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Facing serious competition from big-box stores, Stacks and Stacks Homewares tears down its stores and launches a profitable e-commerce site.
In 1984 Mel Ronick opened a six-store chain in the San Francisco Bay Area called Stacks and Stacks Homewares. A little more than 10 years later he found himself facing brutal competition from big-box stores like Target Corp., Linens ‘n’ Things Inc., and Bed, Bath & Beyond Inc.
He was watching the development of e-commerce, though, and bought a few books at Amazon.com on the subject. Ronick concluded getting into e-commerce could be rather easy-and it got him thinking.
“We couldn’t sustain the same numbers we were used to with all of this new competition and its buying and marketing power,” Ronick says. “As the poker adage goes, you have to know when to hold and when to fold. It was either close or figure out a new way to stay in business.”
So the retailer closed five of its six shops, launched an e-commerce site in 1998, and today attempts to set itself apart from online and offline big-box competitors via numerous methods, including honing organic search, enhancing customer service, and incorporating customer-oriented applications like live chat and ask the expert.
Since launch, the e-commerce site has been chugging along, profitable from the outset, growing revenue 30% to 40% every year, Ronick says.
The sole remaining store resides in a mall in Santa Rosa, CA. The store is profitable, he says. “It shows we aren’t just a dot-com-we are a 15-year-old company that knows what it’s doing.”
Stacks and Stacks plays the scrappy card against big-name rivals like Target and Bed, Bath & Beyond, says e-commerce consultant Lauren Freedman, president of Chicago-based The E-tailing Group Inc. “They’re not a destination site, and they don’t have the visibility of a traditional retailer,” she says. “But they drive business off of search-and when you get there, it’s a functional site with a mix of decent brands and unique items.”
Though he’s pleased with his market position, Ronick never considers himself home free-not while more famous competitors have room to improve their online marketing strategies. His success with organic search will last only as long as none of the big names take aim at it. But he’s philosophical. “Companies like Amazon or Wal-Mart or Target can hire the best minds available,” he says. “One day they will probably replace me. But not yet.”