Staying Alive: What It Takes to Be a Thriving Neighborhood Business

‘Small Business’ doesn’t mean ‘Small Town’

by Eric Jay Toll

Zola Bells Vintage Emporium-4“There’s almost nothing like the moment you’re able to take home your first paycheck from the store,” Amy Wulfert reminisces. She’s talking at the front desk in Hair of the Dog, a dog-grooming parlor in Scottsdale. “It took me about three years to get to that point. Three years of hard work, being there every day, and working with a good staff.”

The neighborhood shopping center Hair of the Dog calls home is an L-shaped complex anchored by Safeway. Several empty bays dot the property, but the corner of the L where Amy hangs an “Open” sign five mornings a week is fully rented.

“The recession hit neighborhood centers hard. It hit major retailers hard,” says Stan Sanchez, president of De Rito Partners, a Phoenix-based real estate company that sells, leases, buys and develops commercial centers. “The small, local retail business can succeed if it fits into the new market.” Small business accounts for 97 percent of businesses in Arizona, with retail making up $32 billion of the $60.5 billion in state sales activity. Retail sales are up 9.9 percent over fiscal year 2012-13.

Destination and Errand Businesses

 High-PointAccording to Sanchez, there are, essentially, two types of local retailers who are going to thrive regardless of Internet shopping. “These are going to be the everyday uses that people can’t live without,” he says. “They are stores people visit on the way to someplace else or are the shopper’s ultimate destination. People are not going to order sandwiches from Amazon.”

Knowing whether the shop is an “errand stop” — such as a dry cleaner or certain specialty retailers — or “destination” — such as a restaurant, grocery, gym or styling salon — makes all the difference. “A retailer has to know why customers come through the door,” says Robyn Young, spokesman for RED Development, which has developed and manages several shopping centers around the country. Although not every business fits perfectly into one category or the other, she believes a business owner has to decide whether his or her store is the reason people come to the neighborhood center or coming to the center gives a reason to shop the store while running other errands.

Humble Pie Pizza Wine & Spirits intended to be a destination specifically for people living in a given neighborhood. “We wanted to be a place people could go for a quality meal at a modest price any time they wanted. We did not want to be a ‘special occasion,’” is how Rich Sullivan, one of the partners, describes the concept behind the locally-based chain.

Situated in a location with a large number of locally owned businesses, Carter’s Men’s Clothing in Phoenix is both a destination and an errand store. “We’re the traditional men’s clothing store,” explains Michael Carter, owner. “That’s why I opened in an old-fashioned neighborhood center.” Camelback Village at 44th Street and Camelback is a place where people go to mix and match errands, he says, noting that people stop in one or more of the shops on the same trip.

The Right Location

Sanchez says knowing the business’s customers and business type — errand or destination — plays the major role in picking a location. “As a destination business, you want an identifiable location people can find and places they can park,” he says, noting the importance of parking, convenience and visibility. “If you’re an errand business for multitasking customers, you want to be in a location with a strong anchor people regularly visit.” Even more specifically, Young suggests an errand business “pick a location near the destination people come to the center to shop.”

Pink-House“If I had known that nine years ago when I opened, I might be in a different location — but I was more wholesale than retail then,” shares Shaun Breese, owner of Urban Cookies Bakeshop in Phoenix. “It’s important for a location to be convenient and easy for customers.” The Valley is filled with neighborhood centers and a lot of parking. Breese says her location is set back from the street and lacks good signage. These are considerations she’d have weighed differently were she opening today.

Bill Hallstrom, owner of Billy’s Cleaners, and Wulfert run businesses that serve errand shoppers. “My customers drop off their pets and then go shopping at the Safeway or head to the [U-Fit] gym,” Wulfert says. “Usually, I’m not the reason they come to the shopping center; I’m one of the errands.” Her location has high visibility from anchors Safeway and YouFit. She’s close to Dollar Tree. Billy’s Cleaners, on Bell Road at Tatum Boulevard in Phoenix, takes an end cap facing Tatum with easy in-out to the neighborhood center.

Humble Pie and Urban Cookies Bakeshop, on the other hand, are destinations. Humble Pie locations are highly visible, either end caps or free-standing. The sites feature close-in parking and easy street access.

Landlords Want Shops to Thrive

“We put a lot of effort into working with our tenants to help them succeed,” points out Young. “That can mean working closely with tenant improvements, marketing and helping find the right location. When we made major changes to Town & Country [on Camelback in Phoenix], we actually moved tenants around to get them better locations.”

De Rito and RED look for a balanced mix of tenants. They know they need businesses that will draw customers to the shopping center. The landlords also want businesses that people will shop once they are at the neighborhood center. 

De Rito is focusing its neighborhood center acquisition and development around the strongest neighborhood anchor, a grocery store. “We believe that people need to shop for food at convenient locations,” Sanchez says. “Then we want retailers at the center who will be stops when people go for groceries.”

“Food stores are really strong anchors in Phoenix,” Young reports. “Not only the Whole Foods general grocery, but specialty food stores like Trader Joe’s and Sprouts. They help bring traffic other stores can use.”

It’s more than just food stores. “Restaurants are a major part of the mix today,” she continues. “We have a team dedicated to putting a mix of breakfast, lunch and dinner restaurants in our properties. This helps drive traffic all day and into the night. It makes our shopping centers destinations.”

Knowing Customers as Individuals

“What I love most about my business is greeting customers when they come in the door,” shares Hallstrom. He believes it is important a business owner be there as much as possible because he or she is passionate about the business and the customers feel that passion.

“I remember my customers’ names,” relates Wulfert. “More important, I remember the dogs’ names.” That personal connection brings customers back again and again. For a small retailer, the repeat traffic is essential because it’s easier to increase sales from existing customers than it is to attract new ones.

“I grew up in Phoenix, went to high school here, and graduated from [Arizona State University]. I know the people in my neighborhood,” Carter says. The clothing store often has customers come in to talk sports or neighborhood news. Carter says this comes from his active involvement in area schools and organizations.

As a business owner, “it’s so important to share your passion with your customers,” says Breese. “You and all your employees need to come across the counter and connect with customers.” A small shop is missing the big advertising budget, so personal service leads to happy customers and high ratings on social media sites.

Involvement Is Marketing

“We struggled during the recession, but we’re still here for a number of reasons.” Carter, laying out a small retailer’s marketing strategy, says, “If you’re in a neighborhood center, you’re a neighborhood business. Get to know the other owners and your customers.”

“Recently, one of my employees called in sick. I ended up working the counter in the store for the first time in a long time. It was a great day,” Breese recalls. “My husband and kids were in the store, too. That doesn’t happen often any more. Customers were glad to see me and it reminded me of how important it is for me to be interacting with customers regularly.”

Breese is heavily involved in social media. “I watch our customer comments, and when I see something negative, I jump on it right away. People are surprised when the owner calls to ask them how they can make up for not meeting expectations.”

Social media can require significant time investments. Wulfert and Carter don’t spend much time on social media, focusing instead on quality customer service and high levels of personal service. The success of a store is built one customer at a time. Sullivan and his partners work closely with the management team and the staff to instill the importance of being part of the neighborhood. In fact, many of the business owners interviewed for this article spoke of how being a contributing member of the neighborhood makes the difference in business success when times are slow.

Knowing Customers, Knowing Business

“Before I opened my doors,” Hallstrom recounts, “I knew my customers. I knew who they were, where they live and work, and why they will shop my store.” He recommends mentoring. “I was in this business for years and learned from others before opening Billy’s.”

“We signed up for mentoring from APS,” confides Breese, referring to APS’s Academy for the Advancement of Small, Minority- and Women-Owned Enterprises, one of several mentoring programs available to local small businesses. “The most important lesson we learned from the program has never left us: Understand the financials.” Observing that many store owners rely on the bookkeeper or accountant to put the profit and loss statement together, she says, “Know how to read profit and loss statements, and do it every day. There isn’t a single decision we make without consulting how it affects our financials. We talk about money every day. I share it with employees so they understand that if the customer count drops a little bit, it has a big impact.” 

The money aspect plays into site selection as well. “As we branch out, we look very closely at the neighborhood where we’re going to open. We look for population density, market demographics,” says Sullivan. “We want to be in a place where people live, not just sleep there.” 

“When I decided to leave my 25-year career as a legal secretary and open Hair of the Dog, I knew I wanted to have a Scottsdale address,” explains Wulfert. “I also wanted the shop close to where I live, because I know the people in the area and I wanted to be convenient, essentially, to my neighbors and friends.”

Living near the business has an additional benefit cited by many shopkeepers. The long hours and hard work aren’t compounded by long commute times, they note, and it is easier to get to the business when needed.

Passion and Passionate Employees

“I’d like to think that everyone who has ever worked for me moved on having learned something about business that contributed to their success,” Carter says, counting off the long list of ASU students who started working in his store. “You can’t shirk training.”

At Humble Pie, Sullivan and his management team take one additional step. “We prefer to hire workers who live in the neighborhood. We want them to know the people.” Sullivan believes in chemistry between the shopkeeper, those who work in the store and the customer. A bad experience with a clerk can chase a loyal customer to competition.

“Sometimes, it’s the little things that keep you up at night,” Breese confides. “The sales staff in front are just as important to the store’s success as the bakers in back. A hiring decision should not be made lightly.”

Just because the job is part-time and minimum-wage does not mean that an effort to recruit quality employees can be set aside. When the owner is not in the store, that part-time, minimum-wage clerk is the owner as far as a customer is concerned.

Wulfert says she checks references and makes sure her hires like dealing with customers and love dogs. “I think my biggest edge over competition is that my customers can tell that we love dogs as much as they do,” she says.

Before the popularity of social media and store-review sites, poor customer service used to mean one customer walking away and telling a dozen people the bad experience. Today, poor customer service is transmitted to thousands instantly on sites like Yelp, Twitter and other social media networks. Each employee needs to understand how actions can affect the store’s very survival.

“It’s all a lot of hard work, but in the end it’s worth it,” says Wulfert. “I learned to listen to my customers because they teach me a lot about what I can do better to serve them. And when I’m serving my customers, they keep coming back, and that’s what made my business succeed.”

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