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Retail survivors: How four family-owned Washington shops have made it in the Amazon era

Benjamin Romano, The Seattle Times on

Published in Business News

Rob Whitten had fled corporate life west of the Cascades and was working in construction when he got to know the owners of the small hardware store in Plain, Wash.

One day, they offered to sell. He took the plunge into retail 21 years ago, just as it began a massive transformation with the blossoming of e-commerce.

From the start, Whitten knew that Plain Hardware, buoyed as it is by a building boom in the surrounding vacation communities, would have to adapt to compete in the Amazon era, with its bottomless selection, always-on availability and ever-faster delivery speeds.

"They've transformed customers' expectations for fairly quick fulfillment, and that will never go away," Whitten said. "Our job is to figure out how we do it better than they do it."

That means working with suppliers to ensure he's never out of that key piece or tool a local homeowner needs to finish a project, today. "Instant fulfillment," Whitten calls it.

Surviving in retail, as in many businesses, is the art of adapting. That's never been more true than in the age of Amazon. In its first 25 years, the Seattle company's relentless algorithmic efficiency and scale have fundamentally changed the game of buying and selling. But the stories of Plain Hardware and three other family-owned Washington retailers reveal how small stores have carved out a niche to survive and even thrive by providing expertise, personal service and community support.

The U.S. retail industry is enormous, generating some $5.3 trillion in sales last year. Online sales have grown to about 10% of that total. Amazon is expected to garner about 38% of online retail spending in the U.S. this year, according to eMarketer. Meanwhile, many long-tenured national brands have struggled and closed stores.

In Washington state, the number of retailers, including everything from hardware stores and grocers to restaurants and online merchants, shrank over the last quarter-century, even as the state's population rose 40%. The state went from 11.3 retail establishments per 1,000 residents 25 years ago to 7.8 last year, according to an analysis of Washington Department of Revenue tax data.

That said, the "retail apocalypse" narrative can be overstated. As the National Retail Federation noted recently, stores are making a comeback as big brands invest in technology to modernize the shopping experience and better integrate physical locations with e-commerce operations for things like order pickups and returns. This remains a risky bet, however, as retailers try to catch up with Amazon's massive spending on technology and willingness to experiment with new retail concepts, such as the "4-star store" it opened in Seattle this past week.

Three-quarters of the 550 independent retailers polled this spring by the Institute for Local Self-Reliance, which calls for greater regulation of Amazon as part of its advocacy for decentralized economic power, considered competition with the Seattle-based company to be their top challenge.

Of course, thousands of small and mid-size businesses also use Amazon's infrastructure to host digital storefronts, connect to customers and deliver their wares. Some argue that Amazon's third-party sellers business, now accounting for 58% of its physical gross merchandise sales, amount to an important lifeline for small business. Others see Amazon and its growing share of online sales as the greater threat.

'Instant fulfillment'

Plain Hardware is helped by its location: Beside Just Plain Grocery & Gas, the only other store in town. That remains an advantage, even in an era of next-day delivery. Most of the items Whitten sells are available on Amazon, often from 10 different vendors. (That said, people aren't yet buying dimensional lumber or drywall on Amazon in significant quantities.) His nearest physical competitor is 14 miles away in Leavenworth. The big-box home-improvement stores are farther off in Wenatchee.

To keep local builders and homeowners coming back, Whitten learns what they need – and want – mostly with "face-to-face interactions with customers ... asking and listening," he said. He augments that customer input with his knowledge as a builder, making sure to have all the little parts for finishing common building projects.

Whitten arranges weekly deliveries to ensure he doesn't run out of key items without having to hold too much inventory in his relatively small store -- about 5,000 square feet indoors, and a 10,000-square-foot outdoor lumberyard. He knows that a customer who is disappointed to find that the key piece they need is out-of-stock probably won't give him many second chances.

But when he does have what they need to finish that day's project a short drive away, he can compete with next-day Amazon Prime delivery and competitors farther down the road.

Plain Hardware, like other physical retailers, offers "instant gratification, instant fulfillment," Whitten said. "Somebody walks into the store and they walk out with the shovel they need. Done deal."

Amazon, the so-called Everything Store, also can't deliver the local gossip, the advice and expertise (particularly in hardware), the support that customers and employees provide one other and a venue for community events, such as the farmers market in the summer and youth ski-team gatherings. Plain Hardware employs about 20 people year-round.

"The feel that customers get when they come into our store -- you'll never get that from an online experience," Whitten said.

Over the years, Whitten has expanded Plain Hardware's offerings. The store stocks a rotating selection of gift items and clothing -- product lines that require different merchandising expertise to keep up with seasonal trends. There's espresso up front. In the winter, Plain Hardware rents cross-country skis to use on a 24-kilometer trail system through adjacent properties that the store maintains.

That diversification helps Whitten better serve the locals and the tourists, and has helped eliminate seasonal business lulls.

"Someone comes in for a coffee and they leave with earrings and a new blouse," he said.

A community of shared interests

A few years after falling in love with the hammered dulcimer at a Northwest Folklife Festival and starting a home-based business to pursue their passion, Ray and Sue Mooers and Randy Hudson started making and selling the instruments from a downstairs shop in Fremont, Wash. It was 1982.

Today, Dusty Strings sells a wide range of stringed instruments from the same retail space, which also offers lessons and repairs.

The Mooers say they have always tried to imbue the retail store with a welcoming, supportive vibe, meeting anyone at any level of musical ability where they are. The store convenes a community of musicians who gather for classes, workshops and jam sessions. "They get connected with other people that are attracted to their particular instrument," Ray Mooers said.

Advertising

That's helped keep it relevant in the e-commerce era, and distinguish it from competing national chain stores, he said.

In a separate building in Interbay, the company's craftspeople turn slabs of walnut, cherry and other woods into 80 to 90 hammered dulcimers and lever harps a month, sold to musicians and instrument dealers around the world. As they grew the manufacturing side of the business, the Mooers were slow to embrace the internet. But now it's become a primary way customers discover their instruments, which are in a subcategory that many music stores don't carry.

Don't look for a click-to-buy button on the detailed pages describing the complex, beautiful instruments, however. To complete an order, you have to call up and talk to a human being. Sometimes that can be an impediment to people used to more automated commercial interactions, and the occasional sale nowadays happens only through email exchanges, Sue Mooers said. (The Fremont retail store does sell online, though the majority of its business is with local, in-person buyers.)

Ray Mooers said Amazon, earlier in its history, asked Dusty Strings to sell on its site. "Any product they didn't already have, they were looking to bring in," he said. "We got multiple calls from them soliciting our participation."

 

The Mooers declined, and have continued to stay off Amazon, for reasons of cost and because of the individualized service they feel is an essential part of the business.

"What we do is idiosyncratic enough that we need, a lot of times, personal connection with our customers for it to be effective and worthwhile," Sue Moers said.

The biggest Amazon-related challenge, she said, is how its growth in Seattle has contributed to a rising cost of living.

"It just narrows who can actually afford to live in Seattle and work in this type of business," she said, adding that the same is true for other artisan manufacturers and retailers. "That's the piece that worries anybody in our position."

Playing the long game

"Do we have the Duckabush in topo?" Hanna Brown asked her uncle Eric inside their family's 100-year-old Port Angeles, Wash., shop, Brown's Outdoor, on a recent summer day.

A customer was looking for a topographic map of the upper portion of the Duckabush River near the boundary of Olympic National Park. Eric talked the man through several options showing the remote stretch of wilderness.

A century ago, Hanna Brown's great-great-grandfather came to the Port Angeles area to work on dams. He ended up starting a consignment shop that became an Army surplus store, later an electronics and hi-fi stereo-equipment store and now a backpacking, outdoor-equipment and clothing specialist.

The family business has moved and changed with the times over and again, including as it adapted to the upheaval of online shopping and big-box competitors. Walmart opened in Port Angeles in 1996.

Amazon's steady march from online bookseller in the mid-1990s to the all-encompassing emporium it is today gave specialty stores like Brown's "a lot of time to adjust," Eric Brown said.

But for the most part, they've stuck to what they were doing: providing expertise and equipment for exploring the national park, such as custom-fitted backpacks, hiking boots and the deep catalog of maps.

Like many retailers, Brown's has suffered from "showrooming" -- the consumer practice of trying out an item in a store, only to ultimately purchase online in pursuit of a lower price. (Amazon's short-lived Fire phone had a feature designed for this purpose, and it remains a part of the company's shopping app.)

Brown said the family's philosophy has been to treat those customers the same as any other.

"It doesn't matter," he said. "You continue on with that person. It will be valuable somewhere down the road."

The bet is that in the long term, customers will remember them when they need a higher quality or specialty item not available online or in the big box store.

Showrooming is less of a problem than it used to be. Changed pricing practices in the outdoor equipment industry in recent years have reduced some of the pricing advantages that bigger sellers had over small stores like Brown's, he said. Brown has also noticed a shift in consumer sentiment: After years of "buy local" messaging, more people come into the store motivated to do so.

Triple-checking to get it exactly right

Athletic Awards, one of the longest-tenured businesses in Seattle's South Lake Union neighborhood, feels a bit like a local history museum.

There's the Starbucks Golden Bean award. There's the Clammy, from local seafood restaurant chain Ivar's. There's a giant bottle of Dom Perignon engraved with the Vince Lombardi trophy, marking the Seahawks' 2014 Super Bowl win, one of more than a hundred the company did for the team.

The small company is thriving amid the rapid growth of its famous neighbor, Amazon, which Athletic Awards now counts as a customer, with various company teams ordering awards, T-shirts and other corporate swag. Indeed, owner Monty Holmes said, the transformation of the neighborhood into a hub of tech jobs and housing has helped his business, which serves a niche that hasn't been subsumed by e-commerce.

Foot traffic is up. People in the neighborhood stop in at the yellow single-story building adorned with a mural, an analog reader board displaying quirky messages and "the world's largest trophy cup" on the roof. "We just wanted to be the P.T. Barnum" of South Lake Union, said Holmes, who as a co-founder of the neighborhood's Chamber of Commerce has been a longtime advocate and firsthand witness to its transformation.

Athletic Awards has been in its current location since 1983, when Holmes' father bought the property and moved the 70-year-old business from a location a block away. "That's why we're able to be here," Holmes said. "If we were leasing, this would've been probably gone and we'd be out of here."

Holmes said Athletic Awards first added a website in the mid-1990s, but he thought then that people buying a one-of-a-kind item such as an engraved award or custom groomsman gift "were going to have to come in and see it. ... It's a personal item that doesn't translate so well to the internet."

The company added e-commerce capabilities in 1999, and today customers shop the online catalog, place an order and receive a proof via email. That represents about one-fifth of Athletic Awards' sales, mainly to repeat customers. The majority of sales still occur in person.

Holmes said the company treats small jobs the same as large, triple-checking proofs and stretching to meet rush deadlines, knowing how important the items are to his customers.

"This is your Emmy, this is your Oscar ... your icon in your company," he said.

(c)2019 The Seattle Times

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