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Retailers docking on both sides of the bay

It's a tough call for Pinellas retailers trying to decide when, how and even if they should open a second location in Tampa. Expansion is a way to increase profits and gain buying power. But it's also a way to overextend. A small-business owner can give up only so much time and money before both locations struggle.

"You don't expand until you know damn well that what you're doing in the worst-case scenario would just be breaking even," said Bert Swain, owner of Rollin' Oats Market & Cafe.

There are countless stories of expansions that went sour. There are also plenty of examples of expansions that turned into empires. Remember a little Tampa restaurant called Outback Steakhouse?

Several concepts born in St. Petersburg have successfully jumped the bay: Old Northeast Jewelers, Rollin' Oats, Kahwa Coffee, the Shop, Milagros soaps and Painting with a Twist. Embellish, a gift and monogram store, flourished in St. Petersburg but had to close both shops 15 months after expanding to South Tampa.

Some of these small-business owners regret jumping the bay, others wish they had gone for it sooner. They share similar experiences as well as widely varying ones. Here are their stories and the business lessons they learned.

The Shop

After four successful years running the Shop clothing store next to El Cap Restaurant on Fourth Street, owner Vicky Blair wasn't so sure when her husband urged her to open a second location in South Tampa.

"I didn't know if I'd be able to split myself and have that same kind of connection I have here in two separate stores," she said. "But like everything else in life, you have to take a chance."

It paid off. The store at 2507 S MacDill Ave. was profitable from the start. Blair credits customer service and her constantly changing inventory that's different from anything at chain stores. She and her husband go on buying trips once or twice a month, work with small designers and are very conscious of pricing.

Blair has also found a way to almost be in two places at once. Her employees at the Tampa store text her once an hour to report how many customers have come in, how many have purchased and what has sold. She constantly compares activity at the two stores.

"If sales are off one hour, okay. Two hours, okay. At three hours I start asking: 'What's going on. Is it raining? Is somebody not feeling well? We're selling a lot of this or that (in St. Petersburg), do you have it out on the floor?' We talk back and forth all day, almost every hour,'' she said. "We boost each other up."

Old Northeast Jewelers

Twenty years after Old Northeast Jewelers opened at 1131 Fourth St. N in 1990, it started a second location at International Plaza. The recession made many retailers gun- shy, so anyone wanting to lease space got better than usual rates.

"We saw that many of the big jewelry chains had lost touch with their clients and they were heavily in touch with the banks," said Jeffrey Hess, the store's owner. "They were highly leveraged."

After filing for bankruptcy in 2009, Bailey Banks & Biddle's International Plaza store closed, and this was the push to finally expand to Tampa, Hess said. He didn't open in the former jewelry store's space, however, opting for a 1,200-square-foot sliver.

"If you take 5,000 square feet of space in a mall, it's extremely difficult to make ends meet,'' he said. "We wanted to carry similar brands, but with the mom-and-pop touch. We wanted to have a smaller location so we could turn on a dime."

It was profitable right out of the box.

While struggling retailers cut back on advertising and buying inventory during the worst of the recession, Old Northeast Jewelers didn't.

Hess briefly considered changing the store's name but said many Tampa residents already knew Old Northeast Jewelers because it had a reputation for luxury watches on both sides of the bay.

"There was a little push back from some customers wanting to know what did it mean, but I thought the cache of Old Northeast in St. Petersburg would carry into Tampa," he said.

With just two down months out of 27 so far, the name seems to be working fine.

"Should I have opened in Tampa 10 years earlier?" Hess asked rhetorically. "I should have."

Rollin' Oats

Rollin' Oats co-owner Bert Swain, who also moved into Tampa when a bankrupt competitor moved out, isn't so certain his expansion was a great move.

It took two years before his Tampa store broke even, and it has only been profitable the past few months. With a successful store at 2842 Dr. Martin Luther King Jr. St. N in St. Petersburg that had called for three expansions since opening in 1994, Swain had always had an eye on Tampa. Then Nature's Harvest Market & Deli filed for bankruptcy and he bought the store at 1021 N MacDill Ave. for about $1.8 million.

He was glad he could own the building and control his destiny. But good service and aggressive pricing weren't enough in a location that formerly housed a struggling grocer.

"Turning around a food store that has gone down steadily for years is like turning an aircraft carrier around in a river. It's slow going," Swain said.

Along with overcoming its predecessor's reputation, Rollin' Oats was also competing with national chains such as Whole Foods and Fresh Market. His company's small size is an asset in those battles, he said, because he doesn't have the costs tied to multiple tiers of bureaucracy. He credits loyal customers and their word-of-mouth praise for making the Tampa store profitable.

In hindsight, he thinks he could have spent more on advertising, and a location north of Kennedy Boulevard proved tougher than he expected. Swain is sure the Tampa store wouldn't have made it if not for the financial support of the St. Petersburg store, which will double in size over the next 15 months.

"You have to keep feeding it. That's a tough feed when it's not making money," he said. He wouldn't expand again based on the time it took for Tampa to become profitable.

"Big companies, they treat it like it's not real money. They do 10 or 20 new stores a year," Swain said. "When it's just you, you're the one sweating the details when it takes two years to break even."

Embellish

After three years of steady business growth in St. Petersburg for Embellish gift and monogram shop on Fourth Street, opening a Tampa store was the obvious next step for owner Michelle Burtch. She brought in a business partner with more capital and leased space on S Dale Mabry Highway.

"You look at St. Petersburg and Tampa and think, 'Well if St. Pete is doing this much, then Tampa is going to be double that.' But it doesn't happen as quickly as you anticipate," Burtch said. "All sorts of costs are introduced when you can't be two places at once. There's also more direct mailing, more inventory, more marketing."

She had a business plan but in hindsight it wasn't aggressive enough, largely because she didn't have enough working capital.

"The amount of capital (corporately owned) franchises require versus the amount of money I started Embellish on would make you laugh," Burtch said.

After closing both stores Burtch read The E (Entrepreneurial) Myth by Michael Gerber. "It lent a lot of perspective on some of the common pitfalls of having a small business," she said. The book's premise is that all stores should strive to be a franchise model, whether the owner wants to open just one or 100. They should be well-capitalized and have standardized practices and measurements. Burtch says she is better prepared for her next venture, which will get rolling this summer.

Painting with a Twist

For the owners of Painting with a Twist, building a customer base in Tampa was easier than when they first opened in St. Petersburg because their concept is a little hard to explain.

"Within months we were closing in on (sales levels) that it took us a year to reach in St. Petersburg," said Marvin Gay, who owns two local painting class franchises with his wife, Leslie.

Painting with a Twist studios at 2527 Central Ave. and 2821 S MacDill Ave offer group painting classes. The classes last two to three hours and cost $25 to $45 depending on the subject. The pictures painted on canvas range from beach scenes and the Eiffel Tower to Warholesque palm trees and the Pier. Customers can check the calendar to see which painting out of hundreds of options will be taught when. They bring their own snacks and drinks, often wine, which makes for a great group outing, date night or birthday party.

The Gays opened the first Florida franchise of the New Orleans-based company in St. Petersburg three years ago. Since then, others have opened franchises in Miami, Orlando, Pensacola and Trinity. A lot of Tampa residents were painting at the St. Petersburg store and urging them to open in Hillsborough County. If the Gays didn't, they knew somebody else would.

"Part of opening there was almost a defensive move. When you're hoping to grow a business, you don't want the time you spent building name recognition to benefit somebody else," Leslie Gay said.

"We were breaking even on a month-to-month basis in St. Petersburg so we decided to expand. It was different looking in South Tampa because the (lease) rates are a good big higher," Marvin Gay said.

But the high exposure site at Bay to Bay Boulevard and S MacDill Avenue has boosted business at both stores. Another key to the successful expansion was that most of their St. Petersburg art teachers hailed from Tampa and had a lot of experience behind them before opening the new store.

Roughly half of the stores' painters are repeat customers. Of those, 10 percent are regulars who come four to six times a year and another 10 percent are "addicts" who come several times a month.

"It's all about creating," Marvin Gay said. "And having fun."

Katherine Snow Smith can be reached at (727) 893-8785 or kssmith@tampabay.com.

Fast facts

Tips

Shrimatee Ojah Maharaj, manager of the city of St. Petersburg's Business Assistance Center, offers some advice for retailers pondering jumping the bay.

• You should be able to go six months to a year without breaking even. Can you do this without relying on cash flow?

• Make sure you have a competent staff at the second location. People you trust and can rely on.

• You may have name recognition and a good reputation here, but it takes time to establish that in a new location.

• Don't get locked into a long lease at first. You may need to cut your losses and close up shop at some point.

• Do you have everything standardized at your current location? Do you have an exact understanding of staffing needs and sales quotas required to break even?

• Along with capital, do you have enough time and energy for a second location? Getting it open isn't the end. That's just the beginning.

Retailers docking on both sides of the bay 04/24/12 [Last modified: Tuesday, April 24, 2012 6:38pm]

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