Surviving a retail rut

Some of Southwest’s smaller merchants are struggling to stay alive in the midst of a nationwide retail slump

Even a Fairy Godmother has to keep a strong bottom line.

Those magic wands aren’t free. Nor are the books, cards, charms, or other treasures in Terre Thomas’ store, Fairy Godmother, at 38th Street and Grand Avenue.

In a retail market that’s anything but a fairytale, the ball-gown-wearing boutique owner is struggling. So much so, that she’s planning to move to a location with more foot traffic.

“It was an awful holiday season,” Thomas said. “Sales just didn’t happen.”

The retail rut is a nationwide problem that has gone so far as to impact big chain stores including Target, which reported sluggish holiday sales compared to previous years.

Smaller merchants lacking reserves or capital for marketing and discounts have been challenged most and Fairy Godmother isn’t the only Southwest store feeling pinched. With the holiday rush over, suffering stores are looking at how to bolster sales to avoid going belly up.

Shopping with caution

Cautious consumers have played a major role in the retail slowdown, said James McComb, president of Minneapolis-based retail consultant firm McComb Group Ltd.

A languishing real estate market and soaring prices for energy and food are among the factors contributing to that cautiousness, McComb said.

“People generally feel they’re less well off this year,” he said during an interview at the end of December.

Lowry Hill resident Sally Hyslop, 57, who was buying envelopes at Paper Source in Uptown on New Year’s Eve, said she has been careful about spending because of real estate tax hikes and an increase in the cost of goods, services and transportation.

“We support our independent stores. We love our independent stores,” she said. “Everything is just going up, and most definitely this holiday season we thought twice about what we were doing.”

St. Paul residents Mat Lindquist, 30, and wife Monique, 24, who were checking out cookware at Kitchen Window in Calhoun Square Dec. 31, said they have budgeted tighter during the past year because they are saving for a house.

“When we make purchases, it’s generally a very chosen thing,” Mat said. “There haven’t been a lot of splurges.”

Kitchen Window, a longtime destination business, is one retailer that has managed to maintain sales despite the retail slump, said general manager and co-owner Doug Huemoeller. Sales were consistent with 2006, he said.

Rick Haase, co owner of Patina Gift Shops, which has stores in Uptown and Lynnhurst, said his stores did better in 2007 than in 2006. Customers spent less, he said, but the stores saw more transactions.

Success in today’s business climate depends on a number of factors such as how unique or popular a store’s offerings are, where a business is located, what kind of traffic it has nearby and what kind of service is offered, McComb said.

“A lot of retailing really boils down to being a good merchant,” he said.

Staying optimistic

When business is slow at Larue’s or L2, Kathy Lawrow’s boutiques at 40th Street and Lyndale Avenue, employees pull fistfulls of cash from the registers and dance.

It’s called the money dance, and employees swear it brings in customers. At the very least, it adds a little fun to a tough workday.

“If you can feel good, you’re going to attract people who feel good, too,” Lawrow said.

The 26-year retail veteran said 2007 was a tough year for her businesses, and she didn’t see as many regular customers as in years past. But she’s not worried.

“It was quite a challenge this past year, but we are through it,” she said. “I truly feel this year will be better. We’re going to clean things up a bit.”

Lawrow said she’s looking at playing with store hours and offerings, as well as hosting weekend events and enhancing staff training this year. She said the biggest mistake a retailer can make is giving up.

Nancy Locken, owner of Auntie Em’s, a book and gift store at Diamond Lake Road and Nicollet Avenue, said she doesn’t want to give up, but she’s been fighting an uphill battle ever since she opened about three years ago.

“I try to remain optimistic only because I feel that if you remain optimistic, good things will happen to you,” Locken said. “But it’s hard to stay positive when you can’t pay your bills.”

Business slowed severely when the Diamond Lake Road bridge over Interstate 35W closed last summer, she said. Things improved noticeably when it reopened, but she’s never dug herself out of the red.

“With our business, we’re pretty much just taking it month to month or week to week,” she said.

Locken said she could not afford advertising or any more staff beyond the one part-time employee she has now. She said she’s hoping to draw more customers with store events and a website and email list that are in the works.

She’s also considering reducing the store’s hours and possibly getting a second job.

At Fairy Godmother, Thomas said she’s done all sorts of things to attract customers, including handing out cookies at the bus stop, increasing her hours, hosting holiday parties and offering sales. Nothing was enough.

She said her 4-year-old business grew every year until 2007. Then sales dropped nearly 20 percent. Thomas said her relatively new business is not able to absorb that loss.

“We put almost all of our family resources into starting this store, and there’s no real cushion to fall back on,” she said.

The self-proclaimed Fairy Godmother who writes a column for the Journal said she’s hoping to move to Uptown, where there’s more foot traffic. But she said she would need an investor first.

Her new store would probably focus more on the “Restore the Tingle” department — which offers sex toys for middle-aged women looking to restore their sex lives — because those products sell well, she said.

Thomas said she would still be a Fairy Godmother, as her goal has always been to affirm and encourage people during momentous stages of their lives.

She’s still holding out for a happy ending.

“I want to keep doing this kind of work in this kind of store,” she said. “If that means I have to make some adjustments and move to another location, I’ll do it.”