Retailiatory Strike

Bag a Winner: Corda-Roy's Originals Inc.

Byron Young, 33, is founder and president of Corda-Roys Originals Inc., a 4-year-old Gainesville, Florida, company that makes high-end corduroy beanbags that convert into futonlike beds. His products sell for $79 to $379.

But in 1998, Young was a fledgling entrepreneur sewing beanbags in his garage. "I literally started with a few sewing machines and a table," he says. The idea for a corduroy beanbag came to him while he was driving around Gainesville in his favorite corduroy jacket. For some reason, beanbags flashed through his mind. Why not put the two together?

"It hit me in about 15 seconds that no one had jumped on the idea yet," he says. "Corduroy just seemed natural to me. It's nice and soft and kind of retro."

The idea that his beanbags could also be a bed occurred to him when some friends stayed over and he didn't have anywhere for them to sleep. He pulled out the soft, futonlike core of one of his beanbags as a makeshift bed for the night. "They woke up the next morning and thought it was the greatest thing since sliced bread," he says.

Young knew he was on to something, and things started to happen quickly. Before long, he was sewing up to five beanbags per day, selling them from his house and through a few local stores. Despite his lack of retail experience, he rented a location on the edge of a Gainesville highway. It turned out to be a bad decision. "Maybe five people came in all day long," he says. "The rent was cheap, but it was cheap for a reason." On the upside, he noticed that four out of five people who came into the store ended up buying a beanbag. "I thought if these numbers hold true, we should be able to make it in the mall," Young says.

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But he didn't know anything about mall retailing. All he knew was that his start-up funds were very limited. "I wanted the least expensive space in the mall," he says. "I wasn't even sure if I could handle the monthly payment on a kiosk, much less an in-line store."

He approached the manager of Gainesville's upscale Oaks Mall near the University of Florida campus about opening a kiosk. For Young, it was an affordable option with a much shorter lease than an in-line store, which would have required him to pay $3,500 per month in rent plus utilities and sign a minimum three-year lease. The two struck a deal. "I think he just felt sorry for me," Young laughs.

He spent $2,500 to open his first kiosk in 2000. Soon, Young was taking orders for more beanbags than he could possibly make by himself. With help from investor and partner John Gasser, 48, Corda-Roy's Originals has now grown to include 50 employees and two in-line stores in Florida, one in North Carolina and one in South Carolina. The company also has 12 kiosks dispersed throughout those three states, as well as in Indiana, Ohio and Tennessee. Company sales in 2001 were just under $2 million, and Young projects $3 million in sales by the end of the year.

But kiosks and carts present some unique challenges. Customers sometimes wonder if you'll still be around tomorrow if they need to return something. Displaying products in limited space and establishing a brand identity is also tricky. Passing shoppers "can't take everything in," Young says. It doesn't help matters that you're also battling showy window displays for consumers. How do you compete?

Attention, Shoppers! Explore what people look at, what they buy and in our interview with retail guruPaco Underhill.

Over the years, Young has learned how to show off his products. When he started out, he would display a few beanbags and a bed, but he found that customers didn't want to stoop down to touch them. So Young built a central platform to get a sample of his product off the floor.

Today, his kiosks are surrounded by six to 10 colorful beanbags on display. Vacuum-packed beanbags are also kept on-site for impulse buys, though customers can have their orders delivered. Young uses low-budget signs with single words and phrases like "new," "bed inside" and "try me," along with photos showing the beanbag-to-bed process. It has made a huge difference for his customers. "[Your marketing] has to be like a billboard you see on the side of the road," Young explains.

As a kiosk operator, you'll need to give consumers something interesting to do, says Arthur Gilmore, managing director of Interbrand, a New York City brand consulting firm. "How you stage your products makes a big difference," Gilmore adds. Dynamic, moving displays and product demonstrations will draw people's attention. Avoid a cluttered look and have business cards handy to lend credibility.

Also, create a Web site that includes a general description of your products, along with photos, product prices, return information, a list of locations and contact information, in addition to a general overview of your company and its mission.

Don't focus solely on price either, Phibbs says, because you'll never win against the big retailers who have latched onto the idea that price is everything. Instead, try creating a personalized experience heavy on good service. "Don't think like a big box," he warns. "Know who your customer is."

Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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This article was originally published in the December 2002 print edition of Entrepreneur with the headline: Retailiatory Strike.

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