CSG Industry Experts:



Natasha Perry

Apparel & Department

Rebecca Ewing

Grocery & C-store

Arthur Rosenberg

Home, Hardware, & Discount

Loren McCollom

Restaurant

Brian List

Drug, & HBC

 

Our panel of Industry Experts and authors of CSG Through The Ages, brings you this year’s series: Recession Busters

Businesses need vision, strategy, and the right leadership to find success even in a tough economy.

Using the vast CSG database of historical data and inside knowledge of each industry, our expert panelists have followed the trends for the last decade and selected the Top 10 companies in each segment that survived the recession.

Each month we reveal a top company that weathered the storm. We will examine what they did, how they did it, and where they are going in the future.

Apparel & Department Store Retailers

 

Plato’s Closet is a secondhand clothing store, selling men and women’s clothing.  The gently used apparel, footwear and accessories that are bought and sold, are top-name brands, clean and in good condition. Typical items have been in the original stores within the past 12 to 18 months and are current teen and young adult styles that are still seen in the mall.

Plato’s Closet reported $387 million in sales last year. This is a 237% growth over the company’s $115 million in sales in 2007 when the company operated just over 200 locations. The family retailer has continued to grow and succeed because of its business model. Keeping inventory moving and promising the latest fashions at all times has helped create a loyal customer base. Plato’s Closet customers bring in goods that store employees look through to decide if the items will resell before they go out of fashion. Athletic wear, dresses, boots and purses are the top-sellers right now at Plato’s Closet locations.

All of the retailers 400 stores are franchised, making it the fastest growing retail franchise in North America. Plato’s Closet has an impressive 88% growth rate in locations over the past 7 years. With one location in each Alaska and Hawaii, Plato’s Closet has locations in almost all 50 United States (Montana, New Hampshire and Rhode Island are late to the party). The fast growing retailer also has a handful of locations in Canada. The company is currently targeting continued expansion in all markets in North America, with specific growth opportunities in Canada, the mid-Atlantic region, California, and the New England area. New location announcements are on the company website.

Plato’s Closet continues to rank in Chain Store Guide’s Top 100 Apparel Retailers. The company is owned by Winmark Corporation, parent of Play It Again Sports, Once upon a Child, and Style Encore among others. Forbes Magazine named Plato’s Closet the “Best Franchise among Chains with Entry Costs $150,001 – $500,000”. The initial investment to open a Plato’s Closet franchise typically ranges from $250,000 to $300,000.

 

 

 

Discount, Dollar, & Hardware Retailers

 

The retailers reported on in this series, reflect results which are remarkable as to their abilities to actually grow significantly or thrive through the many economic hurdles posed by the recession.  Interestingly, many of the seeds for these success stories were actually planted years before factual rumors of a coming economic catastrophe began to emerge.  Such was this case with IKEA.

However, IKEA is a company possibly unique among our recession busting retailers.  As rough as the recession was on our domestic economy, many countries and regions overseas actually suffered even more severely.  IKEA is a true multinational, created in Sweden with strong European roots.  As many of its prime European retail and international sourcing markets suffered, IKEA was left with uncertain economic conditions, unmatched since its founding as a mail order sales enterprise, during the latter phases of World War II.

As an expansive and expanding multinational, IKEA experienced a grand variety of economic weaknesses as well as some strengths, as the recession unfolded, hitting various sourcing areas and most of the company’s retail markets particularly hard.  Of all internationals trying to adjust to such a wide variety of market and economic conditions, IKEA’s long stated philosophy suited the company toward succeeding through the complexities of an internationally devastating recession.

Historically, the company had always emphasized product sourcing based on what we might now call ‘green’ efficiencies.  The company was willing to spend a bit more on products if the costs enhanced quality and a greater efficiency to the environment.  Many of the company’s offerings require assembly by the consumer.  IKEA views this enterprise as a manner of minimizing shipping costs, including greatly reduced wastes in packaging.  IKEA then boasted offerings at prices which drew consumers in droves.

As the recession hit hard, IKEA’s immense stores began to emphasize the company’s efficiencies as enabling very affordable prices for quality home furnishings.  The company also began to reemphasize the perception of its enormous stores as destinations, a place to spend a few hours or even a day with family and friends.  Its already famous restaurants were almost reintroduced as offering quality, unique meals at bargain prices.  It became common to hear friends at work deciding to plan a trip to indulge in IKEA’s famous Swedish meatballs. Typically this was followed by hours of browsing and shopping.

At the height of the recession the company continued to plan a greener culture, eventually aiming to energy and resource independence.  Two years ago IKEA announced a comprehensive plan to become energy and resource independent by the year 2020.   As with so many companies which have succeeded despite the recession, IKEA continued on its course of quality and efficiency, while respecting the planet and its international markets.  The company simply remained on a path set long ago, while emphasizing its long standing commitment to quality and economy.

IKEA opened its first store in the United States in 1985.  At the beginning of the recession, in August 2008, IKEA was operating 35 stores.  During the five years prior to this, the company had been opening 2-5 locations per year.  The recession halted openings to about one every other year.  Here the company preferred to plan future openings while snapping up real estate bargains in the few markets large enough to support its gigantic home furnishing venues. This past August IKEA opened its 51st U.S. location in Miami.  Included in the opening morning crowd were a number of foodies preparing to indulge in the new location’s offerings. This likely reflects the opening of the locations 600 seat restaurant serving Ikea’s world famous Swedish meatballs and other specialties.  A month later IKEA opened its newest store in the Kansas City area.

 

 

 

Drug Store & HBC Chains

 

Walgreens has maintained its status as one of the fastest growing retailers in the country over the past decade.  Currently led by president and CEO Gregory Wasson – a thirty-four year veteran of the company – Walgreens’ total revenue has increased 20% while unit count is up 17% since its fiscal year 2009. Wasson began as a pharmacy intern with the company in 1980 and was worked his way through various levels of the organization.

Several factors led to Walgreens maintaining success through the recession. The aging American population combined with a more overall health-conscious consumer has contributed greatly. However, the company’s emphasis on health benefits is broad, ranging from its growing network of over 700 Take Care Clinics and preventive health care services, to its Prescription Savings Club program that saves members on average $170 per year.  As part of a project with First Lady Michelle Obama to provide better food options in underserved communities, Walgreens has introduced fresh food at hundreds of locations. In addition, private label product offerings have been expanded chain wide.

Walgreens has also been a leader in energy efficient store enhancements. As of June 2013, 350 of its stores were powered by solar energy, with more on the way. In November of the same year, Walgreens opened what is believed to be the nation’s first ‘net zero’ energy retail store. Powered by two wind turbines, 850 solar panels, and an underground geothermal system, the store anticipates producing energy equal to or greater than it consumes.

 

 

 

Grocery & C-Store Chains

 

In 1927, Joe Thompson began selling eggs, milk, and bread from one of Southland Ice Company’s makeshift storefronts in Dallas, Texas. Residents liked the convenience of quickly being able to pick up the bare essentials from a smaller store and eventually, Thompson bought out the ice company and began opening more little stores all over Texas. In 1946, the company decided to change its hours to 7 am to 11 pm, creating 7-Eleven as we know it today. It was also the first convenience store to have its very own commercial, which aired in 1949. The decision to be open 24 hours a day, 7 days a week didn’t come until 1962 when there was a steady flow of customers after a football game and the store couldn’t close until dawn. The company officially changed its name to 7-Eleven Inc. in 1999 and has successfully been growing its business since.

An example of 7-Eleven’s success at drawing in customers is its promotional events. When The Simpsons Movie came out in 2007, the company re-branded 12 of its stores in North America to look like Kwik-E-Marts (the convenience store from the show) and even had products such as Krusty-O’s cereal and Buzz Cola.  The company also gives away free small Slurpees, to its customers each year on its birthday, 7/11, which on average equates to around 500,000 gallons. The company also runs a promotional event during the presidential elections, called 7-Election. The customers vote by purchasing red or blue coffee cups with the candidates name printed on them. Recently, the company has announced that it plans to begin selling a line of “nutritionally balanced” food designed by Tony Horton, the man behind P90X. The line will include salads, wraps, sandwiches, and cold-pressed juices. Each store is between 2,400 to 3,000 sq.-ft. and carries around 2,500 different products including coffee, wraps, sandwiches, fruits, salads, and baked goods. Two of the main products 7-Eleven is known for are the Slurpees and the Big Gulps. As a result of these favorites, the chain sells almost 26 million gallons of fountain drinks per year.

According to CSG’s 2014 Supermarket, Grocery & Convenience Store Chains Database, the company is ranked first in store count and third in domestic sales, just behind Pilot Flying J and Love’s Travel Stops & Country Stores Inc. 7-Eleven is now one of the largest franchise companies in the world having 53,500 stores in 16 countries, even surpassing McDonald’s. In 2004, store count in North America was 5,788 with sales of $12.2 billion; today these numbers have almost doubled with 10,400 stores and $23 billion in sales. One of the reasons for its growth and success is that since 2006 the company has acquired more than 1,200 stores from other companies. Another reason for its continual growth is the reported support it gives to franchise owners. One owner reported that 7-Eleven provides a “franchise consultant” and took care of the “back office stuff” such as payroll and accounting. This year the company was rated number 6 on Entrepreneur’s Franchise 500 list. The company’s website boasts: “Growing, Growing, Growing, We add another store to our worldwide operations every 2 hours. Where will the next one be?”

 

 

 

Restaurant Chains

 

Everyone knows that the key to having a successful day is to start it off with a good, hearty breakfast, but what if the fridge is empty, greasy fast food isn’t appealing, and delicious home-style cooking is what you’re really craving? Well, change out of those flannel pajamas and head over to The Egg & I restaurant which has been providing excellent food and service for over 20 years.

The Egg & I Restaurant concept was created by the original owners, Rayno and Patty Seaser, in 1987 in Fort Collins, CO. Eighteen years later, William “Bill” Baumhauer and Don Lamb noticed an underserved breakfast and lunch niche in the Colorado market. With more than 50 years of restaurant experience between the two of them, Baumhauer (former CEO and Chairman) and Lamb (Interim CEO, COO, and President) formed E&I Holdings Inc. and acquired the rights to The Egg & I Restaurants in October 2005.

Starting with 17 restaurant locations in 2005, E&I Holdings Inc. continued to grow and maintain a competitive edge during the Great Recession with simplicity (benefits of operating only two meal periods: breakfast and lunch), limited hours of operation (provides managers and associates a better quality of life), a streamlined menu, lower food costs resulting in higher profit margins, and the company’s commitment to creating a comfortable “home away from home” environment.

By 2012, there were 52 The Egg & I restaurants – three times the number of locations since before the recession – dispersed across 10 states. According to an article published in the same year, Lamb reported that The Egg & I concept “has never had to close a restaurant in its 25 year history.”

As a result of The Egg & I’s superior operating philosophy, great working conditions, and longtime associates, the company experienced approximately 210% growth in locations. Currently with over 100 restaurants across 21 states, The Egg & I plans to continue national expansion opportunities with 10 locations coming soon in CO, FL, MO, NC, and TX.