Sunday, August 31, 2008
Buying over and under trends.
I have product that gets hot for awhile, and then completely dies: Beanie Babies, Pogs. Stuff that is hot, then cold, then hot: Magic. Product that is super hot, and then trends down to a low level: Pokemon, sports cards. Stuff that has trendy waves but stays pretty solid: comics. And even product that completely dies off, and then comes back. Dungeon and Dragons.
So it's really important that I gauge the trends correctly.
What's I've learned to do is: buy over the top of the trends, under the bottom of the trend.
This will take some explaining.
What set this train of thought off was that the last week of August has been just awful. This has happened pretty much all this year. I've asked other comics, game stores, etc. if this happens to them, and they say no.
Maybe they don't keep as detailed records as I do. But if they are telling the truth, I need to figure out a reason for this phenomenon.
The only thing I can come up with, and this has always been a tentative assumption until something better comes along, is that enough of my regular customers are having trouble making their paychecks reach the end of the month, that I'm kind of left hanging.
Tourists shouldn't fall off because it's the fourth week: indeed sometimes I see a surge at the end of summer from tourists. 'Rich' people shouldn't fall off spending in the final week, either, and I'm assured we have such people around Bend.
So, it's the working stiffs. Who just happen to be most of the people who subscribe to my comic lists.
I've lost a bunch of strong subscribers to jobs out of town. I've gained a few smaller subscribers. So that is another sign that the working stiffs are having trouble.
Which made me realize that my sales during the last four strong tourist months, December, June, July and August, have been pretty good. Down only 4.5%, from a very strong, high product buying year.
But my sales in the non tourist months have been awful. Especially in October and January, probably the two slowest tourist months of the year.
So...I'm going to assume that this fall is going to be terrible. This Christmas will be O.K. and next spring will be awful.
Why would I be so negative?
Because it's important that I arrive as estimates that are ahead of the curve.
Look, many businesses could survive at lower levels of sales. They cut expenses, they order correctly, they hunker down.
But...it doesn't work that way. Because most people are reactive. They have a bad month, and they cut expenses. They have another month, and they cut expenses. And so on, always riding the trend down. And losing money every step of the way.
So it's a double whammy. Not only do they end up at a lower level of sales, but they're much weaker arriving there.
So it's important to see the trend and spend appropriately.
When the trend is upward, you might only earn, say (totally made up figures, folks, don't read too much into it) 15k and spend 17k, but if you make 18k the next month and so on, the damage is ameliorated. You error into the upside of a trend, and increase your sales.
That is essentially what I've been doing since about 2002. Pushing sales for all I was worth, just trying to break even. Keeping my overhead the same, but increasing my inventory. This is what I call going over the top of the trend.
I thought I'd have a couple years to take profits, but couldn't resist one more year of adding new books and boardgames. And looking at my sales figures, I'm not too sorry I did.
So I've had more like one year of taking profits, and a bit of profit taking on the way down.
Take the above figures: Let's say, instead, that I made 15k but only spent 13k. And that the following month, I earned only 14k and so on. This is what I call coming up under the trend.
This may hurt sales, but you can't buy sales in a downtrend.
You can't really fight the trend, only adjust to it.
Saturday, August 30, 2008
If that is success....
"...two of every three new restaurants, delis and food shops close within three years of opening, according to federal government statistics, the same failure rate for small businesses in general" the article says.
Well, that caught my attention. Two out of three, within 3 years? That figure seems really high.
In fact, it runs contrary to what I think I see -- most businesses last at least three years.
Extend that timeline out a bit further, and I might believe it.
Sure enough, when I researched it, there is a good deal of controversy about small business failure rates. But most agree with the 'rule of thirds'; something like one third of all businesses lose money in the course of their lifetimes; one third break even; and one third make money.
And, in a very vague way -- what's a failure? what's a small business?--- it might be said that a third of all small businesses go out in the first few years, more than half after five years, and two/thirds after ten years.
These figures are more in accord with what I think I see.
"When Linda Lipsky taught a course called “So You Want to Open a Restaurant” at Temple University in Philadelphia, she deliberately made the business sound like a minefield. She warned her students that it is possible to lose their homes, their life savings, and even the rights to their own names. Her goal, she said, was “to get two-thirds of them to quit,” starts the article.
Which echoes what the people said to me up at the Small Business Administration at C.O.C.C. Their job was to guide people through a small business plan, and if many people never follow through because of what they learn, that's considered a successful result.
I'm probably more severe in what I consider a success than most people: Businesses close all the time, but it's the rare case that a business closes or sells at the conclusion of a 'successful run.' (I hope to do so, someday, so I won't say it impossible, just rare.) I don't believe most business close or sell when they are truly profitable, no matter what the owners says. But no one wants to admit defeat. Any and every other reason is floated as to why the business is closing/selling. So, just as some successes are obscured by the statistics, so are many of the failures.
Even the example of a successful restaurant in the article seemed a little iffy. The example of the fellow who is now 'only' working 90 hours a week (exaggeration is part of the deal) and only "modest salary," meanwhile having borrowed 440k from the SBA -- well, to declare that a success is a little too soon and a little too broad.
If that is a success....
But at least he's devoting his full attention to his dream.
The other example, of the lady lawyer who kept her day job; this always bugs me. This may seem smart, but shows a complete lack of confidence. Leaving yourself an escape clause is almost a guarantee that the clause will be used.
Anyway, it's still a very interesting article, especially for Bend with it's 8,343 restaurants.
Hey, I work 100 hours a week....I'm too tired not to exaggerate.
Water park 'delayed.'
Even the Bulletin seems a bit skeptical, putting hypens around the words 'realistic date' for opening in 2012.
Turns out there are 'funding obstacles.'
Friday, August 29, 2008
The Keypoint Partners Retail Roundup site is fascinating to me.
I'm just going to geek out on it.
First article, (Drug Store News): National Retail Federation forecasts slow sales through the holidays.
“We don’t see a turnaround until, at the earliest, the second half of next year and even that may be optimistic.”
Next article, (Yahoo.com): Walmart converts more than 1700 Garden Centers into Game Time Headquarters.
Turning seasonal dead space into useful space. "...customized for supporters of local college or professional football teams." Seems smart to me.
Next article, (The Mac Observer): Apple Stores generally mirror U.S. Population density.
Especially interesting are the maps, showing the dead zones for Apple stores, almost the entire great basin and southeast. Apple is more inclined to open more stores in high population areas they already have stores in, than open in less populated areas without an Apple store.
From my own experience in a less populated area, I'd follow Apple's example if I was going to create a chain. A small personal example is how my two little stores in Bend did better than exclusive stores in Redmond and Sisters.
My advice to any new business? Go for the population.
Or -- forget my advice. Live in Bend. Poverty with a view.
Mid-Tier Retailers try new brands for size. (Washington Post): The upshot of this article is that the mid-tier retailers, J.C. Penney, Dillards, Kohl, are having trouble holding their own against the discount stores and the luxury stores. Their solution is to create multiple brands, "private labels."
Oh, boy. I know how that ends. Damned if they do, damned if they don't. They'll flood the market fighting for space and end up driving everyone away.
Interestingly, Kohl's sales are down 10% -- just in time to open in Bend.
Real Estate Recovery Expected in 2011.(National Real Estate Investor.): Oh, that's good. No...wait. That's three years from now!
They're talking commercial real estate here.
I especially liked this line: “In the real estate business we don’t care what GDP is,” Dotzour quipped in a forecast presented to members and guests of the Real Estate Council of Austin on Aug. 18. “All we’re interested in is job growth, and we’ve had negative job growth in the U.S. now for about eight months. I call that a recession.”
This mirrors what I've been trying to say about Bend. It's the jobs that count, and with only 27 building permits being issued a month, we're in for a long slow period. Frankly, I could give a rip about housing 'prices.' My customers come either through tourism or locally, and I'm pretty sure a large percentage of the locals are affected by the slowdown.
Sears profit drops 62%,outlook weak. (Chicago Tribune.): This includes poor old K-Mart. Say no more.
Talbot's 2Q loss swells...(Chain Store Age.): Again, say no more.
Border's hits store opening goal. (GlobeSt.com): Essentially seems to be saying that Borders went ahead and opened the stores they couldn't cancel.
Borders has "new concept" stores "...which reduces the space allocated to music, giving that space to children’s and bargain books."
My understanding is that this includes quite a few graphic novels.
Also, they have kiosks for internet ordering. This seems to me to be the big store equivalent of a small stores saying "We'll order it for you." Good luck with that.
Gap cutting square footage... (GlobeSt.com): And finally, this amazing statement by the CEO of Gap: "We see no reason for optimism and are managing our business accordingly.”
Well, I can't top that.
I could go on and on with these articles. I'm going to let my business geek flag fly.
Thursday, August 28, 2008
One of the Blasher Boys is gone.
It helped that the Trailblazers had a good team. Jerome Kersey, Terry Porter, Clyde Drexler, Buck Williams, and Kevin Duckworth.
Linda always called them the 'Blasher Boys' because one of the announcers had slight lisp and that's how we always heard it.
When they started unloading that team, and replacing them with the JailBlashers, we stopped watching. (Of course, all incentive from sports cards ended as well. I guess I didn't really like watching sports as much as I thought, because I'm back to watching the occasional football game, and the World Series. If the Blazers got good, I'd probably watch. Fair Weather fan, I admit it.)
It seemed as though we really got to know the Blasher Boys, and it's sad that Kevin Duckworth has died at such a young age. But I'm glad to know that he spent his post career in Oregon, still promoting the Blashers.
Wednesday, August 27, 2008
Reason for optimism?
I don't share that optimism. But I'm interested as to why it's occurring. Perhaps it's seasonal. Perhaps it's cyclical. Perhaps it's just people tired of all the bad news and looking for the slimmest of reasons to hope.
Far be it for me to stomp on their hope.
Still, there is one thing I wish all the news stories would do, both locally and nationally.
Put the process into context. Use a timeline. And use the words, "So Far." And "Yet."
This is a process, not an end result.
For me, right now, optimism is a moot point. My taxes are so huge that I'll be dealing with nothing but that for next couple of months. I can do it, but it's an internal thing. I suppose I should be glad that my business is in a position to pay them off.
When you get right down to it, most business decisions are more internal than external. The national or local economy of course have an impact, but your everyday business decisions, and your own circumstances, are so much more important.
That why I almost need to ignore what's happening out there in the 'real' world and just pay attention to my own requirements.
Taxes are a bitch.
Tuesday, August 26, 2008
Books are a hit, but not hit books.
At the same time, I've sold all my Jack Kerouac books again, most of my Chuck Palahniuk books, most of my Cormac McCarthy books.
Even the newest Stephanie Meyer's book, Breaking Dawn, hasn't sold that well for me, though I was admittedly late out of the gate with that one. But I could've sold the first book, Twilight, many times over the last couple of weeks if I could've gotten it in stock. That seems to be a pattern; early books by popular authors, especially if I carry a full run, there seems to be at least one in the oeuvre that even the biggest fan hasn't read yet.
I think books like The Shack, or Breaking Dawn, much like the Harry Potter books before them, are going to sell first in the big stores, and only by happenstance in my store. (For one thing, I don't discount, and most bestsellers are heavily discounted. Which is confounding -- here you have a book everyone wants, and you completely give up your profit margin to sell it.)
After the Crazy Days sale was over, I continued to put the table on the sidewalk and sold the .50 pbks, and the 1.00 hdcs.
Linda and I were concerned that it might eat into our used book sales, but it's done the opposite. People often come in and buy something else while they're at it. The weather will soon put an end that that practice, but I think it gave us a boost.
I continue to sell classics, and what I would call 'near' classics -- best selling literary fiction from the last few decades that don't make it to the used bookselves often enough.
What is really encouraging to me, is that I haven't yet really put in the effort on new books. That's not to say the books I've gotten in aren't good books -- they almost need to be to survive the process. But usually I do a great deal of analysis, and with new books -- so far -- I've mostly been responding to events. Haven't yet been all the proactive.
I'm holding off a bit before I really dive in. Our tax bill will be humongous, as I feared, and I also need to save up for other possibilities as well.
But, it certainly has been more successful a venture than I expected at my most optimistic.
Monday, August 25, 2008
I'm a social butterfly.
As it happens, my office is the guest bedroom.
No access to my own computer for 14 days. None of my passwords, bookmarks. I have to use Linda's office. Linda has an Apple and I have a PC. Similar, but not the same. Simple things like refreshing the page stump me.
No access to my comics. No access to a new book off a shelf when I finish one late at night. (I search Linda's shelves -- she really likes girly fantasy.....)
I want my routine back. I'm cranky.
You know that idea I had about a social club?
Well, forget it. I just can't handle the social whirl.
How the hell does anyone with kids or any kind of social life get anything done?
On the other hand. I've also had first hand examples lately of people who live alone to whom I wanted to say, "Geez. Be flexible!"
Let that be a warning example to me.
Sunday, August 24, 2008
The Duck Blind. Join now.
Err....John. No one was taking these builder suicide/murder conspiracy's seriously except Buster...and I'm not even sure about him. Besides, he's a nut. Also a sly dog who makes most of his points by overstatement -- and then overstating that overstatement again and again. It may seem like there's a bunch of us who believe the banks took hits out on bankrupt builders, but really it's just Bilbo Buster, over and over again, under different names but with that unmistakably offensive tone.
Also news to me that there were 4 builders who might have jumped; I was only aware of three.
Finally, for the 'confirmed' suicides, and the Bulletin policy of not "naming people who commit suicide unless they are public figures," I'll submit that the building boom was one of the biggest 'public' stories Bend has had over the last 5 years or so, which makes prominent builders into public figures. The paper certainly wasn't shy about publishing their big plans, but strangely quiet when those plans fall through in such a disaster that the prominent investors and planners feel like they have to jump into the rapids.
Then again, I'm sympathetic to the idea that "reporting a suicide adds a level of pain to an existing tragedy.'
Nevertheless, until today, there wasn't even an acknowledgment that even unnamed individuals had committed suicides.
I think there has to be a way to report the wreckage of the boom in a sensitive way.
Besides, the editorial is proof in a way that keeping these things quiet doesn't work in this modern blog world.
There is another story in the Bulletin about the Loft.
Again, I say without Irony that this appears to be a brilliant plan. I seems to me that it pencils out nicely.
So much so that I again propose another exclusive club on the upper floors of the Decoy building. We'll call it the Duck Blind. Membership is 1000.00 entry and 100.00 a month. No concierge, though. Just a full fridge.
Saturday, August 23, 2008
"The (Right) Customer is Always Right."
O.K. I think to myself. At least he's not saying the Customer is Always Right. But I still expect that to be the gist of the actual column.
First paragraph is pretty good, if vague.
"Have you ever heard or repeated the old saying "the customer is always right"? Let's take a look at that old maxim in the context of the real world of business. We would like to offer this as a counter statement: "The right customer is always right, but the wrong customer is often very wrong -- at least for your business."
So...using the words "real" world, and "wrong customer" sounds promising. I'll keep reading. As in all business advice columns, I know I'll hit the "oh, damn," moment, where I completely disagree with what they're saying.
"Businesspeople who have begun with "the customer is always right" philosophy will often discover the necessity of categorizing customers, whether they want to or not..." and it goes on, paragraph after paragraph to the end, right on message, right on target.
Miracle of miracles.
I highly recommend that you go get this issue of Cascade Business for this one column alone. I'd repeat it in total here, but I'm not sure how they'd feel about that. Most of the rest of the newspaper is fluff, but this was a homerun.
I especially like how he brought up the possibility that the customer might not share the same values and integrity as you.
"If your business features honesty and fairness as core values, you will have a great potential for trouble if your client doesn't share those values..."
And it dares to bring up prioritizing customers, and to suggest that you have to treat customers differently.
"Your best procedure is to "spoil" the top, cultivate the middle, and low the bottom."
You said it!
Friday, August 22, 2008
Bend is different, again.
Not one iota.
When I peruse the Source and there are new stores I've never heard of, new restaurants opening everywhere. New shopping malls, new department stores soon to open (Gottshalks and Kohls) , new hotels.
It's just weird I tell ya.
Over the last few days, I kept having customers come in with a shopping bag i'd never seen. Turns out, it's a new store on Wall Street. Must be selling the hell out of things, based on the number of bags.
At the same time, I counted 7 large ads in the Source of 7 long term stores selling off inventory anywhere from 40 to 80% off: and these aren't the stores going out of business, as far as I can tell. I'm sorry, but my reaction is always the same -- if you are selling everything in your store from 40 to 80% off and you're NOT going out of business, you were overpriced in the first place!
Very strange, especially if you've been paying attention to the national trends. The Bulletin has a small article in the corner of the business page: "Commercial property, bankers fear, may be the 'next shoe to drop.'"
I've been paying a lot of attention to this -- as I always say, it just isn't a very interesting subject to most people. Housing declines, everyone can relate to that. Commercial building? Shrug.
Whenever the CRE market subject comes up on the Housing Bubble Blog, or Calculated Risk, the comments drop in half, and usually stray over the housing after a couple of back and forths.
In the NYT's News Service article, it says "For Wall Street banks, which hold about $100 billion of commercial mortgage-backed securities, the prospect has fanned new worries that a deterioration of the overall commercial property market could trigger more write-downs in the coming quarter, on top of losses already expected from their distressed mortgage securities holdings."
A little bit of a cast off statement; from what I've read, the commercial mortgage loans for next year have dropped roughly 80% or more.
There's a time lag here. For instance, another measure, architect billings, precedes that market by about 8 to 12 months, and those pretty much fell off the cliff earlier this year, which means to effect would hit............................... right about now.
So there it is: national news that building has all but stopped. Even the big boys are pulling back. Anything that hasn't already been excavated, probably won't be built.
So just like the Housing Boom in Bend, a year or two ago, either I have to believe that Bend is different......
Or most of these projects won't be built.
And we know how the Housing Boom went; turns out we weren't so different after all.
Thursday, August 21, 2008
I know, I know, you could say the same think about any fiction and or hobby.
Anyway, I also know that I would end up completely bothered to distraction by the commentary.
I did see one of the Michael Phelps races; I think if you were within a mile of a T.V. you couldn't avoid one of those.
But then that just confirmed my suspicion that these guys are mutant freaks.
I've been staying away from the T.V. mostly.
Does it seem like the Bulletin has a Creationist editorial just about every?
I don't feel like I'm particularly 'in the know' but I knew the Blue Fish was closing weeks ago. I guess I don't feel like it my job to reveal such things until they are confirmed.
A new restaurant in the Old Mill. What was notable to me is that the owners chose to open in Bend before Eugene or Salem. That's different from the old days. Nor did I realize that the Pita Pit is a franchise. Both Subway and Pita Pit are franchises, so does that mean we're being invaded by the chains? Only Starbucks is truly a corporate thing, so far. I still think downtown just doesn't lend itself to chain stores, at least not as long as the Old Mill is around to fit the bill better.
My pinched nerve returned last night. First time this particular nerve got pinched was probably 20 years ago, and I couldn't move off the couch. Slowly the symptoms have been less dire each time. Nowadays, if I quickly take an Aleve, I can forestall it all together.
The weird effect is that it makes me feel almost paralyzed in the upper body. Very unsettling. If I lay flat on the floor and extend my arms as much as I can above my head, I can reduce the pressure a bit.
But mostly, time heals. I just have to wait.
My son Todd and his wife Elsa were home for a few days. I love to see how they relax and decompress when they're in Bend. He came home from an afternoon at Deschutes Brewery already half snockered. I broke out the beer in the basement fridge, and started slipping him some bottles during dinner.
He's a funny guy normally, and snockered he's hilarious. My brother-in-law Dave was also visiting, and surprised me by having a beer. One beer.
Dave's pretty conservative, so when Todd started spouting some liberal politics, I sort of tried to get a discussion going.
What was different about all this, is that I didn't have a drink myself. I don't think I've ever in my life sat at the same table with others who were drinking and not drank myself.
It's different experience. I was able to hang back and watch the fireworks.
Actually, they had a good discussion. If it had been me, Dave and I would have clashed. So I let Todd be the stalking horse.
Because really, in the end, family peace is more important than being right about politics.
Wednesday, August 20, 2008
Four more places to eat?
I like Paul-does comment:
"A great article on why downtown should consist 115% of restaurants.
We are dangerously low on restaurants downtown, there being several vacant spaces that do not have a Subway yet."
Tuesday, August 19, 2008
One stat lies, but many stats reveal.
What's most interesting to me is that hard statistics simply confirm what is happening in my store. There have been six months of comic sales decline. Yes. There are only 27 building permits and a rise in unemployment in Bend. Yes. There has been a large increase in inflation. Yes.
But there are idiots who will post the 'good' news that Sacramento housing prices are starting to stabilize and that Sales are increasing. Tell you what, if I put my product out there for half price, my sales would increase too. Not sure that would be good for the bottom line, though. And we're probably a year or two away from bottom here in Bend -- and we have to hope it won't be as far down to the bottom as Sacramento.
I understand the need and desire for good news. The hope for an upturn. Optimism.
But let's be realistic. Look at the stats.
They aren't pretty.
Increased inflation. Increased unemployment. Decreased building. Falling housing prices. Falling sales. Lack of credit. Falling earnings.
So telling me that prices on gas have decreased from 4.30 a gallon to 3.99 a gallon, isn't a whole lot of comfort. It's still freakin expensive.
A year ago, there was a lot of uncertainty. Seems to me that there is plenty of evidence now where we're headed, but still plenty of denial. I can understand denial when the evidence is contradictory or uncertain. But now?
Talk turkey, people.
But at least now we can start to deal with the reality. Wait for a real bottom.
Watch the stats. Then wait six months and see what the 'real' stats reveal.
Monday, August 18, 2008
Taxes, damn taxes.
We are going to owe a bunch of money on Oct.15, probably enough to wipe out whatever I've managed to save by then. So the rest of fall and Christmas will have to be the time to actually put money in the bank.
Trouble with owning your own business is that unless you are disciplined, it's very easy to put off paying until the end of the year....which really makes for sticker shock. Linda has tried to make payments, but just like me finds the everyday expenses of a business enough to make it difficult.
For me, the middle of April is about the lowest cash point of the entire year, but October is much much more manageable.
What's scary is that it will be even worse next year.
But as my accountant always says, owing taxes just means you made a profit.
I try not to get too worked up about it, since it's unavoidable.
Sunday, August 17, 2008
The Growth Industry isn't Growing.
This an umbrella term which I think pretty much covers all the jobs that came to Bend because of the Boom.
The term Ponzi scheme is overused, but I think completely appropriate to Bend.
Look -- I've lived here my whole life, so I have a pretty good idea of what kind of industries Bend had five years ago, ten years ago, twenty years ago.
And other than the "Growth" industry, I've seen very little that I would hang my hat on. Minor industry, small tech, nothing I would consider to amount to much.
To earn the original dollar.
Lots of retail, but that was part of the growth industry as well.
Schools, government and health -- those are neutral factors, present everywhere, though I'm willing to concede that as a regional hub, we get more than our share. Same with retail.
But, REAL industry, good paying jobs? I just don't see them.
We have tourism and retirement. Both notoriously low-paying jobs.
So what I think I've seen is huge numbers of newcomers who moved here BECAUSE we were a boom town, and because they moved here they made it a boom town.
And we know what happens to Boomtowns.
I'm amazed that the leaders of this community can't see what's coming. All I can think is that they didn't live here 20 years ago when we had nothing but tourism, petty much, and it wasn't terribly lucrative.
Building up shopping malls and stores may obscure the basic weakness of the local economy, but in a way that makes even tougher for the locals. Ask yourself, if any of the people you know are part of the Growth industry.
As I said, everyone of them should be looking at that 27 housing starts and asking themselve, "What next?"
You make your bet, I'll make mine.
Let's talk turkey. Too many houses, too few people able to sell their houses elsewhere to move here, too few well-paying jobs, too high priced.
But all of that is almost beside the point. The number I've always thought most significant for me and my business is the building permit numbers. And they're as low as can be. A drop from the 400's just a few years ago to an average monthly rate of 27.
27 building permits per month.
These are jobs disappearing, whether they're showing up on the statistics or not. The other stuff, the overhanging inventory, the shadow inventory, and whether credit loosens up and prices drop enough for people to start winnowing down that inventory -- that all has to happen before building permits are likely to pick up. At the end of the process.
So houses could start selling tomorrow, and I still think it would be a year or two before builders would start ramping up again.
But I see no signs of that happening. Whatsoever.
So...that 7 year building cycle looks awfully likely now, and we're only a year or at most a year and 1/2 into it. It is no longer a matter of waiting to see what happens. Because of the time lag, we already know what it's going to be like for the next year or two minimum. The damage has already been done.
27 building permits!!!.
Again, I'm looking at new money and jobs: all the people who sold houses, who build houses, who furnished houses. All the money is disappearing. And many of those people have been my customers.
Just as a thought experiment, think about all the people involved in building just one house.
The original raw material. The transporting of material. The building of foundations and infrastructure, the electrical, plumbing, landscaping, painting. The raw material for the furnishing of a house, the transportation and building of furnishing, the salesmen of everything involved in the house, the financial underpinnings, banks, mortgages, agents, trusts, etc. etc.
Ask yourself how many people in Bend are involved in those industries? How many own houses? How many opened businesses catering to that trade?
What do they do now? Twiddle their thumbs? I've thought before that there was a chance that we'd actually have out-migration. So far, there still seem to be enough retirees and equity refugees to keep that from happening. But I know a fair number of construction people who are leaving town to find work.
I suspect this fall and winter is going to be much worse than I expected, because while there has been decent tourism, my regular customers seem to be a bit more scarce than usual. Maybe they're off enjoying themselves, or held hostage by the Olympics, or -- like my cat -- paralyzed by the heat. But I'm very curious what the numbers will be when the tourists are gone.
And as I've mentioned before, the Commercial Real Estate building, which was a bit of a lifeline for the last year or so, is coming to a screeching halt. Nationally, the reaction has been -- if anything -- quicker and stronger.
Even 6 months ago, I knew people who could sell their house. Now, we have a friend who really wants to get out of here who can't.
So I'm guessing that retail sales are going to be down in Bend for quite awhile. I'd be surprised if we don't drop overall at least 25% -- remember, Bend had a bigger building boom than most.
The big boys will be O.K. locally, unless they collapse nationally. For the little guys, it's really going to matter whether they're willing to struggle with not one, not two, not three bad years but perhaps up to 4 or 5 years. There'll be exceptions, of course. Even in my store, a product suddenly getting hot could easily erase a 20% downturn overnight.
But that's not where I'm laying my bet.
27 building permits.
I'm going to keep trying to stay ahead of the curve.
Saturday, August 16, 2008
100 degrees but Fall billing.
Whatever I spend right now will have to come out of the lower cash flow in few weeks, so if I want to earn an August profit instead of letting it get eaten up by a cash flow shortage, I have to cut back. So I have to wrench my thinking away from the summer phase and start thinking fall even though it's a 100 degrees outside.
Dog days of summer, pretty hard to get motivated.
I was going to write an entry called, 'In praise of inefficiency," about how letting things slide can actually work in my favor. I tend to make money by not spending it. Guessing actual sales, or seeing an actual cause and effect to spending, is just too difficult.
Besides, I can always see a million little things that could improve the looks of the store, and a million little things that I could add to the inventory. A million little ways to spend money.
It took me way too long to recognize that having the best possible store is not the same thing as having a profitable store. The goal should be to have the best possible store that still earns a profit.
I've always said, there are three things every store has to do: pay the overhead, keep up the inventory, and hopefully earn a profit.
As anyone who has been in my store can testify, I've always put inventory first. Too me, everything flows from that. Secondly, I make sure that my overhead is paid in full and in a timely manner, and I consider my basic wages (the minimum wage part) as overhead. Only then do I think about profit.
I think the fact that I'm still in business 25 years later testifies that this is the right priority for me. I've seen businesses spend way more on overhead than me -- the best of fixtures, heavy advertising, many employees. I've seen businesses that obviously put the emphasis on profits -- they don't last long. And I've seen businesses that go crazy on the inventory.
While I was gone on vacation, someone came in and bought all the Pokemon packs. I came in on Wednesday, and realized that if I didn't order more, I'd be out for a week. Which has probably never happened since Pokemon came along about 9 years ago. But I also realized that someone else had bought a bunch of the little Pokemon figures I bought too much of, and that we have a whole album of singles we could turn people too, and that selling either would be more profitable.
It's agony for me to not have a product in stock that I think will sell. The final clincher was that a "new" wave of Pokemon is coming out next week anyway, so if I'm going to spend the money it might as well be on the new stuff.
I think I have always been a little too quick on the spending trigger. A little too eager to get the newest thing, to make sure no gaps develop, to be the "go to" outlet.
But by being just a tad bit more slow -- inefficient if you will -- I can actually earn a bit more profit.
I know that isn't true, exactly. I'm probably just messing up the terminology. But I do know that being Johnny on the Spot hasn't always been the right decision. And being "Mr. I'll Get Around to It Soon," sometimes has been.
Don't tell anybody....
Friday, August 15, 2008
News trumps the Snark.
I've been trying to catch up to my reading from our three day vacation. Bulletin didn't have much -- except I'd like to point out that you needn't say "two twins," pretty much the same thing, you know.
There was this little nugget from the Housing Bubble Blog:
In Business Las Vegas from Nevada. “The shutdown of Boyd Gaming Corp.’s $4.75 billion Echelon resort will have a far-reaching effect on Southern Nevada’s economic climate - both good and bad - analysts and economists say. ‘It’s like going through the North Atlantic during iceberg season,’ said Keith Schwer, director of UNLV’s Center for Business and Economic Research. ‘We’re just not seeing everything yet.’”
“Boyd Gaming announced Aug. 1 that it was mothballing the 5,000-room Strip resort being built on the 64-acre site formerly occupied by the Stardust. The shutdown pulled 800 construction workers off the job.”
“The postponement of Echelon Resorts is likely to put more strain on the Las Vegas housing market. The housing industry was counting on the creation of thousands of jobs with the opening of new resorts to help lift the market out of its doldrums of the past two years.”
Wow. 4.75 Billion. 800 construction jobs. 1000's of resort jobs.
Good to know that there are even crazier places than Bend.
Only to wake up this morning to THIS: Bend Bulletin, August 15, 2008.
A BIGGER DOWNTOWN FOR SISTERS?
Plans to develop a 10-acre property at the north end of Sisters could create four new city blocks with a mix of housing and commercial space next to the city’s new post office, city and real estate officials said Thursday.
The development, called Black Butte Crossing, would include 32,000 square feet of commercial space and up to 243 apartment units comprising roughly 340,000 square feet when built out over four to seven years, according to representatives of the project and plans filed with the city of Sisters...
You really have to read the whole thing. It makes look Juniper Ridge look like a realistic project.
The Bulletin was smart enough to include a question mark.
I'd be amazed if this ever happens.
Announcing a project isn't the same thing as actually building a project.
But I take it back about Las Vegas being crazier than we are.
Thursday, August 14, 2008
Bookstore tour lessons.
One thing I noticed about all the used bookstores we visited is that their traffic flow somehow wasn't intuitive. Not easy to negotiate. A hodgepodge organization, dictated I suspect, by the mazelike floor-plans and the mix and match bookshelves.
Our white bookshelves really give a clean feel to our bookstore, that plus the constant cleaning and straightening. The shelves are modular, saving space. The wide corridors that Linda insists upon, and the little oasis' of chairs and tables, and a relative lack of knick knacks and pictures, puts the focus on the books and gives a cleaner, less cluttered feel.
We are complimented all the time for our organization. The irony is that we probably actually organize our books into less categories than most bookstores. We keep the divisions of books into as few categories as we can manage. By splitting, say, the health section into -- diet, medicine, lifestyle, etc. etc. we would really only add to the clutter and confusion.
We seem to have quite a few more hardcovers than most used bookstores, and we don't relegate them to the corners or the back of the store. We probably give a bit more space to non-fiction than most used bookstores we visited.
We give quite a bit of room to genres, just like everyone else, but not so it obscures everything else.
The biggest difference, and I'm not sure how this happened, if that we give much more room to 'literary fiction.' Current fiction. Hardcovers and trade paperbacks. We've separated out the older, and more beat-up but still worthy classics -- the Hemingways and the Steinbecks -- into our 'vintage' section.
It's not just Oprah books, either. Authors like Philip Roth and Salman Rushdie and John Updike and so on. Sell very well.
More than half the stores we visited didn't even have a distinct section; and the others put them in a back room and let them gather dust.
Yet in our store it is probably our most active section.
Hard to understand. We were told by our 'adviser' that current fiction "doesn't sell," and based on what we've seen elsewhere, I have to assume it doesn't sell for other stores, but our store does very well with them.
Could it simply be that we have given them due respect, and space and focus, and those who like those kinds of books come back? And bring in those kinds of books?
I believe there is an awful lot of interference on the part of used bookstores about what books to carry and what books sell and what books the owners likes or dislikes and how his organization reflects that.
We've tried very hard to be a mirror to what books actually come in and what books are actually bought. Instead of imposing our own tastes. Many of the bookstores, which are run by women a majority of the time, are pretty skimpy in their science fiction and their westerns and their war books, for instance.
Others have an overabundance of romance, or too few, or whatever.
Seems to me our trade policy of taking in most any book a person brings in (within the limits of one box or bag per customer per visit) reflects what those people actually read. Whereas the usual choosiness of most bookstore owners only reflects their own biases.
And finally, the biggest difference is that we make a constant effort to clean and straighten our books. For the life of me, I can't figure out why the majority of bookstores let themselves become messy and cluttered, especially when it would only take, say, five minutes out of every hour to go around and straighten.
I guess if I had to pick an element that separates our store, it's that we have tried to have a retail bookstore look. We look more like Barnes and Nobles in our displays and organization that the typical bookstore. Customers often come in and say, "Oh, we thought you were a 'used bookstore."
We are, Linda says.
"Oh, you have new and used?"
No, Linda answers. Just used.
We have a nice retail feel, and haven't allowed ourselves to look "Old".
No real reason to look old, except tradition. Used bookstores tend to follow the example of other used bookstores, instead of adapting to this new world of books.
Having spent 20 years selling books and comics out of Pegasus, we knew what kind of store we wanted.
I give Linda most of the credit for keeping it this way. I would've probably complicated and messed with the formula. The store has kept the fung shui that it had from the very beginning, that was almost a happy accident, except...well, it was our choices that made it so.
Wednesday, August 13, 2008
Bookstore tour, continued.
Visited a nice bookstore, Basin Books, in Klamath Falls. Only bookstore left. About a third to half of the bookstores on our trip we remembered visiting last time or which were listed in the Yellow Pages were gone.
Basin Books seemed to have a handle on things -- the only wrinkle I pointed out to Linda was that I thought their policy of trading CD books for CD books made sense, but she's heard it before from me. We haven't had to change our very simple trading policy since we started, and the minute you start making exceptions, you stray. So....well, good for her for sticking to basics.
Also in Klamath Falls, we talked to a downtown owner, who was upbeat. Whenever I talk about how downtown Bend is booming to other downtowners in other towns, they always nod their head and say, "Yeah, we're getting busy, too."
They have no idea. The other day, I was getting away from my own store and standing in Pave Jewelers next door, with their wrap around picture windows on the corner and was just amazed and astounded by the hordes of browsers. Never would have thought it would happen in my lifetime. Most of these other downtowns are miles away from that. Miles away. I always mention that there is both good and bad in these crowds, but I'd have to say I'd rather have the raw material to work with. Keep those hordes coming!
We're not seasoned travelers. Being able to afford motels is relatively new for us. So we didn't make reservations. We were shocked by the price of the big motels by I-5 in Grants Pass, as well as the fact they were sold out. Checked the older motels in the downtown area, and the first two places we checked were also sold out. So we tried Motel 6.
I had no idea it was such a basic motel. Half the price, a tiny room, zero amenities. Didn't bother me at all, but I think Linda was disappointed. We rarely get to go on trips and I think she's willing to pay more for amenities. My bad.
In the Grants Pass area, we found a bookstore called Oregon Books. It was new/used and also a very nice bookstore. I took a few notes and we moved on.
In Crescent City, Linda insisted on trying an older motel that her sisters had once stayed at.
Wow. Perfect. It was on the beach -- I mean ON the beach, 300 feet from the waterline. Beach level. You could sit on the bed and hear the waves and watch the sunset, or sit on the porch and watch the falling stars. Just about perfect. I ain't telling you the name. It's a secret.
After spending time on the beach and picking up rocks (and trying to dissuade Linda from picking up skeletons) we checked out the last bookstore we could find in Crescent City. This store had morphed into a music/bookstore, and seemed, well, less orderly than the last time we visited.
We were a little shocked that Crescent City was so run down. We'd heard it was coming back, but it looked seedier than we remembered. Linda grew up there and as long as her mother was alive we'd visit every year. Looks as though they'd torn down buildings in preparation for new ones and got caught by the slowdown. Downtown was a ghost town.
We jaunted up to Brookings.
Bookstores everywhere. Checked into Earl's Books, which was a very nice store, one of those nook and crannies and little rooms connected to little rooms type bookstores I like. He sent us the Abbey's Bookstore, who told us they did a large amount of their business online. When we questioned them, they told us that if we were making enough in our brick and mortar, to stick with that.
That's a pretty constant refrain we get from people who's business is partly online. They are less than enthused, and seem to view it as a necessary evil.
Found a new bookstore, Words and Pictures, run by an petite older woman who really knew her stuff. We seemed to really hit it off. She knew what I was saying, and I understood what she was saying. Maybe it's just that we'd both been doing it for 25 years or so. Liked her and her store. She had an art gallery connected, which was the third store on this trip that was also either a music store or art gallery.
We also popped into FullSpeed Comics and said hello. Tiny comic shop, in a very small town, but obviously a labor of love. Tried to give him a pep talk about carrying graphic novels, but didn't push it too hard since it was obvious he had some capital restraints. Young guy, who was trying to do what was common 20 or 30 years ago in the comic trade, but which is harder to do now: start small and grow. When did I become the grizzled old veteran?
Finally, we had heard about a bookstore in Rogue River.
If you had all the money you needed to buy any book or accoutrement you wanted? That's this bookstore. In a tiny tourist town.
This store would absolutely kick butt if it was in Bend. I thought the selection of books was great. Really well done. Too many knick knacks for my taste, but they were intriguing knick knacks. They had the best stuffed animal collection I've seen. A huge stuffed Otter that I insulted them by calling it a bear -- biggest stuffed animal I've ever seen.
Took lots of notes.
Just as we were leaving, the owner came in, and we introduced ourselves as two bookstore owners from Bend.
"That's nice," she says, and leaves.
Which kind of reminded me that most of the bookstore people on this trip were more talkative than usual. I made it very clear to all of them that we had no intention of leaving Bend -- and I suppose we are far enough away not to be a threat.
Linda made a comment that I thought was right on. All these bookstore people had great pride in their stores, and felt they were doing it the right way.
"I bet they shake their heads after we leave and wonder how we stay in business..."
More than one way to skin a cat -- though I still think we've got the best handle on things.....
Tuesday, August 12, 2008
That’s a very simple-minded way of looking at it.
Stan Lee never met a Marvel comic that wasn’t stupendously great.
I stopped listening to Stan Lee 20 years ago. If he said it was light outside, I’d go to the window to check.
It’s not about the individual sale, or the individual product. It’s about establishing a credibility with your customer, so they believe you when you say, “This is a good graphic novel.” It’s about establishing a relationship of trust.
Is this any good? They ask.
Fantastic! you say.
How about this?
Best thing I ever read!
And if they go home and it’s a piece of crap, they’ll not only not believe you, but they may never come back.
Imagine instead, this,
It’s O.K., but this one over here is even better.
Should I get this?
Lot’s of people like it, but my favorite is this comic.
You’re showing faith in the artform and the industry to be able to pan a comic. You’re saying, I feel secure enough about the quality of what I sell to be able to tell you if something isn’t good.
Always with the caveat, “in my opinion.”
But you want to create an atmosphere in your store that rewards good work. You want the customer to feel like he can ask your honest opinion, and you’ll give it.
Giving a negative review may have the reverse effect of making them buy something else, instead of nothing at all. It’s actually a good marketing tool, sometimes, believe it or not.
I'll probably be completely thrashed over there, but I'm safe over here....
Kevin replied: Duncan, did you actually read the post? You’re turning a mass email to the customer base telling people to not buy something into a one-on-one sales experience, which is not what happened. Amazon doesn’t give me books to not buy in the marketing messages I get from them - why should a comic book shop do the opposite?
Even in a newsletter, it’s important to have credibility. As well as entertainment value — you want them to come back, and maybe a negative review can do that. Should be seeded with recommendations for good product, though.
In my bookstore blog, I review every novel I read. Good, bad, or indifferent. I want people coming back to read my blog, to remind them of my store, the remind them that I carry many other novels, good, bad or indifferent. Selling that particular book isn’t the real point of the exercise.
Talking about books, is. Enjoying reading, and saying why I didn’t enjoy a certain book, is not a contradiction. It’s proof that I enjoy reading enough that I’ll try another and another book until I do find that really good book and tell you all about it.
I understand credibility and its importance, but I really do not see how trashing an X-Men comic book gains that from anybody but the people who already don’t like it, who weren’t going to like it anyway. Maybe I’m just too darn positive to work in marketing.
Oh, wait a minute…
I'll let him have the last word.
Heck with that. I couldn't resist.
I think customers appreciate an honest tone, they find it refreshing. I suppose if you really hate all comics and express that, then you’ve got a problem.
But if you love comics, and find one you don’t like, and express that…they’ll try something else. And believe you the next time, too.
Well, this just keeps going:
Another guy slammed me for being stupid enough to tell people not to buy a comic:
“Step three: Profit!”
Well, I’m in my 28th and most profitable year.
Without pandering. I like, I don’t like. I’ll tell you.
I’m pretty sure my customers wouldn’t like it if all I did was hype stuff. Nothing but sugar. A little spice just makes it taste better.
So, Duncan, you’d tell people to not buy The DaVinci Code then? You’ve done that? You’ve slapped a big DON’T BUY on it on your blog?
Books and comics aren’t the same marketplace - comics come out on a weekly basis, have a smaller per-unit margin, and aren’t returnable. Comics retailers can chose to pan a title, but they’re also likely to to be panning the next year or so on that title and turning down money that could be coming in for the next year.
Interesting example. I thought The DaVinci Code sucked. Didn’t seem to stop it from selling….
What I tend to do is review a bunch of comic titles at a time, just like I read them.
I already know what comics and authors and artists I like, usually, so the review is more likely to be positive than negative, because of the culling process.
But after that, yes, I call it as I see it. I tend to see good things in almost all books, movies and comics, so even a negative review will hold out hope.
But, yes. What counts is that you are covering the hobby honestly. That you are entertaining. That you are showing you know your stuff, and have the credibility to be a good source.
Telling a whopper, to someone who knows better...
We hadn't been to Klamath Falls in ages; the last time I saw the downtown area, it looked as though a neutron bomb had gone off. This time -- it was better, looking more like La Grande or Baker City's downtown, still struggling but slowly improving.
We found a used bookstore on the outskirts and had a long talk with one of the employees. She mentioned that the owners had just bought the store, and that they charge a dime with every transaction.
Linda and I can't help but tell her about our policy -- but in the middle of the conversation she tells us a bombshell that leaves me speechless.
"Oh, yes," she says, "We made $$$$$ last month."
I stop talking and stare at her. "Never mind anything we said," I said. "Keep doing what you're doing."
This happens to me quite often. Someone tells me something that simply can't be true. Sort of like, "Yeah, we took our pigs out to the airport so they could do a flyover."
But what you going to do, call them a liar?
With that kind of money, the previous owners could've hired a full time manager and a couple of employees and gone on constant vacation and still had money left over -- which begs the question of why they would sell.
Usually it's a customer who tells me one of these whoppers, and I always just nod my head, figuring that something got lost in translation. And I think that much of this kind of information comes from employees who overhead something and just misunderstood.
Or, possibly, sadly, owners who simply aren't telling the truth.
It was a pretty nice used bookstore, but on the outskirts of a economically struggling small town. Every bookstore we went into had rents that were roughly a third what Linda and I pay. And none of them had anywhere near the drive-by or foot traffic. Nor were the customers anywhere near as prosperous looking as those in Bend.
More on that later.
So we get to Grants Pass, and find a very nice new and used bookstore there. We have another long conversation, and again start talking about our bookstore and again the manager lets loose with a statistic that stops me cold. Again, I nod my head and congratulate her.
And again, we walk to our car shaking our heads.
Both figures that both stores gave us were, quite frankly, impossible. And completely unbelievable. But most people would probably accept them at face value.
This has happened, like I said, many times over the years. And almost always, the store that told me the whopper was gone a short time later.
Why do they do it? I mean, I've told them I've owned a store for 25 years, so surely they could come up with an inflated figure that was at least believable.
I think it's mostly just sloppy talk and sloppy thinking and sloppy information gathering. Or they are just trying to one up us.
But they don't have to tell us something that makes me want to roll my eyes up into my head and groan.
Every time I'm in my wife's store, she has 5 or 10 or 15 people walking around, most of them bringing in bags or boxes of books. Her store is twice the size of any that we saw on our trip, and much much busier. Both her and my store are hopping and prosperous and usually better inventoried than the stores we were looking at.
Seriously, the store we first went into, would have had to do, oh, I don't know -- 30 times the business we were seeing them do. And at a dime per transaction, more like a 100 times.
And none of what they were saying was in evidence in the stores themselves. They were all pretty bare bones compared to our stores, and the usual neglect in straightening and cleaning.
Nice little fairy land they live in.
Basically, to do what the second store said they did, they'd have stacks and stacks of books around the counter and one or two employees doing nothing but filing books. And a constant line of customers at the counter buying, buying -- to possibly reach the numbers we were told. Or twice the size of store or twice the sales price of
any store I know about. (When in fact, their trade policies were such that not much money would change hands in each trade.)
Remember...these are quiet towns, small towns, small amounts of money per transaction. Bend is a boom town compared to any of these places.
So...well, I always want to say, hey, we know what's in the realm of possibility. And what's just a whopper. Try telling it to someone who doesn't know better.
Anyway, more on our trip, later.
Monday, August 11, 2008
The King is dead, long live the King?
I don't care who Bendbubble2 is; I've always been more interested in the message. I alluded to the whole mess the day before yesterday.
What's most interesting to me is -- BB2 didn't have hs weekly rant up on Sunday.
Is he in hiding? Is he angry? Upset? Is he plotting his return? Or was this a stake in his heart?
With unseemly haste, Buster and Marge and a few others have already started a Bendbubble3 blog -- I guess they mean it to be a group blog, whatever that is. I'll be joining in the comments, if Paul-doh doesn't come back.
But...I expect him to return, one way or another.
I suppose if I ever flame out of the blogosphere, I'll probably do it loudly and with great fanfare. Something like, "You won't have Duncan to kick around anymore."
But...I think that having control over my own blog gives me a certain amount of comfort.
Anyway, I doubt Paul-doh is all that delicate. He could just proclaim who he is to the world, on a new blog, but he would have to be more restrained in language and tone -- but he could always start an alter-ego in the comments section.
If not....been nice knowing you, in the blogging sense.
The King is dead, long live the King.
Heading to 1000
Writing this blog has been easy. Full of the blarney.
I was writing a business journal before this, for several years. Partly because I'm so obsessive and repeat myself so much I figured I was driving my wife crazy.
So this was almost a seamless transition.
I find it harder to keep up the Pegasus Blog, possibly because I believe it needs content instead of me just blathering. And it hasn't become the habit. I often read other bloggers' alarm that so much time has passed between blogs, and I'm finding the same with the Pegasus Blog.
Whereas with this blog, I guess obsessive/compulsive wouldn't be too much of a reach.
Sunday, August 10, 2008
I gaze on these pictures and wonder, What are they thinking, right now?
Do they do the Tom DeLay thing and smile as if nothing's wrong? Do they scowl? Look bewildered?
One thing's for sure, there is some hard living going on.
To read the same crimes in a paragraph in the Bulletin is to read a denuded report. Pictures really do tell a thousand words.
I'm thinking -- is this like Dorian Gray, and their character is reflected in these pictures? Or would anyone look bad? Or, as I've read somewhere, some monsters just don't show it.
These aren't monsters, just people who somewhere along the line got addicted to something, most of them.
But I can't avert my eyes.
Oh, and either they have a buzz cut, most of them, or the wildest hair imaginable. Tough life, tough night.
The second finds are business blogs that are real. That is, they aren't just puffery.
Very few of these, understandably. My blog is a business blog because it's what I do for a living, and thus what I talk about. When I actually created a Pegasus Blog companion, I decided to keep it to the basics. Not as interesting, even to me.
I think it has a lot to do with personality. Don's Sunnyside blog tends to talk about his customers and employees in the most glowing way, probably because that is his focus. Lyle (Jake's) also tends to have a more humanistic approach rather than a business approach, which is also his manner.
I know that some of the most popular blogs locally and nationally are pretty innocuous, but I don't find them all that interesting.
I like Keeneye's blog about her pizza parlor in Baker City. But even her mild reactions to the craziness of customers has caused her problems.
One of my inspirations to this blog was a guy who started a comic shop back east. (Riot Comics). He immediately started making some strange decisions, but it was fascinating to me to watch him crash.
I have found a couple of business sites I like a lot. Calculated Risk is written in a very interesting way. I don't even agree with much of what they say, but I like the way they say it. And, as I've mentioned several other times, I love the KeyPoint Partners Retail Roundup. Some of the latest headlines: "More Shopper Spurning the Mall": "July Sales Flat as School Season Shopping Starts": "Retailers Pull Back, At a Cost": "July Sales Tough for Retailers."
I can't tell you how unusual it is to find a professional business site that is this honest. This is the business world I experience and see, not the puff pieces I see most everywhere else. They could just as easily aggregate only the good news (it seems about half and half, currently) and I really appreciate the opportunity to see that other retailers are -- in fact -- not all that far off from what's happening to me.
And of course, the local and national bubble blogs. Who would've ever thunk I'd be fascinated by real estate, or all things. As I've mentioned before, I enjoy a good rant, especially if it's creative and humorous; and we've got a couple of practitioners here that are both: Paul-do on Bendbubble2, and Bilbo/Busters comments on BB2. (I think Buster tries too hard on his own site, but let's loose on BB2.) I also think HBM is fairly brave on his Source blog. He's been more willing to take on local misdoings that I have, at times.
So there you have it. I'm pretty sure these are quirky favorites, and probably a little weird. Just like me.
Saturday, August 9, 2008
There are plenty of inoffensive blogs out there, nicey nicey blogs, flower blogs, blogs about dogs and cats and gardening and kids and food and babies and sewing and the weather.
I pass them by, mostly. I read a lot of local blogs for the news and mood. But only locally.
I like the rants, the riled up folk.
Well, except the political and religiously riled up folk. They get on my nerves.
But, you know, a good soul cleansing beef about traffic or getting a ticket for your unleashed dog? Hey, it's better to put your angst on the web than take it out on the street.
I started this blog with my own name without even thinking. I wasn't even aware that most bloggers were anonymous. But in hindsight, I couldn't have written this blog about a bookstore owner in Bend without outing myself.
There have been times when I haven't quite been able to say what I think. Or at least say it in the tone that first emerged from my fingers.
But overall, that's a good thing. It's made me think, reflect, and finding a less vile way of saying it. I have a tendency to get all verbally riled up, and spout, especially at the store. I'm sure I've had customers who thought I was off my rocker.
So it's not a bad thing for me to take the time to think about what I'm saying. I'm usually able to get the point across.
I've tried not to take this too seriously. My words are not golden. They aren't going to change the world.
I try to treat other blogs with the same distance. If I don't like something, I don't have to read it. But I'm not going to try and tell other people what they can read and not read.
At the same time that local blogs can be completely over the top, they've also been willing to tackle subjects that the local mainstream media either won't or can't deal with. There is a certain amount of truth in even the wildest, most offensive rants that simply isn't being talked about elsewhere.
And I don't think that aspect could exist without anonymity. Political correctness is an extremely strong force in our culture. Even 'negativity' is incorrect; which is pretty crazy if you ever want to solve any problems.
I've sidestepped the whole moral dilemma of being anonymous. It's as I've always said about lying -- if you tell the truth, you don't have to constantly try to remember what you said the last time. Besides, it just feels good and strong to be forthright and honest.
But sometimes I wish I could yet let it rip with a nice anonymous post.
Friday, August 8, 2008
Bad news, good news.
What's interesting to me, is that it's obvious the decline in restaurant dining started in August of 2007, just like my store.
Meanwhile, they're still debating on some of the money channels if we are in a recession.
Ask people in stores or restaurants if we are in a recession.
So the bad news is the downturn started in middle of 2007 instead of the beginning of 2008.
The good news is the downturn started in middle of 2007 instead of the beginning of 2008.
So we are six months further into the 7 year cycle than we thought.
Since I already have the title subject, I've come back to talk about the articles in the Bulletin today.
Good news, I guess, is that Bend income is slowly catching up to the rest of the state. Bad news, we're still about 10% less than either Portland or the national average.
Not sure how that fits with the idea that we have a bunch of rich, or retired folk around here.
And if I'm not mistaken, Bend living costs are way up there, equaling Portland.
I've always just kind of believed that Bend has an 'overlay' of rich and sophisticated. And the old rural center, and then just average folk. Not really sure there is much trickle down, either. At least not if the so called rich tighten their belts. (Even the rich don't like losing money.)
It's hard to see how Bend can maintain such high living costs and retail costs in the face of a faltering real estate economy.
Tourism is a minimum wage job. High tech? Splattered here and there through the landscape. What I mostly see is store after store after store.
Thursday, August 7, 2008
Meanwhile, over on the business section is this wonderful little article about Pennbrook, who apparently is defaulting on a gimmick of leasing back houses it sold. No good gimmick goes unpunished.
What I love is the detached air of the comments by Bauhofer, as though it has nothing to do with him: " We had a lease-back program on our project out at Eagle Crest," said Pennbrook founder Don Bauhofer. "With the downturn in the market, the company just ran out of money."
(Later in the article -- "...other Pennbrook companies, including Arrowood Development remain active." Wish I could do that -- sorry, I'm not paying the bills on that part of the store, but you can still buy from me in this part of the store.)
Here's a final comment that ought to be plastered on the foreheads of our city councilors for a day or two while they walk around, (INVENTORY GLUT). If they can manage that without embarrassment, then I give them their little gimmick. (Remember, no gimmick goes unpunished.)
"...when financing became more difficult and a lot of those buyers had to pull out of the market, and that precipitated an inventory glut," Bauhofer said. "The builders were left with a substantial number of units that had been built on presale."
Bauhofer says, "...he and other investers never expected the market's bottom to fall out. "It's a really unfortunate product of the market. You don't make an investment believing the value is going to go down.""
And apparently, if you make a legal commitment to pay the lease because of a gimmick and the house turns upside down, you walk away and let the courts thrash it out. How reassuring.
Wednesday, August 6, 2008
An ominous Trifecta
First, that Les Schwab has laid off workers, though they won't tell us how many. I've never heard of them doing that before. If ever there was a solid business based in Bend, it would be LS.
Secondly, Airport boardings in Redmond have dipped, for the first time since after 9/11.
Third, an article about commercial Real Estate vacancies in Bend. They inform us that Bend office vacancy is up by 5.9%, to a total of 13.5%. Sounds very precise, doesn't it? How do they reach this number?; by a local commercial real estate agent doing a phone survey.
A phone survey? By a real estate agent?
Yeah, that sounds like something to hang your hat on. I'm not doubting the honesty, just the method. Maybe it's accurate, I don't know. But it seems pretty amorphous.
And if I may add, as I always do, we are in the middle of our busiest season, with Christmas to finish off the last quarter. And then, in Bend at least, another 6 months of slow business. I'd like to see the lay of the land next spring....
This has all just started.
At least there is an acknowledgment of tough retail times. Bill Smith down at Old Mill is saying retail tenant sales are "off about 5 percent to 25 percent..." I think I've mentioned before, whenever someone gives me a range, I always assume the worser end of the two numbers.
Also interesting to me is that they are mentioning the tough lending situation for small business. Meanwhile, lending to build commercial space (malls, offices and hotels) are off even worse.
Nationwide, as I've mentioned before, lending is down 96% on the 75% of the lending done by a process known as CMBS (Commercial Mortgage Backed Securities.) Announced building is down more than 80% for the first half of 2009 from the first half of 2010.
And kudos's to them for mentioning that there was a commercial bubble that followed the housing bubble:
"There was a lot of speculative building fueled by cheap money," he (Darren Powderly, of Compass Commercial) said. "Now a lot of those buildings are coming online and tenants aren't there. That's where we're going to be for a while."
"In some cases, commercial real estate, which boomed later than the housing market, will follow the residential real estate on the way down...."
By that way, no one has mentioned the fact that Hotel building is having huge problems as well. I'll be very, very interested to see if that hotel on Franklin that has been announced, ever breaks ground.
Finally, here's a little something from the website "The Big Picture" to gnaw on. It's a partial list of retail and restaurants who have folded their tents recently.
Ann Taylor closing 117 stores nationwide
Bombay Company: to close all 384 U.S.-based Bombay Company stores. Cache, a women’s retailer is closing 20 to 23 stores this year
Disney Store owner has the right to close 98 stores.
Dillard's Inc. will close another six stores this year.
Eddie Bauer to close more stores after closing 27 stores in the first quarter
Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.
Foot Locker to close 140 stores
Gap Inc. closing 85 stores
Home Depot store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world's largest home improvement store chain has ever closed a flagship store.
J. C. Penney, Lowe's and Office Depot are all scaling back
Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide
Levitz - the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.
Macy's - 9 stores closed
Movie Gallery – video rental company plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.
Pacific Sunwear - 153 Demo stores closing
Pep Boys - 33 stores of auto parts supplier closing
Sprint Nextel - 125 retail locations to close with 4,000 employees following 5,000 layoffs last year
Talbots, J. Jill closing stores. Talbots will close all 78 of its kids and men's stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women's and J. Jill
Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.
Wilsons the Leather Experts – closing 158 stores
Zales, Piercing Pagoda plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.
I know Linens & Things just went belly up, and Steve & Barrys recently filed for bankruptcy protection and sale.
To which, I'd like to add some others, who are at least closing some stores: I can't vouch for this list, so take it with a grain of salt.
Starbucks: 616 stores
Cold Stone Creamery
Kirkland Home Decor
Tuesday, August 5, 2008
"Gossip is just news running ahead of itself..."
The rumor mill is grinding away steadily in Bend. On one hand, I love the gossip. Doing a blog is very conducive to gossip. Especially if the mainstream media in town isn't even willing to confirm some of the real news -- such as the suicides of local builders. We bloggers leap into the breach.
Some of it is silly, such as talking about 'mob hits'. But I'm assuming that kind of talk is just for effect and that the other bloggers don't really believe it. But the rumors enter in when at least one of these guys is said to have been going through a divorce....and I haven't heard it mentioned anywhere.
Which is more irresponsible -- to repeat information that isn't confirmed which you heard from the horses mouth and thus betraying trust? Or to repeat information that isn't in any way confirmed but feels true? Or to talk mysteriously about things you know or guess and come across as a big tease?
Yesterday I got a couple of search bings about a local, prominent restaurant closing. This was probably just fishing, but it makes me wonder if something is happening. See....I wouldn't be surprised. This is a place that would probably both surprise people because of its size and its splashy debut .... and not surprise others.
I have made myself a little inner list of 6 restaurants downtown that I don't think are going to survive the year. Probably more than a little bad karma in even making the list, much less saying it out loud. I want to be able to take the credit for being so prescient, to say "mark my words" and at the same time I don't want to be accused of helping the process along.
I'm being purposely oblique.
So why do I do it? Mostly it is my survival instinct, testing my perceptions against results. I had a list of 5 competitors that I had estimated wouldn't last 2 years, and that is exactly what happened. Again, I couldn't say it out loud. But I knew just from experience, from watching, that things were happening. Confirmation of my instincts just reinforces confidence in my instincts. What I couldn't know was the inner dynamics, the capital reserves the level of motivation and tenaciousness. Thus, the what I considered the weakest store lasted the longest.
I usually don't have any real inside knowledge. I just know things like -- level of business, local attitudes, tourist waves, overhead, profit margins, and so on. Put it all together and I can make a pretty good guess. For 90% of the businesses I look at, I don't have enough information. I hold back on making an opinion.
And I also have some overall theories about the size and demographics of the local population that definitely don't match the common perceptions.
Let me give you an example. I had a fairly famous guy in the store the other day. I tried to stay real casual, but just in our little conversation it was pretty much clear to me that he liked Bend because of the small town nature of it. And that he couldn't care less about fancy restaurants and jewelry stores and such.
Because, folks, where he came from little old Bend's "high-end" probably looks like a joke. He wants high end, he can get all the high end he could ever want where he works.
I extend that to all the supposed 'rich.' Which means, to me, that much of the high end in Bend is selling to the rich and famous wannabes....
I've just always believed that you should aim your store or restaurant for the somewhat humble but things starting to happen and nice stuff in a rural town and isn't it great atmosphere of say.....ten years ago. That was both appropriate for locals and visitors.
And in the last five years, we've really overshot that. Just driving around the west side, it's clear that we've completely overshot the amount of office and retail we really need.
Let me give you another example.
I believe that you could take any number of businesses that have opened in the last five years, and they would have been appropriate for Salem, Eugene, Medford or Portland.
But the same storefront probably would've done one third better business in Salem, Eugene, and Medford, and maybe half again better in Portland -- just because of population base and demographics, because of colleges and interstates and surrounding towns.
And I'd be willing to bet, nary a one of these new businesses really knew that.
I've been trying to say to folks that I think the last 4 years were nearly an illusion. That if and when we settle back down to reality, it will become clear to everyone that we overshot the mark.
We have two high end business districts in Bend, at least, the Old Mill and Old Downtown. The way I think it will play out is that the Old Mill will become the province of chainstores -- that it will become very difficult for locally owned businesses to survive there, because of both the size and cost of the storefronts.
Meanwhile, downtown will become the province of locally owned businesses, because I believe the chain stores have inner dymetrics about size and suitability of space and parking and so on that would preclude them coming. And this is also with the big caveat that the local landlords don't go too crazy on the rent increases.
Like I said, I don't really have any inside knowledge. Just what I observe from inside my store.
Monday, August 4, 2008
Outside the Box
So what would make Bend breeze through the housing bust and economic slowdown?
Believe me, I have many doubts, caveats and yes, buts....about the following, but brainstorming doesn't work if you let those in. Maybe in the comments. Suffice to say, I don't really believe any of the following.
1.) Watch the unemployment rate. If most people are keeping their jobs, than they are going to maybe cut back slightly but pretty much go on as usual.
2.) Rich people moving to town. Or maybe, just a continual flow of people with equity, opening businesses, settling in and enjoying themselves.
3.) Tourism. Not just the 'minimum wage' type tourism, but the kind that spends the big bucks on ski trips and golfing and rafting and everything else.
4.) Enough high tech or small businesses start-ups keep coming to keep the local economy afloat. For steps 2, 3 and 4 there is the thought that Bend is a pretty fabulous place to live.
5.) Corporate continues to come to Bend, and because they have a longer time line, they bridge the next couple of years with construction and jobs.
6.) A national recovery begins soon enough that we simply never have a chance to fall deeper than we already have.
Sunday, August 3, 2008
We beat last year, by .04%.
Several other months have been almost even, and a few have been absolutely awful.
We're down about 12% this year in sales; which for a corporation would be horrible and huge, but for a Mom and Pop business, not so much. Much more adaptable, we little guys. So much so that I don't consider anything less than 20% down to be harmful, as long as my spending is right. (Not fun, and somewhat discouraging, but not something that can't be handled.)
I keep hearing from others that sales are down about 25%; and I think if I had the same product mix as 2 years ago, I would be down that much too. Fortunately, new books and board games have been making up for the slack. Pat turned to me the other day and said, "We need more new books!" Sales are outstripping my ordering, which is a good sign but also dangerous. I don't need much encouragement to go crazy ordering. I'd like to see what the fall and spring bring us with new book sales....
We've made much more profit this year, by cutting our spending.
In the last couple of months, I've started buying again; but trying to be canny about it. This week's invoice, for instance, came in at a full 10% cheaper than last year's average. I'm probably averaging a good 5% better Cost of Goods this year. Part of this is not paying the huge 'reship' costs, and part is from looking for bargains. We're getting into the rhythm of buying on a 10-20 day delay, instead of a 2 to 10 day delay.
Got a call from a dealer in Texas who was thinking about adding used books. While giving him my sage advice, he casually mentioned how many comics he sells. Easily double what I sell. I'm always so frustrated by that. I think I've got a well stocked store, and yet I've never been able to get comics more than 2/3rds of the level I think they should be. His rent was less than 1.00 a foot; mine is well over double, almost triple his, per foot, and likely to go up.
Oh, well. I live in paradise, right? I have the best minimum wage job in Bend a middle aged guy could ever have, right?
Finally, I can't help but comment on the "3 builders" article in today's Bulletin.
I hope that what they are saying for public consumption isn't what they are really thinking. They are projecting 'best case' scenario's which I think are wildly optimistic. In fact, the scenario that one of the builders said would create more problems for him -- his 'worst case' -- seems to me to be a certainty. Based on what has happened in California and Florida, I think two years is too short a time, especially if they time it from mid-2006. (Sure isn't what they were saying in mid-2006.)
So mid-2007 is a more realistic date to when they started to get religion. And I believe a two to three year slide from there, a bump along the bottom for another year or two, and maybe a 2 year slow rise. More a 6 to 7 year process before they can really cash in on surviving.
At least, that's what I'd be planning for, if I were them. And a middle scenario of 3 to 4 years. High, middle and low. That's the way to plan for contingencies.
Planning your business on the absolute best case is a dangerous, dangerous thing to do. I'll assume that they have some brains and are only saying this out loud, and meanwhile planning for a more dire scenario.