Ned Hayes [00:00:09] Welcome to SparkPlug, where we talk to smart people working at the intersection of business and technology. Brought to you by SnowShoe making mobile location smarter. Today I’m interviewing Karen Jensen, who’s an expert in retail research, and she’s done some really interesting research with small retailers in the Pacific Northwest, and she’s especially focused on what happened during COVID and how these retailers responded. So. Welcome, Karen. 

Karen Jensen [00:00:38] Hey, how’s it going? 

Ned Hayes [00:00:39] Thank you. Yeah. Great to chat with you today. You spent some time talking to retailers and talked to a variety. So could you just give us a brief overview of the kind of retail work that these people do? 

Karen Jensen [00:00:52] Yeah. As you mentioned, we spoke to a select group of people in one city and those were retailers who were business owners in clothing, candy toy stores, anything that you can kind of wrap retail under. 

Ned Hayes [00:01:10] Wow. It sounds like it really covered the spectrum. So are these franchises or chains or are they individual entrepreneurs? 

Karen Jensen [00:01:20] Yeah. So everyone we spoke to was an individual entrepreneur. I’ve a couple of the business owners who actually have stores in outside areas, bigger cities, but for the most part, everyone they are, you know, a single business owner dedicated to that. One is that one store in the downtown area. 

Ned Hayes [00:01:39] Wow. So what were they able to tell you about the size of their business? I mean, mom and pop shops, they probably don’t make very much money, right? I mean, like 50,000 is probably a good year for them. Am I right? 

Karen Jensen [00:01:51] No, you are actually wrong on that. I was surprised, too. I was. That’s what I was thinking and what expecting to hear. I was much, much surprised to hear that, you know, so many businesses are prior to COVID. We’re in the million-dollar range or the half a million-dollar range. You know, there’s smaller retailers, say, ice cream and ice cream business that pull in two hundred thousand dollars a year with just a couple of employees. 

Ned Hayes [00:02:22] Any of these businesses that like a million dollars? 

Karen Jensen [00:02:25] Yeah, there was a couple of them, and they definitely capitalized on a smaller market, if you will. Got it. 

Ned Hayes [00:02:33] Of course, that’s growth, not net. So that doesn’t include all of their expenses. Yeah. And they’re actually making up to a million dollars is a small retail business laptop with a few employees. But still, that’s saying something for a small economic base to be able to pull in that kind of gross income on an annual basis. 

Karen Jensen [00:02:52] Yeah, it’s pretty surprising. Going into this research. I was kind of expecting to hear smaller numbers and not so many success stories, but it was quite the opposite. 

Ned Hayes [00:03:04] So in this retail research, then you were able to talk to you. Were you talking to employees or were you actually talking to the founders or owners? 

Karen Jensen [00:03:13] Founders and owners. Everyone that we talked to is the owner, not necessarily founders. A couple of these businesses were taken over and have been in the area for decades. We had the opportunity to speak to all of the owners and had one extra interview with a manager for one of the stores. So we kind of got to two interviews for one store, which was really exciting. 

Ned Hayes [00:03:38] Got it. So before we jump into the kind of store findings and what you found about Main Street, because this is a really mainstream retailers like the Gap or Nike, these are people who are in their communities, it sounds like. Tell me a little bit about the Pacific Northwest city that you were doing your research on. 

Karen Jensen [00:03:57] Yeah, we did our research in Olympia, which is the state capital, highly engaged community, robust economy, which is directly attributed to the stable employment at the state government. And there’s a huge, huge art scene, a huge trend to shop local and not go to those big-box stores and remain loyal to the downtown area. 

Ned Hayes [00:04:24] That’s fascinating. So what’s the population of Olympia, just so we can size it for our listeners? 

Karen Jensen [00:04:32] Yeah. In 2018, the population was about 50,000 people. The surrounding area was about 100,000. It’s in Thurston County, which is pretty large. 

Ned Hayes [00:04:43] And then the median income like are these, is Olympia, a pretty wealthy district isn’t like downtown Seattle or not? You know, the median.

Karen Jensen [00:04:51] Income is about $58,000, with a median age of about 38 years old. 

Ned Hayes [00:04:55] OK, so it’s people who do go out and shop, but they don’t actually have a lot of money. So the fact that you have retailers pulling in up to a million a year really says a lot about the commitment to shopping local. 

Karen Jensen [00:05:08] It really does, yeah. I don’t think that this economy would be booming if these locals were depending on their Amazon orders and going to the mall and relying on those big box stores. 

Ned Hayes [00:05:24] Right. So when you talk to these retailers, I imagine that in 2020, things just fell off a cliff. Like I bet you, you know, most of them had to shut down and go out of business like it was that what you found when you did your research? 

Karen Jensen [00:05:37] Yeah, you’re totally wrong on that, actually. You know it was the opposite, frankly, because most of these retailers had an already stable presence in the community. Their business plan was flexible. They were actually quite successful. One business in particular business owner, gelato store. I was personally really blown away from that individual store’s success because they mentioned closing down for one day pivoting to using a food truck as a delivery service, doing pickup and curbside, and really changing their business model on the drop of a dime. 

Ned Hayes [00:06:22] Wow. So they were able to pivot successfully from doing a gelato in-store to doing gelato deliveries, and they were able to keep their revenues going. 

Karen Jensen [00:06:32] Yeah, and this is something that they’re going to basically keep running with in 2021. As this particular business owner mentioned, this delivery option that they that they did during COVID that now acts as a second store for them where they can go, park it somewhere. They don’t have to pay rent and they have two areas, and that truck is actually going to be solving an issue for them, which, you know, the issue of indoor dining and social distancing. You don’t have to do that when you’re outside serving, you know, ice cream from a food truck. 

Ned Hayes [00:07:07] That’s fantastic. So basically kind of doubling their outreach to the community. Yeah, I assume the truck is refrigerated. 

Karen Jensen [00:07:14] Yeah, yeah. All by just trying to stay alive during the pandemic. 

Ned Hayes [00:07:18] Right? Well, it sounds like a really sharp business owner. How about the clothing, though? I mean, I know I started buying more stuff on Amazon, even though I believe in local it’s just easier. So. So what about clothing stores and what about like, like were they able to change course as well? 

Karen Jensen [00:07:33] Yeah. Clothing retail. We saw a general pivot to e-commerce and curbside as well. We had retailers that we spoke to that, you know, we’re kind of in the event clothing market so formal or wedding. And you would think that those businesses would be completely shut down because of events, right? Everyone’s canceling events, but I was wrong on that, too. People are not just buying more, they’re buying bigger-priced items. And it’s not necessarily a business where there’s a lot of loyalty in there, either. 

Ned Hayes [00:08:10] Fascinating. So even in the pandemic, they were able to keep going, even the specialty and clothing stores. 

Karen Jensen [00:08:17] Yeah. And you know, a lot of business owners are actually mentioning they’re seeing these bigger receipt numbers come in because people are spending their vacation funds on renovating and redoing their closet and buying household goods. 

Ned Hayes [00:08:35] Fascinating. So it sounds like these retail owners kept moving forward. 

Karen Jensen [00:08:41] Oh yeah. You know, one retailer in particular, she knows that it’s not all about what she wants to do. She listens to her customers and she listens to her employees and specifically stating that, you know, retail evolves. What you are in one decade is not necessarily what you are in the next. We just keep evolving. 

Ned Hayes [00:09:02] That’s fantastic. But honestly, COVID was hard when the businesses hit COVID. They must have had to change course in some way. I mean, they couldn’t just keep doing the same thing. It’s great that they’re gelato place was able to get a truck for deliveries, but I’m sure there were some negative impact. What happened to the retailers once they were told that they had to shut down or lockdown? 

Karen Jensen [00:09:23] Yeah, a great question that on average, I think that the retailers that we spoke with really had success figuring that out. But that initial like shock to the the down and everything closing did result in many employees being laid off, a lot of them furloughed so they can keep their benefits expecting to rehire them. You know, a lot of business owners were actually one of two employees standing, even putting in some of their own funds to stay afloat. Some of the retailers, I was surprised to hear that they’re applying for the loans that turned into grants. I mean, that wasn’t their first course of action. It actually took some neighboring retailers to say, Hey, did you do this? I did it. And look what happened? Or even a bank manager in the community calling that business owner and saying, Hey, we have funds available, come down here and apply for it because they’re just sitting here.

Ned Hayes [00:10:22] Right, during that time. They must have had to shut their doors. What did they do when their doors were shut? 

Karen Jensen [00:10:27] Yeah, that’s a great question. Many, many people did what most others would kind of think to do. You know, they figured out how to launch an e-commerce site. They figured out how to do deliveries. They did curbside pickup, they figured out ways to stay connected with their customers, keep providing the products that they need and doing so these they kept their customers loyalty. They, you know, these customers didn’t just drop them and start ordering from Amazon. 

Ned Hayes [00:10:57] So frankly, when that happened, I thought that a number of businesses like this would run for the hills or would say, hey, we’re shut forever. We can’t sustain this, like hand-to-mouth. But what you’re saying is that these retailers were really resilient, were entrepreneurial in their thinking, and were able to take that time to regroup and rethink their offerings. 

Karen Jensen [00:11:20] And not only that, but really thinking ahead and taking advantage of the time of year for a company to have to shut down in March that does ice cream while they’re busy season. It’s not till June, so that was a bit of luck. But it was also just the right time. And, you know, they couldn’t have asked for a better time for that to happen. You know, other people who had rather a slow summer because there’s not a whole lot of tourists they planned and they took that time to really make up and have a good game plan for their holiday season when they knew that they were going to have higher sales, more traffic. 

Ned Hayes [00:12:01] Interesting. So it was kind of a pause to regroup and think, what about loyalty? Like you talked about them building loyalty with customers, but what are the strategies that they use? 

Karen Jensen [00:12:11] Yeah. So, you know, to be honest, I think that there could be zero loyalty programs and you would still have the same amount of people coming back to the stores. I think people are just married to that area, to be honest. They know what works and they go to it because it’s consistent. But we did learn that the old-fashioned paper and stamp cards are very popular. Whether it’s a stamp card where you get a coffee each time and after 10 of them, you get free or you fill up your stamp card and you get a percentage off, those types of programs were pretty popular. We did also find that there’s a lot of business owners using a post system that kind of captures everything. You know, it’s the credit card reader, the whole backend system of inventory, as well as a loyalty component. Not everyone that has that program is using it for cost reasons, but there’s a lot of loyalty efforts in that area. Not to mention the downtown association. United is a stronger strategy than going at it alone, and the whole association looked at what was happening and actually created a program. Love Oly was the program that they created to unify the retailers and create and hold that loyalty within the downtown region. They provided all the materials and basically, you know, when someone had a filled up card, they had the merchandise to provide. 

Ned Hayes [00:13:34] Got it. So in your research, what were the kind of key findings if you can kind of give us the bottom line? 

Karen Jensen [00:13:40] Key findings were that beginning of the pandemic, those were actually on pause because of safety, you know, passing, you know, paper hand to hand. The risk of infecting someone, you know, was was definitely high. So that was on pause, but it didn’t slow down or minimize the loyalty. In general, it literally just replaced, you know, it took away a piece of paper. 

Ned Hayes [00:14:09] And so was the customer loyalty maintained at a high level? Yeah, yeah. And then what other findings beyond?

Karen Jensen [00:14:18] Yeah, other businesses were equally successful because they pivoted to e-commerce and delivery and curbside. What I found really, really interesting was the number of the total number of transactions declined drastically, right? Because you had less travelers, less tourists, you know, less random sales. But they saw a rise in the price per transaction. So people were buying less, but they were buying more. 

Ned Hayes [00:14:46] So average revenue per buyer went up. 

Karen Jensen [00:14:51] Yeah. Many, many people by the many retailers by the end of the year said that they broke even that they had dips in their slow periods or when they shut down and those busy seasonal times when they really boost sales more than made up for it. 

Ned Hayes [00:15:09] So fantastic findings, Karen. Thank you for doing this research. It sounds like there is hope in Main Street. There’s hope for small retailers. The bottom line here? 

Karen Jensen [00:15:18] Yeah, absolutely. I mean, it was almost like a breath of fresh air interviewing these people because it wasn’t bad news, which is really exciting. And in review, you know, successive Olympians downtown retailers throughout the pandemic and part lies in the hands of their consumers. I mean, these consumers made it possible for them to not have to lock their doors. Offering loyalty and remaining present and visible in the community were key factors for thriving in this economy. Social media, just getting your face out there and reminding people who you are and what you offer was so important. 

Ned Hayes [00:15:54] Well, thanks for all the great research you’re doing. Karen, we hope to hear more as you do additional research in other northwest cities. And I know that you’re working with a team that goes around the world. So thank you so much. Anything else that you want to add? 

Karen Jensen [00:16:08] You know, just it was truly inspirational to talk to these retailers. You know, it was the responses I got was not what I thought would be happening. And it was really fantastic to talk to these individuals. 

Ned Hayes [00:16:20] Thank you, Karen. Have a good one. Thank you. Thanks for listening today to the SparkPlug podcast hosted by me, Ned Hayes and brought to you by SnowShoe. https://snow.sh. For smarter mobile location. SparkPlug is a wholly owned property of SnowShoe All Content. Copyright 2021 SparkPlug Media.