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Ready For Two?

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If you’re up for a challenge, try a second store by Sharon Goldman

After 17 years of running gold ‘n’ carats in Irving, Texas, Lucinda Rogers and husband and co-owner Jim noticed a change. ?We used to be considered right in the middle of the city,? says Lucinda of their store, located at a major intersection of a major highway. ?But we saw a large percentage of our customer mailing list moving to the north of us.? In order to serve that customer base as well as expand to new customers, the Rogers’ decided they needed to go north as well. So they unveiled a second store in a ?power strip,? with national chains as anchors as well as space for smaller operations like Gold ?n’ Carats. While the new location has been ?worth all the headaches,? Lucinda admits that there have been plenty of Tylenol-worthy challenges over the past 18 months. ?You almost have to be crazy,? she says about the decision to open a second store. Or at least, she laughs, you’ll ?have to find a good psychiatrist.? 

The Second Store …
Whether you have a second store or not, chances are you’ve considered it. For at least a moment. After all, another location can offer an entirely new customer base while offering the opportunity of leverage with suppliers, negotiating better terms and spreading out fixed costs such as marketing, advertising and administration. 

But becoming a twice-is-nice operation is not for the faint of heart, say experts and retailers who have been there, done that. ?You definitely have to know what you’re in for,? says Ernie Dowd, managing partner at Doug Hausner Visnar in Glendale, CA, a consulting firm that offers strategic advice to entrepreneurial and family businesses. Staffing, capitalization and time management are only some of the challenges facing independent retailers when opening a second location, he explains. 

But with the right planning, preparation and attitude ? as well as a competent, trusted manager or family member ? making the move to open a second location can help expand your business. In 1992, after 12 years in one store, Susan Eisen opened her second El Paso, Texas location after deciding she wanted to build her market base. ?It’s simply a challenge to go after a new market,? she explains. ?I was happy with my business but wanted to go on and try something new.? Today, both of her stores are successful and Eisen says her entrepreneurial personality has thrived on trying to make her businesses the best they can be. ?I’m learned to operate a business that requires different things than I’m used to, I’ve expanded my market and gotten familiar with a different part of town.? 

If you’re thinking about taking the second store plunge, however, there are several issues to keep in mind. The first, say experts and retailers, is location, location, location. And the location you think is best….well, might not be. When Eisen searched for a location for her second store, she believed that the downtown business district was the perfect place. ?I assumed that people wanted to shop where they worked,? she explains. She had always dreamed of moving into a beautiful bank building that had previously been an elegant, expensive jewelry store. And when she moved in, she thought she had won the jackpot. ?The whole store was in place, the remodeling was cosmetic and it even had a walk-in safe,? she says. But four years after she opened, Eisen had to face the facts: ?I failed to recognize that I couldn’t change the reputation of it being an expensive store by taking it over. So people had already chosen not to shop there. And I also didn’t realize that the people who work downtown would prefer to shop where they lived, not where they work.?  

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Undeterred, after four years Eisen moved her second store to the east side of town, farther away from her original store. The new location has provided exciting new challenges: ?I can’t use the same tactics that I use in the other store because each area has its own wants and needs,? she explains. ?There’s more older clientele in the second store, the merchandise mix that’s requested is different, the staffing needs were different. It was almost like starting all over again.? 

For other retailers, capitalization turns out to be a tricky business, especially when unforeseen circumstances pop up. ?We thought we were capitalized enough,? says Rogers. ?But unexpectedly, the city started tearing up three of the roads around our original store for over two years.? With business taking a nose dive, it was tough to recover from the lack of cash flow, she says. ?I praise God that my vendors stayed with me, but we’re still paying for what happened.?  

But for most jewelers, it is staffing and management issues that are the most challenging elements when opening a second store. ?You can’t be on the premises all the time to check what’s going on,? says Eisen, ?so there’s a lot of risk involved in that.? Eisen uses outside trainers to get her staff up to speed, and has a trusted manager in place at her second location, but she still works hard to maintain a presence at both locations. ?I have no family in the business, so it’s a little harder for me,? she says. ?Many times other jewelers have a spouse or child to help out.? 

Competent managers are certainly necessary for a second location to work, agrees Dowd. ?If you don’t have someone that you trust, whether it’s family or not, it can be a big stumbling block,? he says. But even the most seasoned husband/wife team can find staffing tough. Tom Wright of Wright’s Jewelers in Lincoln, Nebraska had a second store with his wife, Mary, but closed it several years ago due to staffing issues. ?I honestly feel that if you step away from being a jeweler when you have another location,? says Wright. ?I’m a hands-on person ? I’m at the sales counter, I’m in the shop making things, I’m doing inventory work and so on. If I’m going to have multiple locations, I have to step aside from that and manage people instead.? What the couple realized, he says, is that they simply didn’t want to only be managers. ?We sat down at dinner one night and listed the pros and cons of the second store,? he explains. ?Halfway through a bottle of wine it was obvious that what we enjoyed was helping other customers, doing the unique specialty side of the business. And there was no future to that in the path we were on.? Ironically, Wright adds, the original store has done better business since the second location was closed. ?It was much easier once we had a plan and a roadmap of what we wanted to create. We were immensely relieved.? 

Dowd agrees that retailers need to have a vision of where they want to take their business. ?You have to think about where you want your store, or stores, in three to five years,? he advises. ?Growth is not mandated, but if you want to build your brand you need to consider: Do you have family interested in being a part of it? Are there potential people in your existing operation that can take on leadership? Most importantly, what is the rationale behind the decision to open the store? Is it driven by the market?? 

But even a second store failure doesn’t necessarily mean that another location won’t be a good idea in the future. Frank Adams Jewelers, in Albany, New York, has been a trusted landmark in the city for over 70 years. While the store was downtown for nearly all of that time, a second store was opened in a suburban plaza six years ago. Financially, the second store began to carry the first store ? and within a year the downtown location was shuttered. But co-owner Kimberly Adams still yearns for a second location. ?I’m an ?A’ personality, always looking for a challenge,? she says. ?I see an open market and I just want to do it because I know it would work.? On the other hand, she recognizes the challenges and stress the added time and energy required would have on her and her family. ?Right now, the one store is manageable ? I can balance family and work, with newborn twins and a son. A second would be hard work and take time away from family. But ultimately, I think I will do it.? 

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No matter when you begin to consider the possibility of opening a second store, experts and retailers recommend you ask yourself some tough questions before you get started: How hard are you willing to work? Are you ready for a third to twice as many hours? Have you done research on your competition and the local market? Do you have enough money to make it work? Do you have a vision as to where you want your business to go over the next few years? If you’ve answered all of those questions and still feel ready to make a go of it, Dowd says a second store can bring a tremendous amount of satisfaction. ?It’s not just financial, but emotional as well,? he says. ?If expansion is, and it usually is, a measure of success, than it just feels good. You’re really moving to the next level of building your brand and being a professional manager.? 

Eisen answered all of those questions for herself when she opened her second store and is happy with the results. But how about a third? ?No way, I’d never open another location. I’m going towards the internet ? you don’t have the same problems of staffing and training,? she says thoughtfully. ?A third store, yes ? but not bricks and mortar.? 

RETAILERS SAY
Here are some thoughts on second (and third) stores from Instore’s Professional Retail Panel. (If you’d like to join the panel, email us at Click here)

?Going from one to two was the most difficult. We now have three and the third was very easy in comparison because the systems we set up when we opened the second store. We tried to expand to two stores 10 years ago without structure and failed! Ended up closing three years later. We made more than four years of due diligence and pre-planning prior to opening a second store for the second time [two years ago]. It’s the best decision we ever made.? 

?My attempt at a second store [failed because it] involved having a partner who proved untrustworthy. If you can avoid a partner, do!? 

?Make sure you’re opening a new location for the right reason.?  

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?Opening a new location just in the hope of making more money is NOT a good reason. In order to keep those customers who had trouble driving to us, we opened another, smaller location closer to them.? 

?Two stores is four times the work of one store, and adding two hours daily in travel time makes a 10-hour day that much worse. I could write a book about the experience, about hiring a manager who promised to do everything necessary to make the store ?work?, then one year later was married and expecting a baby with a due date of the week before Christmas, etc.? 

?The phrase ?location, location, location’ does not necessarily imply opening a store where there is no real competition. Rather, it speaks volumes about opening a store where the money is.? 

?Be sure the locations aren’t too close to each other ? at least 15 miles.? 

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