Locally Grown Chains
Retailers unlock the key to success beyond the initial start-up location
Story by Sean Fitzgerald, New North B2B publisher
Building a business from the ground up is rarely easy. And when the business owner becomes comfortable enough with the success of one location to branch out and start another, such an expansion can often come with a whole set of different issues from starting up in the first place.
So go the lessons for business owners who grow retail and service chains from an unknown start-up to brand names most of us recognize as we drive around northeast Wisconsin.
As a business expands locations, consistency of processes, style of service and character of the environment become all the more important to guaranteeing the intended customer experience. While change can be good for any business, sticking to what works can sometimes prove more difficult than expected.
Northeast Wisconsin boasts a variety of its own homegrown retail chains that started in the area and eventually opened new locations outside of the communities in which they started. Here’s the story of three diverse businesses as they grew from start-up to their current status.
Appleton resident Todd Degner has fond memories of growing up in Rhinelander and his father taking him to Walter’s Barber Shop on a Saturday morning for a trim. He’s found it to become a bygone tradition of father-son quality bonding time that’s difficult to find in the 21st century.
As an adult, Degner routinely went to get his own hair trimmed at various salons across the Fox Valley, and noticed the price kept increasing for his relatively simple, 15-minute cut. He had to book out a month or more just to make an appointment. The salon always smelled a bit funny, like feminine beauty supplies and hair product solution. And the only magazines to read in the waiting area were Cosmo and Good Housekeeping. There wasn’t much to help make a male customer feel masculine about going to the salon.
Those thoughts and the memories of going to the Barbershop with dad while growing up helped spark the entrepreneurial endeavor Degner and his wife hatched back in 2003 while he worked fulltime in the information technology industry and was looking to start a small business as an investment. If a salon were designed exclusively for males – from the barrels of peanuts and Sports Illustrated magazines in the waiting area to televisions at each hair station and stylists who work almost exclusively with men’s hair – would people come? What if it included a neck massage, shampoo and scalp massage, all for a $10 bill?
‘Cool idea, but it’s never going to make it,’ was a phrase Degner heard often from those close to him to whom he’d share the new business concept. He and his wife refined the concept, crafted a solid business plan, and worked to recruit stylists out of the boutique-style salons in the area. By July 2005 they opened their first The Barbershop – A Hair Salon for Men, on the west side of the Fox Cities. The concept caught on like wildfire with customers.
Within the first three months of being open, revenue and customer demand were exceeding projections. A second location was opened in Neenah before the end of 2005. Within three years of opening the first location near Fox River Mall in Appleton, the Degners would open ten stores across northeast and northcentral Wisconsin. They all remain open to this day.
At first, the immediate success came as a bit of a surprise to Degner.
“All we’ve done is taken a haircut that’s been done for centuries and repackaged it,” he said.
The critical difference, Degner believes, is the culture of customer service that evolved and remains the hallmark of The Barbershop to this day – they view themselves in the hospitality industry more than they do the beauty industry. The average male gets his hair trimmed every four to six weeks, so it’s crucial to develop an experience that customers keep coming back for time and again. Otherwise, there’s plenty of alternatives customers can investigate.
“We’re going to keep taking it further in that we’re going to continue to make a connection with the customer,” Degner said. With about 180 employees at his 10 locations, Degner said paramount to customer satisfaction is ensuring his staff of stylists enjoy what they’re doing and look forward to coming into work each day. In an industry where clients tend to follow a favorite stylist around from employer to employer, Degner has worked hard to design an atmosphere and compensation and benefits package that attracts experienced talent and keeps them on board. As a result, The Barbershop has had a high rate of employee retention, and boast more than half of its managers have been with the company as long as their respective store has been open.
Degner would occasionally come in on weekends and evenings to sweep hair from the floors, pay the bills and manage some of the higher-level marketing. His managers accomplished all of the day-to-day operations while he continued to work his fulltime job in IT sales. And while not initially intending his business would become his career, Degner left his employer and jumped into The Barbershop fulltime in 2009. By this time, the business had started to develop franchise partners in Minnesota, and soon would launch another franchising arrangement in North Carolina.
Now with their own 10 stores holding steady and “hitting their stride,” as Degner said, focus has shifted toward developing the franchise and expanding it further into mid-sized markets across the country. At this point, Degner said he’s averaging about three inquiries a week from prospective franchisees looking to develop a market for The Barbershop on their own. It’s been a challenging learning experience to craft the franchise model, but Degner said there’s been sufficient help from his accounting partners along the way.
He and his wife still plan to grow their own portfolio of stores they own into the Milwaukee market in the next few years, hoping that might open the door for a potential franchisee in northern Illinois.
Run Away Shoes
Nothing beats building a successful business like having a well-identified, well plugged-in customer base.
The running community throughout northeast Wisconsin is a relatively tight knit group, who tend to be particular about the shoes that cradle their feet, and even some of the clothing and accessories that make keeping one’s body temperature constant just a little more comfortable. They like to shop from people who know what they’re talking about when it comes to running, and that’s not the same kind of customer service one might expect from any run-of-the-mill shoe store.
“It’s a very small world when you get into the people who run the store, the shoe reps,” the coaches and the runners themselves, said Ross McDowell, a former star mid-distance runner in high school college who turned his passion for running into a career.
A month after graduating from the University of Wisconsin-Oshkosh in 2004 with a business degree in marketing, McDowell opened his first store in downtown Oshkosh. It was technically a franchise of another running store in the Madison area for whom he worked during college, learning the back end of the industry relative to managing inventory and setting up the stores.
He ultimately would split apart from his former employer, striking out on his own with the Run Away Shoes name and business model in 2006, then opening a second store in Ashwaubenon a year later.
It became the soft skills of talking to his customers and finding the right shoes to match their feet that has kept his customers returning every 1,000 miles. He half-heartedly refers to his staff – all runners themselves – as “stewards of the foot.” McDowell said walkers now account for about 30 percent of his customer base. He hopes to continue to expand into the realm of casual runners, those who run regularly for exercise but don’t necessarily run in the various road races across northeast Wisconsin.
Just before hitting the ripe age of 30 last year, McDowell opened his third store on Appleton’s east side. It’s a far cry from the 15 or 20 stores McDowell said he hoped to have after coming out of college, but it’s also part of a vision that perhaps has matured as McDowell gained more entrepreneurial experience.
“Over time, I started to realize (that if he expanded too fast) you lose your connection to the customer,” he said.
In the next 10 years, McDowell hopes to double in size. He doesn’t know if that will be accomplished by opening new stores, but increasing the awareness of Run Away Shoes in the community will continue to play a critical role.
Running has become more popular than ever before, and it’s also become more organized, McDowell said, through better marketing of sanctioned community races or clubs that go out for casual group runs during the evening. Run Away Shoes has some visibility at each of those events, whether it’s serving on a committee for Green Bay’s Cellcom Marathon or conducting a lunch-and-learn presentation on proper running regimens for a local employer’s wellness council. Invariably, McDowell said, those participants eventually tend to seek out Run Away Shoes when they’re hunting down their next pair of running shoes.
That’s good news to McDowell, who finds that most of his first-time customers leave satisfied, and bring along a running buddy the next time they come in for shoes.
“Each customer, to me, is a potential three (new customers),” McDowell said.
Eaton’s Fresh Pizza
With a total of four locations between Oshkosh and Fond du Lac, Eaton’s Fresh Pizza had always been a bit ahead of its time in a food business.
In the late 1970s, before take-and-bake pizzas even emerged as a trend, the small little Eaton’s grocery market at the corner of Hickory and Johnson streets in Fond du Lac became a popular destination for households in the community to make up a special treat for dinner, simply having to stop to pick up a pizza on the way home from work.
Eaton’s patriarch Dale Hochstein and his partner invested in real estate properties in West Bend and Fond du Lac during the 1970s. When the Eaton’s grocer that leased their Hickory Street building struggled to remain in business in 1980, the two property owners bought the business.
As consumers shifted to shopping at larger supermarkets in the community which carried a variety of selection in every product category, small neighborhood grocers struggled to stay in business.
“It kind of became obvious there was no future in being a little grocery store, but there certainly was in the pizzas,” said Jason Hochstein, Dale’s son, who now owns the two Oshkosh Eaton’s Pizza locations along with his wife, Michele.
From that point on, Jason’s parent’s changed the format of the small grocery store into a full service take-and-bake pizza shop. They eventually bought out Dale’s real estate partner, who also ran a second Eaton’s location in West Bend. At its peak in the late 1990s, Eaton’s boasted six retail locations between Oshkosh, Fond du Lac and West Bend, all run by Hochstein family members with a striking similarity of service and experience between stores.
Hochstein’s parents were avid readers of business management books, he said, and readily consumed stories about Ray Kroc’s success growing his McDonald’s chain and how process, standards and consistency in everything from food preparation to customer service helped grow the brand recognition of arguably the world’s most popular retail chain.
That consistency has become a hallmark of the way Eaton’s are operated. As a kid growing up in the shops with his brother and sister, Jason recalls “a lot of family meetings.”
“For a while there, we were having meetings every week,” he said.
But those meetings were integral to keeping all staff on the same page as the business changed and grew. In 1982, Eaton’s began offering submarine sandwiches, long before popular national retail sub shops emerged in northeast Wisconsin. Eaton’s also developed deli meat and party trays about the same time, foreshadowing a trend that would eventually become a staple for the deli departments at large supermarkets.
Two years ago, Jason and his wife, Michele, purchased the two Oshkosh Eaton’s locations from Jason’s father, Dale, who continues to hold the two Fond du Lac stores. Since then, they’ve implemented a few unique changes not in line with their father’s stores, such as fresh soups each day. They’ve also taken to conducting fundraisers for local schools and youth groups, which has helped pave the way into new markets, Michele said.
But above all, Eaton’s hasn’t changed the mozzarella it procures from a nearby cheese maker or the distinctive zesty pizza sauce – its signature ingredient which helped Eaton’s make a name for its pizza back in the late 1970s.
“We haven’t tampered with that,” Hochstein said. “People really seemed to like it.”
The lesson here for any aspiring retailer – don’t mess with a good thing when you know that it’s what customers want.