Emperors of cheap

Inside C-Mart's 2 stores beat hearts of master liquidators

October 14, 2007|By Hanah Cho | Hanah Cho,Sun reporter

Shoppers scouring for good buys at bargain magnet C-Mart can see the changes on the sales floor.

Workers replaced handwritten price tags with bar-coded tickets. Computerized machines are in, while old-fashioned cash registers are out. By January, with a click of a mouse, customers should be able buy discount designer clothes and furniture now found only at C-Mart's Joppatowne and Landover stores.

C-Mart's new owners want to build the company into a national retailer. That is a challenging proposition: trying to balance the roots of this paper-and-pencil enterprise against ambitious goals to become a big chain.

The payoff is great if their gamble succeeds, yet these Baltimore entrepreneurs acknowledge that the risks are huge.

After acquiring controlling interest in the family-owned business this summer, C-Mart executives are working to hold on to the culture that made the flea market-like store one of the region's most reliable spots for deeply discounted Kate Spade and Prada handbags.

The executives think that modernizing the operation should provide added power in offering better prices and selections while appealing to more shoppers who expect Internet shopping and other conveniences.

C-Mart seeks out liquidated designer merchandise from department stores and other retailers. The new owners hope to broaden C-Mart's appeal beyond its two stores.

"We're aiming to grow a business and maintain the spirit of what has built this business," said Brad Bondroff, 29, C-Mart's new president. "At the same time, we think there's work to be done in the back office and the Internet to change the business and leave the brand intact."

Bondroff and his partner, Daniel Shuman, say the move is necessary to expand the mom-and-pop retailer online and add more stores in larger markets such as Miami, Las Vegas and New York.

As founders of the Baltimore online liquidator the Asset Store, Shuman and Bondroff plan to bring their technological expertise and success to C-Mart.

But the men are not tinkering with C-Mart's tried-and-true formula: deep discounts, brand-name blowouts and its signature hand-scribbled newspaper advertisements.

They know that any changes at a company that has generated a loyal following for more than 30 years could alienate core customers. And they know that for every Starbucks, there are more businesses that have failed at trying to replicate local success at the national level or maintaining the brand's identity under new owners.

"They need to understand what about the experience at C-Mart brings people back and is it translatable?" said Julie Lenzer Kirk, a Damascus consultant who trains entrepreneurs at the University of Maryland, Baltimore County.

"If they don't connect with the brand and what it is that made them successful and be able to scale that, they run the risk of crash and burn."

C-Mart's new owners recognize the potential landmines they face, but they say the changes will ultimately mean better deals and more products for their customers.

"We're trying to see if we could expand this concept and maximize it without screwing up whatever works," said Jim Dale, a Baltimore marketing consultant hired by the new owners to help with C-Mart's expansion plans. "There are a lot of good things that have been done over the years, and they've made it a successful company and brand."

No-frills reputation

C-Mart built its no-frills reputation more than a quarter of a century ago by promising low prices for designer garb and goods. Customers never see fancy signs, ornate displays or over-the-top decor at the retailer's two Maryland stores.

C-Mart executives have made upgrading inventory and sales systems their first priority. They hired more than three dozen temporary employees to bar code furniture, books, shoes, clothes and knickknacks at the two stores in the past two months. Equipped with rented laptops, the temporary workers finished the task late last month.

The idea is to use inventory and sales databases to help C-Mart track customers' buying habits, including which brands and merchandise are selling and how fast. That system, in turn, will provide information for the retailer's merchandise purchases, benefiting customers through quicker turnaround of inventory, Bondroff said.

The partners think that greater reliance on technology, statistics and numbers to make decisions will allow them to operate the business more efficiently. That results-driven mentality also brings added pressure to meet margins and other targets, they acknowledge.

"It makes us accountable. Our board has a clear view of what we're doing and how quickly we're doing it. That's what drives us. That pressure is good," said Shuman, 30, C-Mart's chief executive officer.

Such automated systems also will allow for a seamless transition about two years from now, when C-Mart plans to begin opening additional stores, he said.

The retailer's more immediate bet, though, involves operating an online business.

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