Summer 2013

Moving On Up By Sue Marquette Poremba

Having more than one store brings new customers and new challenges. See what prompted the business move for two gift store retailers.

“The euphoria, overconfidence and heightened appetite for risk that grip traders during a bull market may result from a phenomenon known in biology as the ‘winner effect.’”

John Coates made that statement in his book The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust. Coates was talking about financial trading, but he could have just as easily been talking about anyone who wants to take a risk in their business. That would include small business owners who, after running one successful gift shop, decide to make the leap – and take the risk – of opening a second shop.

Treasure trove

Or maybe even a third, as Isabella Chiseno did. Chiseno opened her first gift shop in New Paltz, NY, Isabella’s Treasures, ten years ago. Isabella’s Treasures sells handcrafted jewelry from all over the world, as well as items that are Victorian and vintage styled. But Isabella’s Treasures is slightly off the beaten path in this Hudson Valley tourist community, so Chiseno wanted to open a shop along the town’s main thoroughfare. An opportunity opened up when a store that sold new-age style items came for sale. Chiseno changed the focus of the shop to fair-trade items and Bohemian jewelry and renamed it Isabella’s on Main.

Almost four years ago, a third shop became available. The store, Nora’s Cottage, belonged to her parents and was next door from Isabella’s Treasures. Initially the store sold antiques, but Chiseno says, “Antique shops don’t have a Christmas season, and in retail, you need a Christmas season.” She kept the antique focus of Nora’s Cottage, but added vintage clothing, furniture, and jewelry.

“I love to create,” Chiseno says, explaining why she decided to expand her business ventures. “I love creating spaces in different ways. The different focuses of the shops give me the opportunity to try new products and expand in different ways, like into the fair-trade market.”

Not everyone who wants to open a second store wants to go in new directions, however. Sometimes owning the second shop is a chance to create enjoyable challenges, as Tom Konopacki did.

The appeal of a challenge

Konopacki owns Anastazia – Treasures for the Home, with locations in the Chicago suburbs of Geneva and Glen Ellyn, IL. Konopacki started with a business partner and the store was very successful for the first few years until the economy tanked. “We were able to hold on, but after five years realized the business wasn’t big enough for both of us, and I was able to buy him out,” Konopacki says.

It took a few more years of running the business on his own before he felt confident enough to branch out with a second location. “After seven years, I felt the need to challenge myself on a professional level and wanted to do more with the business,” Konopacki says adding that he tells people he had the seven-year itch. “The options were to either expand the current store by moving to a larger location or to open a second store. The thing about expanding a store is that if you double your space, you need to double your sales to pay for it. I didn’t feel that a larger storefront would bring enough additional business to make it worthwhile. With a second location, you are in a new market with a broader reach.”

His stores are about fifteen miles apart and use the same name and branding. Konopacki has noticed a slight difference in the customer base and has begun to modify the merchandise accordingly. “Our Geneva store is in an area that is a recognized shopping destination for the surrounding areas. Many of our customers come from out of town, and tend to be more ‘browsers.’ I need to carry more unique impulse or gift items to entice them to make a purchase,” Konopacki says. “Our second location in Glen Ellyn is also in a historic downtown setting, but it does not have quite the regional draw; our customers are more local.” Konopacki sells more home accents in the
Glen Ellyn store, so he stocks his inventory accordingly.

What works

Having more than one store gives retailers more than one local audience to cater to and build loyalty from, according to Nicole Leinbach Reyhle, retail and wholesale professional who founded Retail Minded, which provides consulting, workshops and other services for those in the retail industry. That’s an experience Chiseno found to be true. New Paltz is a tourist town, and Isabella on Main, in the midst of downtown activity, depends primarily on tourist traffic. But Isabella’s Treasures and Nora’s Cottage thrive on the business of locals and regular customers. Because of the way the stores are situated next door, each store has picked up customers who originally came to shop in the other store.

Reyhle says another advantage to owning multiple stores is the ability to swap inventory, buy in larger quantities and share marketing calendars and plans. Konopacki agrees. “I can take advantage of volume discounts when making purchases,” he says. “It also seems to give me more prestige with vendors when they find out that I have two locations. The ability to transfer merchandise between the two stores helps greatly. If I sell out of an item in one store, I can quickly get it back in stock by taking it from the other store.”

However, anytime you extend yourself beyond one store, you need to consider how you can be stretched among both or more than two storefronts. “Often, customers associate people with retail shops, and you need to consider how this may affect each store when you are not on site,” Reyhle says. “Additionally, multiple storefronts equal more inventory. This can translate to stronger sales across the board or more markdowns. Finally, not everyone is cut out for employee management yet multiple storefronts demand you have a team you can trust.”

Chiseno credits having the right staff for the success of her stores. “I couldn’t do this without my staff,” she says. Her staff is small and each staff member works primarily in one store, as does Chiseno (her home base is Isabella’s Treasures), but she relies on her staff to keep each location operating.

Is the model for you?

Both Chiseno and Konopacki say that opening the second (or third) location was the right decision, even if their original store remains their more profitable shop. For anyone considering expansion, Reyhle recommends doing plenty of homework ahead of time. It is a lot more than making sure you have the capital to cover the additional costs. It is also a matter of knowing your customers and whether or not business will translate to a new store. “If you have built a business around local customers, consider how your new location may or may not attract similar clientele,” she says.

Also consider how the second store will impact your life. “Two stores may blend seamlessly for some folks, but most often two stores equals twice as much work,” she points out.

“You cannot be a control freak and successfully run two or more stores,” Konopacki adds. “You have to be able to delegate and trust that your employees will do what needs to be done when you are not there. If you get caught up in the minutiae of every day, it will paralyze you.”

How do you know if the time is right to open a second store? “Sometimes you have to listen to your heart,” says Chiseno. “Yes, the workload will more than double, but you need to be passionate about what you are doing in order to make it work.”

Sue Marquette Poremba

Sue Marquette Poremba is a freelance writer based in State College, PA. She specializes in technology, engineering, energy, and IT security topics. She has also published over a dozen essays and is the author of a book about the Philadelphia Phillies.