loving to scrap was enough to run a retail store. Many owners simply didn't know how to run their stores. During this time, more multi-level direct sales companies were formed. Several were closed due to mismanagement, while others weathered the tough times. It also gave rise to a new breed of business - the home-based retailer. Companies arrived to provide information for individuals who wanted to break out of the direct sales mold and go out on their own. While vendors had traditionally stayed away from the home-based market due to fraud, they began to warm to the idea of the non-traditional sales channels as a way to get their products in front of more consumers through home parties and workshops. Working with a company like this enabled them to tap into legitimate home-based retailers. US
The scrapbooking industry doubled in size between 2001 and 2004 to $2.5 billion with over 1,600 companies creating scrapbooking products by 2003. Creative Memories, a home-based retailer of scrapbooking supplies founded in 1987, saw $425 million in retail sales in 2004. This hobby has in the US surpassed golf in popularity: one in four households has someone playing golf; one in three has someone involved in scrapbooking.
In other words, Anne might be on to something. Maybe that "extra" space isn't entirely a luxury after all :)
Scrappers make glorified baby books about memorabilia and family history. Their output is crafty and sentimental. But they do love to buy supplies, as the Wiki points out. And those supplies are just unusual enough to mesh with
ATC artists are on a higher plane. They subsist on scraps from the scrappers. ATC artists possess the art knowledge and the ambition to rise above crafty sentimentality. They are probably richer and better educated than scrappers, and they resent plowing through all the tacky garbage on the market as much as I deplore the necessity of carrying it.
There might be a business opportunity here for somebody with both ATC knowledge (Anne) and retail savvy (me). Maybe this is the year-round business that could sustain
Possible drawbacks: ATC artists are a much smaller population than scrappers, and (according to Wiki) their hobby has only existed for about 10 years. What if the fad dies out? I have no knowledge of, or interest in, any of this. I’d have to rely on the chronically-overscheduled Anne to drive every aspect of that business.
While this is an intriguing approach to my core conundrum, it’s too iffy to bet the company on. I still need to make
So…how’s it going? Last year, this would’ve been one of the slowest weeks of the year had I not unexpectedly sold $900 worth of E-luminators for a high school dance. My very ambitious goal for this February, barring another miracle sale, is simply to equal LY. That would effectively be a $900 year-over-year increase, which is pretty good for a slow month. If Panther comes through with those 4-LED caps as scheduled, I might have a chance. My biggest constraint right now is an OTB stubbornly stuck more than $2,100 in the red, preventing me from bringing in any new products.
Finally, I want to thank the 53 readers who clicked on a Google ad during the past two years. Thanks to your support, I just qualified for my first Google AdSense payment: $30.27, baby! W00t! The rest of you know what to do.