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Expanding To Two StoresPremium Member
Posted By: dgsilva on 7/26/2006 11:34 AM (CST) 250 Points
We are a small ($2M revenues) retail sewing machine sales, service, training and support products store at one location. We are in the top five single store locations for this brand nationally. We are opening a second store approximately 10 miles away with about the same retail space but a different look. How much should we duplicate the second store off of the first store? We are trying not to use a cookie cutter approach. We do not plan additional further expansion of stores. Any suggestions?

Posted by: jusedom2 Accepted Answer
7/26/2006 11:58 AM (CST)
Don,

Congratulations on the growth. If your success has allowed you the opportunity to expand your business, then why not duplicate it. You'll want to improve some or all of the things that you don't like about your current location, but there are a number of benefits of maintaining your existing layout. It makes it easy on those customers who may visit both locations and it makes it easier on any staff that may work at either location. There are other reasons but these are two of the major reasons why using a "cookie cutter" may be a good idea. On the other hand, if your current location get's lots of complaints from customers and staff about the layout, use the complaints to make the new location a great place. Best of luck.
 
Posted by: wnelson Accepted Answer
7/26/2006 12:18 PM (CST)
Don,

I assume that you are opening the second store to attract a different set of customers that the first store couldn't because of location? I am also assuming that you have adquate research to support that this second store is indeed in the right location such that profits from NEW SALES minus CANNIBALIZED SALES (those sales that simply move to the new store from the old one) pays for the cost of the new store? And that the 10 mile difference is far enough to support this notion?

Well, anyway, if your aim is to hit a different set of customers from the first, what's the difference if the stores are identical or not? Your aim is for neither set of customers to overlap - right? So no one will know if you "cookie cuttered" it or not. If the formula/layout for the existing store works why would you want to reinvent? This would take both time and money - which are precious resources for you and better spent on other things, I would presume.

On the other hand, if there are things you want to "fix" concerning the layout/look of the existing store - now's your time to do it. Also, you can experiment with new ideas - try them in the new store and then if you like them, implement them in the existing store. If they don't work, drop back to what works from the exisiting store.

If, however, you are offering something different for customers in the new store - addressing a different segment (other than geography - for instance, a higher economic level, different age group, etc.) - then changing the store to something more attractive to the new segment is warranted.

So, in summary, if you are trying to attract a similar demographic but from a different geography, copy what works. If you are trying to attract a different demographic, make the store fit the demographics.

I hope this helps.

Wayde
 
Posted by: dgsilva Author Response
7/26/2006 12:20 PM (CST)
John,
thanks for your response. We have done it right over the past 26 years so the main store is a destination location. We thought giving the customers something different would attract them to the new store and not just a closer place to take their business. Your advice is well taken and we will think about just how much we will duplicqate the new operation.
 
Posted by: dgsilva Author Response
7/26/2006 12:25 PM (CST)
Wayde,

Thanks for your input.

I think the answer is both. We are trying to attract the same demographic but at a different location and attract new demographics. The trick may be balancing these two segments. Sounds like a bit of both but mostly a lot of the main store is the way to go.
 
Posted by: wnelson Accepted Answer
7/26/2006 12:38 PM (CST)
Giving them something different so they move from your first store to you new one...sounds like a waste. Unless you are trying to attract customers who have left your store for the competition. Then, they are not "existing customers" but fall more in the category of "new customers" with different demographics or needs. So if you believe you lost customers or failed to capture customers because of the look and feel of the existing store, make appropriate changes to attract them in. Since ultimately, you have one store, you need to decide what demographic to appeal to and go with it. If you water it down such that it has elements of everything - leaving it up to the customers to find their particular fit, it attracts no one.

Wayde
 
Posted by: Frank Hurtte Accepted Answer
7/26/2006 1:22 PM (CST)
I would suggest you keep it as close to the same as possible... The population is beginning to expect this in stores. I can think of nothing worse than one of your customers saying... I would go to the new store except they just don't have the same ...xxx.

A possible exception is with training, lesson space. I believe training and lessons will be a bigger market in the future because of the aging baby bombers wanting to expand their hobbys. Yours fits into that category.
 
Posted by: kpalmer Accepted Answer
7/26/2006 2:28 PM (CST)
I can add something . . .

What if you were to flip the product mix % exactly opposite to what you have in the existing store?

You'd have the same basic store, but may encounter significant growth in areas where you main store cannot.

For instance, if training is not that big at the main store, and there is an emphasis on training at the second location, you may see a benefit of incorporating more trainers and grab some efficiencies from the labour component - as you'll now have theoretically more training going on and can split the costs of software, equipment, labor etc. by more revenues.

The key is not to obviously divide the same revenue between two cost centres.

But imagine for a second if you have 5 trainers at the present location - 5 wages, 5 benefits, 5 offices, 5 computers, etc. By moving all the training into the other facility, you'll more than likely have less equipment, better dedication to training and enrich the customer's training from the main store...plus - you'll free up that space in the main store to do more retailing and the other things that you do.

If it works, a third store could conceivably look after repairs and maintenance and operate as a satellite store in a lower priced retail area of the City you are in. Again, you'd have more room to sell more retail at the primary facility, would have maximized the training rooms at facility #2 and would provide room for the technicians to do their thing - void of the ugly scopes, tools and all the other things that technicians love to play with.

Someone once said: "If you can't buy it, you shouldn't see it" referring of course to the Mom and Pop retail shops that have all types of things on the counters, papers and stuff all over and equipment on display that they'd use to produce a "good or service".

To summarize: if training occupies 25%, service 25%, retail 50% in the current building - why not try training 50%, service 25% and retail 25% in the new location? The new mix would offer the new customers something different, would benefit your company from less duplication of equipment AND would pave the way to move repairs out of high cost retail space and into lower cost warehouse type space in the future.


Just a thought, don't know if it makes any sense.
 
Posted by: DR Hitch* Accepted Answer
7/26/2006 4:24 PM (CST)
I agree with kpalmer,

would your 2nd location (only 10 miles awy) be better-suited to set-up as a "classroom" training location instead of a mirror-image of your current retail selling store?

Which location is better suited as a "destination" (you said your 1st store) versus which location is better suited for impules purchase (Oh, I need 2 more yards of sheer fabric....)

ps: two brothers here opened two identical paint stores about 15 miles apart to attract the "same" type of customers, but from slightly different geographies. It didn't pay off. But, had they made one location a pait store and the other a wallpaper store, then both locations may have survived.

ps: where are the JoAnn fabric franchises relative to your two small stores? Be very afraid of the big retailers in your expansion unless you offer unique "SERVICES" not just "products"
 
Posted by: dgsilva Author Response
7/26/2006 5:25 PM (CST)
Thank you Doug, Frank and Wayde,
A bit more info about our operations. Machine, cabinets and software are 57.5%; Classes 4.3%; Repairs are 8.6%; and Fabrics and Notions and Supplies 29.6% of Revenues. This latter category is in direct competition to 4 other quilt Stores within 2 miles and a JoAnns and Handcock Stores within 2 miles. We love it because when they advertise we sell product. Setting up another repair operation is expensive and capital intensive with compressors, vacuums and tools so we are thinking of doing all repairs at the main location. At the main location we already have two furnished classrooms of about 1600 square feet and will have a gathering area in the new store of about 600 square feet so some training could take place there or we could invite sewing groups to come in and use our high speed internet lines. We expect to open in about 6 weeks so you can see we haven't settled on exactly what will be happening at the new location but it is beginning to look like more of what we do best right now.
 
Posted by: MANSING Accepted Answer
7/27/2006 4:15 AM (CST)
Hi Dgsilva,

You have received very good answers and I would like to give you my views. If you are going to open a new shop then you need to think? What is the purpose behind this? There is always reason for every thing?

If you want to increase your production or transportation/ easy access to the market, you need to implement these things in that shop. For example if you want to do more research on the product quality then you need to design a Research and development centre.

Try to do SWOP analysis - Strength, Weakness, Opportunity and Treats for your new shop. I do agree you should maintain your basic structure to the new shop. But try to implement some thing which will make it different than previous shop. That’s call Business development.

I hope this will help!

Regards,

M Bhor
 
Posted by: dgsilva Author Response
7/27/2006 11:10 AM (CST)
Thank you all for your input. It has been most helpful and thought provoking. Unless things happen to change our minds we will mostly(80-85%) do a lot of the same strategies at the second store that we do at the main store. As customers come to the new store we will be able to get better information about the demographics of that store and how much it is the same or different than the present store. We can then be more responsive to those shoppers. thank you all again.
 
Posted by: varko* Accepted Answer
7/28/2006 4:17 PM (CST)
May be that's a time to develop costomers' flows management technology?
 
Posted by: dgsilva Author Response
7/30/2006 9:49 PM (CST)
Thanks to all who sent in advice. All were very helpful.
 


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