They survived the superstore invasion Small music store, office supply changed focus -- and thrived

October 05, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

In just about every way, An Die Musik and Jacobs Gardner Supply Co. are opposites.

An Die Musik sells entertainment: music for the soul.

Jacobs Gardner Supply Co. sells the essentials of work life: pens, copy paper and desks.

But the two Maryland businesses, one a music store recently opened on North Charles Street and the other a large office supply business based in Bowie, have much in common.

They confronted a common enemy -- the American superstore -- and have undergone significant transformations to stay in business.

Thousands of small and mid-size retailers have succumbed in the past decade to the large category killers that dominate life in the suburbs. Individually owned bookstores, hardware stores and appliance stores have given way to huge chains offering immense selection and rock-bottom prices.

But some aggressive and innovative retailers have found ways to compete, by focusing on small niches in the market or providing better service than the big guys.

An Die Musik started as an innovative business. When it opened in Towson in 1990, it offered music lovers a then-unheard of 8,000 square feet of CDs. It also featured listening stations -- and beyond that allowed customers to listen to any CD before plopping down the cash.

But then Borders opened a store nearby in late 1992. When Borders later expanded to offer a big music section, An Die Musik -- faced with an annual rent of $100,000 and shrinking margins -- decided to bail out. In late 1995 it announced that it would resurface downtown.

It was its second retreat: Its Ellicott City branch had already closed due to intense competition, including a new Best Buy in Columbia and Planet Music at Westview Mall.

But nearly everything about An Die Musik has changed since its recent reopening at 407 N. Charles St.

Narrowed approach

The new store focuses on customers interested in classical, jazz and blues and has very little of the rock and roll selection it did in Towson. It's smaller, leaner, has more expertise among its sales staff and will use half its 3,000 square feet of space to open a light-fare cafe.

It's new location is part of a strategy that store owners Henry Wong, Eugene Mo and Neal Woodson hope will work. Wong says the trio wanted to take advantage of Mount Vernon's cultural attractions and appeal to Peabody Conservatory students and visitors to the Walters Art Gallery. He hopes to be part of a rejuvenation of downtown shopping.

He's offering special services to downtown workers: Customers who hear something on the radio in the morning can order it from An Die Musik and have it delivered to their offices, Wong said. And they hope the cafe, to open early next month, will pull in more customers.

Jacobs Gardner Supply Co. Inc. was a successful office supply chain with 25 stores in Washington D.C. and New York when the superstores began siphoning off business.

"When we started to feel that pressure in 1988, we knew our retailing formula was not going to work in the long run," said Gary Luiza, president and chief executive officer.

Staples and Office Depot had entered the market with big warehouse stores in cheap locations. Jacobs Gardner had small stores in high-rent downtown spaces -- and higher prices.

Luiza said the company started questioning how it did business. "How can we cut costs out of our business so we could charge customers less? How can we expand business without being limited to the D.C. and New York area?" he said.

The answer came in a catalog business, with the trade name of Penny Wise, the company started in 1992. It grew quickly enough to allow the company to close stores when the leases were up.

Penny Wise also made a deal with a national wholesaler of office products that gave it the flexibility to offer customers next-day delivery of 20,000 stock items anywhere in the nation.

That allowed the company to shut its own warehouse and reduce its staff to 30 people, down 75 percent. Instead of 25

stores, it now maintains only one in Washington.

The company declined to say what its annual sales are, although Luiza said the company's profits are up 320 percent since 1992. Sales have increased 20 percent this year and its customer base, now at 500,000, is growing annually at about the rate of 20 percent.

Luiza feels lucky to have survived. "Five years ago there were 18,000 dealers nationwide," he said, citing statistics from his industry association. "That number is below 3,000. They are statistics of the incredible decline. Some is consolidation, but the vast majority is people who have had to close up shop."

What both Penny Wise and An Die Musik did, said Skip Briggs, a Severna Park retail consultant who specializes in the growth of ,, small businesses, is to find a way to focus on what the big bookstores and office supply stores weren't doing.

'Laser-like' focus

His advice to small retailers: "Create a laser-like focus on the thing you are good at." Often that means reducing the number of products a company sells, as An Die Musik has done.

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