SUMMIT FEVER

I may have overreached a bit, this Christmas. I was so close to completely stocking my store, in every category, that I went for it. But I think I may have gotten a little ahead of the actual level of business.

I'm not sorry I did it. The store is extremely satisfying to me, right now. I know what I've accomplished. It will be much easier to maintain the current levels, then it was to build to these levels. There are still small improvements to be made, there are always new products being offered, but there isn't a section in the store that I've had to delay fixing up.

I've done fixed them.

However, I've known from past expansions that it usually takes 6 months before we really start to see the benefits.

Christmas has been slow so far. I don't find myself surprised. I usually try to make a bit of extra profit at Christmas, because I need that money to cover the cash-flow for the much slower, Jan. through June period. My attitude is actually pretty good, considering that sales are nowhere near what I envisioned them.

It just means I'll have to be more careful about my budgeting next year, but that should be much, much easier with the store fully inventoried. I had an image in my mind 23 years ago of the store that I wanted, and if anything, I've surpassed that. The trade-0ff of the satisfaction of a job well done, versus actually making money, is one I'm always struggling with. I always tell myself that I'll try to make money next year, but right now,
I'd like to start carrying.....say....new books. And there goes my profits for another 6 months.

But I prefer having too many options than not having any options. There was a time in the mid to late 90's when every single product line in my store went down in sales, month after month. There wasn't a thing I could do about it. I looked around for product to replace the falling product, and there wasn't anything I could find that fit my store. It was a scary time as sales got closer and closer to my break-even point.

The store I have now is a reaction to the helpless feeling I had at that time. I have one main product line, where I try to have just about everything (comics and graphic novels), and then I have a bunch of products where I have tried to have almost everything. (sports cards, toys, games, anime, manga, used books, new books, art books.)

I used to tell myself that there was never a finishing line, that I would never get all the way to the summit. But, you know what, I feel in some ways that I have indeed reached to top of my capabilities.

I've also reached a physical limit. There simply isn't a sq. ft. in the store that isn't being used. So, from now on, I keep my eyes open for anything new, I refresh every category with new product, be certain to replace the 'evergreen' product, and look for opportunities and bargains. Every category can be incrimentally improved, of course. But I'm very proud of my store right now, and when I walk in every morning, I feel a great satisfaction.

SMALL TOWN/BIG TOWN

I don't want anyone to think I'm totally anti-growth. As I've said before, I couldn't have the store I currently have if Bend was still the small town it was when I started. The store, to me at least, is much more varied and cosmopolitan and interesting than the side street nerdy store of 20 years ago.

But there is good growth and bad growth. I believe that the first couple of waves of newcomers to Bend, adapted to the town. They slowed down a bit, dressed down a bit, appreciated what was here. They didn't have to numbers to overcome the small town ethos, and I don't think they had the inclination.

If there was a golden age for local business, it was around 1990. We had clawed our way back from the devastation of the Raygun recession. Little did we know that Walmart and Target and the Outlet Malls and Fred Meyer and Shopko and a seemingly every other big box chain was about to stomp into town.

I liken us small businesses to the mammals in the age of dinosaurs. It isn't so much that we are being hunted, as that the big thrashing dinosaurs might squash us without noticing. We run from niche to niche, hoping to survive.

One of the more astonishing things I ever heard from a tourist was; "I can now move to Bend because you have a Pier One Imports." Huh? Don't they have one of those where you came from? If you drew a curtain around the Forum shopping center, so that you couldn't see Pilot Butter or the Cascades, could you really tell where it was?

So the latter, bigger wave of newcomers totally overwhelmed us. They brought their attitudes and expectations with them, and expected us to adapt to them.

But they also brought numbers and money.

On the other hand, small towns also have their drawbacks. At the peak of the golden age, I had expanded to 4 stores. One in Sisters, one in Redmond, one in the Mountain View Mall, and the one in downtown Bend.

When we first opened in Sisters and Redmond, we were welcomed. People seemed glad to see us. But, even though the sales were barely sustainable even when I had the monopoly, I immediately had competition, opening across the street or just down the street. Suddenly, to the small town mentality of Redmond and Sisters, I was the 'big' Bend store, a carpet-bagger, while my competition was a local, who attended the same church, who's kids attended the same schools.

I put up with that for awhile, and then just left. The competition folded within months, and I spent the next 5 years listening to my former customers asking up to come back. But I learned my lesson.

Smaller towns get just as much competition as bigger towns, if not more. And in a smaller town, one cliche of customers can put you out of business overnight if they decide en masse to go to the other guy.

There is a safety in numbers. One wave of customers leaves, another wave shows up. You don't have to please everyone; just do your job and trust that enough people will appreciate it.

I went from the small town expectation of needing to sell to almost everyone who came in the door and to needing to be almost the sole provider of niche product -- to being one among many, to NOT expecting to sell to most people who come in the door. But...enough people are coming in the door to make us viable. I know that some retailers prefer a small group of dedicated, loyal, hardcore customers, but I prefer a much larger group of customers, dedicated and loyal if possible, but I don't mind the occasional, casual customer either.

How did this come to pass? How did we end up with a town that has new houses built into every crevice, every commercial building quadrupiling in size, huge big box stores offering everything we never needed, apartment buildings spilling into the street?

I'm no expert on the legal mechanisms that might have been employed to slow down growth. Because it never really mattered. There was never any political WILL to slow growth, control growth, much less stop growth. I don't believe a serious anti-growth candidate could be elected, even now. We've had plenty of chances.

Well, if you were here in 1980, you'd know why.

When I went off to college in the mid 70's Bend was still a sleepy little town. But every time I came home for the holiday's, it seemed like there was another growth spurt. First one mall was built, then almost immediately, a second mall. New subdivisions sprang up. We got our own bookstore, finally, and really hit the big time with our very own T.V. station! A sewer system was installed. A kind of mini boom that didn't seem mini at the time.

And then the Reagon was elected, Paul Volcker jacked up interest rates to try to stop inflation. Bend spiraled into more of a depression than a recession. All the construction jobs dried up. We had a full ten year span from 1982 to 1992 when no new major retail came to town, very little building went on. The new malls never reached profitability, the downtown emptied out.

I swear there were FOR SALE signs, or a u-haul in the driveway, of every other house.

It was bad.

While the rest of the country had "Morning in America", Bend had poverty with a view. I don't believe I really felt we had even gotten back to square one until the very late eighties.

So when signs of life began to appear in the early nineties, no one was in a mood to try to slow it down. We were hoping for more. When building sped up in the mid-90's, we were all hoping it would continue.

Looking back, the time to step back and take a breath would've been around then. Before Walmart and Target flattened the terrain and they put in their cheapest, ugliest versions of big box.

But we still didn't trust that it would continue. We kept cheering for growth, until that day when we realized that it took twice as long to get across town as it used to, until one too many S.U.V.'s cut us off in traffic, until Masterston's Hardware was replaced not only by Home Depot, but also Lowes; until Cascade Stationary was displaced not only by Staples, but by Office Max, until it tipped over into ridiculously over-retailed.

The door to growth hadn't just been pried open, as we'd struggled to do for years, but kicked open and blown off its hinges.

So we find ourselves where we are today.

THE CHANGING FACE OF DOWNTOWN

The article in the Bulletin showed up in today's paper. I was quoted for a few paragraphs, (and she mentions this blog!), which is about what I expected. Of course, what I actually said was much more extensive and some ways nuanced.

I have to quibble with the first paragraph my store is mentioned: "Duncan McGeary has owned Pegasus Books in downtown Bend since 1984. At that time, the Minnesota Avenue surroundings lacked the clusters of funky businesses that fill the old buildings today."

Actually, what I tried to say is that my little corner of downtown used to HAVE the funky businesses; such as Masterson St. Clair Hardware, the The Sole Shop, etc. Where the misunderstanding comes in probably is that it wasn't a strong retail part of downtown, but more a mix of service and retail. But the area around the corner of Bond and Minnesota did change to a more funky retail mix over the last 20 years. The problem, I tried to point out, is that the funky retail IS being replaced by high end dress shops and jewelry stores and home furnishings and art galleries. The funk factor is what I was talking about in my first entries on this blog.

What I tried to say was that there is both good and bad in the changes downtown. That the store I currently own wouldn't have survived in the downtown Bend of 10 or 15 years ago; that I've tried to adapt my store to the current environment. But it is a natural event, and inevitable. The rugged individualists, the risk-takers, are gone, replaced by people who are, well, almost by definition, followers. That is a completely different mindset. Meanwhile, like weeds, the bo ho crowd will move somewhere else.

There are three separate issues.

1.) Lifestyle. Obviously, a block that contains a hardware store, a shoe repair shop, an engraving store, a bike shop, and a comic shop has a completely different flavor from a block that contains the ubiquitous high end furnishings shop, a high end dress shop, a high end jewelry store and art galleries. The very funkiness that attracted people to downtown is being lost. I hear the comment from locals all the time, "I don't shop downtown because it is too expensive..." True, or not, that is the perception.

2.) Architecture. When every building is built in a faux 'craftsmans' syle, instead of an eclectic mix of styles, old and new, then the look become homogenized. And to me boring and tasteless. When every single story building is replaced by 3, 4 and 5 story buildings, the 'small town' atmosphere is obviously lost. (Not to mention the sunlight.)

3.) The economics. Rents look to be getting way too high. I will stake 26 years of experience in downtown Bend to say this: if you rent any space in downtown Bend for 2.50 a foot, (plus triple net, which is the equivelent of another .25 to .75 a foot) it will be extremely difficult for you to make money. Period.

The landlords have a choice of sustaining viable long-term businesses at reasonable rents, or they can encourage mayfly-type, here today, gone tomorrow businesses, at the rents that are being quoted. (Yes, they may fill the spots, but not for long. Being an equity sink with constant turnover can't be healthy.)

In the long run, reality will set in. If rents are too high, spaces will stay unrented. Or the shops will split in the middle of the night owing months of rent, or it will become obvious to everyone that even though most spaces are rented, the turnover rate makes it a killing zone.

We are in a dangerous time, here, because I think reality is on its way, but it may take a few years. I'm afraid we are going to lose alot of viable business before the right equilibrium is established. I hope the landlords will be smart enough to be flexible with the few long-term businesses that are left, or downtown Bend will turn into nothing but a tourist trap, and that would be a shame.

ADDED LATER:

I thought I should explain why even the slightest increase in rent can be significant for a small business, just so's you know we aren't just a bunch of complainers.

Specialty stores, by their very natures, need higher profit margins. We don't ordinarily sell by volume, but by specialness, therefore every sale counts. But in the a retail world dominated by mass market discounters, it can be very, very difficult to maintain your margins. Sure, you try to offer more service, selection, knowledge, etc. but PRICE is king. Always was, always will be, despite what the consumer might say.

I was told early on that I would need about a 40% markup to stay in business, and I have found this to be generally true. But over the last few years, as my product has begun to show up more and more in the mass market, the margins on many of my items has dropped to more like 30 - 35%. (This is not counting the stuff damaged, stolen, or that just sits on the shelf and never sells.) At the same time, all expenses in Bend have risen, until we are one of the most expensive places in Oregon.

So the landlord raises your rent 1.00, and adds a .35 triple net. On a thousand square foot space, that would be 1350.00 more in rent. That's pretty hard to take, but in reality you need to make 1350.00 divided by your profit margin. So if your margin is 35%, you need to earn 3857.14 more per month, of 128.57 more each and every day of the month.

Believe me, if I knew where to make another 128.57 a day, I'd be doing it. And that figure seems even more intimidating on a cold, snowy, wet blustery Tuesday in February, when you've had 5 people in the door all day.

So, you say, it must be that the higher end stores must sell more, or make higher margins? Why? Margins are always close to edge of survivability or someone else will come along and be cheaper than you. Selling more? At higher prices? Maybe. But I suspect that they sell more at higher prices, LESS OFTEN. So it evens out. The higher the cost of inventory, the more risk. There just isn't any free lunch, and I haven't noticed that higher end stores last any longer than your average funky store. In fact, the opposite. Most businesses that I have seen survive downtown over the LONG run have been modest business, with nice but not overly expensive product. I have seen a huge number of 'high end' business come and go.

OUR GROWTH, YOUR GROWTH

The subject of growth and change often comes up in conversations with tourists. They will almost always nod their head knowingly, and say; "It's happening where I come from, too."

Well, no. Not at the pace that Bend has seen. While growth and change are happening throughout America, very few places have gone through what Bend has gone through.

Yesterday, I had a young family come in and say, "We asked all over town, where are you located! We asked five different people on Wall Street, and none of them knew!"

How can that be? How could a store, which has been in the same location for 25 years, become lost? It's not like downtown Bend is Siberia, and our store is located almost smack dab in the middle of all the new development.

When we first purchased the store, we were fairly unknown. 10 years later, after a sport card boom, and a comic boom, it seemed as though everyone in town knew who we were. I couldn't walk down the street without someone yelling, "PEGASUS!" That was followed by hordes of customers buying beanie babies, magic, pogs, etc.

Yet 10 years after that
it seems like no one knows where we are again.

The Bulletin published a statistic that sort of explains it; 75% of all residents of Bend have been here less than 5 years. And since that was published a few years ago, that percentage has probably gone up.

At what point is it the responsibility of a newcomer, to acquaint themselves with their chosen hometown? I've taken to pulling out the phone book and saying in a folksy voice, "Hey, they have this newfangled invention called the Yellow Pages where you can actually look up businesses! And if that is too retro for you, they have this magical thing called Google!"

Sometimes I sort of test the customer: Do you know where the Pine Tavern is? Have you ever been to Dandy's resturant? Have you been to the top of Pilot Butte? Do you know the streets, Greenwood, Franklin, Division, Newport? I'm fascinated by the lack of knowledge. Why do they bother to live here? Is it like when I lived in Eugene for a few years after college, but never read the newspaper because I knew I wasn't going to stay? Are these newcomers actually a transient population, how deep are they going to plant their roots?

Now some could say, it is YOUR responsibility, through advertising, or marketing, or promotions, to let people know you are here, and I wouldn't argue. (Though I have my doubts about the effectiveness of advertising, especially for niche businesses.)

But at some point, I think a civic duty on the part of any resident to try to get to know their town.

Don't you think?

Finally woke up on a morning, without feeling like my tail is dragging. 3 nights of moving fixtures and putting up shelving really knocked the stuffing out of me. The store looks great, and I'm hoping that I'm finished with all the changes for awhile.

Used to be, I'd routinely put that much physical labor into the store, and it would hardly affect me. Which brings me in a roundabout way to the title of this blog -- the 'best job' part and the 'middle aged' part, and the 'minimum wage' part.

Most of my regular customers are 15 to 25 years younger than I am. Ironically, that was true when I started at 31 years old, still true now that I'm 54 years old, and I'm suspecting that I'll be a 64 year old guy selling comics to 45 year olds.

Just really don't see kids buying comics (or books) these days. Kids are pretty much the same as they were when I started, except for that one thing. For a person who can no more imagine not reading than I can not breathing, it seems very strange. One of these days I'd like to talk about why I think kids don't read (video games!), but back to the age thing.

So in some ways, by constantly talking to customers younger than me, I've never really felt my age. (I know that's a cliche.) I'm very up on pop culture, not just because of my business, but because it's my inclination. Let's face it, I'm a nerd. If I could go back to my high school days, I'd tell my younger self; "Embrace you're inner nerdism! Quit trying to be different, you can't NOT be different."

So in a way, my store has become my little clubhouse. Those people who like what I'm doing, come back, those that don't, don't. As I've matured, I've tried to broaden the appeal of the store...after all, I've always been interested lots of things, not just the nerdy things. My eyes glaze over at most talk about super-hero's, or Star Trek, or someone's D & D game, but I love to talk about who might be the best current writer who carries on the tradition of Dashiel Hammett, or Raymond Chandler, or whether the new James Bond movie is the closest to the book. Politics, religion, books, movies, comics, business, all are fair game for discussion.

So I enjoy my store. I figured out early on that there are only two reasons to own a business -- for the fun, or for the money. If you aren't getting either, then look for something else.

I've always had fun, if nothing else I've enjoyed being in charge of my own destiny. But it is easy to accept a minimum wage when you are 34 years old, it's a little annoying to still be making minimum wage at 44, but at 54 for it starts to become alarming.

It is possible to live pretty close to a middle class life at minimum wage, if your wife is also earning an income, if you live very, very modestly. We lucked out and were able to put a down payment on a house a few years ago, just before the current run-up on prices. I drive a 1990 Toyota, my wife drives a 91 Toyota. We don't eat out, our recreation is walking, Luckily, my reading and entertainment are pretty much taken care of. I'm really not complaining.

Thing is, the store has always had tons of potential. If such and such happened, if things went right for that amount of time, and so on....The store STILL has tons of potential. There is money to be made, and if it isn't being made, it's because of choices I'm making. I'm still hoping I'm won't be a 64 year old earning minimum wage. But I'm willing to take the chance. because of the "BEST JOB" part.

I decided going in, that I wouldn't talk about the daily ups and downs of sales. Or the every day aggravations. But, to not talk about them, at least a little bit, isn't being candid or honest, either.

Yesterday, my main weekly shipment from my main supplier didn't show up. Bad enough, followed by the trepidation that it may not show up today either. So, my regular crew, the most loyal customers who come in every Wednesday, found nothing on their shelves. I usually have a 20% off sale on days like these, but the faithful regulars usually already know what they want and are willing to buy it, discount or not.

Meanwhile, my employee, who I schedule for extra hours on shipping days, is mostly standing around, and I have to bring him in on his day off, today. We lose a day of sales, pretty much.
It seems to happen every Christmas, just when we need to make money the most.

I figure there are probably temps working at the printers, the distributers, the shipping companies......in other words, all the way through the system. The wonderful, cheap American economy has the weakest links in the system at the most stressful time, because the wonderful, cheap American economy doesn't want to pay experienced, qualified employees full time.

The public seems to want the cheapest prices, at the same time as they want: helpful, experienced, knowledgeable employees. The two things are probably mutually exclusive, wouldn't you think?