business news in context, analysis with attitude

A pair of stories in the Wall Street Journal illustrate how different retailers have navigated the rough waters in which so many traditional retailers have found themselves…

There is the story of Atlanta-based A Cappella Books, which spent a decade “on the edge of collapse,” with mounting debt and a seeming inability to compete effectively with Amazon and big box chains.

But now, sales are up - to almost $1 million annually - and so are margins. How?

Owner Frank Reiss, the story says, “added a whole other side to his operation, author events, which proved lucrative and bolstered his storefront operation. And he focused his events and his bookstore selections to reflect his interests - a personal touch that resonates with a lot of customers these days … the selling point has evolved into speakers and a book selection that generally represent his liberal political slant, distinctive musical interests, such as protest and folk music, and a fresh take on Southern history.”

In other words, his bookstore almost became more about curation than simply replicating what other stores, both online and bricks-and-mortar, were doing. Reiss also has been lucky, in that he’s part of a broader rebound in the independent bookseller segment, as many bookstores - by having a stronger attitude and specific point of view - have taken advantage of the fact that the big chains have fallen … and customers have begun wanting to shop local and embrace independent booksellers.

At the same time, the Journal has the story of New York-based sport goods chain Modell’s, which recently hired a turnaround firm to help it deal with tough times - a move that spooked may of its vendors, which had seen the likes of Sports Authority and Sports Chalet file for bankruptcy in recent years.

“There were legitimate reasons for Modell’s vendors to be anxious,” the Journal writes. “After all, dozens of retailers have failed in the past three years and the carnage isn’t expected to subside anytime soon. December and January were tough months for Modell’s, contributing to a sharp drop in same-store sales in the last fiscal quarter. Even though it followed four straight quarters of higher same-store sales, Modell’s vendors needed explanations and handholding.” Plus, the company has been hurt by the fact that many of the local teams in the markets it serves have not done well, which means that fewer people want to wear the shirts and hats bearing their logos.

Fourth-generation CEO Mitchell Modell essentially had a two-pronged strategy for dealing with the problems. First, he “over-communicated” with the CEOs of the vendor companies, making sure that each one of them had his cell phone number, explaining his circumstances in detail, and stressing that his name was on the door and that he took survival very seriously. He even provided vendors “with the company’s financials under nondisclosure agreements.”

Second, “Modell’s is also planning to close some of its 150 stores and to start opening pop-up stores and smaller formats.” This has been tied to concessions that the company has been able to get from some of its landlords.
KC's View:
The lesson seems simple and clear - if you want to survive these days, you can’t do the same old thing. You have to have a stronger point of view. You have to have more attitude. You should curate, not just stock stuff. And, in the case of Modell’s, it’d be nice if they gave the Mets some of the attention that they give the Yankees. (I don’t like to go there mostly because they’re so over the top for the Yankees … it is just annoying.)