At Basin Inc., a Bloomington, Minnesota, bath and body company
co-founded four years ago by Randy Heninger, 38, and his wife,
Shawna, 34, the focus is on creating a unique customer experience
that can't be found at competing mall retailers such as Bath
& Body Works, The Body Shop and Origins.
Basin's stores are modeled after an 18th-century mercantile
shop. Weathered pine shelves and linen curtains decorate the
stores, and customers can sort through metal tubs filled with the
company's line of custom-made soaps, bath crystals, shampoos
and facial treatments. They can fill up their own bath salt tubes
and make their own candles. Basin employees even hand-cut soap
pieces for customers from natural soap blocks. "It's very
hands-on," Randy says. "We're learning as we go
along."
The concept is working: Basin is bringing in $1,000 per square
foot
in yearly sales, and the company has already reached $1 million in
sales annually. Today, the couple operates two in-line stores at
the Mall of America in Bloomington and at the Disneyland Resort in
Anaheim, California.
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But the Heningers' success in retail started with a single
kiosk. They were both working for the IRS in Utah in the early
1990s--and tiring of it--when a friend in Dallas, who was running a
successful key chain and magnet kiosk, suggested they break into
the retail business. They opened a similar key chain and magnet
kiosk in the Mall of America in 1992, signing a one-year lease and
paying $1,500 per month in rent.
Starting with a kiosk meant less inventory to carry and less
stress knowing their lease wasn't locking them in for years if
their idea didn't work. Learning about retail on a smaller
scale "was worth it," Randy says. In their first year of
business, they had the second-highest sales of the mall's 50
kiosks.
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They opened an additional kiosk in the Mall of America, and by
1994 they had three other kiosk locations in tourist malls in Fort
Lauderdale, Las
Vegas, and in Canada's West Edmonton Mall, the biggest mall
in the world. They also opened in-line magnet stores in Myrtle
Beach, South Carolina, and Ontario, California.
By 1997, the couple began to look for a new business concept
because the magnet and key chain business came with some downsides:
Margins are low, and once people buy a magnet or key chain, they
don't need another for a while. After gaining retail
experience, they decided to make the switch to bath and beauty,
where consumers spend a lot of money and replenish their supplies
regularly.
Basin was finally born in 1998 after a year of careful planning.
The Heningers sold their magnet and key chain business and signed a
$3,500 per month, one-year lease to move into a temporary,
500-square-foot in-line space in the Mall of America to test their
bath and beauty concept. The mall provided color schemes, signage
and merchandising, which was "a big help," Randy
says.
Eventually, the couple signed a five-year lease and upgraded to
a 750-square-foot permanent in-line space in the mall. Starting
with temporary space eliminated some onerous construction costs.
"It's expensive to open a permanent store," says
Randy, who paid $100,000 in costs, from fixtures to merchandise, to
bump up to a permanent location. Starting with a kiosk was the
right move. "It taught us how to run a business when we had no
clue," he says. "If we had started with an in-line space,
it would have been a lot harder."
But do some research before you leap into retail. Make it a
point to ask shop and kiosk owners at your target location how
they're doing before you sign a lease. Mall managers aren't
fond of tenants dishing the dirt, but it's the only way to find
out things you may not learn otherwise about a mall's foot
traffic, rental rates, marketing plan, security problems and repair
issues. "It's amazing what [tenants will] tell you,"
Randy says. "It doesn't hurt to ask."
Negotiating the lease can be a daunting
process. But mall developers are willing to work with new
retailers, Norins says. One place to save money is in your overage
rent--the percentage of sales a mall takes when you sell over a
certain amount each week. Don't be afraid to ask for extras
that might lead to cost savings. "Say 'Look, I really need
your help these first couple of months,'" says Norins.
"[Mall developers] might say they won't charge you any
overage rent, or they might throw in a free week at the end of the
two months."
Will kiosks or temporary space work for your independent retail
business? It's a good time to find out. David went head-to-head
with Goliath and won. You can, too.
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