Owners: Malcom Felt (FB customer service) and John Erickson (FB VP of Account Management)
Purchase price of business: $0 (They built it from scratch)
Additional cash required: $20k in loans. $10k in cash
- Two months of construction.
- Two months to set up store.
- Started with $15k in inventory but eventually upped that by $55k, to $70k.
Rent: $2200-3500 per month (The mall gets a cut of their sales based on volume. The higher the sales, the greater the rent)
Average Markup on product: 50%
Advertising: $0 (The store is located in the Provo Towne Center mall so it’s all walk-in traffic).
I often wonder, when I walk through a mall, why one store is successful while another store, selling the exact same products a few doors down, is unsuccessful? It seems like most new stores don’t last a year. Even some of the well-known brand stores will shut down an outlet or go out of business entirely (which always surprises me because how did they get to be a well-known brand in the first place if they can’t get their store to survive long enough to recoup their costs?) So why do some survive while others don’t?
Well, I don’t presume to know the answer to that question but I suspect a big part of the answer lies in how well the store is run. Even stores with questionable product lines, like one I saw focused totally on socks (seriously?), can still make it if the store is managed properly. So, in talking with Malcom and John, my interest was in the specifics of what they do to manage their store as efficiently as possible.
Getting started with Fishbowl. No matter how good a fit Fishbowl is for a company there will always be a few glitches along the way. For example, Fishbowl’s original Point-of-Sale was designed to be used with a regular computer monitor and mouse, so the buttons on the screen were too small to use on a touchscreen and caused problems. When Fishbowl Salespoint came out the buttons were much bigger and easier to use.
Clothing stores like to have what is called a “Part Matrix” that shows the style, color and size in a simple matrix. Fishbowl does not have that feature so Sole Envy simply designed each sku to convey the shoename (style), size and color so that when any style is searched on within Fishbowl, all the corresponding colors, sizes and inventory levels for each style will be shown. It’s not as convenient for the end user as a part matrix would be but is easy to set up and use.
Give ‘em what they want! If you read the notes above you’ll notice they opened the store with $15k in inventory and eventually upped that to $70k. According to Malcom, they did this because they started tracking the number of people that came in the store and purchased something versus the number of people who came in but didn’t purchase. Often, the reason they didn’t buy something was because the right size wasn’t on hand and with a walk-in shoe store, if you don’t have the right size, then it’s just as easy for the customer to walk out. So, over the course of their first year, they gradually increased the inventory, (and therefore the selection), by $55k and watched the number of walk-in “conversions” increase. Also, with the increased inventory/selection the average sale size increased as well because when someone would purchase a pair of shoes they would often find another pair or two to purchase.
Keep an eye on things. Let’s face it, if you own a retail store you’ve got to watch you’re inventory like a hawk because some of it is going to walk out. Case in point: A woman and her 4 year old (holding a soccer ball), came in the store. On a given signal the 4 year old would throw the soccer ball into a display. While the attendant’s attention was diverted the mother would stuff as many shoe boxes as she could into the stroller and then walk out the door. They know this because, later, the store cameras showed her doing it. When she came back in the store several weeks later the employees recognized her and called security. She ran out the door and got away. I’m guessing she won’t be back.
Another scam involved people asking for refunds when they were not entitled to one. The store has a 30 day return policy so some people would buy shoes, use them for a while, then bring them back without a receipt and ask for a cash refund after the 30 days. They solved the problem by simply date-stamping each box of shoes that was purchased. Simple solution.
But probably the best idea they had to avoid shoplifting was simply to design the store with an open floor plan so that everything can be seen from a single location and the temptation to shoplift is minimized in the first place. As a result their “shrinkage” (that’s always sounded like a politically correct term to me), is less than 1 percent.
Sole Envy has now been in business for four years, they’re profitable, and are now planning on expanding to a second mall by the end of 2012. Remember us peons when you guys get rich and famous.
Till next time!