Retailers Diversify With Side Businesses

Retailers Diversify With Side Businesses
Inside the restaurant at American Rag in Los Angeles.

As competition from department stores and e-tailers intensifies, some independent shoe sellers have found the best solution is to diversify, and in the most unexpected ways.

Retailers, in an attempt to find interesting synergies and improve the shopping experience, have added side ventures such as restaurants, spas and art galleries to their stores. The hybridization of the businesses allows them to not only attract new customers and forge distinctive identities for themselves but also expand into new profit centers. (For an in-depth look at one such kids’ retailer, see page 26.)

At Salt Lake City-based Chalk Garden Co-Op, which reopened in August after a 12-year hiatus, owner Jeff Barnard said he wanted to bring something new to the marketplace that could compete with nearby boutiques and shopping centers. The 6,000-sq.-ft. space houses three additional concepts, including the The Lanny Barnard Gallery, Lunatic Fringe Salon and an upcoming spa.

“We’re trying to be different than all the shiny sparkly stores that are in the mall,” he said. “The store feels more boutique-y and more local, which we thought Salt Lake City was lacking.”

Barnard’s parents opened Chalk Garden in 1960 and the store closed in 2000 when they retired. To differentiate itself from its past, the retailer is now called Chalk Garden Co-Op.

The expanded concept features businesses that are owned and operated by others, but Barnard said the connections between them are already paying off.

“In the space, the four businesses are not separated by walls. It’s all open, so it feels like one store,” Barnard said. “This gives us a big edge over our competitors. We wanted to create as big a draw as possible. We’ve only been open three months, and business is even stronger than we expected.”

When Burlington, Vt.-based Tootsies of Vermont opened in 2005, co-owner Beth Estey said manicures and pedicures were offered as add-ons for customers. But as the footwear store grew, she saw the opportunity to branch out. A year and a half ago, Estey, who co-owns the company with her mother, Mary Lou Robinson, established a full spa inside the shop. “We decided that if spa services are what people want, we’re going to expand that department,” she said.

Tootsies cross-merchandises product throughout the shoe floor and spa. Skincare items are displayed near footwear, and flip-flops have a prominent position in the spa. And because the concepts are completely integrated, customers can see the full product offering as they receive pedicures, manicures, facials, chair massages and waxing.

Now, Tootsies’ revenue is split evenly between the spa and footwear sales. “We try to make it as easy as possible for our customers,” Estey said. “People can come in and shop and use the spa and pay with one transaction. It’s really taken off.”

At Los Angeles-based American Rag, founder and CEO Mark Werts said his stores were always designed to include a restaurant. “Retail should reflect how people live and how they shop,” he said.

Each store features an organic western Mediterranean menu and a curated selection of housewares. Still, Werts said, marrying different concepts can be difficult.

“The challenge is you have to put just as much effort into the restaurant as everything else because being mediocre is awful, and being a mediocre restaurant is worse than awful,” he said. “I think of myself as a restaurateur just as I think of myself as a shoe salesman.”

Similarly, when Dee Dee Perkins opened outdoor apparel and footwear shop DD Bullwinkels in an old drugstore in 1994, she decided to leave the soda fountain and lunch counter in place and intermix the two businesses. In 2005, the footwear department was expanded into an adjacent space under the banner of Moose Tracks and sells an assortment of comfort footwear. “Years ago, when we were selling shoes all under one roof, I would laugh because I would be serving somebody a milkshake and selling them a pair of Acorn slippers at the same time,” she said.

Perkins said she uses the back page of the menu to showcase new shoe styles and brands, and the popularity of the restaurant helps to drive traffic.

“There is easily a 15- to 30-minute wait in the restaurant, in the summertime in particular,” Perkins said, noting that while juggling the unique needs of each business can be challenging, it’s critical to her success. “The beauty of it is I can send people next door to shop while they are waiting for a table for lunch. There is no question that one [business] helps the other.”