When Passion and Knowledge Help Build a Business
Updated: Jul 17
If I could go back in time and choose a different career path to study in college, it might look something like an archivist of retail, where I could help in preserving the past that might somehow move us into the new future. My brother even gifted me for Christmas one year a framed drawing of a bustling retail shop set in the 1940's, which can tell you how much I love the retail industry. It is where I started my career journey, and where my heart continues to stay. As I read and follow the industry closely, I continue to find so many lessons on how each brand and retailer are handling this new era of consumerism. A reflection of my past experience led me to form a narrative from a merchants perspective—connecting traditional values of a department store operation to then bringing that knowledge into running your own independent boutique.
A true merchant is one who brings the values of traditional retail in servicing a customer, to the future of shopping into their own small retail shops. I spoke with Heidi Hayes, a former colleague of mine from Nordstrom who is the owner of Phayes, a retail shop in Chicago's Logan Square neighborhood. I already knew her views of running a retail store because we both have the same work ethic and vulnerability when it came to our service level and pro-active mentality of a fast moving and ever-changing business. Our repeat customers came back to us because we let them into our world, just as much as they allowed us to enter theirs. As any veteran of the iconic retailer will tell you, working your way up from the sales floor meant you knew everything related to the business, and most importantly felt a connection to it. When we both reflect on our time spent there we managed to agree that we worked so hard, becoming hustlers who gained valuable professional skills that we still use today. We built honest and authentic relationships with customers, colleagues, and people outside the business that has allowed us to move forward in the roles we took on after leaving the company.
As a small business owner in the age of Amazon and during a global pandemic, Heidi is moving forward with the confidence that her expansive knowledge and the customers she has come to love will get her through one of the toughest challenges she has yet to face. What she brings to retail is real and authentic—preserving artisanship by featuring local designers, and connecting to her customers by remembering important milestones or interests in their lives. We both believe that physical retail will survive, but it will just look a bit different. With this passion and vision for the service level and loyal customers that a retailer succeeds on, we can only hope that the future generation of work force will value it as much as we did. A lot of the workplace culture nowadays stem from the connection to the start-up life, but as we move into a new place in history, I only imagine a world changed where we become more of that on which our hearts our fixed, no matter if it is a start-up or a traditional and larger corporation.
What is key to starting a retail business and the steps to bringing it into reality?
Building a business from scratch, creating a business plan and making your dream come true are hard work and I think one of the most important things is being practical and starting small from the very beginning with what are you going to do to, from finding a space to then building it out. We would all love to have Nordstrom budgets and their furniture in our stores, but you have to figure out what your priorities are. When I first opened, it was so minimal, about 70% of the fixtures and not even 1/2 of the product. But my focus was going to be service and difference in the market place by selling in season goods that are a good value (we are not on the typical schedule of bringing in summer stuff in February and putting on sale in June). Men especially do not shop like that and I don’t know why we continue to push that strategy, if they have not adjusted in 50 years, they are NEVER going to shop like that and part of that service is bringing the neighborhood what they want when they want it. I bought a little inventory of several different things I thought would work and left some open to buy. This helped so that I could bring in more of what was selling when I went to market in August to expand on the ‘hot’ categories. I learned this strategy from Nordstrom, where you always leave some room in your 'open to buy' for items that are working and to buy things that customers are asking for that maybe you did not think of. I go to market with a budget in hand and what I need and try to make appointments for ’needs’ and always, always always save time to look for new brands and categories.
A couple years ago, I thought it would be cool to try some ‘home goods’ for the holiday season. Candles, trays, pillows…it was almost a complete bust but the candles worked really well and now candles are a nice little business that do not take up much room. Also, they make the store smell nice and a great little add-on while people are waiting for me to complete their purchase.
What is your biggest challenge in owning a retail store?
Deciding to go into women's apparel has been the most stressful thing I have ever dealt with at the store. It was hard because I don't know anything about it, and feared that I wouldn't pick the right stuff. I only did it because my customers were asking me to and so if they didn't it would have never crossed my mind. I brought in some pieces in October of 2018 and that month was insane! I kept testing it through the holiday to see how that went, and it just stayed steady, so by the time January came, I bought a little off price, and realized it was here to stay and I was nervous because I knew by February I had just entered the women's business too.
The best part of owning your own retail store?
You can make a decent living if you are smart about the business, but you don't make any money on the first year, so it shows how much I love what I do, and I truly love my customers. You develop solid relationships. I even remember the first time some of them even shopped in my store. Now four years later, I almost built a family, and the relationships are the only way I have survived this pandemic.
Was there preliminary research that needed to be done before you opened?
I was doing research in the neighborhood before I opened because I wanted that perspective of consumer who would most likely walk into my store. Start by observing, go out and see what is going on. Talk to people in the business. I had built relationships with vendors, so that was easier to gain their trust in selling me product. So much of what I learned from working at Nordstrom gave me the ability to open this store, because the selling and service part is so important. If you are not confident that you can sell someone more than one shirt, you are not going to make it. So the research never stops, and keeping track of your customer's journey so that you know how to approach them when something new comes in is key.
What was your experience like when you were a buyer for Nordstrom?
My experience was well-balanced because you were a buyer and a merchandiser. You helped department managers do everything from teaching them how to sell, to build a schematic, to place product, to training their assistants, and then you were also buying the product. When we were all based within a set region of the country, we were able to visit stores and get to know the customers there. This helped so that when we went back to the buying office, we understood more of who we were buying for, and how that particular store functioned. It is hard when you are sitting at a desk trying to determine which pieces out of a 120 Tommy Bahama sku's which store and customer needs it for which season. The numbers can only show you what you are selling, but will never show you what you are not selling. Talking to each person on the floor is where you get that information. You rely on the manager a lot with that because there is only so much of analyzing numbers that you can do as a buyer. Gone are the days when retailers can just buy a bunch of stuff and hope it sells.
My customers want color, prints, pattern, or something different that they can't find anywhere else. Unique things. I get a lot of men walking in here telling me that often times, they go out and see another guy or their friend with the same shirt on to quickly realize that they both shopped with a subscription box company. It's the algorithm that might be giving them direction, not a salesperson, which equates to them walking around town looking like everyone else.
What do you do outside of this business to help bring a new perspective to how you run the store or your team? Things like selling tactics, or even marketing strategies?
Hate to say it because it is so cliché, but we lead by example and have to show our employees exactly what to do. I was the leader at Nordstrom that told my staff that I do better when they do better. If they sold more, then I won't have to take their sales in order to make my business happen. Walking them through the process step by step in how to approach, to engage and to build trust is key. Don't overwhelm the customer, and just listen. I am always inspired by other retail shop owners so I keep up with what they are doing through social media, and I ask my vendors who have been in my store and have engaged with my customers their opinions on product. I have taken a some marketing classes to help me better understand as well because when I first opened I hired a company that did all of that, but after a year I never attained one single lead from them so I decided to figure out how to do it on my own. Unfortunately there is nothing really out there to read that helps me, because it is either too old, complicated, or is offering knowledge that I don't already have. It would be great to have more resources with a fresh perspective on this business.
A great source for learning about the future of retail is an article in Business of Fashion which lists the author's retail archetypes that will survive in a post-pandemic world.
1. The Renegade: Renegade retailers challenge incumbents in a market by identifying creative product or operations-related unlocks that radically alter the price-value equation. They leverage technology, people, supply chain efficiency and systems thinking to redefine customer experience in their chosen categories. The Renegade dedicates all its energy, resources and assets to its battle against the status quo. It highlights the inherent shortcomings of the current customer experience in their category and underscores its unique method as the way of the future. These brands differentiate themselves on the basis of product and/or experience and reinforce their anti-status quo approach at every touchpoint.
Points of differentiation: Uniquely easier or better buying system
Examples: Warby Parker, Casper, Costco
2. The Activist: Activist retailers use their businesses to support social, economic or environmental causes. They not only champion their cause; they bake it directly into their products and their business model. They align every communication and experiential touchpoint back to the North Star of their cause. Customers and employees select activist retailers based on their own sense of moral alignment with the cause.
Points of differentiation: Societal good and ability to affect change
Examples: Body Shop, Patagonia, Bombas
3. The Storyteller: Storyteller retailers are those that grow so large, ubiquitous and iconic they supersede their own product category. They come to represent a higher societal ideal or aspiration. These retailers, often vertically integrated brands, spend the majority of their effort creating compelling content, editorial, events and experiences both on and offline, resulting in a deep sense of community affiliation. In essence they are branded media companies that sell quality products. Storyteller retailers see their stores not as mere distribution channels for product, but as stages that can be used for media production, live-streaming and community events.
Points of differentiation: Content and community
Examples: LVMH, Nike, Apple
4. The Artist: Artist retailers very often sell products that are similar or even identical to those of other retailers, but through their sheer creativity and capacity for stagecraft they design experiences around those products that are highly unique, engaging and differentiated, thus winning them distinct positioning. These are retailers that differentiate based on customer experience both on and offline. They measure their stores not only from the standpoint of traditional retail metrics but also for the media value of each positive consumer impression.
Points of differentiation: Customer experience, retail theatre and engagement
Examples: Showfields, Camp, Selfridges
5. The Tastemaker: Tastemaker retailers are those whose products or brands are not necessarily unique but may indeed be more difficult to find. Tastemaker assortments are carefully sourced, curated and merchandised with a clear nod to the more discerning shopper in a particular category or those aspiring to a particular lifestyle. And beyond products, some tastemakers will even curate unique brands and businesses in one central location, saving shoppers the time and effort of researching on their own.
Points of differentiation: Deep knowledge of trends and ability to expertly curate products and experiences
Examples: Neighborhood Goods, Gadget Flow, Williams Sonoma
6. The Oracle: The oracle retailer is one who delivers unparalleled expertise within a specific category. These retailers go beyond simply offering product knowledge by hiring and nurturing passionate category enthusiasts to engage customers and speak from personal experience about the use of their products. The emphasis on service and knowledge makes them appealing to both professional and consumer users.
Points of differentiation: Unparalleled product expertise and customer support
Examples: B&H Photo, Recreational Equipment Inc.
7. The Concierge: Concierge retailers are those that deliver highly personalised and engaging experiences to their shoppers. These retailers thrive by taking service to the level of an art form, both online and off. They place emphasis on customer delight and afford employees significant autonomy in proactively satisfying customers, resolving issues and exceeding expectations. Concierge brands win by maintaining a painstakingly complete understanding of unique customer needs and preferences.
Points of differentiation: Benchmark levels of service, intimacy and guest experience
Examples: Publix, Nordstrom
8. The Clairvoyant: The clairvoyant retailer is one that uses both technology and human intuition to actually predict needs, preferences and desires on the part of its customers and proactively present products on that basis. Unlike those that provide latent recommendations based on customer buying habits, clairvoyant retailers actually use their skill to present opportunities for discovery and surprise.
Points of differentiation: Ability to leverage deep data insights to customise product recommendations
Examples: Stitch Fix, Pop Sugar
9. The Engineer: Engineer retailers figure shit out. They use technology to solve product or service design problems that elude other brands, thereby creating solutions for consumers. These retailers excel at design thinking in all aspects of their go-to-market propositions, from what they sell to how they sell it.
Points of differentiation: Differentiates on design and technological prowess
Examples: Dyson, Away, Google
10. The Gatekeeper: Gatekeeper retailers are those that maintain position through regulatory or financial barriers to entry. They often dominate a market completely or as part of a small oligopoly. It’s important to note that while this ensures their existence in the short-term, it also makes them constantly vulnerable to attack from renegade retailers that may infiltrate their walled categories. The gatekeeper is both an enviable yet precarious market position for any incumbent.
Points of differentiation: Differentiates on size, legislative barriers or market exclusivity
Examples: Verizon, CVS, Luxottica