When small stores go out of business, owners ask: Now what?

By Joyce M. Rosenberg
AP Business Writer

NEW YORK (AP) — When small or independent retailers post “Going Out of Business” signs, many ask themselves, now what? That may mean trying again — or forging ahead on a completely different career path.

Reilly Starr and her business partner had opened Naked Sports Gear, a Manhattan store that sold athletic wear for women, in 2011. They were successful, but faced increasing competition and high rent and other overhead. Three years ago, an underwear company sued over the word “naked.” Starr and her partner fought it until late last year. Then, believing the workout wear fad was fading, they accepted a cash settlement and wound down the business.

“We were part of a trend and we seized that trend at the right time, and we rode it out as long as we could,” Starr says. But she didn’t see opening another store as an option: “Brick and mortar is the worst thing you can do in New York.”

Her next move was instead starting a service company, a dry cleaning and laundry business called Dapper Dame whose target customers are women. She launched a month ago without a storefront; using an app to connect with customers and contracting with a wholesale dry cleaning company to do the work.

Starr had the idea for a women’s dry cleaner in her head for some time. That kind of thinking about “what’s next” is a strategy that even successful storeowners should be using, says Bob Phibbs, CEO of The Retail Doctor, a consulting company based in Coxsackie, New York. He points out that stores are closing in cities, big malls and small local shopping centers.

“You need to have a Plan B, or at least be open to what else could be out there,” Phibbs says.

Stores fail for many reasons, and retailers of all sizes have suffered because people are shopping more online and less in physical stores. In the past few months, big department store chains like Macy’s and Sears have said they’ll close some stores, and clothing sellers like Limited have shut down completely. Small retailers can be more vulnerable than the bigger players because they don’t have the big cash reserves or the same negotiating power with vendors.

Some business owners who close their stores but want to stay in retail transition to online-only selling. Leigh Meadows-McAlpin had a furniture and home design business for nearly 15 years on King Street, a shopping mecca in Charleston, South Carolina. As the years went by, overhead including rent kept rising, to the point where she described King Street as “an unreasonably challenging environment to compete” in.

When Meadows-McAlpin decided to shut the store down two years ago, she was at first unsure about what to do next. Her answer was to create a new business focused on interior design.

“It was a very natural transition in some ways to move from a product-based business in which we were promoting consumer goods toward more of a service-based business which capitalizes on my experience,” she says.

Meadows-McAlpin had to build the new business, but had a customer base she knew she could market to. She used the same name that the store had: Dwelling.

“Any time you’re making a career change, especially when you’re leaving behind loyal clients, you need to get your message out there and help the public understand the reasons for your change,” she says.

Robert Garcia had to wrestle with what to do next a decade ago, when the rent for his patio umbrella store in Hialeah, Florida, more than tripled from $1,200 a month to $3,800 in just 18 months. He tried to find a new space, but says “there wasn’t anything even remotely close” that he could afford. Garcia considered getting out of retailing entirely.

“I went through all the philosophic questions in my head in the space of two to three days,” he says. “Do I go work for somebody else after owning my own business? Part of that makes you feel like a failure.”

He decided to try selling umbrellas online. They are a product people are willing to buy from a picture on a website, and because internet retailing was then relatively new, he suspected he wouldn’t have much competition.

“We did OK right off the bat,” Garcia says. The iPatioUmbrella.com site allows him to draw on his retailing experience, and he doesn’t have the threat of suddenly soaring overhead costs.

But that kind of plan these days needs to be well thought-out, given the increase in competition, Phibbs says.

“People are looking for the magic wand, and think, we’ll just go online and make tons of money,” he says.

Gabrielle Napolitano got out of store ownership altogether when she closed her shop in 2011 after five years of selling children’s secondhand clothes, books and toys in New York’s borough of Brooklyn. She had lost her business partner and her marriage broke up, and she couldn’t run the store, or any other retailer, on her own, especially because she had two small children to care for.

Napolitano’s store had been successful in part because she put on events like parties at her store and was able to get publicity for them. Within weeks of the closing, other local retailers approached Napolitano for help with social media and marketing.

“People were asking, ‘can you help me market my business?’ It kind of morphed,” says Napolitano, whose GabNapDesigns does graphic and web design and social media marketing.

Napolitano also works at several small retailers, but says, “I have no intention of opening another shop.”