Should I resurrect my expansion plans now?
What about opening a new store?
What say you, Bob?
The answer is: Yes! Yes! and Yes!
2009 may have been a mediocre year for many stores. While there are bright spots in some parts of the country, most stores were happy to achieve 2007 or 2008 sales numbers with modest growth, particularly if the store was not yet mature, not open for at least five years. However, many mature stores — stores open over five years — experienced growth because of their maturity despite economic conditions, and because of a little ingenuity and the willingness to try new and fresh approaches to their established businesses even in this economic environment.
My current read on our industry is that 2009 brought the worst of the worst. There is a good chance that as we entered into 2010, the economy has bottomed out or will be bouncing along the bottom of the downturn curve for the next six to nine months.
What say you, Bob? I say if you have the cash and a natural entrepreneurial drive, it is time to dust off those expansion plans, or review your dream plans and give serious consideration to opening the kitchenware store you have always wanted to own. The ideal time to be getting serious about either move is now.
There is no better time to be aggressive than when an economy is thinking about recovering (bouncing along the bottom) or is beginning to show signs of growth, however slim those signs look. Move now and you ride the uptick. The return on investment is likely to be very rewarding. Wait and there likely will be a gain on your investment, but it is not likely to be as bountiful as the one you may receive by having started the process earlier.
If the store is an existing entity, do exactly what was done when you located where you are now. Evaluate the location. Has it performed as expected? Is relocation of the business viable? Is the new site truly a better location? Gosh! What are we mulling over here? Why, the roots to the success of every solid profitable kitchenware store — location, location, location. It is the first, second and third reason for taking action.
Remember, a mature successful store needs to be performing at $350 to $400 per square foot of GLA (gross leasable area). If the store is at or near that performance level, in all likelihood an expansion is a viable move. However, in developing the Pro Forma Profit and Loss Budget, do not expect the expanded area to achieve more than 50 percent of the current sales performance per square foot GLA. Also, remember it must go through the same five-year growth process as the original space to reach maturity, at which time it should be making sales equivalent to your current sales per square foot. If it does not achieve those numbers then take a hard look at your assortment, because you have a leak.
So, you are the new guy on the block. You have always wanted to be an entrepreneur. You have a great plan for a dynamic kitchenware store. It is your dream. It is your passion. Well, do not hesitate now. Just be sure that, like the established entrepreneur, you remember the first reason for beginning is you have a fabulous location, the second reason for embarking on this venture is you are sure you have a fabulous location (all the research and homework has been meticulously completed), and the third and final reason is you have no doubt in your mind this is the most fabulous location you have reviewed and finally settled on for your new venture. Whew! Was that complicated? The answer should be, “Yes, it was.”
Now, unlike the established entrepreneur, when you open the first year’s Pro Forma Profit and Loss Budget, sales goals should be forecasted at $200 to $250 per square foot of GLA. The demographic research done in evaluating the location will be the basis for determining the initial sales forecast. Over the next five years, as the venture matures, the store should ultimately perform at $350 to $400 per square foot. If it does not then you have the worst problem imaginable — a location problem. Oh boy! You probably made a “Location Boo-Boo.” Start looking for a band-aid.
Now, let’s talk turkey. Whether you are an established or a budding entrepreneur, if you are a “Smart Cookie,” the right move is to bury any ego you may have. Then seek out some professional advice.
There are consultants who have been in the kitchenware retail business a while. This is the type of consultant you should engage, not a business consultant who may not know all the nuances of creating a successful retail store.
One final note for you established “Big Dogs”: If you have been hanging around the industry and are a successful entrepreneur, and at this time do not belong to an industry buying group, then research what is available and join one. Then you will be a “Top Dog.”
One more final note for you “New Guys” on the block: Do what the “Big Dogs” do early in your entrepreneurship by researching and joining an industry buying group initially in your new venture and become a “Top Dog” right out of the box.
Doggone it, I wish they were around when I started my kitchenware retail store!
Please send any and all your comments to me at htibuying@myfairpoint.net. If there is anything you desire me to pontificate on, do let me know; your article suggestions are welcome.
See you on the IHA Show floor in Chicago, McCormick Place, from March 14 through March 16.
Also, if you enjoy San Francisco as much as I do, please take a hard look at attending the Retail 2020 sponsored by The Gourmet Retailer Magazine and a host of prestigious industry vendors, July 28 through July 30. This annual event is long overdue in our industry. I have been to the two previous events; I learned, I participated, I met some fabulous peers. I will be there this year, too, and I would like to meet you.
Robert F. Coviello is the founder and president of HTI Buying Group, an organization of independent housewares specialty store retailers and industry vendors. He is also president of Housewares Tabletop International, a consulting firm that provides innovative solutions to strategic challenges facing companies in today’s dynamic housewares and tabletop industry. Bob has more than 35 years of experience in the industry and is an acknowledged industry expert in the housewares field.
If you would like to comment or send us your feedback, please send e-mail to mmoran@gourmetretailer.com or htibuying@myfairpoint.net.
